[Title 34 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2018 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

          Title 34

Education


________________________

Parts 400 to 679

                         Revised as of July 1, 2018

          Containing a codification of documents of general 
          applicability and future effect

          As of July 1, 2018
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

[[Page ii]]

          U.S. GOVERNMENT OFFICIAL EDITION NOTICE

          Legal Status and Use of Seals and Logos
          
          
          The seal of the National Archives and Records Administration 
              (NARA) authenticates the Code of Federal Regulations (CFR) as 
              the official codification of Federal regulations established 
              under the Federal Register Act. Under the provisions of 44 
              U.S.C. 1507, the contents of the CFR, a special edition of the 
              Federal Register, shall be judicially noticed. The CFR is 
              prima facie evidence of the original documents published in 
              the Federal Register (44 U.S.C. 1510).

          It is prohibited to use NARA's official seal and the stylized Code 
              of Federal Regulations logo on any republication of this 
              material without the express, written permission of the 
              Archivist of the United States or the Archivist's designee. 
              Any person using NARA's official seals and logos in a manner 
              inconsistent with the provisions of 36 CFR part 1200 is 
              subject to the penalties specified in 18 U.S.C. 506, 701, and 
              1017.

          Use of ISBN Prefix

          This is the Official U.S. Government edition of this publication 
              and is herein identified to certify its authenticity. Use of 
              the 0-16 ISBN prefix is for U.S. Government Publishing Office 
              Official Editions only. The Superintendent of Documents of the 
              U.S. Government Publishing Office requests that any reprinted 
              edition clearly be labeled as a copy of the authentic work 
              with a new ISBN.

              
              
          U . S . G O V E R N M E N T P U B L I S H I N G O F F I C E

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

          U.S. Superintendent of Documents  Washington, DC 20402-
              0001

          http://bookstore.gpo.gov

          Phone: toll-free (866) 512-1800; DC area (202) 512-1800

[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 34:
    SUBTITLE B--Regulations of the Offices of the Department 
      of Education (Continued)
          Chapter IV--Office of Career, Technical, and Adult 
          Education, Department of Education                         5
          Chapter V--Office of Bilingual Education and 
          Minority Languages Affairs, Department of Education      189
          Chapter VI--Office of Postsecondary Education, 
          Department of Education                                  193
  Finding Aids:
      Table of CFR Titles and Chapters........................     819
      Alphabetical List of Agencies Appearing in the CFR......     839
      List of CFR Sections Affected...........................     849

[[Page iv]]


      


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

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 34 CFR 400.1 refers 
                       to title 34, part 400, 
                       section 1.

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

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, July 1, 2018), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

PAST PROVISIONS OF THE CODE

    Provisions of the Code that are no longer in force and effect as of 
the revision date stated on the cover of each volume are not carried. 
Code users may find the text of provisions in effect on any given date 
in the past by using the appropriate List of CFR Sections Affected 
(LSA). For the convenience of the reader, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume. For changes to 
the Code prior to the LSA listings at the end of the volume, consult 
previous annual editions of the LSA. For changes to the Code prior to 
2001, consult the List of CFR Sections Affected compilations, published 
for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.

``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
Federal Regulations. An agency may add regulatory information at a 
``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used 
editorially to indicate that a portion of the CFR was left vacant and 
not accidentally dropped due to a printing or computer error.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed as 
an approved incorporation by reference, please contact the agency that 
issued the regulation containing that incorporation. If, after 
contacting the agency, you find the material is not available, please 
notify the Director of the Federal Register, National Archives and 
Records Administration, 8601 Adelphi Road, College Park, MD 20740-6001, 
or call 202-741-6010.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Authorities 
and Rules. A list of CFR titles, chapters, subchapters, and parts and an 
alphabetical list of agencies publishing in the CFR are also included in 
this volume.

[[Page vii]]

    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, 8601 Adelphi Road, College Park, MD 
20740-6001 or e-mail [email protected].

SALES

    The Government Publishing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call toll-free, 
866-512-1800, or DC area, 202-512-1800, M-F 8 a.m. to 4 p.m. e.s.t. or 
fax your order to 202-512-2104, 24 hours a day. For payment by check, 
write to: US Government Publishing Office - New Orders, P.O. Box 979050, 
St. Louis, MO 63197-9000.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Public Papers of the Presidents of the United 
States, Compilation of Presidential Documents and the Privacy Act 
Compilation are available in electronic format via www.govinfo.gov. For 
more information, contact the GPO Customer Contact Center, U.S. 
Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-
free). E-mail, [email protected].
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.archives.gov/federal-
register.
    The e-CFR is a regularly updated, unofficial editorial compilation 
of CFR material and Federal Register amendments, produced by the Office 
of the Federal Register and the Government Publishing Office. It is 
available at www.ecfr.gov.

    Oliver A. Potts,
    Director,
    Office of the Federal Register
    July 1, 2018

                                
                                      
                            

  

[[Page ix]]



                               THIS TITLE

    Title 34--Education is composed of four volumes. The parts in these 
volumes are arranged in the following order: Parts 1-299, parts 300-399, 
parts 400-679, and part 680 to end. The contents of these volumes 
represent all regulations codified under this title of the CFR as of 
July 1, 2018.

    For this volume, Michele Bugenhagen was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of John 
Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                           TITLE 34--EDUCATION




                  (This book contains parts 400 to 679)

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

 SUBTITLE B--Regulations of the Offices of the Department of Education 
                                (Continued)

                                                                    Part

chapter IV--Office of Career, Technical, and Adult 
  Education, Department of Education........................         400

chapter V--Office of Bilingual Education and Minority 
  Languages Affairs, Department of Education................         535

chapter VI--Office of Postsecondary Education, Department of 
  Education.................................................         600

[[Page 3]]

 Subtitle B--Regulations of the Offices of the Department of Education 
                               (Continued)

[[Page 5]]



CHAPTER IV--OFFICE OF CAREER, TECHNICAL, AND ADULT EDUCATION, DEPARTMENT 
                              OF EDUCATION




  --------------------------------------------------------------------
Part                                                                Page
400             Career, technical, and applied technology 
                    education programs--general provisions..           7
401             Indian vocational education program.........          17
402             Native Hawaiian vocational education program          22
403             State vocational and applied technology 
                    education program.......................          25
406             State-administered tech-prep education 
                    program.................................          71
410             Tribally controlled postsecondary vocational 
                    institutions program....................          75
411             Vocational education research program.......          79
412             National network for curriculum coordination 
                    in vocational and technical education...          83
413             National center or centers for research in 
                    vocational education....................          86
415             Demonstration centers for the training of 
                    dislocated workers program..............          92
421             Business and education standards program....          95
425             Demonstration projects for the integration 
                    of vocational and academic learning 
                    program.................................          98
426

[Reserved]

427             Bilingual vocational training program.......         101
428             Bilingual vocational instructor training 
                    program.................................         106
429             Bilingual vocational materials, methods, and 
                    techniques program......................         109
460

[Reserved]

461             Adult education State-administered basic 
                    grant program...........................         112
462             Measuring educational gain in the National 
                    Reporting System for Adult Education....         126
463             Adult Education and Family Literacy Act.....         136
464

[Reserved]

472

[Reserved]

477

[Reserved]

[[Page 6]]

489-499

[Reserved]

[[Page 7]]



PART 400_CAREER, TECHNICAL, AND APPLIED TECHNOLOGY EDUCATION PROGRAMS
_GENERAL PROVISIONS--Table of Contents



Sec.
400.1  What is the purpose of the Vocational and Applied Technology 
          Education Programs?
400.2  What programs are governed by these regulations?
400.3  What other regulations apply to the Vocational and Applied 
          Technology Education Programs?
400.4  What definitions apply to the Vocational and Applied Technology 
          Education Programs?
400.5  Under what conditions may funds under the Act be used for the 
          joint funding of programs?
400.6  What are the requirements for establishing a State Committee of 
          Practitioners?
400.7  What are the provisions governing the issuance of State core 
          standards and measures of performance and State rules or 
          regulations?
400.8  What are the provisions governing student assistance?
400.9  What additional requirements govern the Vocational and Applied 
          Technology Education Programs?
400.10  What are the reporting requirements?

    Authority: 20 U.S.C. 2301 et seq., unless otherwise noted.

    Source: 57 FR 36724, Aug. 14, 1992, unless otherwise noted.



Sec. 400.1  What is the purpose of the Vocational and Applied Technology
Education Programs?

    (a) The purpose of the Vocational and Applied Technology Education 
Programs is to make the United States more competitive in the world 
economy by developing more fully the academic and occupational skills of 
all segments of the population.
    (b) The purpose will be achieved principally through concentrating 
resources on improving educational programs leading to academic and 
occupational skill competencies needed to work in a technologically 
advanced society.

(Authority: 20 U.S.C. 2301)



Sec. 400.2  What programs are governed by these regulations?

    The regulations in this part apply to the Vocational and Applied 
Technology Education Programs as follows:
    (a) State-administered programs. (1) State Vocational and Applied 
Technology Education Program (34 CFR part 403).
    (2) State-Administered Tech-Prep Education Program (34 CFR part 
406).
    (3) Supplementary State Grants Program (34 CFR part 407).
    (b) National discretionary programs. (1) Indian Vocational Education 
Program (34 CFR part 401).
    (2) Native Hawaiian Vocational Education Program (34 CFR part 402).
    (3) National Tech-Prep Education Program (34 CFR part 405).
    (4) Community Education Employment Centers Program (34 CFR part 
408).
    (5) Vocational Education Lighthouse Schools Program (34 CFR part 
409).
    (6) Tribally Controlled Postsecondary Vocational Institutions 
Program (34 CFR part 410).
    (7) Vocational Education Research Program (34 CFR part 411).
    (8) National Network for Curriculum Coordination in Vocational and 
Technical Education (34 CFR part 412).
    (9) National Center or Centers for Research in Vocational Education 
(34 CFR part 413).
    (10) Materials Development in Telecommunications Program (34 CFR 
part 414).
    (11) Demonstration Centers for the Training of Dislocated Workers 
Program (34 CFR part 415).
    (12) Vocational Education Training and Study Grants Program (34 CFR 
part 416).
    (13) Vocational Education Leadership Development Awards Program (34 
CFR part 417).
    (14) Vocational Educator Training Fellowships Program (34 CFR part 
418).
    (15) Internships for Gifted and Talented Vocational Education 
Students Program (34 CFR part 419).
    (16) Business and Education Standards Program (34 CFR part 421).
    (17) Educational Programs for Federal Correctional Institutions (34 
CFR part 422).

[[Page 8]]

    (18) Vocational Education Dropout Prevention Program (34 CFR part 
423).
    (19) Model Centers of Regional Training for Skilled Trades Program 
(34 CFR part 424).
    (20) Demonstration Projects for the Integration of Vocational and 
Academic Learning Program (34 CFR part 425).
    (21) Cooperative Demonstration Programs (34 CFR part 426).
    (22) Bilingual Vocational Training Program (34 CFR part 427).
    (23) Bilingual Vocational Instructor Training Program (34 CFR part 
428).
    (24) Bilingual Materials, Methods, and Techniques Program (34 CFR 
part 429).

(Authority: 20 U.S.C. 2301 et seq.)



Sec. 400.3  What other regulations apply to the Vocational and Applied
Technology Education Programs?

    The following regulations apply to the Vocational and Applied 
Technology Education Programs:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1)[Reserved]
    (2) 34 CFR part 75 (Direct Grant Programs) (applicable to parts 401, 
402, 405, 408, 409, 410, 411, 412, 413, 414, 415, 416, 417, 418, 419, 
421, 422, 423, 424, 425, 426, 427, 428, and 429 except that 34 CFR 
75.720(b) does not apply to performance reports under parts 401, 402, 
405, 408, 409, 412, 413, 415, 416, 417, 419, 422, 423, 424, 425, 426, 
427, and 428, and to financial reports under parts 412 and 413).
    (3) 34 CFR part 76 (State-Administered Programs) (applicable to 
parts 403, 406, and 407).
    (4) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (5) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities) (not applicable to parts 401, 410, 
411, 413, 418, and 419).
    (6) [Reserved]
    (7) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (8) 34 CFR part 82 (New Restrictions on Lobbying) (not applicable to 
parts 401 and 410).
    (9) [Reserved]
    (10) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The Federal Acquisition Regulation (FAR) in 48 CFR chapter 1 and 
the Education Department Acquisition Regulation (EDAR) in 48 CFR chapter 
34 (applicable to contracts under parts 401, 402, 411, 412, 426, 427, 
428, and 429).
    (c) The regulations in this part 400.
    (d) The regulations in 34 CFR parts 401, 402, 403, 405, 406, 407, 
408, 409, 410, 411, 412, 413, 414, 415, 416, 417, 418, 419, 421, 422, 
423, 424, 425, 426, 427, 428, and 429.
    (e)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Debarment and 
Suspension (Nonprocurement)), as adopted at 2 CFR part 3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 2301 et seq.)

[57 FR 36724, Aug. 14, 1992, as amended at 79 FR 76100, Dec. 19, 2014]



Sec. 400.4  What definitions apply to the Vocational and Applied 
Technology Education Programs?

    (a) General definitions. The following terms used in regulations for 
the Vocational and Applied Technology Education Programs are defined in 
2 CFR part 200, subpart A, or 34 CFR 77.1:

Acquisition
Applicant
Application
Award
Budget
Contract
Department
EDGAR
Elementary school
Facilities
Federally recognized Indian tribal government
Fiscal year
Grant
Grantee
Grant period
Nonprofit
Private
Project
Public
Recipient
Secondary school
Secretary
State educational agency
Subgrant
Subgrantee
Supplies

    (b) Other definitions. The following definitions also apply to the 
regulations for Vocational and Applied Technology Education Programs.
    Act means the Carl D. Perkins Vocational and Applied Technology 
Education Act (20 U.S.C. 2301 et seq.), as amended by Public Law 101-
392, 104 Stat. 753 (1990), and Public Law 102-103, 105 Stat. 497 (1991), 
unless otherwise indicated.

[[Page 9]]

    Administration means activities of a State necessary for the proper 
and efficient performance of its duties under the Act, including 
supervision, but not including curriculum development activities, 
personnel development, or research activities.
    All aspects of an industry includes, with respect to a particular 
industry that a student is preparing to enter, planning, management, 
finances, technical and production skills, underlying principles of 
technology, labor and community issues, health and safety, and 
environmental issues related to that industry.
    Americans with Disabilities Act of 1990 or ADA mean the Act in 42 
U.S.C. 12101 et seq.
    Apprenticeship training program means a program registered with the 
Department of Labor or the State apprenticeship agency in accordance 
with the Act of August 16, 1937, known as the National Apprenticeship 
Act (29 U.S.C. 50), that is conducted or sponsored by an employer, a 
group of employers, or a joint apprenticeship committee representing 
both employers and a union, and that contains all terms and conditions 
for the qualification, recruitment, selection, employment, and training 
of apprentices.
    Area vocational education school means--
    (1) A specialized high school used exclusively or principally for 
the provision of vocational education to individuals who are available 
for study in preparation for entering the labor market;
    (2) The department of a high school exclusively or principally used 
for providing vocational education in not less than five different 
occupational fields to individuals who are available for study in 
preparation for entering the labor market;
    (3) A technical institute or vocational school used exclusively or 
principally for the provision of vocational education to individuals who 
have completed or left high school and who are available for study in 
preparation for entering the labor market; or
    (4) The department or division of a junior college, community 
college, or university that operates under the policies of the State 
board and provides vocational education in not less than five different 
occupational fields leading to immediate employment but not necessarily 
leading to a baccalaureate degree, if, in the case of a school, 
department, or division described in paragraph (3) of this definition or 
in this paragraph, it admits as regular students both individuals who 
have completed high school and individuals who have left high school.
    Career guidance and counseling means programs that--
    (1) Pertain to the body of subject matter and related techniques and 
methods organized for the development in individuals of career 
awareness, career planning, career decision-making, placement skills, 
and knowledge and understanding of local, State, and national 
occupational, educational, and labor market needs, trends, and 
opportunities; and
    (2) Assist those individuals in making and implementing informed 
educational and occupational choices.
    Chapter 1 means chapter 1 of title I of the Elementary and Secondary 
Education Act of 1965, as amended (20 U.S.C. 2701 et seq.).
    Coherent sequence of courses means a series of courses in which 
vocational and academic education are integrated, and which directly 
relates to, and leads to, both academic and occupational competencies. 
The term includes competency-based education, academic education, and 
adult training or retraining, including sequential units encompassed 
within a single adult retraining course, that otherwise meet the 
requirements of this definition.
    Community-based organization means a private nonprofit organization 
of demonstrated effectiveness that is representative of communities or 
significant segments of communities and that provides job training 
services (for example, Opportunities Industrialization Centers, the 
National Urban League, SER-Jobs for Progress, United Way of America, 
Mainstream, the National Puerto Rican Forum, National Council of La 
Raza, WAVE, Inc., Jobs for Youth, organizations operating career intern 
programs, neighborhood groups and organizations, community action

[[Page 10]]

agencies, community development corporations, vocational rehabilitation 
organizations, rehabilitation facilities (as defined in section 7(10) of 
the Rehabilitation Act of 1973 (29 U.S.C. 706(10)), agencies serving 
youth, agencies serving individuals with disabilities, including 
disabled veterans, agencies serving displaced homemakers, union-related 
organizations, and employer-related nonprofit organizations), and an 
organization of demonstrated effectiveness serving non-reservation 
Indians (including the National Urban Indian Council), as well as tribal 
governments and Native Alaskan groups.


(Authority: 20 U.S.C. 2471(6); 41 U.S.C. 1503(5))

    Construction includes construction of new buildings and acquisition, 
expansion, remodeling, and alteration of existing buildings, and 
includes site grading and improvement and architect fees.
    Cooperative education means a method of instruction of vocational 
education for individuals who, through written cooperative arrangements 
between the school and employers, receive instruction, including 
required academic courses and related vocational instruction by 
alternation of study in school with a job in any occupational field. The 
two experiences must be planned and supervised by the school and 
employers so that each contributes to the student's education and 
employability. Work periods and school attendance may be on alternate 
half days, full days, weeks, or other periods of time in fulfilling the 
cooperative program.
    Criminal offender means any individual who is charged with, or 
convicted of, any criminal offense, including a youth offender or a 
juvenile offender.
    Correctional institution means any--
    (1) Prison;
    (2) Jail;
    (3) Reformatory;
    (4) Work farm;
    (5) Detention center; or
    (6) Halfway house, community-based rehabilitation center, or any 
other similar institution designed for the confinement or rehabilitation 
of criminal offenders.
    Curriculum materials means instructional and related or supportive 
material, including materials using advanced learning technology, in any 
occupational field that is designed to strengthen the academic 
foundation and prepare individuals for employment at the entry level or 
to upgrade occupational competencies of those previously or presently 
employed in any occupational field, and appropriate counseling and 
guidance material.
    Disadvantaged refers to individuals (other than individuals with 
disabilities) who have economic or academic disadvantages and who 
require special services and assistance in order to enable these 
individuals to succeed in vocational education programs. This term 
includes individuals who are members of economically disadvantaged 
families, migrants, individuals of limited English proficiency, and 
individuals who are dropouts from, or who are identified as potential 
dropouts from, secondary school. For the purpose of this definition, an 
individual who scores at or below the 25th percentile on a standardized 
achievement or aptitude test, whose secondary school grades are below 
2.0 on a 4.0 scale (on which the grade ``A'' equals 4.0), or who fails 
to attain minimum academic competencies may be considered ``academically 
disadvantaged.'' The definition does not include individuals with 
learning disabilities.
    Displaced homemaker means an individual who--
    (1) Is an adult;
    (2) Has worked as an adult primarily without remuneration to care 
for the home and family, and for that reason has diminished marketable 
skills; and
    (3)(i) Has been dependent on public assistance or on the income of a 
relative but is no longer supported by that income;
    (ii) Is a parent whose youngest dependent child will become 
ineligible to receive assistance under part A of title IV of the Social 
Security Act (42 U.S.C. 601), Aid to Families with Dependent Children, 
within two years of the parent's application for assistance under the 
Carl D. Perkins Vocational and Applied Technology Education Act;
    (iii) Is unemployed or underemployed and is experiencing difficulty 
in obtaining any employment or suitable employment, as appropriate; or

[[Page 11]]

    (iv) Is described in paragraphs (1) and (2) of this definition and 
is a criminal offender.
    Economically disadvantaged family or individual means a family or 
individual that is--
    (1) Eligible for any of the following:
    (i) The program for Aid to Families with Dependent Children under 
part A of title IV of the Social Security Act (42 U.S.C. 601).
    (ii) Benefits under the Food Stamp Act of 1977 (7 U.S.C. 2011).
    (iii) To be counted for purposes of section 1005 of chapter 1 of 
title I of the Elementary and Secondary Education Act of 1965, as 
amended (chapter 1) (20 U.S.C. 2701).
    (iv) The free or reduced-price meals program under the National 
School Lunch Act (42 U.S.C. 1751).

    Note to paragraph (1)(iv): The National School Lunch Act prohibits 
the identification of students by name. However, State and local 
projects may use the total number of students participating in a free or 
reduced-priced meals program to determine eligibility for projects, 
services, and activities under the Vocational and Applied Technology 
Education Programs.

    (v) Participation in programs assisted under title II of the JTPA.
    (2) In receipt of a Pell grant or assistance under a comparable 
State program of need-based financial assistance.
    (3) Determined by the Secretary to be low-income according to the 
latest available data from the Department of Commerce or the Department 
of Health and Human Services Poverty Guidelines.
    (4) Identified as low income according to other indices of economic 
status, including estimates of those indices, if a grantee demonstrates 
to the satisfaction of the Secretary that those indices are more 
representative of the number of economically disadvantaged students 
attending vocational education programs. The Secretary determines, on a 
case-by-case basis, whether other indices of economic status are more 
representative of the number of economically disadvantaged students 
attending vocational education programs, taking into consideration, for 
example, the statistical reliability of any data submitted by a grantee 
as well as the general acceptance of the indices by other agencies in 
the State or local area.


(Authority: 20 U.S.C. 2341(d)(3))

    Eligible recipient means, except as otherwise provided, a local 
educational agency, an area vocational education school, an intermediate 
educational agency, a postsecondary educational institution, a State 
corrections educational agency, or an eligible institution as defined in 
34 CFR 403.117(a).
    General occupational skills means strong experience in, and 
understanding of, all aspects of an industry.
    High technology means state-of-the-art computer, microelectronic, 
hydraulic, pneumatic, laser, nuclear, chemical, telecommunication, and 
other technologies being used to enhance productivity in manufacturing, 
communication, transportation, agriculture, mining, energy, commercial, 
and similar economic activity, and to improve the provision of health 
care.
    IDEA means the Individuals with Disabilities Education Act (20 
U.S.C. 1400 et seq.), formerly entitled ``Education of the Handicapped 
Act.''
    Individual with disabilities means any individual with any 
disability (as defined in section 3(2) of the Americans With 
Disabilities Act of 1990), which includes any individual who--
    (1) Has a physical or mental impairment that substantially limits 
one or more of the major life activities of that individual;
    (2) Has a record of an impairment described in paragraph (1) of this 
definition; or
    (3) Is regarded as having an impairment described in paragraph (1) 
of this definition.
    Note: This definition necessarily includes any individual who has 
been evaluated under part B of the IDEA and determined to be an 
individual with a disability who is in need of special education and 
related services; and any individual who is considered disabled under 
section 504 of the Rehabilitation Act of 1973.


(Authority: 42 U.S.C. 12102(2))

    Individualized education program means a written statement for a 
disabled individual developed in accordance with sections 612(4) and 
614(a)(5) of

[[Page 12]]

the IDEA (20 U.S.C. 1412(4) and 1414(a)(5)).
    Institution of higher education. (1) The term means an educational 
institution in any State that--
    (i) Admits as regular students only persons having a certificate of 
graduation from a school providing secondary education, or the 
recognized equivalent of such a certificate;
    (ii) Is legally authorized within such State to provide a program of 
education beyond secondary education;
    (iii) Provides an educational program for which it awards a 
bachelor's degree or provides not less than a two-year program that is 
acceptable for full credit toward such a degree;
    (iv) Is a public or other nonprofit institution; and
    (v) Is accredited by a nationally recognized accrediting agency or 
association, or if not so accredited--
    (A) Is an institution with respect to which the Secretary has 
determined that there is satisfactory assurance, considering the 
resources available to the institution, the period of time, if any, 
during which it has operated, the effort it is making to meet 
accreditation standards, and the purpose for which this determination is 
being made, that the institution will meet the accreditation standards 
of such an agency or association within a reasonable time; or
    (B) Is an institution whose credits are accepted, on transfer, by 
not less than three institutions which are so accredited, for credit on 
the same basis as if transferred from an institution so accredited.
    (2) The term also includes--
    (i) Any school which provides not less than a one-year program of 
training to prepare students for gainful employment in a recognized 
occupation and that meets the provisions of paragraphs (1) (i), (ii), 
(iv), and (v) of this definition; and
    (ii) A public or nonprofit private educational institution in any 
State which, in lieu of the requirement in paragraph (1) of this 
definition, admits as regular students persons who are beyond the age of 
compulsory school attendance in the State in which the institution is 
located and who meet the requirements of section 484(d) of the Higher 
Education Act of 1965 (20 U.S.C. 1091(d)).


(Authority: 20 U.S.C. 1141(a))

    Intermediate educational agency means a combination of school 
districts or counties (those divisions of a State utilized by the 
Secretary of Commerce in compiling and reporting data regarding 
counties) as are recognized in a State as an administrative agency for 
that State's vocational or technical education schools or for vocational 
programs within its public elementary or secondary schools. This term 
includes any other public institution or agency having administrative 
control and direction over a public elementary or secondary school.


(Authority: 20 U.S.C. 2891(5))

    JTPA means the Job Training Partnership Act (29 U.S.C. 1501 et 
seq.).
    Limited English proficiency, if used with reference to individuals, 
means individuals--
    (1)(i) Who were not born in the United States or whose native 
language is a language other than English;
    (ii) Who come from environments where a language other than English 
is dominant; or
    (iii) Who are American Indian and Alaska Natives and who come from 
environments where a language other than English has had a significant 
impact on their level of English language proficiency; and
    (2) Who by reason thereof, have sufficient difficulty speaking, 
reading, writing, or understanding the English language to deny those 
individuals the opportunity to learn successfully in classrooms where 
the language of instruction is English or to participate fully in our 
society.


(Authority: 20 U.S.C. 3223(a)(1))

    Local educational agency means a board of education or other legally 
constituted local school authority having administrative control and 
direction of public elementary or secondary schools in a city, county, 
township, school district, or political subdivision in a State, or any 
other public educational

[[Page 13]]

institution or agency having administrative control and direction of a 
vocational education program. For the purposes of sections 114, 115, 
116, 117, and 240 of the Act (implemented at 34 CFR 403.31 (e) and (f), 
403.32(c)(3), 403.190, 403.191, 403.192, 403.201, 403.202, and 403.204), 
this term includes a State corrections educational agency.
    Measure means a description of an outcome.


(Authority: H.R. Rep. No. 41, 101st Cong., 1st Sess. 13 (1989))

    Postsecondary educational institution means an institution legally 
authorized to provide postsecondary education within a State, a Bureau 
of Indian Affairs-controlled postsecondary institution, or any 
postsecondary educational institution operated by, or on behalf of, any 
Indian tribe that is eligible to contract with the Secretary of the 
Interior for the administration of programs under the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450) or under the 
Act of April 16, 1934 (25 U.S.C. 452).
    Preparatory services means services, programs, or activities 
designed to assist individuals who are not enrolled in vocational 
education programs in the selection of, or preparation for participation 
in, an appropriate vocational education training program. Preparatory 
services may include, but are not limited to--
    (1) Services, programs, or activities related to outreach to, or 
recruitment of, potential vocational education students;
    (2) Career counseling and personal counseling;
    (3) Vocational assessment and testing; and
    (4) Other appropriate services, programs, or activities.
    Private vocational training institution means a business or trade 
school, or technical institution or other technical or vocational 
school, in any State, that--
    (1) Admits as regular students only persons who have completed or 
left elementary or secondary school and who have the ability to benefit 
from the training offered by the institution;
    (2) Is legally authorized to provide, and provides within that 
State, a program of postsecondary vocational or technical education 
designed to fit individuals for useful employment in recognized 
occupations;
    (3) Has been in existence for two years or has been specially 
accredited by the Secretary as an institution meeting the other 
requirements of this definition; and
    (4) Is accredited--
    (i) By a nationally recognized accrediting agency or association 
listed by the Secretary;
    (ii) If the Secretary determines that there is no nationally 
recognized accrediting agency or association qualified to accredit 
schools of a particular category, by a State agency listed by the 
Secretary; or
    (iii) If the Secretary determines that there is no nationally 
recognized or State agency or association qualified to accredit schools 
of a particular category, by an advisory committee appointed by the 
Secretary and composed of persons specially qualified to evaluate 
training provided by schools of that category. The committee shall 
prescribe the standards of content, scope, and quality that must be met 
by those schools and shall also determine whether particular schools 
meet those standards.
    Program effectiveness panel means the panel of experts in the 
evaluation of education programs and in other areas of education, at 
least two-thirds of whom are not Federal employees, who are appointed by 
the Secretary, and who review and assign scores to programs according to 
the criteria in 34 CFR 786.12 or 787.12.
    Program year or academic year mean the twelve-month period during 
which a State operates its vocational education program (which is most 
generally a period beginning on July 1 and ending on the following June 
30).


(Authority: 20 U.S.C. 1225(a))

    Rehabilitation Act of 1973 means the Act in 29 U.S.C. 701 et seq.
    School facilities means classrooms and related facilities, including 
initial equipment, and interests in lands on which the facilities are 
constructed. The term does not include any facility intended primarily 
for events for which

[[Page 14]]

admission is to be charged to the general public.
    Sequential course of study means an integrated series of courses 
that are directly related to the educational and occupational skills 
preparation of individuals for jobs, or preparation for postsecondary 
education.
    Single parent means an individual who--
    (1) Is unmarried or legally separated from a spouse; and
    (2)(i) Has a minor child or children for which the parent has either 
custody or joint custody; or
    (ii) Is pregnant.
    Small business means a for-profit enterprise employing 500 or fewer 
employees.
    Special populations refers to individuals with disabilities, 
educationally and economically disadvantaged individuals (including 
foster children), individuals of limited English proficiency, 
individuals who participate in programs designed to eliminate sex bias, 
and individuals in correctional institutions.
    Specific job training means training and education for skills 
required by an employer to provide the individual student with the 
ability to obtain employment and to adapt to the changing demands of the 
workplace.
    Spread means the degree to which--
    (1) Project activities and results are demonstrated to others;
    (2) Technical assistance is provided to others to help them 
replicate project activities and results;
    (3) Project activities and results are replicated at other sites; or
    (4) Information and material about or resulting from the project are 
disseminated.
    Standard means the level or rate of an outcome.


(Authority: H.R. Rep. No. 41, 101st Cong., 1st Sess. 13 (1989))

    State means any of the 50 States, the Commonwealth of Puerto Rico, 
the District of Columbia, Guam, American Samoa, the Virgin Islands, the 
Commonwealth of the Northern Mariana Islands, and Palau (until the 
Compact of Free Association with Palau takes effect pursuant to section 
101(a) of Public Law 99-658 (48 U.S.C. 1681)).
    State board means a State board designated or created by State law 
as the sole State agency responsible for the administration of 
vocational education or for supervision of the administration of 
vocational education in the State.
    State corrections educational agency means the State agency or 
agencies responsible for carrying out corrections education programs in 
the State.
    State council means the State council on vocational education 
established in accordance with 34 CFR 403.17 through 403.19.
    Supplementary services means curriculum modification, equipment 
modification, classroom modification, supportive personnel, and 
instructional aids and devices.
    Technology education means an applied discipline designed to promote 
technological literacy that provides knowledge and understanding of the 
impacts of technology including its organizations, techniques, tools, 
and skills to solve practical problems and extend human capabilities in 
areas such as construction, manufacturing, communication, 
transportation, power, and energy.
    Transportability means the ease by which project activities and 
results may be replicated at other sites, such as through the 
development and use of guides or manuals that provide step-by-step 
directions for others to follow in order to initiate similar efforts and 
reproduce comparable results.
    Tribally controlled community college means an institution that 
receives assistance under the Tribally Controlled Community College 
Assistance Act of 1978 (25 U.S.C. 1801 et seq.) or the Navajo Community 
College Act (25 U.S.C. 640a).
    Vocational education means organized educational programs offering a 
sequence of courses or instruction in a sequence or aggregation of 
occupational competencies that are directly related to the preparation 
of individuals for paid or unpaid employment in current or emerging 
occupations requiring other than a baccalaureate or advanced degree. 
These programs must include competency-based applied learning that 
contributes to an individual's academic knowledge, higher-order

[[Page 15]]

reasoning and problem-solving skills, work attitudes, general 
employability skills, and the occupational-specific skills necessary for 
economic independence as a productive and contributing member of 
society. This term also includes applied technology education.
    Vocational student organizations means those organizations for 
individuals enrolled in vocational education programs that engage in 
activities as an integral part of the instructional program. These 
organizations may have State and national units that aggregate the work 
and purposes of instruction in vocational education at the local level.
    Wagner-Peyser Act means the Act in 29 U.S.C. 49 et seq.

(Authority: 20 U.S.C. 2471)

[57 FR 36724, Aug. 14, 1992, as amended at 79 FR 76100, Dec. 19, 2014]



Sec. 400.5  Under what conditions may funds under the Act be used for
the joint funding of programs?

    (a) Funds made available under the Act may be used to provide 
additional funds under any of the programs in--
    (1) Title II, section 123 and title III of the JTPA; or
    (2) The Wagner-Peyser Act.
    (b) Funds used to carry out paragraph (a) of this section may be 
used only if the--
    (1) Program otherwise meets the requirements of the Act and the 
requirements of the programs in paragraph (a) (1) and (2) of this 
section;
    (2) Program serves the same individuals that are served under the 
Act;
    (3) Program provides services in a coordinated manner with services 
provided under the Act; and
    (4) Funds would be used to supplement, and not supplant, funds 
provided from non-Federal sources.
    (c) Funds that meet the conditions in paragraphs (a) and (b) of this 
section may be used as matching funds.

(Authority: 20 U.S.C. 2468)



Sec. 400.6  What are the requirements for establishing a State 
Committee of Practitioners?

    (a) Consultation. A State shall appoint a State Committee of 
Practitioners (Committee) after consulting with--
    (1) Local school officials representing eligible recipients;
    (2) Representatives of--
    (i) Organized labor;
    (ii) Business;
    (iii) Superintendents;
    (iv) Community-based organizations;
    (v) Private industry councils established under section 102(a) of 
the JTPA (29 U.S.C. 1512);
    (vi) State councils;
    (vii) Parents;
    (viii) Special populations; and
    (ix) Correctional institutions;
    (3) The administrator appointed under 34 CFR 403.13(a);
    (4) The State administrator of programs assisted under part B of the 
IDEA;
    (5) The State administrator of programs assisted under chapter 1;
    (6) The State administrator of programs for students of limited 
English proficiency; and
    (7) Guidance counselors.
    (b) Committee selection. The State shall select the Committee from 
nominees solicited from--
    (1) State organizations representing school administrators;
    (2) Teachers;
    (3) Parents;
    (4) Members of local boards of education; and
    (5) Appropriate representatives of institutions of higher education.
    (c)(1) Committee membership. The Committee must consist of--
    (i) Representatives of local educational agencies, who must 
constitute a majority of the members of the committee;
    (ii) School administrators;
    (iii) Teachers;
    (iv) Parents;
    (v) Members of local boards of education;
    (vi) Representatives of institutions of higher education; and
    (vii) Students.
    (2) School administrators, teachers, and members of local boards of 
education may be counted as representatives of LEAs for purposes of 
paragraph (c)(1)(i) of this section.

(Authority: 20 U.S.C. 2325 (a) and (d)(1); 2468a)

[[Page 16]]



Sec. 400.7  What are the provisions governing the issuance of State
core standards and measures of performance and State rules or 
regulations?

    (a)(1) State standards and measures. A State shall convene, on a 
regular basis, the Committee established under Sec. 400.6 to review, 
comment on, and propose revisions to a draft proposal that the State 
board develops for a statewide system of core standards and measures of 
performance for secondary, postsecondary, and adult vocational education 
programs.
    (2) The Committee shall make recommendations to the State board with 
respect to modifying statewide standards and measures based on 
information provided by the State under 34 CFR 403.201(d).
    (b)(1) State rules and regulations. Except as provided in paragraph 
(b)(2) of this section, before a State publishes any proposed or final 
State rule or regulation for programs, services, or activities covered 
by the Act, the State shall convene the Committee for the purpose of 
reviewing the rule or regulation.
    (2) In an emergency, in which a rule or regulation must be issued 
within a very limited time period to assist eligible recipients with the 
operation of projects, services, or activities, the State--
    (i) May issue a proposed rule or regulation without meeting the 
requirements in paragraph (b)(1) of this section; but
    (ii) Shall immediately convene the Committee to review the rule or 
regulation before it is issued in final form.

    Cross Reference: See Sec. 400.9(c).

    (3) If a State policy is binding on eligible recipients and has the 
same effect as a formal rule or regulation, although it is not issued as 
one, that policy is covered by this section.

(Authority: 20 U.S.C. 2325(a); 2468a)



Sec. 400.8  What are the provisions governing student assistance?

    (a) The portion of any student financial assistance received under 
the Act that is made available for attendance costs described in 
paragraph (b) of this section may not be considered as income or 
resources in determining eligibility for assistance under any other 
program funded in whole or in part with Federal funds.
    (b) For purposes of this section, attendance costs are--
    (1) Tuition and fees normally assessed a student carrying the same 
academic workload as determined by the institution, including costs for 
rental or purchases of any equipment, materials, or supplies required of 
all students in the same course of study; and
    (2) An allowance for books, supplies, transportation, dependent 
care, and miscellaneous personal expenses for a student attending an 
institution on at least a half-time basis, as determined by the 
institution.

(Authority: 20 U.S.C. 2466d)



Sec. 400.9  What additional requirements govern the Vocational and
Applied Technology Education Programs?

    In addition to the Act, applicable Federal laws, and regulations, 
the following requirements apply to Vocational and Applied Technology 
Education Programs:
    (a) A State that receives funds under the Act shall cooperate with 
the Secretary in supplying the information the Secretary requires, in 
the form the Secretary requires, and shall comply in its reports with 
the information system developed by the Secretary under section 421 of 
the Act.
    (b) Nothing in the Act is to be construed to be inconsistent with 
applicable Federal laws guaranteeing civil rights, or is intended to, or 
has the effect of, limiting or diminishing any obligations imposed under 
the IDEA or section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 
794).
    (c) Any State rule, regulation, or policy imposed on the 
administration or operation of programs funded under the Act, including 
any rule, regulation, or policy based on a State's interpretation of any 
Federal law, regulation, or guideline, must be identified as a State 
imposed requirement.
    (d) Funds provided under the Act may not be used for the purpose of 
directly providing incentives or inducements to relocate a business or 
enterprise from one State to another State if the relocation would 
result in a reduction in the number of jobs available

[[Page 17]]

in the State where the business enterprise is located before the 
incentives or inducements are offered.
    (e) A State may not take into consideration payments under the Act 
in determining for any educational agency or institution in that State 
the eligibility for State aid or the amount of State aid with respect to 
public education within the State.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2421, 2424, 2466c, 2468b, 2468c, and 2468e(a)(2))



Sec. 400.10  What are the reporting requirements?

    (a) Recipients of grants and cooperative agreements shall report 
information about students, projects, evaluations, dissemination, 
expenditures, accomplishments, and any other information, as may be 
required by the Secretary.
    (b) Recipients of grants and cooperative agreements under--
    (1) Parts 401, 402, 405, 408, 409, 413, 415, 416, 417, 419, 422, 
423, 424, 425, 426, 427, and 428 shall submit performance reports at 
least semi-annually;
    (2) Part 412 shall submit monthly progress and financial status 
reports and an annual impact report; and
    (3) Part 413 shall submit monthly exception reports and quarterly 
financial status reports.
    (c) Recipients of grants under parts 403, 406, and 407 shall submit 
annual performance and financial reports.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2301 et seq.)



PART 401_INDIAN VOCATIONAL EDUCATION PROGRAM--Table of Contents



                            Subpart A_General

Sec.
401.1  What is the Indian Vocational Education Program?
401.2  Who is eligible for an award?
401.3  What activities may the Secretary fund?
401.4  What regulations apply?
401.5  What definitions apply?

               Subpart B_How Does One Apply for an Award?

401.10  How are applications submitted?

             Subpart C_How Does the Secretary Make an Award?

401.20  How does the Secretary evaluate an application?
401.21  What selection criteria does the Secretary use?
401.22  What additional factors may the Secretary consider?
401.23  Is the Secretary's decision not to make an award under the 
          Indian Vocational Education Program subject to a hearing?

          Subpart D_What Conditions Must Be Met After an Award?

401.30  How do the Indian Self-Determination Act and the Act of April 
          16, 1934 affect awards under the Indian Vocational Education 
          Program?
401.31  What are the evaluation requirements?

    Authority: 20 U.S.C. 2313(b), unless otherwise noted.

    Source: 57 FR 36730, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 401.1  What is the Indian Vocational Education Program?

    The Indian Vocational Education Program provides financial 
assistance to projects that provide vocational education for the benefit 
of Indians.

(Authority: 20 U.S.C. 2313(b))



Sec. 401.2  Who is eligible for an award?

    (a) The following entities are eligible for an award under this 
program:
    (1) A tribal organization of any Indian tribe that is eligible to 
contract with the Secretary of the Interior under the Indian Self-
Determination and Education Assistance Act or under the Act of April 16, 
1934.
    (2) A Bureau-funded school offering a secondary program.
    (b) Any tribal organization or Bureau-funded school described in 
paragraph (a) of this section may apply individually or jointly as part 
of a consortium with one or more eligible tribal organizations or 
schools.

[[Page 18]]

    (c)(1) A consortium shall enter into an agreement signed by all 
members of the consortium, and designating one member of the consortium 
as the applicant and grantee.
    (2) The agreement must detail the activities each member of the 
consortium plans to perform, and must bind each member to every 
statement and assurance made in the application.
    (3) The applicant shall submit the agreement with its application.

    Cross Reference: See 34 CFR 75.127-75.129--Group applications.

(Authority: 20 U.S.C. 2313(b))



Sec. 401.3  What activities may the Secretary fund?

    (a) The Secretary provides financial assistance through grants, 
contracts, or cooperative agreements to plan, conduct, and administer 
projects or portions of projects that are authorized by and consistent 
with the purposes of the Act. In the case of a grant to a Bureau-funded 
school, the Secretary provides a minimum grant of $35,000.
    (b) Projects funded under this program are in addition to other 
programs, services, and activities made available under other provisions 
of the Act to--
    (1) Eligible Indians in need of vocational education; and
    (2) Eligible Indian tribes as community-based organizations that 
receive State vocational education assistance.
    (c) An award under this program may be used to provide a stipend to 
a student who--
    (1) Is enrolled in a vocational education project funded under this 
program; and
    (2) Has an acute economic need that cannot be met through work-study 
programs.
    (d) The amount of a stipend may be the greater of either the minimum 
hourly wage prescribed by State or local law, or the minimum hourly wage 
set under the Fair Labor Standards Act. A stipend may not be paid for 
time a student is not in attendance in a project.

(Authority: 20 U.S.C. 2313(b) (1) and (3))



Sec. 401.4  What regulations apply?

    The following regulations apply to the Indian Vocational Education 
Program:
    (a) The regulations in 34 CFR part 400 (except that 34 CFR parts 79 
and 82 do not apply to this program).
    (b) The regulations in this part 401.

(Authority: 20 U.S.C. 2313(b))



Sec. 401.5  What definitions apply?

    (a) The definitions in 34 CFR 400.4 apply to this part.
    (b) The following definitions also apply to this part:
    Act of April 16, 1934 means the Federal law commonly known as the 
``Johnson-O'Malley Act'' that authorizes the Secretary of the Interior 
to make contracts for the education of Indians and other purposes (25 
U.S.C. 455-457).
    Acute economic need means an income that is at or below the national 
poverty level according to the latest available data from the Department 
of Commerce or the Department of Health and Human Services Poverty 
Guidelines.
    Bureau means the Bureau of Indian Affairs, Department of the 
Interior.
    Bureau-funded school means--
    (1) A Bureau-operated elementary or secondary day or boarding school 
or a Bureau-operated dormitory for students attending a school other 
than a Bureau school;
    (2) An elementary or secondary school or a dormitory that receives 
financial assistance for its operation under a contract or agreement 
with the Bureau under sections 102, 104(1), or 208 of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450f, 450h(1), and 
458d); or
    (3) A school for which assistance is provided under the Tribally 
Controlled Schools Act of 1988.


(Authority: 20 U.S.C. 2313(b); 25 U.S.C. 2019 (3), (4), and (5))

    Indian means a person who is a member of an Indian tribe.


(Authority: 25 U.S.C. 450b(d))

    Indian tribe means any Indian tribe, band, Nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established

[[Page 19]]

pursuant to the Alaska Native Claims Settlement Act (85 Stat. 688) that 
is federally recognized as eligible for the special programs and 
services provided by the United States to Indians because of their 
status as Indians.


(Authority: 25 U.S.C. 450b(e))

    Stipend means a subsistence allowance for a student that is 
necessary for the student to participate in a project funded under this 
program.
    Tribal organization means the recognized governing body of any 
Indian tribe or any legally established organization of Indians that is 
controlled, sanctioned, or chartered by that governing body or that is 
democratically elected by the adult members of the Indian community to 
be served by the organization and that includes the maximum 
participation of Indians in all phases of its activities. However, in 
any case where a contract is let or grant made to an organization to 
perform services benefiting more than one Indian tribe, the approval of 
each of those Indian tribes must be a prerequisite to the letting or 
making of that contract or grant.

(Authority: 20 U.S.C. 2313(a)(1)(A), (b); 25 U.S.C. 450b(l))



               Subpart B_How Does One Apply for an Award?



Sec. 401.10  How are applications submitted?

    (a) An application from a tribal organization, other than a Bureau-
funded school, must be submitted to the Secretary by the Indian tribe.
    (b) An application for a project to serve more than one Indian tribe 
must be approved by each tribe to be served.
    (c) An application from a Bureau-funded school may be submitted 
directly to the Secretary.

(Authority: 20 U.S.C. 2313(b)(1); 25 U.S.C. 450b)



             Subpart C_How Does the Secretary Make an Award?



Sec. 401.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec. 401.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 401.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition, as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 401.21.
    (e) In addition to the 100 points to be awarded based on the 
criteria in Sec. 401.21, the Secretary awards--
    (1) Up to 5 points to applications that propose exemplary approaches 
that involve, coordinate with, or encourage tribal economic development 
plans; and
    (2) Five points to applications from tribally controlled community 
colleges that--
    (i) Are accredited or are candidates for accreditation by a 
nationally recognized accreditation organization as an institution of 
postsecondary vocational education; or
    (ii) Operate vocational education programs that are accredited or 
are candidates for accreditation by a nationally recognized 
accreditation organization and issue certificates for completion of 
vocational education programs.

(Authority: 20 U.S.C. 2313(b))



Sec. 401.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) Program factors. (20 points) The Secretary reviews each 
application to determine the extent to which it--
    (1) Proposes measurable goals for student enrollment, completion, 
and placement (including placement in jobs

[[Page 20]]

or military specialties and in continuing education or training 
opportunities) that are realistic in terms of stated needs, resources, 
and job opportunities in each occupation for which training is to be 
provided;
    (2) Proposes goals that take into consideration any related goals or 
standards developed for Job Opportunities and Basic Skills (JOBS) 
programs (42 U.S.C. 681 et seq.) and Job Training Partnership Act (JTPA) 
(29 U.S.C. 1501 et seq.) training programs operating in the area, and, 
where appropriate, any goals set by the State board for vocational 
education for the occupation and geographic area;
    (3) Describes, for each occupation for which training is to be 
provided, how successful program completion will be determined in terms 
of academic and vocational competencies demonstrated by enrollees prior 
to completion and any academic or work credentials acquired by enrollees 
upon completion;
    (4) Demonstrates the active commitment in the project's planning and 
operation by advisory committees, tribal planning offices, the JOBS 
program office, the JTPA program director, and potential employers such 
as tribal enterprises, private enterprises (on or off reservation), and 
other organizations;
    (5) Is targeted to individuals with inadequate skills to assist 
those individuals in obtaining new employment; and
    (6) Includes a thorough description of the approach to be used 
including some or all of the following components:
    (i) Methods of participant selection.
    (ii) Assessment and feedback of participant progress.
    (iii) Coordination of vocational instruction, academic instruction, 
and support services such as counseling, transportation, and child care.
    (iv) Curriculum and, if appropriate, approaches for providing on-
the-job training experience.
    (b) Need. (15 points) The Secretary reviews each application to 
determine the extent to which the project addresses specific needs, 
including--
    (1) The job market and related needs (such as educational level) of 
the target population;
    (2) Characteristics of that population, including an estimate of 
those to be served by the project;
    (3) How the project will meet the needs of the target population; 
and
    (4) A description of any ongoing and planned activities relative to 
those needs, including, if appropriate, how the State plan developed 
under 34 CFR 403.30 through 403.34 is designed to meet those needs.
    (c) Plan of operation. (15 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including--
    (1) The establishment of objectives that are clearly related to 
project goals and activities and are measurable with respect to 
anticipated enrollments, completions, and placements;
    (2) A management plan that describes the chain of command, how staff 
will be managed, how coordination among staff will be accomplished, and 
timelines for each activity; and
    (3) The way the applicant intends to use its resources and personnel 
to achieve each objective.
    (d) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications of the project director;
    (ii) The qualifications of each of the other key personnel to be 
used on the project;
    (iii) The time, including justification for the time that each one 
of the key personnel, including the project director, will commit to the 
project; and
    (iv) Subject to the Indian preference provisions of the Indian Self-
Determination Act (25 U.S.C. 450 et seq.) that apply to grants and 
contracts to tribal organizations, how the applicant, as part of its 
nondiscriminatory employment practices, will ensure that its personnel 
are selected for employment without regard to race, color, national 
origin, gender, age, or disabling condition.
    (2) To determine personnel qualifications, the Secretary considers--
    (i) The experience and training of key personnel in project 
management and in fields particularly related to the objectives of the 
project; and
    (ii) Any other qualifications of key personnel that pertain to the 
quality of the project.

[[Page 21]]

    (e) Budget and cost effectiveness. (5 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is adequate to support the project activities;
    (2) Costs are reasonable in relation to the objectives of the 
project and the number of participants to be served; and
    (3) The budget narrative justifies the expenditures.
    (f) Evaluation plan. (10 points) The Secretary reviews each 
application to determine the quality of the evaluation plan for the 
project, including the extent to which--
    (1) The plan identifies, at a minimum, types of data to be collected 
and reported with respect to the academic and vocational competencies 
demonstrated by participants and the number and kind of academic and 
work credentials acquired by participants who complete the training;
    (2) The plan identifies, at a minimum, types of data to be collected 
and reported with respect to the achievement of project goals for the 
enrollment, completion, and placement of participants. The data must be 
broken down by sex and by occupation for which the training was 
provided;
    (3) The methods of evaluation are appropriate for the project and, 
to the extent possible, are objective and produce data that are 
quantifiable; and
    (4) The methods of evaluation provide periodic data that can be used 
by the project for ongoing program improvement.
    (g) Employment opportunities. (10 points) The Secretary reviews each 
application to determine the quality of the plan for job placement of 
participants who complete training under this program, including--
    (1) The expected employment opportunities (including any military 
specialties) and any additional educational or training opportunities 
that are related to the participants' training;
    (2) Information and documentation concerning potential employers' 
commitment to hire participants who complete the training; and
    (3) An estimate of the percentage of trainees expected to be 
employed (including self-employed individuals) in the field for which 
they were trained following completion of the training.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2313(b))



Sec. 401.22  What additional factors may the Secretary consider?

    The Secretary may decide not to award a grant or cooperative 
agreement if--
    (a) The proposed project duplicates an effort already being made; or
    (b) Funding the project would create an inequitable distribution of 
funds under this part among Indian tribes.

(Authority: 20 U.S.C. 2313(b))



Sec. 401.23  Is the Secretary's decision not to make an award under
the Indian Vocational Education Program subject to a hearing?

    (a) After receiving written notice from an authorized official of 
the Department that the Secretary will not award a grant or cooperative 
agreement to an eligible applicant under Sec. 401.2(a)(1), an Indian 
tribal organization has 30 calendar days to make a written request to 
the Secretary for a hearing to review the Secretary's decision.
    (b) Within 10 business days of the Department's receipt of a hearing 
request, the Secretary designates a Department employee who is not 
assigned to the Office of Vocational and Adult Education to serve as a 
hearing officer. The hearing officer conducts a hearing and issues a 
written decision within 75 calendar days of the Department's receipt of 
the hearing request. The hearing officer establishes rules for the 
conduct of the hearing. The hearing officer conducts the hearing solely 
on the basis of written submissions unless the officer determines, in 
accordance with standards in 34 CFR 81.6(b), that oral argument or 
testimony is necessary.
    (c) The Secretary does not make any award under this part to an 
Indian tribal organization until the hearing officer issues a written 
decision on any appeal brought under this section.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2313(b); 25 U.S.C. 450f)

[[Page 22]]



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 401.30  How do the Indian Self-Determination Act and the Act of
April 16, 1934 affect awards under the Indian Vocational Education
Program?

    (a) Grants, cooperative agreements, or contracts with tribal 
organizations are subject to the terms and conditions of section 102 of 
the Indian Self-Determination Act (25 U.S.C. 450f). These awards must be 
conducted by the recipient or contractor in accordance with the 
provisions of sections 4, 5, and 6 of the Act of April 16, 1934, that 
are relevant to the projects administered under this part. Section 4 
contains requirements pertaining to submission of an education plan by a 
contractor. Section 5 pertains to participation of parents of Indian 
children. Section 6 pertains to reimbursement for educating non-resident 
students.
    (b) Grants to Bureau-funded schools are not subject to the 
requirements of the Indian Self-Determination Act or the Act of April 
16, 1934.

(Authority: 20 U.S.C. 2313 (b)(1)(A)(ii)(I) and (II))



Sec. 401.31  What are the evaluation requirements?

    (a) Each grantee shall annually provide and budget for either an 
internal or external evaluation, or both, of its activities.
    (b) The evaluation must be both formative and summative in nature.
    (c) The annual evaluation must include--
    (1) Descriptions and analyses of the accuracy of records and the 
validity of measures used by the project to establish and report on the 
academic and vocational competencies demonstrated and the academic and 
work credentials acquired;
    (2) Descriptions and analyses of the accuracy of records and the 
validity of measures used by the project to establish and report on 
participant enrollment, completion, and placement by sex and socio-
economic status for each occupation for which training has been 
provided;
    (3) The grantee's progress in achieving the objectives in its 
approved application, including any approved revisions of the 
application;
    (4) If applicable, actions taken by the grantee to address 
significant barriers impeding progress; and
    (5) The effectiveness of the project in promoting key elements for 
participants' job readiness, including--
    (i) Coordination of services;
    (ii) Improved attendance rates; and
    (iii) Improved basic and vocational skills competencies.

(Approved by the Office of Management and Budget under Control Number 
1830-0013)

(Authority: 20 U.S.C. 2313(b))



PART 402_NATIVE HAWAIIAN VOCATIONAL EDUCATION PROGRAM--Table of Contents



                            Subpart A_General

Sec.
402.1  What is the Native Hawaiian Vocational Education Program?
402.2  Who is eligible for an award?
402.3  What activities may the Secretary fund?
402.4  What regulations apply?
402.5  What definitions apply?

Subpart B [Reserved]

             Subpart C_How does the Secretary Make an Award?

402.20  How does the Secretary evaluate an application?
402.21  What selection criteria does the Secretary use?

          Subpart D_What Conditions Must Be Met After an Award?

402.30  What are the evaluation requirements?

    Authority: 20 U.S.C. 2313(c), unless otherwise noted.

    Source: 57 FR 36733, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 402.1  What is the Native Hawaiian Vocational Education Program?

    The Native Hawaiian Vocational Education Program provides financial

[[Page 23]]

assistance to projects that provide vocational training and related 
activities for the benefit of native Hawaiians.

(Authority: 20 U.S.C. 2313(c))



Sec. 402.2  Who is eligible for an award?

    Any organization that primarily serves and represents native 
Hawaiians and that is recognized by the Governor of the State of Hawaii 
is eligible to apply for an award under this program.

(Authority: 20 U.S.C. 2313(c))



Sec. 402.3  What activities may the Secretary fund?

    The Secretary provides assistance through grants, contracts, or 
cooperative agreements to plan, conduct, and administer programs, or 
portions of programs, that provide vocational training and related 
activities for the benefit of native Hawaiians.

(Authority: 20 U.S.C. 2313(c))



Sec. 402.4  What regulations apply?

    The following regulations apply to the Native Hawaiian Vocational 
Education Program:
    (a) The regulations in 34 CFR part 400.
    (b) The regulations in this part 402.

(Authority: 20 U.S.C. 2313(c))



Sec. 402.5  What definitions apply?

    The following definitions apply to the Native Hawaiian Vocational 
Education Program:
    (a) The definitions in 34 CFR 400.4 apply to this part.
    (b) The following definition also applies to this part:
    Native Hawaiian means any individual who has any ancestors who were 
natives, prior to 1778, of the area that now comprises the State of 
Hawaii.

(Authority: 20 U.S.C. 2313(a)(1)(B))

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 402.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 402.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 402.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
points for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition, as announced in a notice published in the 
Federal Register, the Secretary may assign the reserved 15 points among 
the criteria in Sec. 402.21.

(Authority: 20 U.S.C. 2313(c))



Sec. 402.21  What selection criteria does the Secretary use?

    The Secretary uses the following selection criteria to evaluate an 
application:
    (a) Program design. (35 points) The Secretary reviews each 
application to determine the extent to which--
    (1) The application presents a complete program design, including 
identifying the services to be provided, who will provide them, how they 
will be provided, and the expected outcomes for each activity;
    (2) The proposed program is designed to meet the identified 
vocational education needs of native Hawaiians;
    (3) The application proposes an effective plan for coordination with 
the office of the Hawaii State director for vocational education; and
    (4) If vocational training is proposed within the project--
    (i) Proposes measurable goals for student enrollment, completion, 
and placement.
    (ii) Proposes goals that take into consideration any related 
standards and measures developed for Job Opportunities and Basic Skills 
(JOBS) programs (42 U.S.C. 681 et seq.) and any Job Training Partnership 
Act (JTPA) (29 U.S.C. 1501 et seq.) programs in that geographic area;
    (iii) Proposes goals that take into consideration any standards set 
by the State board for vocational education for the occupation and 
geographic area; and

[[Page 24]]

    (iv) Describes how successful program completion will be determined 
for each occupation for which training is to be provided, in terms of 
the academic and vocational competencies demonstrated by enrollees prior 
to successful completion and any academic or work credentials acquired 
upon completion.
    (b) Management plan. (25 points) The Secretary reviews each 
application to determine the quality of the management plan for the 
project, including--
    (1) The chain of command, how staff will be managed, how 
coordination among staff will be accomplished, and timelines for each 
activity;
    (2) A clear description of the interrelationship among goals, 
objectives, and activities;
    (3) The way the applicant plans to use the resources and personnel 
from the grant to achieve each objective; and
    (4) How any contracts awarded by the grantee will be awarded, 
monitored, and evaluated.
    (c) Key personnel. (10 points)
    (1) The Secretary reviews each application to determine the quality 
of key personnel the applicant plans to use on the project, including--
    (i) The qualifications of the project director;
    (ii) The qualifications of each of the other key personnel to be 
used on the project;
    (iii) The time, including justification for the time, that each one 
of the key personnel, including the project director, will commit to the 
proposed project; and
    (iv) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that personnel for this project are selected for 
employment without regard to race, color, national origin, gender, age, 
or disabling condition.
    (2) To determine personnel qualifications, the Secretary considers--
    (i) The experience and training of key personnel in project 
management and in fields particularly related to the objectives of the 
project; and
    (ii) Any other qualifications of key personnel that pertain to the 
quality of the project.
    (d) Evaluation plan. (10 points)
    (1) The Secretary reviews each application to determine the quality 
of the project's plan for an independent evaluation of the project, 
including, if applicable, the extent to which the plan includes 
activities during the formative stages of the project to help guide and 
improve the project, as well as a final evaluation that includes summary 
data and recommendations.
    (2) The Secretary reviews each application to determine whether, for 
any training programs proposed--
    (i) The plan identifies, at a minimum, types of data to be collected 
and reported with respect to the academic and vocational competencies 
demonstrated by participants and the number and kinds of academic and 
work credentials acquired by completers; and
    (ii) The plan identifies, at a minimum, types of data to be 
collected and reported with respect to enrollment, completion, and 
placement of participants by sex and socio-economic status for each 
occupation for which training is provided.
    (e) Budget and cost-effectiveness. (5 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is detailed and tied to the proposed activities;
    (2) The budget narrative is explanatory and justifies expenses;
    (3) The budget is adequate to support the project; and
    (4) Costs are reasonable in relation to the objectives of the 
project.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2313(c))



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 402.30  What are the evaluation requirements?

    (a) Each grantee shall annually provide and budget for an external 
evaluation of its activities.
    (b) The evaluation must be both formative and summative in nature.
    (c) The annual evaluation must include--

[[Page 25]]

    (1) The grantee's progress in achieving the objectives in its 
approved application, including any approved revisions of the 
application; and
    (2) If applicable, actions taken by the grantee to address 
significant barriers impeding progress when training is provided by the 
project, including--
    (i) Descriptions and analyses of the accuracy of records and the 
validity of measures used by the project to establish and report on the 
academic and vocational competencies demonstrated and the academic and 
work credentials acquired; and
    (ii) Descriptions and analyses of the accuracy of records and the 
validity of measures used by the project to establish and report on 
participant enrollment, completion, and placement by sex and socio-
economic status for each occupation for which training has been 
provided.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2313(c))



PART 403_STATE VOCATIONAL AND APPLIED TECHNOLOGY EDUCATION PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
403.1  What is the State Vocational and Applied Technology Education 
          Program?
403.2  Who is eligible for an award?
403.3  What regulations apply?
403.4  What definitions apply?

       Subpart B_What Are the State's Organizational and Planning 
                            Responsibilities?

403.10  What is the State board?
403.11  What are the principal responsibilities of the State board?
403.12  What are the additional responsibilities of the State board?
403.13  What are the personnel requirements regarding the elimination of 
          sex discrimination and sex stereotyping?
403.14  What are the personnel requirements regarding coordination with 
          services for individuals with disabilities?
403.15  What are the personnel requirements regarding coordination with 
          services under chapter 1 of title I of the Elementary and 
          Secondary Education Act?
403.16  What are the personnel requirements regarding coordination with 
          programs for individuals of limited English proficiency?
403.17  What are the State's responsibilities regarding a State council 
          on vocational education?
403.18  What are the membership requirements of a State council on 
          vocational education?
403.19  What are the responsibilities of a State council on vocational 
          education?

              Subpart C_How Does a State Apply for a Grant?

403.30  What documents must a State submit to receive a grant?
403.31  How is the State plan developed?
403.32  What must the State plan contain?
403.33  What procedures does a State use to submit its State plan?
403.34  When are amendments to the State plan required?

        Subpart D_How Does the Secretary Make a Grant to a State?

403.50  How does the Secretary make allotments?
403.51  How does the Secretary make reallotments?
403.52  When does the Secretary approve State plans and amendments?

 Subpart E_What Kinds of Activities Does the Secretary Assist Under the 
                             Basic Programs?

                                 General

403.60  What are the basic programs?
403.61  What projects, services, and activities are permissible under 
          the basic programs?
403.62  What administrative provisions apply?
403.63  How does a State carry out the State Vocational and Applied 
          Technology Education Program?

             State Programs and State Leadership Activities

403.70  How must funds be used under the State Programs and State 
          Leadership Activities?
403.71  In what additional ways may funds be used under the State 
          Programs and State Leadership Activities?

 Single Parents, Displaced Homemakers, and Single Pregnant Women Program

403.80  Who is eligible for a subgrant or contract?
403.81  How must funds be used under the Single Parents, Displaced 
          Homemakers, and Single Pregnant Women Program?
403.82  In what settings may the Single Parents, Displaced Homemakers, 
          and Single Pregnant Women Program be offered?

[[Page 26]]

                           Sex Equity Program

403.90  Who is eligible for a subgrant or contract?
403.91  How must funds be used under the Sex Equity Program?
403.92  Under what circumstances may the age limit under the Sex Equity 
          Program be waived?

                     Programs for Criminal Offenders

403.100  What are the requirements for designating a State corrections 
          educational agency to administer the Programs for Criminal 
          Offenders?
403.101  How must funds be used under the Programs for Criminal 
          Offenders?
403.102  What other requirements apply to the Program for Criminal 
          Offenders?

    Secondary, Postsecondary, and Adult Vocational Education Programs

403.110  Who is eligible for a subgrant or contract?
403.111  How must funds be used under the Secondary School Vocational 
          Education Program and the Postsecondary and Adult Vocational 
          Education Programs?
403.112  How does a State allocate funds under the Secondary School 
          Vocational Education Program to local educational agencies?
403.113  How does a State allocate funds under the Secondary School 
          Vocational Education Program to area vocational education 
          schools and intermediate educational agencies?
403.114  How does a State determine the number of economically 
          disadvantaged students attending vocational education programs 
          under the Secondary School Vocational Education Program?
403.115  What appeal procedures must be established under the Secondary 
          School Vocational Education Program?
403.116  How does a State allocate funds under the Postsecondary and 
          Adult Vocational Education Programs?
403.117  What definitions apply to the Postsecondary and Adult 
          Vocational Education Programs?
403.118  Under what circumstances may the Secretary waive the 
          distribution requirements for the Postsecondary and Adult 
          Vocational Education Programs?
403.119  Under what circumstances may the State waive the distribution 
          requirements for Secondary School Vocational Education Program 
          or the Postsecondary and Adult Vocational Education Programs?
403.120  How does a State reallocate funds under the Secondary School 
          Vocational Education Program and the Postsecondary and Adult 
          Vocational Education Programs?

 Subpart F_What Kinds of Activities Does the Secretary Assist Under the 
                            Special Programs?

                                 General

403.130  What are the Special Programs?
403.131  Who is eligible for an award under the Special Programs?

 Vocational Education Support Programs by Community-Based Organizations

403.140  What activities does the Secretary support under the State 
          Assistance for Vocational Education Support Programs by 
          Community-Based Organizations?
403.141  What are the application requirements for the State Assistance 
          for Vocational Education Support Programs by Community-Based 
          Organizations?

               Consumer and Homemaking Education Programs

403.150  What activities does the Secretary support under the Consumer 
          and Homemaking Education Programs?
403.151  How must funds be used under the Consumer and Homemaking 
          Education Programs?

          Comprehensive Career Guidance and Counseling Programs

403.160  What activities does the Secretary support under the 
          Comprehensive Career Guidance and Counseling Programs?
403.161  How must funds be used under the Comprehensive Career Guidance 
          and Counseling Programs?

        Business-Labor-Education Partnership for Training Program

403.170  What activities does the Secretary support under the Business-
          Labor-Education Partnership for Training Program?
403.171  Who is eligible to apply to a State board for an award?
403.172  What special considerations must the State board give in 
          approving projects, services, and activities?
403.173  What expenses are allowable?
403.174  What additional fiscal requirements apply to the Business-
          Labor-Education Partnership for Training Program?

       Subpart G_What Financial Conditions Must Be Met by a State?

403.180  How must a State reserve funds for the basic programs?
403.181  What are the cost-sharing requirements applicable to the basic 
          programs?

[[Page 27]]

403.182  What is the maintenance of fiscal effort requirement?
403.183  Under what circumstances may the Secretary waive the 
          maintenance of effort requirement?
403.184  How does a State request a waiver of the maintenance of effort 
          requirement?
403.185  How does the Secretary compute maintenance of effort in the 
          event of a waiver?
403.186  What are the administrative cost requirements applicable to a 
          State?
403.187  How may a State provide technical assistance?
403.188  What is a State's responsibility for the cost of services and 
          activities for members of special populations?

       Subpart H_What Conditions Must Be Met by Local Recipients?

403.190  What are the requirements for receiving a subgrant or contract?
403.191  What are the requirements for program evaluation?
403.192  What are the requirements for program improvement?
403.193  What are the information requirements regarding special 
          populations?
403.194  What are the comparability requirements?
403.195  What are the administrative cost requirements applicable to 
          local recipients?
403.196  What are the requirements regarding supplanting?
403.197  What are the requirements for the use of equipment?

Subpart I_What Are the Administrative Responsibilities of a State Under 
     the State Vocational and Applied Technology Education Program?

403.200  What are the State's responsibilities for ensuring compliance 
          with the comparability requirements?
403.201  What are the State's responsibilities for developing and 
          implementing a statewide system of core standards and measures 
          of performance?
403.202  What must each State's system of core standards and measures of 
          performance include?
403.203  What are the State's responsibilities for a State assessment?
403.204  What are the State's responsibilities for program evaluation 
          and improvement?
403.205  What are the State's responsibilities for members of special 
          populations?
403.206  What are the State's responsibilities regarding a State 
          occupational information coordinating committee?
403.207  What are the State's responsibilities to the National Center or 
          Centers for Research in Vocational Education?
403.208  What are the requirements regarding supplanting?

Appendix A to Part 403--Examples for 34 CFR 403.111(a) and 403.111(c)(3)
Appendix B to Part 403--Examples for 34 CFR 403.194--Comparability 
          Requirements

    Authority: 20 U.S.C. 2301 et seq., unless otherwise noted.

    Source: 57 FR 36735, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 403.1  What is the State Vocational and Applied Technology Education
Program?

    (a) Under the State Vocational and Applied Technology Education 
Program, the Secretary makes grants to States, to assist them, local 
educational agencies, postsecondary educational institutions, and other 
agencies and institutions to administer and conduct vocational education 
programs that are authorized by the Act.
    (b) The State Vocational and Applied Technology Education Program 
consists of the programs under the basic programs for vocational 
education authorized by title II of the Act and listed in Sec. 403.60, 
and the special programs authorized by title III of the Act that are 
covered by the State plan and listed in Sec. 403.130.

(Authority: 20 U.S.C. 2301 et seq.)



Sec. 403.2  Who is eligible for an award?

    Except as otherwise provided in Sec. 403.131, a State is eligible 
for an award under the State Vocational and Applied Technology Education 
Program.

(Authority: 20 U.S.C. 2311 and 2311a)



Sec. 403.3  What regulations apply?

    The following regulations apply to the State Vocational and Applied 
Technology Education Program:
    (a) The regulations in 34 CFR part 400.
    (b) The regulations in this part 403.

(Authority: 20 U.S.C. 2301 et seq.)

[[Page 28]]



Sec. 403.4  What definitions apply?

    The definitions in 34 CFR 400.4 apply to the State Vocational and 
Applied Technology Education Program.

(Authority: 20 U.S.C. 2471)



       Subpart B_What Are the State's Organizational and Planning 
                            Responsibilities?



Sec. 403.10  What is the State board?

    A State that desires to participate in the programs authorized by 
the Act shall, consistent with State law, designate or establish a State 
board of vocational education (State board). The State board must be the 
sole State agency responsible for the administration or the supervision 
of the State's vocational and applied technology education program.

(Authority: 20 U.S.C. 2321(a))



Sec. 403.11  What are the principal responsibilities of the State board?

    The principal responsibilities of the State board must include--
    (a) The coordination of the development, submission, and 
implementation of the State plan;
    (b) The evaluation of the programs, services, and activities 
assisted under the Act, as required by Secs. 403.32 (a)(7) and (b)(9) 
and 403.201 through 403.204;
    (c) The development, in consultation with the State council on 
vocational education, of the State plan and its submission to the 
Secretary, as required by Secs. 403.30 through 403.34;
    (d) Consultation with the State council on vocational education and 
other appropriate agencies, groups, and individuals, including business, 
industry, and labor, involved in the planning, administration, 
evaluation, and coordination of programs funded under the Act;
    (e) Convening and meeting as a State board, consistent with 
applicable State law and procedure, when the State board determines it 
is necessary to meet to carry out its functions under the Act, but not 
less than four times annually; and
    (f) The adoption of those procedures the State board considers 
necessary to implement State level coordination with the State job 
training coordinating council in order to encourage cooperation between 
programs under the Act and programs under the Job Training Partnership 
Act (JTPA) (29 U.S.C. 1501 et seq.).

(Authority: 20 U.S.C. 2321(a))



Sec. 403.12  What are the additional responsibilities of the State board?

    (a) The State board shall make available to each private industry 
council established within the State under section 102 of the JTPA a 
current listing of all programs assisted under the Act.
    (b)(1) The State board, in consultation with the State council on 
vocational education established under Sec. 403.17, shall establish a 
limited number of (but at least two) technical committees to advise the 
State council and the State board on the development of model curricula 
to address State labor market needs. The technical committees shall 
develop an inventory of skills that may be used by the State board to 
define state-of-the-art model curricula. This inventory must identify 
the type and level of knowledge and skills needed for entry, retention, 
and advancement in occupational areas taught in the State.
    (2) The State board shall establish procedures that are consistent 
with the purposes of the Act for membership, operation, and duration of 
the technical committees. Their membership must be composed of 
representatives of--
    (i) Employers from any relevant industry or occupation for which the 
committee is established;
    (ii) Trade or professional organizations representing any relevant 
occupations; and
    (iii) Organized labor, if appropriate.
    (c) Except for the functions described in Sec. 403.11, the State 
board may delegate any of its other administrative, operational, or 
supervisory responsibilities, in whole or in part, to one or more 
appropriate State agencies.
    (d) The State board shall carry out the responsibilities described 
in Secs. 403.13 through 403.18 and 403.200 through 403.208.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2321(a)(1), (f), (g))

[[Page 29]]



Sec. 403.13  What are the personnel requirements regarding the elimination
of sex discrimination and sex stereotyping?

    (a) A State that desires to participate in the State Vocational and 
Applied Technology Education Program shall assign one individual, within 
the appropriate agency established or designated by the State board 
under Sec. 403.12(c), to administer vocational education programs within 
the State, to work full-time to assist the State board to fulfill the 
purposes of the Act by--
    (1) Administering the program of vocational education for single 
parents, displaced homemakers, and single pregnant women described in 
Sec. 403.81, and the sex equity program described in Sec. 403.91;
    (2) Gathering, analyzing, and disseminating data on the--
    (i) Adequacy and effectiveness of vocational education programs in 
the State in meeting the education and employment needs of women, 
including the preparation of women for employment in technical 
occupations, new and emerging occupational fields, and occupations 
regarded as nontraditional for women; and
    (ii) Status of men and women students and employees in the programs 
described in paragraph (a)(2)(i) of this section;
    (3) Reviewing and commenting upon, and making recommendations 
concerning, the plans of local educational agencies, area vocational 
education schools, intermediate educational agencies, and postsecondary 
educational institutions to ensure that the needs of women and men for 
training in nontraditional jobs are met;
    (4)(i) Reviewing vocational educational programs, including career 
guidance and counseling, for sex stereotyping and sex bias, with 
particular attention to practices that tend to inhibit the entry of 
women in high technology occupations; and
    (ii) Submitting recommendations, to the State board for inclusion in 
the State plan, for programs and policies to overcome sex bias and sex 
stereotyping in the programs described in paragraph (a)(4)(i) of this 
section;
    (5) Submitting to the State board an assessment of the State's 
progress in meeting the purposes of the Act with regard to overcoming 
sex discrimination and sex stereotyping;
    (6) Reviewing proposed actions on grants, contracts, and the 
policies of the State board to ensure that the needs of women are 
addressed in the administration of the Act;
    (7) Developing recommendations for programs of information and 
outreach to women concerning vocational education and employment 
opportunities for women, including opportunities for careers as 
technicians and skilled workers in technical fields and new and emerging 
occupational fields;
    (8) Providing technical assistance and advice to local educational 
agencies, postsecondary institutions, and other interested parties in 
the State on expanding vocational opportunities for women;
    (9) Assisting administrators, instructors, and counselors in 
implementing programs and activities to increase access for women, 
including displaced homemakers and single heads of households, to 
vocational education and to increase male and female students' 
enrollment in nontraditional programs;
    (10) Developing an annual plan for the use of all funds available 
for programs described in Secs. 403.81 and 403.91;
    (11) Managing the distribution of funds pursuant to Secs. 403.81 and 
403.91;
    (12) Monitoring the use of funds distributed to recipients under 
Secs. 403.81 and 403.91;
    (13) Evaluating the effectiveness of programs and activities 
supported by funds under Secs. 403.81 and 403.91;
    (14) On a competitive basis, allocating and distributing to eligible 
recipients or community-based organizations subgrants or contracts to 
carry out the Programs for Single Parents, Displaced Homemakers, and 
Single Pregnant Women and the Sex Equity Program;
    (15) Ensuring that each subgrant or contract awarded under the 
Programs for Single Parents, Displaced Homemakers, and Single Pregnant 
Women and the Sex Equity Program is of sufficient size, scope, and 
quality to be effective;

[[Page 30]]

    (16) Developing procedures for the collection from eligible 
recipients or community-based organizations that receive funds under 
Secs. 403.81 and 403.91 of data appropriate to the individuals served in 
programs under Secs. 403.81 and 403.91 in order to permit an evaluation 
of effectiveness of those programs as required by paragraph (a)(13) of 
this section; and
    (17) Cooperating in the elimination of sex bias and sex stereotyping 
in Consumer and Homemaking Education Programs.
    (b) A State shall, in accordance with Sec. 403.180(b)(4)(i), reserve 
at least $60,000 to carry out the provisions of paragraph (a) of this 
section, including the provision of necessary and reasonable staff 
support.
    (c) For the purposes of this section, the term ``State'' includes 
only the fifty States and the District of Columbia.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2312(a)(4)(A), 2321(b), 2335b, 2362(a)(3))



Sec. 403.14  What are the personnel requirements regarding coordination
with services for individuals with disabilities?

    (a) A State desiring to participate in programs authorized by the 
Act shall designate or assign the head of the State office responsible 
for administering part B of the Individuals with Disabilities Education 
Act (IDEA) (20 U.S.C. 1400 et seq.) to review the implementation of the 
provisions of the Act as they relate to students with disabilities by 
reviewing all or a representative sample of applications of eligible 
recipients to ensure that--
    (1) Individuals with disabilities are receiving vocational 
educational services;
    (2) Applications of the eligible recipients provide assurances of 
compliance with the requirements of section 504 of the Rehabilitation 
Act of 1973 (29 U.S.C. 794) and the IDEA and regulations implementing 
those statutes, regarding equal access to programs; and
    (3) Eligible recipients have--
    (i) Identified the number of students with disabilities enrolled in 
the eligible recipients' vocational programs;
    (ii) Assessed the vocational needs of those students; and
    (iii) Developed an adequate plan to provide supplementary services 
sufficient to meet the needs of those students.
    (b) For the purposes of this section, the term ``State'' includes 
only the fifty States, the District of Columbia, and the Commonwealth of 
Puerto Rico.

(Authority: 20 U.S.C. 2321(c))



Sec. 403.15  What are the personnel requirements regarding coordination
with services under chapter 1 of title I of the Elementary and Secondary
Education Act?

    (a) A State desiring to participate in programs authorized by the 
Act shall designate or assign the head of the State office or other 
appropriate individual responsible for coordinating services under 
chapter 1 of title I of the Elementary and Secondary Education Act of 
1965, as amended (chapter 1) (20 U.S.C. 2701 et seq.) to review all or a 
representative sample of applications from eligible recipients to ensure 
that--
    (1) The number of economically disadvantaged students has been 
identified; and
    (2) The needs of economically disadvantaged students are being met 
as outlined in the applications of eligible recipients.
    (b) For the purposes of this section, the term ``State'' includes 
only the fifty States, the District of Columbia, and the Commonwealth of 
Puerto Rico.

(Authority: 20 U.S.C. 2321 (c) and (d))



Sec. 403.16  What are the personnel requirements regarding coordination
with programs for individuals of limited English proficiency?

    (a) A State desiring to participate in programs authorized by the 
Act shall designate or assign the head of the State office or other 
appropriate individual responsible for administering programs for 
students of limited English proficiency to review all or a 
representative sample of applications from eligible recipients to ensure 
that--
    (1) The number of students of limited English proficiency has been 
identified; and

[[Page 31]]

    (2) The needs of students of limited English proficiency for 
participation in vocational education programs are being met as outlined 
in the applications of eligible recipients.
    (b) For the purposes of this section, the term ``State'' includes 
only the fifty States, the District of Columbia, and the Commonwealth of 
Puerto Rico.

(Authority: 20 U.S.C. 2321 (c) and (e))



Sec. 403.17  What are the State's responsibilities regarding a State
council on vocational education?

    (a) A State desiring to participate in the State Vocational and 
Applied Technology Education Program shall establish a State council on 
vocational education. The State council must be appointed--
    (1) By the Governor; or
    (2) By the State board of education, in a State in which the members 
of the State board of education are elected, including election by the 
State legislature.
    (b) Each State shall certify to the Secretary the establishment and 
membership of the State council by June 1 prior to the beginning of each 
State plan period described in Sec. 403.30.
    (c) Each State shall recertify to the Secretary any new member of 
the State council not more than 60 days after a position on the State 
council is vacated.

(Authority: 20 U.S.C. 2322 (a), (b))



Sec. 403.18  What are the membership requirements of a State council
on vocational education?

    (a) Each State council must be composed of 13 individuals, and must 
be broadly representative of citizens and groups within the State having 
an interest in vocational education.
    (b) Each State council must consist of--
    (1) Seven individuals who are representative of the private sector 
in the State and who must constitute a majority of the membership--
    (i) Five of whom must be representatives of business, industry, 
trade organizations, and agriculture including--
    (A) One member who is representative of small business concerns; and
    (B) One member who is a private sector member of the State job 
training coordinating council established pursuant to section 122 of the 
JTPA; and
    (ii) Two of whom must be representatives of labor organizations; and
    (2) Six individuals, one of whom must be representative of special 
education, who are representative of--
    (i) Secondary and postsecondary vocational institutions (equitably 
distributed among those institutions);
    (ii) Career guidance and counseling organizations within the State; 
and
    (iii) Individuals who have special knowledge and qualifications with 
respect to the special educational and career development needs of 
special populations, including women, disadvantaged individuals, 
individuals with disabilities, individuals with limited English 
proficiency, and minorities.
    (c) The State council may include members of vocational student 
organizations and school boards but may not include employees of the 
State board of vocational education.
    (d) In selecting individuals to serve on the State council on 
vocational education, the State shall give due consideration to the 
appointment of individuals who serve on a private industry council under 
the JTPA, or on State councils established under other related Federal 
programs.

(Authority: 20 U.S.C. 2322(a))



Sec. 403.19  What are the responsibilities of a State council on
vocational education?

    (a)(1) The State council on vocational education shall meet as soon 
as practical after the Secretary accepts its certification and shall 
select from among its membership a chairperson who must be a 
representative of the private sector.
    (2) The State council on vocational education shall adopt rules that 
govern the time, place, and manner of meeting, as well as council 
operating procedures and staffing. The rules must provide for at least 
one public meeting each year at which the public is given an opportunity 
to express views concerning the vocational education program of the 
State.

[[Page 32]]

    (b) Each State council on vocational education, during each State 
plan period described in Sec. 403.30 unless otherwise indicated in the 
regulations in this section, shall--
    (1) Meet with the State board or its representatives to advise on 
the development of the subsequent State plan, or any amendments to the 
current State plan, while the State plan or amendment is being 
developed;
    (2) Make recommendations to the State board and make reports to the 
Governor, the business community, and general public of the State, 
concerning--
    (i) The State plan;
    (ii) Policies the State should pursue to strengthen vocational 
education, with particular attention to programs for individuals with 
disabilities; and
    (iii) Initiatives and methods the private sector could undertake to 
assist in the modernization of vocational education programs;
    (3) Analyze and report on the distribution of all vocational 
education funds in the State and on the availability of vocational 
education activities and services within the State;
    (4) Consult with the State board on the establishment of evaluation 
criteria for vocational education programs within the State;
    (5) Submit recommendations to the State board on the conduct of 
vocational education programs conducted in the State that emphasize the 
use of business concerns and labor organizations;
    (6) Assess and report on the distribution of financial assistance 
under the Act, particularly the distribution of financial assistance 
between secondary vocational education programs and postsecondary 
vocational education programs;
    (7) Recommend procedures to the State board to ensure and enhance 
the participation of the public in the provision of vocational education 
at the local level within the State, particularly the participation of 
local employers and local labor organizations;
    (8) Report to the State board on the extent to which individuals who 
are members of special populations are provided with equal access to 
quality vocational education programs;
    (9) Analyze and review corrections education programs; and
    (10)(i) At least once every two years--
    (A) Evaluate the extent to which vocational education, employment, 
and training programs in the State represent a consistent, integrated, 
and coordinated approach to meeting the economic needs of the State;
    (B) Evaluate the vocational education program delivery system 
assisted under the Act, and the job training program delivery system 
assisted under the JTPA, in terms of the delivery systems' adequacy and 
effectiveness in achieving the purposes of both Acts; and
    (C) Make recommendations to the State board on the adequacy and 
effectiveness of the coordination that takes place between vocational 
education and the JTPA;
    (ii) Comment on the adequacy or inadequacy of State action in 
implementing the State plan;
    (iii) Make recommendations to the State board on ways to create 
greater incentives for joint planning and collaboration between the 
vocational education system and the job training system at the State and 
local levels; and
    (iv) Advise, in writing, the Governor, the State board, the State 
job training coordinating council, the Secretary, and the Secretary of 
Labor of these findings and recommendations.
    (c)(1) Each State council on vocational education may--
    (i) Obtain the services of the professional, technical, and clerical 
personnel necessary to enable it to carry out its functions under the 
Act;
    (ii) Contract for the services necessary to enable it to carry out 
its evaluation functions; and
    (iii) Submit a statement to the Secretary reviewing and commenting 
upon the State plan.
    (2)(i) The expenditure of funds awarded to a State council on 
vocational education by the Secretary must be solely determined by that 
State council and may not be diverted or reprogrammed for any other 
purpose by any State board, agency, or individual.
    (ii) Each State council on vocational education shall designate an 
appropriate State agency, or other public agency, eligible to receive 
funds under

[[Page 33]]

the Act, to act as its fiscal agent for purposes of disbursement, 
accounting, and auditing.
    (3) Each State council on vocational education shall carry out its 
functions, whether directly or by way of contract for services, 
independent of programmatic and administrative control by other State 
boards, agencies, and individuals.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2322(c)-(e) and (f)(2); 2323(c))



              Subpart C_How Does A State Apply for a Grant?



Sec. 403.30  What documents must a State submit to receive a grant?

    (a) A State that desires to participate in the State Vocational and 
Applied Technology Education Program shall submit to the Secretary a 
State plan for a three-year period, in the case of the initial plan, and 
a two-year period thereafter, together with annual revisions the State 
board determines to be necessary.
    (b) Each State shall carry out its programs under the State 
Vocational and Applied Technology Education Program on the basis of 
program years that coincide with program years under section 104(a) of 
the JTPA.
    (c) The provisions of 34 CFR 76.103 do not apply to the State 
Vocational and Applied Technology Education Program.

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

(Authority: 20 U.S.C. 2323)



Sec. 403.31  How is the State plan developed?

    (a) In formulating the State plan, and any amendments to the State 
plan, the State board shall meet with, and utilize, the State council on 
vocational education established under Sec. 403.17.
    (b) After providing appropriate and sufficient notice to the public, 
the State board shall conduct at least two public hearings in the State 
for the purpose of affording all segments of the public and interested 
organizations and groups an opportunity to present their views and make 
recommendations regarding the State plan.
    (c) A State shall provide public notice of hearings on the State 
plan at least 30 days prior to the hearings.
    (d) In developing a State plan, the State shall conduct an 
assessment according to Sec. 403.203.
    (e) The State board shall develop the portion of each State plan 
relating to the amount and uses of any funds proposed to be reserved for 
adult education, postsecondary education, tech-prep education, and 
secondary education after consultation with the State agency responsible 
for supervision of community colleges, technical institutes, or other 
two-year postsecondary institutions primarily engaged in providing 
postsecondary vocational education and the State agency responsible for 
secondary education. If a State agency finds that a portion of the final 
State plan is objectionable, that agency shall file its objections with 
the State board.
    (f) The State board shall, in developing the State plan, take into 
consideration the relative training and retraining needs of secondary, 
adult, and postsecondary students.

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

(Authority: 20 U.S.C. 2323(a)(2) and 2324(a))



Sec. 403.32  What must the State plan contain?

    (a) Assurances. To participate in the programs authorized under the 
State Vocational and Applied Technology Program, the State shall, in its 
State plan, provide assurances that--
    (1) The State board will comply with the applicable requirements of 
titles I, II, III, and V of the Act and regulations implementing those 
requirements (including the maintenance of fiscal effort requirement in 
Sec. 403.182);
    (2) Eligible recipients will comply with the requirements of titles 
I, II, III, and V of the Act and the regulations implementing those 
requirements;
    (3) The State board will develop measurable goals and accountability 
measures for meeting the needs of individuals who are members of special 
populations;

[[Page 34]]

    (4) The State board will conduct adequate monitoring of projects, 
services, and activities conducted by eligible recipients to ensure that 
the eligible recipients are meeting the goals described in paragraph 
(a)(3) of this section;
    (5) To the extent consistent with the number and location of 
individuals who are members of special populations enrolled in private 
secondary schools, the State will provide for the participation of those 
individuals in the vocational education projects, services, and 
activities assisted under Secs. 403.112 and 403.113;

    Cross Reference: See 34 CFR 76.650-76.662, Participation of Students 
Enrolled in Private Schools.

    (6) The State will comply with the provisions of Sec. 403.180, and 
will distribute all of the funds reserved for the Secondary School 
Vocational Education Program and the Postsecondary and Adult Vocational 
Education Programs to eligible recipients pursuant to Secs. 403.112, 
403.113, and 403.116;
    (7) The State will develop and implement a system of standards for 
performance and measures of performance for vocational education 
programs at the State level that meets the requirements of Secs. 403.201 
and 403.202;
    (8) In the use of funds available for programs for single parents, 
displaced homemakers, or single pregnant women under Sec. 403.81, the 
State will--
    (i) Emphasize assisting individuals with the greatest financial 
need; and
    (ii) Give special consideration to displaced homemakers who, because 
of divorce, separation, or the death or disability of a spouse, must 
prepare for paid employment;
    (9) The State will furnish relevant training and vocational 
education activities to men and women who desire to enter occupations 
that are not traditionally associated with their sex;
    (10) The State will fund programs of personnel development and 
curriculum development to further the goals identified in the State 
plan;
    (11) The State has thoroughly assessed the vocational education 
needs of identifiable segments of the population in the State that have 
the highest rates of unemployment, and those needs are reflected in and 
addressed by the State plan;
    (12) The State board will cooperate with the State council in 
carrying out the Board's duties under the State plan;
    (13) None of the funds expended under the Act will be used to 
acquire equipment (including computer software) in any instance in which 
that acquisition results in a direct financial benefit to any 
organization representing the interests of the purchasing entity or its 
employees or any affiliate of such an organization;
    (14) State and local funds will be used in the schools of each local 
educational agency that are receiving funds under the Act to provide 
services that, taken as a whole, are at least comparable to services 
being provided in schools in those agencies that are not receiving funds 
under the Act;

    Cross Reference: See Secs. 403.194 and 403.200.

    (15)(i) The State board will provide leadership (qualified by 
experience and knowledge in guidance and counseling), supervision, and 
resources for comprehensive career guidance, vocational counseling, and 
placement programs; and
    (ii) As a component of the assurances described in paragraph 
(a)(15)(i) of this section, the State board will annually assess and 
include in the State plan a report on the degree to which expenditures 
aggregated within the State for career guidance and vocational 
counseling from allotments under title II of the Act are not less than 
expenditures for guidance and counseling within the State under the Carl 
D. Perkins Vocational Education Act in Fiscal or Program Year 1988;


(Authority: H.R. Rep. No. 660, 101st Cong., 1st Sess. 111 (1990))

    (16) The State will provide for such fiscal control and fund 
accounting procedures as may be necessary to ensure the proper 
disbursement of, and accounting for, Federal funds paid to the State, 
including those funds paid by the State to eligible recipients under the 
Act;

[[Page 35]]

    (17) Funds made available under title II of the Act will be used to 
supplement, and to the extent practicable increase, the amount of State 
and local funds that would in the absence of those Federal funds be made 
available for the uses specified in the State plan and the local 
application, and in no case supplant those State or local funds;

    Cross Reference: See Secs. 403.196 and 403.208.

    (18) Individuals who are members of special populations will be 
provided with equal access to recruitment, enrollment, and placement 
activities;
    (19) Individuals who are members of special populations will be 
provided with equal access to the full range of vocational education 
programs available to individuals who are not members of special 
populations, including occupationally specific courses of study, 
cooperative education, apprenticeship programs, and, to the extent 
practicable, comprehensive career guidance and counseling services, and 
will not be discriminated against on the basis of their status as 
members of special populations;
    (20) Vocational education programs and activities for individuals 
with disabilities will be provided in the least restrictive environment 
in accordance with section 612(5)(B) of the IDEA and will, if 
appropriate, be included as a component of the individualized education 
program developed under section 614(a)(5) of that Act;
    (21) Students with disabilities who have individualized education 
programs developed under section 614(a)(5) of the IDEA, with respect to 
vocational education programs, will be afforded the rights and 
protections guaranteed those students under sections 612, 614, and 615 
of that Act;
    (22) Students with disabilities who do not have individualized 
education programs developed under section 614(a)(5) of the IDEA or who 
are not eligible to have such a program, with respect to vocational 
education programs, will be afforded the rights and protections 
guaranteed those students under section 504 of the Rehabilitation Act of 
1973 (29 U.S.C. 794) and, for the purpose of the State Vocational and 
Applied Technology Education Programs, those rights and protections will 
include making vocational education programs readily accessible to 
eligible individuals with disabilities through the provision of services 
described Sec. 403.190(b)(3);
    (23) Vocational education planning for individuals with disabilities 
will be coordinated among appropriate representatives of vocational 
education, special education, and State vocational rehabilitation 
agencies;
    (24) The provision of vocational education to each student with 
disabilities will be monitored to determine if that education is 
consistent with the individualized education program developed for the 
student under section 614(a)(5) of the IDEA, in any case in which an 
individualized education program exists;
    (25) The provision of vocational education will be monitored to 
ensure that disadvantaged students and students of limited English 
proficiency have access to that education in the most integrated setting 
possible;
    (26)(i) The requirements of the Act relating to individuals who are 
members of special populations--
    (A) Will be carried out under the general supervision of individuals 
in the appropriate State educational agency or State board who are 
responsible for students who are members of special populations; and
    (B) Will meet education standards of the State educational agency or 
State board;
    (ii) With respect to students with disabilities, the supervision 
carried out under paragraph (a)(26)(i) of this section will be carried 
out consistent with, and in conjunction with, supervision by the State 
educational agency or State board carried out under section 612(6) of 
the IDEA;
    (27) Funds received under the Business-Labor-Education Partnership 
for Training Program will be awarded on a competitive basis solely for 
vocational education programs, including programs that--
    (i) Provide apprenticeships and internships in industry;
    (ii) Provide new equipment;
    (iii) Provide teacher internships or teacher training;

[[Page 36]]

    (iv) Bring representatives of business and organized labor into the 
classroom;
    (v) Increase the access to, and quality of, programs for individuals 
who are members of special populations;
    (vi) Strengthen coordination between vocational education programs 
and the labor and skill needs of business and industry;
    (vii) Address the economic development needs of the area served by 
the partnership;
    (viii) Provide training and career counseling that will enable 
workers to retain their jobs;
    (ix) Provide training and career counseling that will enable workers 
to upgrade their jobs; and
    (x) Address the needs of new and emerging industries, particularly 
industries in high-technology fields;
    (28) In administering the Business-Labor-Education Partnership for 
Training Program, the State board will--
    (i) Give preference to partnerships that coordinate with local 
chambers of commerce (or the equivalent), local labor organizations, or 
local economic development plans;
    (ii) Give priority to programs offered by partnerships that provide 
job training in areas or skills where there are significant labor 
shortages; and
    (iii) Ensure an equitable distribution of assistance under this part 
between urban and rural areas;
    (29) Except as provided in paragraph (a)(30) of this section, not 
less than 50 percent of the aggregate cost of programs and projects 
assisted under the Business-Labor-Education Partnership for Training 
Program will be provided from non-Federal sources, and not less than 50 
percent of the non-Federal share will be provided by businesses or labor 
organizations participating in the partnerships; and
    (30) In the event that a partnership includes a small business or 
labor organization, 40 percent of the aggregate cost of the programs and 
projects assisted under the Business-Labor-Education Partnership for 
Training Program will be provided from non-Federal sources and not less 
than 50 percent of the non-Federal share will be provided by 
participating business or labor organizations.
    (b) Descriptions. To participate in programs authorized under the 
State Vocational and Applied Technology Education Program, the State 
must include the following descriptions in the State plan:
    (1) The procedures and criteria for, and the results of, each of the 
assessments required by Sec. 403.203, including the needs identified by 
the assessments.
    (2) The plans for the use of the funds and how those planned uses 
reflect the needs described in paragraph (b)(1) of this section.
    (3) The manner in which the State will comply with the requirements 
in the Act regarding access and services for individuals who are members 
of special populations and a description of the responsiveness of 
programs to the special needs of those students.
    (4) The estimated distribution, for each instructional level--
secondary, postsecondary, and adult--of funds to corrections educational 
agencies as prescribed by Sec. 403.100, of funds to local educational 
agencies, area vocational education schools, or intermediate educational 
agencies as prescribed by Secs. 403.112 and 403.113, and of funds to 
eligible institutions or consortia of eligible institutions as 
prescribed by Sec. 403.116.
    (5) The criteria the State board will use--
    (i) In approving applications of eligible recipients; and
    (ii) For spending the amounts reserved for the State under 
Sec. 403.180(b).
    (6) How funds expended for occupationally specific training will be 
used for occupations in which job openings are projected or available, 
based on a labor market analysis that is not limited to the area in 
which the school is located.


(Authority: H.R. Rep. No. 660, 101st Cong., 1st Sess. 109 (1990))

    (7) In each State plan submitted after Fiscal Year 1991, the 
progress the State has made in achieving the goals described in previous 
State plans.
    (8) The methods of administration necessary for the prompt and 
efficient administration of programs under the Act.

[[Page 37]]

    (9) How the State will implement program evaluations with eligible 
recipients as prescribed in Secs. 403.191, 403.192, 403.201(a) (3) and 
(4), and 403.204.
    (10) The methods proposed for the joint planning and coordination of 
programs carried out under the Act with programs conducted under the 
JTPA, the Adult Education Act (20 U.S.C. 1201 et seq.), chapter 1, the 
IDEA, and the Rehabilitation Act of 1973, and with apprenticeship 
programs.
    (11) Procedures by which an area vocational educational school, 
intermediate educational agency, or local educational agency may appeal 
decisions adverse to its interests with respect to programs assisted 
under the Act.

    Cross Reference: See 34 CFR 76.401.

    (12) How the State will comply with the provisions of 
Secs. 403.32(a)(18)-(26), 403.115, and 403.205.
    (13) The State's rationale for distribution of funds under the 
Secondary School Vocational Education Program and the Postsecondary and 
Adult Vocational Education Programs.
    (14) The State corrections educational agency or agencies designated 
to administer vocational education programs assisted under the Act, and 
the plan for the use of funds provided under Sec. 403.180(b)(5).
    (15) Any delegation of functions under Sec. 403.12(c).
    (16) The manner in which the State board will comply with the 
applicable requirements of titles I, II, III, and V of the Act 
(including the maintenance of fiscal effort requirements in 
Sec. 403.182).
    (17) A summary of recommendations made at public hearings on the 
State plan and the State board's response.
    (18) How the State will determine which LEAs are located in a rural 
sparsely-populated area for purposes of Sec. 403.112(d)(3).
    (19) Which indices of economic status the State will use to 
determine the number of economically disadvantaged students attending 
vocational educational programs for the purposes of Sec. 403.114.
    (20) What method the State will use to distribute minimal amounts 
for the purpose of Sec. 403.119(a).
    (21) As appropriate, what method the State will use to distribute 
funds under Sec. 403.118.
    (c) Consultations. A State desiring to participate in the State 
Vocational and Applied Technology Education Program shall include in its 
State plan--
    (1) A statement, if any, from the State advisory council on 
vocational education reviewing and commenting on the State plan;
    (2) As necessary, the State's reasons for not accepting the 
recommendations of the State Committee of Practitioners for modifying 
standards and measures to be used in the statewide system of core 
standards and measures of performance; and
    (3) As necessary, the State's response to any objections raised by 
State agencies consulted during the development of the State plan as 
required by Sec. 403.31(e).

(Authority: 20 U.S.C. 2321(a)(2); 2322(e); 2323(a)(2)(B), (b); 2324(a); 
2325(a), (d)(3); 2328(a); 2336(a)(1); 2341(b)(2), (d)(3); 2341b(a); 
2392(b); 2463; and 2468e(a)(1))

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

[57 FR 36735, Aug. 14, 1992, as amended at 59 FR 38512, July 28, 1994]



Sec. 403.33  What procedures does a State use to submit its State plan?

    (a)(1) The State board shall submit its State plan for review and 
comment to the State job training coordinating council under section 122 
of the JTPA not less than sixty days before the State plan is submitted 
to the Secretary.
    (2) If the matters raised by the comments of the State job training 
coordinating council are not addressed in the State plan, the State 
board shall submit those comments to the Secretary with the State plan.
    (b) The State board shall submit its State plan for review and 
comment to the State council on vocational education not less than sixty 
days before the State plan is submitted to the Secretary.

    Cross Reference: See Sec. 403.19(c)(1)(iii).

    (c) Each State plan must be submitted to the Secretary by May 1 
preceding the beginning of the first fiscal

[[Page 38]]

year for which the plan is to be in effect.
    (d) The State plan is considered to be the general application 
required by section 435 of the General Education Provisions Act (20 
U.S.C. 1232d).

(Authority: 20 U.S.C. 2322(d)(1) and (2)(A), (e); 2323(a)(2)(A); and 
2324(b))

(Approved by the Office of Management and Budget under Control No. 1830-
0029)



Sec. 403.34  When are amendments to the State plan required?

    The State board, in consultation with the State council, shall 
submit amendments to the State plan to the Secretary when required by 34 
CFR 76.140 or when changes in program conditions, labor market 
conditions, funding, or other factors require substantial amendment of 
an approved State plan. All amendments must be submitted for review by 
the State job training coordinating council and the State council on 
vocational education before submittal to the Secretary.

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

(Authority: 20 U.S.C. 2323(c))



        Subpart D_How Does the Secretary Make a Grant to a State?



Sec. 403.50  How does the Secretary make allotments?

    (a)(1) From funds made available under section 3(c) of the Act for 
the basic programs listed in Sec. 403.60, and under section 3(d) of the 
Act for the special programs listed in Sec. 403.130, the Secretary 
allots funds each fiscal year according to the provisions of section 101 
of the Act to the 50 States, the Commonwealth of Puerto Rico, the 
District of Columbia, and the Virgin Islands.
    (2) Upon approval of its State plan and any annual amendments, the 
Secretary makes one or more grant awards from those allotments to a 
State.
    (b)(1) From funds made available under sections 3(b)(2) of the Act, 
the Secretary allots funds each fiscal year for State councils on 
vocational education according to the provisions of section 112(f)(1) of 
the Act.
    (2) The Secretary makes an award to a State council upon the State 
council's submission of an annual budget covering the proposed 
expenditures of the State council for the following program year, and 
when the Secretary has determined that the State plan is in 
substantially approvable form.
    (c) From funds made available under section 3(b)(1)(B) of the Act 
for the territories, the Secretary allots funds each fiscal year 
according to the provisions of section 101A(a) of the Act.
    (d)(1) The Secretary awards funds remaining after allotments are 
made under paragraph (c) of this section to the Center for the 
Advancement of Pacific Education (CAPE) or its successor entity, such as 
the Pacific Regional Educational Laboratory.
    (2) CAPE or its successor entity shall make grants for vocational 
education and training in Guam, American Samoa, Palau, the Commonwealth 
of the Northern Marianas, the Federated States of Micronesia, and the 
Republic of the Marshall Islands for the purpose of providing direct 
educational services, including--
    (i) Teacher and counselor training and retraining;
    (ii) Curriculum development; and
    (iii) Improving vocational education and training programs in 
secondary schools and institutions of higher education (as defined in 
Sec. 403.117(b)), or improving cooperative programs involving both 
secondary schools and institutions of higher education.
    (3) CAPE may not use more than five percent of the funds received 
under paragraph (d)(1) of this section for administrative costs.

(Authority: 20 U.S.C. 2311; 2311a; and 2461)



Sec. 403.51  How does the Secretary make reallotments?

    (a)(1) If the Secretary determines that any amount of a State's 
allotment under Sec. 403.50(a) will not be required for any fiscal year 
for carrying out the program for which the allotment was made, the 
Secretary reallots those funds to one or more States that demonstrate a 
current need for additional funds and the ability to use them promptly 
and effectively upon reallotment.

[[Page 39]]

    (2) The Secretary announces in the Federal Register the dates on 
which funds will be reallotted.
    (b)(1) No funds reallotted under paragraph (a) of this section may 
be used for any purpose other than the purposes for which they were 
appropriated.
    (2) Any amount reallotted to a State under paragraph (a) of this 
section remains available for obligation during the succeeding fiscal 
year and is deemed to be part of the State's allotment for the fiscal 
year in which the reallotted funds are obligated.

(Authority: 20 U.S.C. 2311(b))



Sec. 403.52  When does the Secretary approve State plans and amendments?

    (a)(1) The Secretary approves a State plan, or an amendment to a 
State plan, within sixty days of its receipt unless the plan or 
amendment is--
    (i) Inconsistent with the requirements and purposes of the Act; or
    (ii) Not of sufficient quality to meet the objectives of the Act, 
including the objective of developing and implementing program 
evaluations and improvements.
    (2) Before the Secretary finally disapproves a State plan, or an 
amendment to a State plan, the Secretary gives reasonable notice and an 
opportunity for a hearing to the State board.
    (b)(1) In reviewing a State plan, or an amendment to a State plan, 
the Secretary considers available comments from--
    (i) The State council on vocational education;
    (ii) The State agency responsible for supervision of community 
colleges, technical institutes, or other two-year postsecondary 
institutions primarily engaged in providing postsecondary vocational 
education;
    (iii) The State agency responsible for secondary education;
    (iv) The State Committee of Practitioners established under 34 CFR 
400.6; and
    (v) The State job training coordinating council.
    (2) In reviewing an amendment to a State plan, the Secretary 
considers available comments from the State job training coordinating 
council and the State council on vocational education.

(Authority: 20 U.S.C. 2323(c), 2324, and 2325(d)(3))



 Subpart E_What Kinds of Activities Does the Secretary Assist Under the 
                             Basic Programs?

                                 General



Sec. 403.60  What are the basic programs?

    The following basic programs are authorized by title II of the Act:
    (a) State Programs and State Leadership Activities.
    (b) Programs for Single Parents, Displaced Homemakers, and Single 
Pregnant Women.
    (c) Sex Equity Programs.
    (d) Programs for Criminal Offenders.
    (e) Secondary School Vocational Education Programs.
    (f) Postsecondary and Adult Vocational Education Programs.

(Authority: 20 U.S.C. 2302)



Sec. 403.61  What projects, services, and activities are permissible
under the basic programs?

    Projects, services, and activities described in Secs. 403.70, 
403.71, 403.81, 403.91, 403.101, and 403.111 may include--
    (a) Work-site programs such as cooperative vocational education, 
programs with community-based organizations, work-study, and 
apprenticeship programs;
    (b) Placement services and activities for students who have 
successfully completed vocational education programs; and
    (c) Programs that involve students in addressing the needs of the 
community in the production of goods or services that contribute to the 
community's welfare or that involve the students with other community 
development planning, institutions, and enterprises.

(Authority: 20 U.S.C. 2468e(c))



Sec. 403.62  What administrative provisions apply?

    (a) Any project assisted with funds made available for the basic 
programs must be of sufficient size, scope, and quality to give 
reasonable promise of meeting the vocational education

[[Page 40]]

needs of the students involved in the project.
    (b) Each State board receiving financial assistance for the basic 
programs may consider granting academic credit for vocational education 
courses that integrate core academic competencies.

(Authority: 20 U.S.C. 2468e (b) and (d))



Sec. 403.63  How does a State carry out the State Vocational and Applied
Technology Education Program?

    (a) Unless otherwise indicated in the regulations in this part, a 
State board shall carry out projects, services, and activities under the 
State Vocational and Applied Technology Education Program--
    (1) Directly;
    (2) Through a school operated by the State board;
    (3) Through awards to State agencies or institutions, such as 
vocational schools or correctional institutions; or
    (4) Through awards to eligible recipients.
    (b) For the purpose of paragraph (a) of this section, a State board 
acts directly if it--
    (1) Carries out projects, services, or activities using its own 
staff (except at a school operated by the State board); or
    (2) Contracts for statewide projects, services, or activities such 
as research, curriculum development, and teacher training.
    (c) The regulations in this part also authorize a State to carry out 
certain projects, services, and activities under the State Vocational 
and Applied Technology Education Program by making an award to an entity 
other than an eligible recipient, such as a community-based 
organization, employers, private vocational training institutions, 
private postsecondary education institutions, labor organizations, and 
joint labor management apprenticeship programs.
    (d) If projects, services, and activities are carried out by a 
school operated by the State board under paragraph (a)(2) of this 
section or are carried out by a State agency or institution under 
paragraph (a)(3) of this section, the requirements dealing with local 
applications (Secs. 403.190 and 403.32(b)(5)(i)) apply in the same 
manner as to other eligible recipients.

(Authority: 20 U.S.C. 2323(b)(5), (6); 2335(a)(3); 2335b; 2342(c)(2)(N); 
and 2343)

             State Programs and State Leadership Activities



Sec. 403.70  How must funds be used under the State Programs and State
Leadership Activities?

    A State shall use funds reserved under section 102(a)(3) of the Act 
for the State Programs and State Leadership Activities in accordance 
with Sec. 403.180(b)(3) to conduct programs, projects, services, and 
activities that include--
    (a) Professional development activities--
    (1) For vocational teachers and academic teachers working with 
vocational education students, including corrections educators and 
counselors and educators and counselors in community-based 
organizations; and
    (2) That include inservice and preservice training of teachers in 
programs and techniques, including integration of vocational and 
academic curricula, with particular emphasis on training of minority 
teachers;
    (b) Development, dissemination, and field testing of curricula, 
especially curricula that--
    (1) Integrate vocational and academic methodologies; and
    (2) Provide a coherent sequence of courses through which academic 
and occupational skills may be measured; and
    (c) Assessment of programs conducted with assistance under the Act 
including the development of--
    (1) Performance standards and measures for those programs; and
    (2) Program improvement and accountability with respect to those 
programs.

(Authority: 20 U.S.C. 2331(b))



Sec. 403.71  In what additional ways may funds be used under the
State Programs and State Leadership Activities?

    In addition to the required activities in Sec. 403.70, a State may 
use funds reserved under section 102(a)(3) of the Act for the State 
Programs and State

[[Page 41]]

Leadership Activities in accordance with Sec. 403.180(b)(3) for 
programs, projects, services, and activities that include--
    (a) The promotion of partnerships among business, education 
(including educational agencies), industry, labor, community-based 
organizations, or governmental agencies;
    (b) The support for tech-prep education as described in 34 CFR part 
406;
    (c)(1) The support of vocational student organizations that are an 
integral part of the vocational education instructional program, 
especially with respect to efforts to increase minority participation in 
those organizations.
    (2) The support of vocational student organizations may include, but 
is not limited to, expenditures for--
    (i) The positions of State executive secretaries and State advisors 
for vocational student organizations;
    (ii) Leadership development workshops;
    (iii) The development of curriculum for vocational student 
organizations; and
    (iv) Field or laboratory work incidental to vocational training so 
long as the activity is supervised by vocational education personnel who 
are qualified in the occupational area and is available to all students 
in the instructional program without regard to membership in any student 
organization.
    (3) The support of vocational student organizations may not 
include--
    (i) Lodging, feeding, conveying, or furnishing transportation to 
conventions or other forms of social assemblage;
    (ii) Purchase of supplies, jackets, and other effects for students' 
personal ownership;
    (iii) Cost of non-instructional activities such as athletic, social, 
or recreational events;
    (iv) Printing and disseminating non-instructional newsletters;
    (v) Purchase of awards for recognition of students, advisors, and 
other individuals; or
    (vi) Payment of membership dues;
    (d) Leadership and instructional programs in technology education; 
and
    (e) Data collection.

(Authority: 20 U.S.C. 2331(c); H.R. Rep. No. 660, 101st Cong., 1st Sess. 
117 (1990))

 Single Parents, Displaced Homemakers, and Single Pregnant Women Program



Sec. 403.80  Who is eligible for a subgrant or contract?

    Eligible recipients and community-based organizations are eligible 
for an award under the Single Parents, Displaced Homemakers, and Single 
Pregnant Women Program.

(Authority: 20 U.S.C. 2335(a)(2), (3); 2335b(1))



Sec. 403.81  How must funds be used under the Single Parents, Displaced
Homemakers, and Single Pregnant Women Program?

    A State shall use funds reserved in accordance with 
Sec. 403.180(b)(2)(i) for individuals who are single parents, displaced 
homemakers, or single pregnant women only to--
    (a) Provide, subsidize, reimburse, or pay for preparatory services, 
including instruction in basic academic and occupational skills, 
necessary educational materials, and career guidance and counseling 
services in preparation for vocational education and training that will 
furnish single parents, displaced homemakers, and single pregnant women 
with marketable skills;
    (b) Make grants to eligible recipients for expanding preparatory 
services and vocational education services if the expansion directly 
increases the eligible recipients' capacity for providing single 
parents, displaced homemakers, and single pregnant women with marketable 
skills;
    (c) Make grants to community-based organizations for the provision 
of preparatory and vocational education services to single parents, 
displaced homemakers, and single pregnant women if the State determines 
that the community-based organizations have demonstrated effectiveness 
in providing comparable or related services to single parents, displaced 
homemakers, and single pregnant women, taking into account the 
demonstrated performance of such organizations in terms of cost, the 
quality of training, and the characteristics of the participants;
    (d) Make preparatory services and vocational education and training 
more

[[Page 42]]

accessible to single parents, displaced homemakers, and single pregnant 
women by assisting those individuals with dependent care, transportation 
services, or special services and supplies, books, and materials, or by 
organizing and scheduling the programs so that those programs are more 
accessible; or
    (e) Provide information to single parents, displaced homemakers, and 
single pregnant women to inform those individuals of vocational 
education programs, related support services, and career counseling.

(Authority: 20 U.S.C. 2335(a))



Sec. 403.82  In what settings may the Single Parents, Displaced Homemakers,
and Single Pregnant Women Program be offered?

    The programs and services described in Sec. 403.81 may be provided 
in postsecondary or secondary school settings, including area vocational 
education schools, and community-based organizations that meet the 
requirements of Sec. 403.81(c), that serve single parents, displaced 
homemakers, and single pregnant women.

(Authority: 20 U.S.C. 2335(b))

                           Sex Equity Program



Sec. 403.90  Who is eligible for a subgrant or contract?

    Eligible recipients and community-based organizations are eligible 
for an award under the Sex Equity Program.

(Authority: 20 U.S.C. 2335b(1))



Sec. 403.91  How must funds be used under the Sex Equity Program?

    Except as provided in Sec. 403.92, each State shall use amounts 
reserved for the Sex Equity Program in accordance with 
Sec. 403.180(b)(2)(ii) only for--
    (a) Programs, services, comprehensive career guidance and 
counseling, and activities to eliminate sex bias and stereotyping in 
secondary and postsecondary vocational education;
    (b) Preparatory services and vocational education programs, 
services, and activities for girls and women, aged 14 through 25, 
designed to enable the participants to support themselves and their 
families; and
    (c) Support services for individuals participating in vocational 
education programs, services, and activities described in paragraphs (a) 
and (b) of this section, including dependent-care services and 
transportation.

(Authority: 20 U.S.C. 2335a(a))



Sec. 403.92  Under what circumstances may the age limit under the Sex
Equity Program be waived?

    The individual appointed under Sec. 403.13(a) may waive the 
requirement in Sec. 403.91(b) with respect to age limitations if the 
individual determines (through appropriate research) that the waiver is 
essential to meet the objectives of Sec. 403.91.

(Authority: 20 U.S.C. 2335a(b))

                     Programs for Criminal Offenders



Sec. 403.100  What are the requirements for designating a State
corrections educational agency to administer the Programs for Criminal
Offenders?

    (a) The State Board shall designate one or more State corrections 
educational agencies to administer programs assisted under the Act for 
juvenile and adult criminal offenders in correctional institutions in 
the State including correctional institutions operated by local 
authorities.
    (b) Each State corrections educational agency that desires to be 
designated under paragraph (a) of this section shall submit to the State 
board a plan for the use of funds.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2336(a))



Sec. 403.101  How must funds be used under the Programs for Criminal
Offenders?

    In administering programs receiving funds reserved under 
Sec. 403.180(b)(5) for criminal offenders, each State corrections 
educational agency designated under Sec. 403.100(a) shall--
    (a) Give special consideration to providing--
    (1) Services to offenders who are completing their sentences and 
preparing for release; and

[[Page 43]]

    (2) Grants for the establishment of vocational education programs in 
correctional institutions that do not have such programs;
    (b) Provide vocational education programs for women who are 
incarcerated;
    (c) Improve equipment; and
    (d) In cooperation with eligible recipients, administer and 
coordinate vocational education services to offenders before and after 
their release.

(Authority: 20 U.S.C. 2336(b))



Sec. 403.102  What other requirements apply to the Program for
Criminal Offenders?

    Each State corrections educational agency designated under 
Sec. 403.100(a) shall meet the requirements in Secs. 403.191 and 
403.192.

(Authority: 20 U.S.C. 2471(22))

    Secondary, Postsecondary, and Adult Vocational Education Programs



Sec. 403.110  Who is eligible for a subgrant or contract?

    (a) Subject to the requirements of paragraph (c) of this section, 
the following entities are eligible for an award under the Secondary 
School Vocational Education Program:
    (1) A local educational agency.
    (2) An area vocational education school or intermediate educational 
agency that meets the requirements in Sec. 403.113.
    (b) Subject to the requirements of paragraph (c) of this section, 
the following entities are eligible for an award under the Postsecondary 
and Adult Vocational Education Programs:
    (1) An institution of higher education as defined in 
Sec. 403.117(b), including a nonprofit institution that satisfies the 
conditions set forth in Sec. 403.111(d)(14).
    (2) A local educational agency serving adults.
    (3) An area vocational education school serving adults that offers 
or will offer a program that meets the requirements of Sec. 403.111 and 
seeks to receive assistance under the Secondary School Vocational 
Education Program or the Postsecondary and Adult Vocational Education 
Programs.
    (c) Only an entity that provides or will provide vocational 
education in a program that meets the requirements of Sec. 403.111 is 
eligible to receive an award under the Secondary School Vocational 
Education Program or the Postsecondary and Adult Vocational Education 
Program.

(Authority: 20 U.S.C. 2341(a) and (d); 2341a (a) and (d)(1); and 
2342(c))



Sec. 403.111  How must funds be used under the Secondary School
Vocational Education Program and the Postsecondary and Adult Vocational
Education Programs?

    (a)(1) Each eligible recipient that receives an award under 
Sec. 403.112, Sec. 403.113, or Sec. 403.116 shall use funds under that 
award to improve vocational education programs.
    (2) Projects assisted with funds awarded under Sec. 403.112, 
Sec. 403.113, or Sec. 403.116 must--
    (i) Provide for the full participation of individuals who are 
members of special populations by providing the supplementary and other 
services required by Sec. 403.190(b) necessary for them to succeed in 
vocational education; and

    Cross Reference: See appendix A to part 403 and Secs. 403.190(c) and 
403.193(e).

    (ii) Operate at a limited number of sites or with respect to a 
limited number of program areas.
    (3) If an eligible recipient that receives an award under 
Sec. 403.112, Sec. 403.113, or Sec. 403.116 meets the requirements in 
this section and Secs. 403.190(b) and 403.193, it may use those Federal 
funds to serve students who are not members of special populations.
    (b) Each eligible recipient that receives an award under 
Sec. 403.112, Sec. 403.113, or Sec. 403.116 shall give priority for 
assistance under those sections to sites or program areas that serve the 
highest concentrations of individuals who are members of special 
populations.

    Examples: Methods by which an eligible recipient may give priority 
to sites or program areas that serve the highest concentrations of 
individuals who are members of special populations include, but are not 
limited to, the following:
    Example 1: Method to give priority to a limited number of sites. 
Based on data from the preceding fiscal year--
    (a) First, a local educational agency ranks each site based on the 
percentage of the

[[Page 44]]

site's total enrollment of students who are members of special 
populations.
    (b) Second, the local educational agency establishes a funding cut-
off point for sites above the district-wide percentage of special 
populations enrollment. The local educational agency funds sites above 
the cut-off point but does not fund sites below that point.
    Example 2: Method to give priority to a limited number of program 
areas. Based on data from the preceding fiscal year--
    (a) First, a postsecondary institution ranks each program area based 
on the percentage of the program area's total enrollment of students who 
are members of special populations.
    (b) Second, the postsecondary institution establishes a funding cut-
off point for program areas that rank above the institution-wide average 
percentage of special populations enrollment. The postsecondary 
institution funds projects in a program area that is above the cut-off 
point but does not fund projects in program areas below that point.
    Example 3: Method to give priority to a limited number of sites. 
Based on data from the preceding fiscal year--
    (a) First, an LEA or postsecondary institution identifies a site 
with a high concentration of special populations;
    (b) Second, the LEA or postsecondary institution identifies a 
program area at the site (such as health occupations) in which the 
participation rate for members of special populations has been lower 
than the overall rate of participation for members of special 
populations at the site; and
    (c) Third, the LEA or postsecondary institution funds a project at 
the site designed to improve the participation rate of members of 
special populations in that program area.
    Note to examples in Sec. 403.111: Absolute counts of special 
population members may be used to determine the sites or program areas 
with the highest concentrations of special population members instead 
of, or in combination with, percentages of special population members.

    (c) Funds made available from an award under Sec. 403.112, 
Sec. 403.113, or Sec. 403.116 must be used to provide vocational 
education in programs that--
    (1) Are of sufficient size, scope, and quality as to be effective;
    (2) Integrate academic and vocational education in those programs 
through coherent sequences of courses so that students achieve both 
academic and occupational competencies; and
    (3) Provide for the equitable participation of members of special 
populations in vocational education consistent with the assurances and 
requirements in Secs. 403.190(b) and 403.193, so that these populations 
have an opportunity to enter vocational education that is equal to that 
afforded to the general student population.

    Cross Reference: See appendix A to part 403.

    (d) In carrying out the provisions of paragraph (c) of this section, 
an eligible recipient under Secs. 403.112, 403.113, or Sec. 403.116 may 
use funds for activities that include, but are not limited to--
    (1) Upgrading of curriculum;
    (2) Purchase of equipment, including instructional aids;
    (3) Inservice training of both vocational instructors and academic 
instructors working with vocational education students for integrating 
academic and vocational education;
    (4) Guidance and counseling;
    (5) Remedial courses;
    (6) Adaptation of equipment;
    (7) Tech-prep education programs;
    (8) Supplementary services designed to meet the needs of special 
populations;
    (9) Payment in whole or in part with funds under Sec. 403.112, 
Sec. 403.113, or Sec. 403.116 for a special populations coordinator, who 
must be a qualified counselor or teacher, to ensure that individuals who 
are members of special populations are receiving adequate services and 
job skill training;
    (10) Apprenticeship programs;
    (11) Programs that are strongly tied to economic development efforts 
in the State;
    (12) Programs that train adults and students for all aspects of an 
occupation in which job openings are projected or available;
    (13) Comprehensive mentor programs in institutions of higher 
education offering comprehensive programs in teacher preparation, which 
seek to use fully the skills and work experience of individuals 
currently or formerly employed in business and industry who are 
interested in becoming classroom instructors and to meet the need of 
vocational educators who wish to upgrade their teaching competencies; or
    (14) Provision of education and training through arrangements with 
private

[[Page 45]]

vocational training institutions, private postsecondary educational 
institutions, employers, labor organizations, and joint labor-management 
apprenticeship programs if those institutions, employers, labor 
organizations, or programs can make a significant contribution to 
obtaining the objectives of the State plan and can provide substantially 
equivalent training at a lesser cost, or can provide equipment or 
services not available in public institutions.

(Authority: 20 U.S.C. 2342)



Sec. 403.112  How does a State allocate funds under the Secondary School
Vocational Education Program to local educational agencies?

    (a) Reservation of funds. From the portion of its allotment under 
Sec. 403.180(b)(1) for the basic programs, each fiscal year a State may 
reserve funds for the Secondary School Vocational Education Program.
    (b) General rule. Except as provided in paragraphs (c) and (d) of 
this section and Sec. 401.119, a State shall distribute funds reserved 
for the Secondary School Vocational Education Program to local 
educational agencies (LEAs) according to the following formula:
    (1) From 70 percent of the amount reserved, an LEA must be allocated 
an amount that bears the same relationship to the 70 percent as the 
amount the LEA was allocated under section 1005 of chapter 1 (20 U.S.C. 
2711) in the fiscal or program year preceding the fiscal or program year 
in which the allocation is made bears to the total amount received under 
section 1005 of chapter 1 by all LEAs in the State in that preceding 
year.
    (2) From 20 percent of the amount reserved, an LEA must be allocated 
an amount that bears the same relationship to the 20 percent as the 
number of students with disabilities who have individualized education 
programs under section 614(a)(5) of the IDEA served by the LEA in the 
fiscal or program year preceding the fiscal or program year in which the 
allocation is made bears to the total number of those students served by 
all LEAs in the State in that preceding year.
    (3) From 10 percent of the amount reserved, an LEA must be allocated 
an amount that bears the same relationship to the 10 percent as the 
number of students enrolled in schools and adults enrolled in vocational 
education training programs under the jurisdiction of the LEA in the 
fiscal or program year preceding the fiscal or program year in which the 
allocation is made bears to the number of students enrolled in schools 
in kindergarten through 12th grade and adults enrolled in vocational 
education training programs under the jurisdiction of all LEAs in the 
State in that preceding year.

    Example: Assume that a State has reserved $5,000,000 of its basic 
programs funds under Title II of the Act for secondary school programs.
    (a)(1) All LEAs in the State were allocated a total of $80,000,000 
under section 1005 of Chapter 1 in the preceding fiscal year. Of that 
amount, school district ``A'' was allocated $400,000.
    (2) The allocation for school district ``A'' is calculated by 
multiplying $3,500,000 (70 percent of $5,000,000) by .005 of the State 
total ($400,000  $80,000,000). The allocation for school district ``A'' 
would be $17,500 under paragraph (b)(1) of this section.
    (b)(1) All LEAs in a State served a total of 100,000 students with 
disabilities who have individualized education programs under section 
614(a)(5) of the IDEA in the preceding fiscal year. Of that total, 
school district ``A'' served 400 of those students in the preceding 
fiscal year.
    (2) The allocation for school district ``A'' is calculated by 
multiplying $1,000,000 (20 percent of $5,000,000) by .004 of the State 
total (400  100,000). The allocation for school district ``A'' would be 
$4,000 under paragraph (b)(2) of this section.
    (c)(1) All LEAs in a State enrolled a total of 1,000,000 students 
(including adults enrolled in vocational education training programs in 
those LEAs) in the preceding fiscal year. Of that number school district 
``A'' enrolled 3,500 of those students in the preceding fiscal year.
    (2) The allocation for school district ``A'' is calculated by 
multiplying 500,000 (10 percent of $5,000,000) by .0035 of the State 
total (3,500  1,000,000). The allocation for school district ``A'' 
would be $1,750 under paragraph (b)(3) of this section.

    (c) Exception to the general rule. In applying the provisions in 
paragraph (b) of this section, a State may not distribute funds to an 
LEA that operates only elementary schools, but shall instead distribute 
funds that would have been allocated for those ineligible LEAs as 
follows:

[[Page 46]]

    (1) If an LEA that operates only elementary schools sends its 
graduating students to a single local or regional educational agency 
that provides secondary school services to secondary school students in 
the same attendance area, a State shall distribute to that local or 
regional educational agency any amounts under paragraph (b) of this 
section that would otherwise have been allocated to LEAs operating only 
elementary schools.
    (2) If an LEA that operates only elementary schools sends its 
graduating students to two or more local or regional educational 
agencies that provide secondary school services to secondary students in 
the same attendance area, the State shall distribute to those local or 
regional educational agencies an amount based on the proportionate 
number of students each agency received in the previous year from the 
LEA that operates only elementary schools.
    (d)(1) Minimum grant amount. Except as provided in paragraph (d)(3) 
of this section, an LEA is not eligible for a grant under the Secondary 
School Vocational Education Program unless the amount allocated to the 
LEA under paragraph (b) of this section is not less than $15,000.
    (2)(i) An LEA may enter into a consortium with one or more LEAs for 
the purpose of providing services under the Secondary School Vocational 
Education Program in order to meet the minimum grant requirement in 
paragraph (d)(1) of this section.
    (ii) A consortium arrangement under paragraph (d)(2)(i) of this 
section must serve primarily as a structure for operating joint projects 
that provide services to all participating local educational agencies.
    (iii) A project operated by a consortium must meet the size, scope, 
and quality requirement of Sec. 403.111(c)(1).

    Example: Under the distribution formula for the Secondary School 
Vocational Education Program, three LEAs earn $5,000 each (which is less 
than the $15,000 minimum grant amount for each LEA). The LEAs form a 
consortium in order to receive an award. One of the LEAs is designated 
as the fiscal agent for the consortium and receives the $15,000 award 
for the consortium. The consortium may operate and fund with the $15,000 
a project or projects for the benefit of all participating LEAs. The 
fiscal agent of the consortium may not subgrant back to the 
participating LEAs the amounts they contributed to the consortium.

    (3) A State may waive paragraph (d)(1) of this section in any case 
in which the LEA--
    (i) Is located in a rural, sparsely populated area;
    (ii) Demonstrates that it is unable to enter into a consortium for 
purposes of providing services under the Secondary School Vocational 
Education Program; and
    (iii) Demonstrates that the projects to be assisted meet the size, 
scope, and quality requirements in Sec. 403.111(c)(1).
    (4) Any amounts that are not distributed by reason of paragraph 
(d)(1) of this section must be redistributed in accordance with the 
provisions in paragraph (b) of this section.

(Authority: 20 U.S.C. 2341 (a), (b), and (c))

    Cross Reference: See 34 CFR 403.113(d).



Sec. 403.113  How does a State allocate funds under the Secondary School
Vocational Education Program to area vocational education schools and
intermediate educational agencies?

    (a) A State shall distribute funds reserved under Sec. 403.112(a) 
directly to the appropriate area vocational education school or 
intermediate educational agency in any case in which--
    (1) The area vocational education school or intermediate educational 
agency and an LEA--
    (i) Have formed or will form a consortium for the purpose of 
receiving funds reserved under Sec. 403.112(a); or
    (ii) Have entered into or will enter into a cooperative arrangement 
for the purpose of receiving funds reserved under Sec. 403.112(a); and
    (2)(i) The area vocational education school or intermediate 
educational agency serves a proportion of students with disabilities and 
students who are economically disadvantaged that is approximately equal 
to or greater than the proportion of those students attending the 
secondary schools under the jurisdiction of all of the LEAs sending 
students to the area vocational education school or the intermediate 
educational agency; or

[[Page 47]]

    (ii) The area vocational education school or intermediate 
educational agency demonstrates that it is unable to meet the criterion 
in paragraph (a)(2)(i) of this section due to the lack of interest by 
students with disabilities and students who are economically 
disadvantaged in attending vocational education programs in that area 
vocational education school or intermediate educational agency.
    (b) If an area vocational education school or intermediate 
educational agency meets the requirements of paragraph (a) of this 
section, then the amount that would otherwise be allocated to the LEA 
may be distributed to the area vocational education school, the 
intermediate educational agency, and the LEA--
    (1) Based on each school's or entity's relative share of students 
with disabilities and students who are economically disadvantaged who 
are attending vocational education programs that meet the requirements 
of Sec. 403.111 (based, if practicable, on the average enrollment for 
the prior 3 years); or
    (2) On the basis of an agreement between the LEA and the area 
vocational education school or intermediate educational agency.
    (c) Notwithstanding paragraphs (a) and (b) of this section, and 
Secs. 403.114 and 403.115, prior to distributing funds to any LEA that 
would receive an allocation that is not sufficient to conduct a program 
that meets the requirements of Sec. 403.111(c), a State shall encourage 
the LEA to--
    (1) Form a consortium or enter a cooperative agreement with an area 
vocational education school or intermediate educational agency offering 
programs that meet the requirements of Sec. 403.111(c), and that are 
accessible to economically disadvantaged students and students with 
disabilities that would be served by the LEA; and
    (2) Transfer its allocation to an area vocational education school 
or intermediate educational agency.
    (d) If an LEA's allocation under Sec. 403.112 meets the minimum 
grant requirement in Sec. 403.112(d), and the allocation is distributed 
in part to an area vocational education school or an intermediate 
educational agency pursuant to paragraphs (a) and (b) of this section, 
the LEA may retain the amount not distributed to the area vocational 
education school or an intermediate educational agency even though that 
amount is less than the minimum grant required by Sec. 403.112(d).

(Authority: 20 U.S.C. 2341(d) (1), (2), and (5))



Sec. 403.114  How does a State determine the number of economically
disadvantaged students attending vocational education programs under
the Secondary School Vocational Education Program?

    (a) For the purposes of Sec. 403.113, a State may determine the 
number of economically disadvantaged students attending vocational 
education programs on any of the following bases:
    (1) Eligibility for one of the following:
    (i) Free or reduced-price meals under the National School Lunch Act 
(42 U.S.C. 1751 et seq.).
    (ii) The program for aid to Families with Dependent Children under 
part A of title IV of the Social Security Act (42 U.S.C. 601).
    (iii) Benefits under the Food Stamp Act of 1977 (7 U.S.C. 2011).
    (iv) To be counted for purposes of section 1005 of chapter 1.
    (v) Participation in programs assisted under title II of the JTPA.
    (2) Receipt of a Pell grant or assistance under a comparable State 
program of need-based financial assistance.
    (3) Status of an individual who is determined by the Secretary to be 
low-income according to the latest available data from the Department of 
Commerce or the Department of Health and Human Services Poverty 
Guidelines.
    (4) Other indices of economic status, including estimates of those 
indices, if the State demonstrates to the satisfaction of the Secretary 
that those indices are more representative of the number of economically 
disadvantaged students attending vocational education programs. The 
Secretary determines, on a case-by-case basis, whether other indices of 
economic status are more representative of the number of economically 
disadvantaged students attending vocational education programs, taking 
into consideration, for example, the statistical reliability of

[[Page 48]]

any data submitted by a grantee as well as the general acceptance of the 
indices by other agencies in the State or local area.
    (b) If a State elects to use more than one factor described in 
paragraph (a) of this section for purposes of determining the number of 
economically disadvantaged students enrolled in vocational education 
programs, the State shall ensure that the data used are not duplicative.

(Authority: 20 U.S.C. 2341(d)(3) and 2471(15))



Sec. 403.115  What appeal procedures must be established under the
Secondary School Vocational Education Program?

    The State board shall establish an appeals procedure for resolution 
of any dispute arising between an LEA and an area vocational education 
school or an intermediate educational agency with respect to the 
allocation procedures described in Secs. 403.112 and 403.113, including 
the decision of an LEA to leave a consortium.

(Authority: 20 U.S.C. 2341(d)(4))

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

    Cross Reference: See 34 CFR 76.401, Disapproval of an application--
opportunity for a hearing.



Sec. 403.116  How does a State allocate funds under the Postsecondary
and Adult Vocational Education Programs?

    (a) Reservation of funds. From the portion of its allotment under 
Sec. 403.180(b)(1) for the basic programs, each fiscal year a State may 
reserve funds for the Postsecondary and Adult Vocational Education 
Programs.
    (b) General rule. (1) A State shall distribute funds reserved for 
Postsecondary and Adult Vocational Education Programs to eligible 
institutions or consortia of eligible institutions within the State.
    (2) Except as provided in paragraph (c) of this section and 
Secs. 403.118 and 403.119, each eligible institution or consortium of 
eligible institutions must receive an amount that bears the same 
relationship to the amount of funds reserved for the Postsecondary and 
Adult Vocational Education Programs as the number of Pell Grant 
recipients and recipients of assistance from the Bureau of Indian 
Affairs enrolled in programs meeting the requirements of Sec. 403.111, 
including meeting the definition of vocational education in 34 CFR 
400.4, offered by the eligible institution or consortium of eligible 
institutions in the fiscal or program year preceding the fiscal or 
program year in which the allocation is made bears to the number of 
those recipients enrolled in these programs within the State in that 
preceding year.
    (c) Minimum grant amount. (1) A State may not provide a grant under 
paragraph (b) of this section to any institution or consortium of 
eligible institutions for an amount that is less than $50,000.
    (2) Any amounts that are not allocated by reason of paragraph (c)(1) 
of this section must be redistributed to eligible institutions or 
consortia of eligible institutions in accordance with the provisions of 
paragraph (b) of this section.
    (d) In order for a consortium of eligible institutions to receive 
assistance under this section, the consortium must operate joint 
projects that--
    (1) Provide services to all postsecondary institutions participating 
in the consortium; and
    (2) Are of sufficient size, scope, and quality as to be effective.

(Authority: 20 U.S.C. 2341a (a) and (c))

[57 FR 36735, Aug. 14, 1992, as amended at 59 FR 38513, July 28, 1994]



Sec. 403.117  What definitions apply to the Postsecondary and Adult
Vocational Education Programs?

    For the purposes of Secs. 403.116, 403.118, and 403.120 the 
following definitions apply:
    (a) Eligible institution means an institution of higher education, 
an LEA serving adults, or an area vocational education school serving 
adults that offers or will offer a program that meets the requirements 
of Sec. 403.111 and seeks to receive assistance under Sec. 403.116.
    (b)(1) Institution of higher education means an educational 
institution in any State that--

[[Page 49]]

    (i) Admits as regular students only persons having a certificate of 
graduation from a school providing secondary education, or the 
recognized equivalent of that certificate, or who are beyond the age of 
compulsory school attendance;
    (ii) Is legally authorized within the State to provide a program of 
education beyond secondary education;
    (iii) Provides an educational program for which it awards a 
bachelor's degree or provides not less than a two-year program which is 
acceptable for full credit toward such a degree, or in the case of a 
hospital or health care facility, that provides training of not less 
than one year for graduates of accredited health professions programs, 
leading to a degree or certificate upon completion of that training;
    (iv) Is a public or other nonprofit institution; and
    (v) Is accredited by a nationally recognized accrediting agency or 
association approved by the Secretary for this purpose or, if not so 
accredited--
    (A) Is an institution with respect to which the Secretary has 
determined that there is satisfactory assurance, considering the 
resources available to the institution, the period of time, if any, 
during which it has operated, the effort it is making to meet 
accreditation standards, and the purpose for which this determination is 
being made, that the institution will meet the accreditation standards 
of such an agency or association within a reasonable time; or
    (B) Is an institution whose credits are accepted, on transfer, by 
not less than three institutions that are so accredited, for credit on 
the same basis as if transferred from an institution so accredited.
    (2) This term also includes any school that provides not less than a 
one-year program of training to prepare students for gainful employment 
in a recognized occupation and that meets the provisions of paragraphs 
(b)(1) (i), (ii), (iv), and (v) of this definition. If the Secretary 
determines that a particular category of these schools does not meet the 
requirements of paragraph (b)(1)(v) because there is no nationally 
recognized accrediting agency or association qualified to accredit 
schools in that category, the Secretary, pending the establishment of 
such an accrediting agency or association, appoints an advisory 
committee, composed of persons specially qualified to evaluate training 
provided by schools in that category, that must--
    (i) Prescribe the standards of content, scope, and quality that must 
be met in order to qualify schools in that category to participate in 
the program pursuant to this part; and
    (ii) Determine whether particular schools not meeting the 
requirements of paragraph (b)(1)(v) of this definition meet those 
standards.


(Authority: 20 U.S.C. 1085)

    (c) Pell Grant recipient means a recipient of financial aid under 
subpart 1 of part A of title IV of the Higher Education Act of 1965 (20 
U.S.C. 1070a-l et seq.).

(Authority: 20 U.S.C. 2341a(d))



Sec. 403.118  Under what circumstances may the Secretary waive the
distribution requirements for the Postsecondary and Adult Vocational
Education Programs?

    The Secretary may waive Sec. 403.116(b)(2) for any fiscal or program 
year for which a State submits to the Secretary an application for such 
a waiver that--
    (a) Demonstrates that the formula in Sec. 403.116(b)(2) does not 
result in a distribution of funds to the institutions or consortia of 
eligible institutions within the State that have the highest numbers of 
economically disadvantaged individuals and that an alternative formula 
would result in such a distribution.
    (b) Includes a proposal for an alternative formula that may include 
criteria relating to the number of individuals attending institutions or 
consortia of eligible institutions within the State who--
    (1) Receive need-based postsecondary financial aid provided from 
public funds;
    (2) Are members of families participating in the program for aid to 
families with dependent children under part A of title IV of the Social 
Security Act (42 U.S.C. 601);

[[Page 50]]

    (3) Are enrolled in postsecondary educational institutions that--
    (i) Are funded by the State;
    (ii) Do not charge tuition; and
    (iii) Serve only economically disadvantaged students;
    (4) Are enrolled in programs serving economically disadvantaged 
adults;
    (5) Are participants in programs assisted under the JTPA;
    (6) Are Pell Grant recipients; and
    (c) Proposes an alternative formula that--
    (1) Includes direct counts of students enrolled in the institutions 
or consortia of eligible institutions;
    (2) Directly relates to the status of students as economically 
disadvantaged individuals;
    (3) Is to be uniformly applied to all eligible institutions;
    (4) Does not include fund pools for specific types of institutions 
or consortia of eligible institutions;
    (5) Does not include the direct assignment of funds to a particular 
institution or consortium of eligible institutions on a non-formula 
basis; and
    (6) Identifies a more accurate count of economically disadvantaged 
individuals in the aggregate than does the formula in 
Sec. 403.116(b)(2).

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

(Authority: 20 U.S.C. 2341a(b))

[57 FR 36735, Aug. 14, 1992, as amended at 59 FR 38513, July 28, 1994]



Sec. 403.119  Under what circumstances may the State waive the 
distribution requirements for Secondary School Vocational Education
Program or the Postsecondary and Adult Vocational Education Programs?

    (a) This section applies in any fiscal or program year in which a 
State reserves 15 percent or less under Sec. 403.180(b)(1) for 
distribution under--
    (1) The Secondary School Vocational Education Program; or
    (2) The Postsecondary and Adult Vocational Education Programs.
    (b) Notwithstanding the provisions and Sec. 403.112, Sec. 403.113, 
or Sec. 403.116, as applicable, in order to result in a more equitable 
distribution of funds for programs serving the highest numbers of 
economically disadvantaged individuals, the State may distribute the 
funds described in paragraph (a) of this section--
    (1) On a competitive basis; or
    (2) Through any alternative method determined by the State.

(Authority: 20 U.S.C. 2341b)



Sec. 403.120  How does a State reallocate funds under the Secondary
School Vocational Education Program and the Postsecondary and Adult
Vocational Education Programs?

    (a) In any fiscal or program year that an LEA, area vocational 
school, intermediate school district, or consortium of those entities, 
or an eligible institution, or consortium of eligible institutions, does 
not obligate all of the amounts it is allocated for that year under the 
Secondary School Vocational Education Program or the Postsecondary and 
Adult Vocational Education Programs, the LEA, area vocational education 
school, intermediate school district, or consortium of those entities, 
or the eligible institution, or consortium of eligible institutions, 
shall return any unobligated amounts to the State to be reallocated 
under Sec. 403.112(b), Sec. 403.113, or Sec. 403.116(b), as applicable.
    (b) In any fiscal or program year in which amounts allocated under 
Sec. 403.112(b), Sec. 403.113, Sec. 403.116(b), or Sec. 403.118 are 
returned to the State and the State is unable to reallocate those 
amounts according to those sections in time for the amounts to be 
obligated in the fiscal or program year, the State shall retain the 
amounts to be distributed in combination with amounts reserved under 
Sec. 403.112(b), Sec. 403.113, Sec. 403.116(b), or Sec. 403.118 for the 
following fiscal or program year.

(Authority: 20 U.S.C. 2341c)

[57 FR 36735, Aug. 14, 1992, as amended at 59 FR 38513, July 28, 1994]

[[Page 51]]



 Subpart F_What Kinds of Activities Does the Secretary Assist Under the 
                            Special Programs?

                                 General



Sec. 403.130  What are the Special Programs?

    The following special programs are authorized by title III of the 
Act and are subject to the requirements of the State plan:
    (a) State Assistance for Vocational Education Support Programs by 
Community-Based Organizations.
    (b) Consumer and Homemaking Education Program.
    (c) Comprehensive Career Guidance and Counseling Programs.
    (d) Business-Labor-Education Partnerships for Training Program.

(Authority: 20 U.S.C. 2302(d)(A)-(D))



Sec. 403.131  Who is eligible for an award under the Special Programs?

    (a) The fifty States, the District of Columbia, Puerto Rico, and the 
Virgin Islands are eligible for an award under the--
    (1) State Assistance for Vocational Education Support and Programs 
by Community-Based Organizations;
    (2) Consumer and Homemaking Education Programs; and
    (3) Comprehensive Career Guidance and Counseling Programs.
    (b) States, as defined in 34 CFR 400.4(b), are eligible for the 
Business-Labor-Education Partnerships for Training Program.

(Authority: 20 U.S.C. 2302(d)(A)-(D))

 Vocational Education Support Programs by Community-Based Organizations



Sec. 403.140  What activities does the Secretary support under the State
Assistance for Vocational Education Support Programs by Community-Based
Organizations?

    (a) The State shall provide, in accordance with its State plan, and 
from its allotment for this program, financial assistance to joint 
projects of eligible recipients and community-based organizations within 
the State that provide the following special vocational education 
services and activities:
    (1) Outreach programs that facilitate the entrance of youth into a 
program of transitional services and subsequent entrance into vocational 
education, employment, or other education and training.
    (2) Transitional services such as attitudinal and motivational 
prevocational training programs.
    (3) Prevocational educational preparation and basic skills 
development conducted in cooperation with business concerns.
    (4) Special prevocational preparations programs targeted to inner-
city youth, non-English speaking youth, Appalachian youth, and the youth 
of other urban and rural areas having a high density of poverty who need 
special prevocational education programs.
    (5) Career intern programs.
    (6) Model programs for school dropouts.
    (7) The assessment of students' needs in relation to vocational 
education and jobs.
    (8) Guidance and counseling to assist students with occupational 
choices and with the selection of a vocational education program.
    (b) Individuals with disabilities who are educationally or 
economically disadvantaged may participate in projects under this 
program.

(Authority: 20 U.S.C. 2352, 2471(6))



Sec. 403.141  What are the application requirements for the State
Assistance for Vocational Education Support Programs by Community-Based
Organizations?

    (a) Each community-based organization and eligible recipient that 
desire to participate in this program shall jointly prepare and submit 
an application to the State board at the time and in the manner 
established by the State board.
    (b) The State board also may establish requirements relating to the 
contents of the applications, except that each application must 
contain--
    (1) An agreement among the community-based organization and the 
eligible recipients in the area to be served that includes the 
designation of one or more fiscal agents for the project;

[[Page 52]]

    (2) A description of how the funds will be used, together with 
evaluation criteria to be applied to the project;
    (3) Assurances that the community-based organization will give 
special consideration to the needs of severely economically and 
educationally disadvantaged youth, ages sixteen through twenty-one, 
inclusive;
    (4) Assurances that business concerns will be involved, as 
appropriate, in services and activities for which assistance is sought;
    (5) A description of the efforts the community-based organization 
will make to collaborate with the eligible recipients participating in 
the joint project;
    (6) A description of the manner in which the services and activities 
for which assistance is sought will serve to enhance the enrollment of 
severely economically and educationally disadvantaged youth into the 
vocational education programs; and
    (7) Assurances that the projects conducted by the community-based 
organization will conform to the applicable standards of performance and 
measures of effectiveness required of vocational education programs in 
the State.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2351)

               Consumer and Homemaking Education Programs



Sec. 403.150  What activities does the Secretary support under the
Consumer and Homemaking Education Programs?

    (a) The State shall conduct, in accordance with its State plan, and 
from its allotment for this program, consumer and homemaking education 
projects that may include--
    (1) Instructional projects, services, and activities that prepare 
youth and adults for the occupation of homemaking;
    (2) Instruction in the areas of--
    (i) Food and nutrition;
    (ii) Individual and family health;
    (iii) Consumer education;
    (iv) Family living and parenthood education;
    (v) Child development and guidance;
    (vi) Housing and home management, including resource management; and
    (vii) Clothing and textiles.
    (b) The State shall use the funds for this program for projects, 
services, and activities--
    (1) For residents of economically depressed areas;
    (2) That encourage the participation of traditionally underserved 
populations;
    (3) That encourage, in cooperation with the individual appointed 
under Sec. 403.13(a), the elimination of sex bias and sex stereotyping;
    (4) That improve, expand, and update Consumer and Homemaking 
Education Programs, especially those that specifically address needs 
described in paragraphs (b) (1), (2), and (3) of this section; and
    (5) That address priorities and emerging concerns at the local, 
State, and national levels.
    (c) The State may use the funds described in paragraph (a) of this 
section for--
    (1) Program development and the improvement of instruction and 
curricula relating to--
    (i) Managing individual and family resources;
    (ii) Making consumer choices;
    (iii) Balancing work and family;
    (iv) Improving responses to individual and family crises (including 
family violence and child abuse);
    (v) Strengthening parenting skills (especially among teenage 
parents);
    (vi) Preventing teenage pregnancy;
    (vii) Assisting the aged, individuals with disabilities, and members 
of at risk populations (including the homeless);
    (viii) Improving individual, child, and family nutrition and 
wellness;
    (ix) Conserving limited resources;
    (x) Understanding the impact of new technology on life and work;
    (xi) Applying consumer and homemaking education skills to jobs and 
careers; and
    (xii) Other needs as determined by the State; and
    (2) Support services and activities designed to ensure the quality 
and effectiveness of programs, including--
    (i) The demonstration of innovative and exemplary projects;

[[Page 53]]

    (ii) Community outreach to underserved populations;
    (iii) The application of academic skills (such as reading, writing, 
mathematics, and science) through consumer and homemaking education 
programs;
    (iv) Curriculum development;
    (v) Research;
    (vi) Program evaluation;
    (vii) The development of instructional materials;
    (viii) Teacher education;
    (ix) The upgrading of equipment;
    (x) Teacher supervision;
    (xi) State leadership, including the activities of student 
organizations; and
    (xii) State administration, subject to Sec. 403.151(c).

(Authority: 20 U.S.C. 2361, 2362(a), (b))



Sec. 403.151  How must funds be used under the Consumer and Homemaking
Education Programs?

    (a) A State shall use not less than one-third of its allotment under 
the Consumer and Homemaking Education Program in economically depressed 
areas or areas with high rates of unemployment for projects, services, 
and activities designed to assist consumers, and to help improve the 
home environment and the quality of family life.
    (b)(1) The State board shall ensure that the experience and 
information gained through carrying out projects, services, and 
activities under this program are shared with program administrators for 
the purpose of program planning.
    (2) The State board shall use funds from its allotment under this 
program to provide State leadership and one or more full-time State 
administrators qualified by experience and educational preparation in 
home economics education.
    (3) For purposes of the Consumer and Homemaking Education Program, 
State leadership includes, but is not limited to, curriculum 
development, personnel development, research, dissemination activities, 
and technical assistance.
    (c) A State may use, in addition to funds reserved under 
Sec. 403.180(b)(4), not more than six percent of its allotment under 
this program for State administration of projects, services, and 
activities under this program.

(Authority: 20 U.S.C. 2362(c), 2363)

          Comprehensive Career Guidance and Counseling Programs



Sec. 403.160  What activities does the Secretary support under the
Comprehensive Career Guidance and Counseling Programs?

    (a) The State shall conduct, in accordance with its State plan, from 
its allotment for this program, career guidance and counseling projects, 
services, and activities that are--
    (1) Organized and administered by certified counselors; and
    (2) Designed to improve, expand, and extend career guidance and 
counseling programs to meet the career development, vocational 
education, and employment needs of vocational education students and 
potential students.
    (b) The purposes of the projects, services, and activities described 
in paragraph (a) of this section must be to--
    (1) Assist individuals to--
    (i) Acquire self-assessment, career planning, career decision-
making, and employability skills;
    (ii) Make the transition from education and training to work;
    (iii) Maintain the marketability of their current job skills in 
established occupations;
    (iv) Develop new skills to move away from declining occupational 
fields and enter new and emerging fields in high-technology areas and 
fields experiencing skill shortages;
    (v) Develop mid-career job search skills and to clarify career 
goals; and
    (vi) Obtain and use information on financial assistance for 
postsecondary and vocational education, and job training; and
    (2)(i) Encourage the elimination of sex, age, disabling conditions, 
and race bias and stereotyping;
    (ii) Provide for community outreach;
    (iii) Enlist the collaboration of the family, the community, 
business, industry, and labor; and
    (iv) Be accessible to all segments of the population, including 
women, minorities, individuals with disabilities, and economically 
disadvantaged individuals.

[[Page 54]]

    (c) The projects, services, and activities described in paragraph 
(a) of this section must consist of--
    (1) Instructional activities and other services at all educational 
levels to help students develop the skills described in paragraph (b)(1) 
of this section;
    (2) Services and activities designed to ensure the quality and 
effectiveness of career guidance and counseling projects such as--
    (i) Counselor education, including the education of counselors 
working with individuals with limited English proficiency;
    (ii) Training support personnel;
    (iii) Curriculum development;
    (iv) Research and demonstration projects;
    (v) Experimental projects;
    (vi) The development of instructional materials;
    (vii) The acquisition of equipment;
    (viii) State and local leadership;
    (ix) The development of career information delivery systems; and
    (x) Local administration, including supervision;
    (xi) State administration, including supervision, subject to 
Sec. 403.161(c);
    (3) Projects that provide opportunities for counselors to obtain 
firsthand experience in business and industry; and
    (4) Projects that provide students with an opportunity to become 
acquainted with business, industry, the labor market, and training 
opportunities, including secondary educational programs that--
    (i) Have at least one characteristic of an apprenticeable occupation 
as recognized by the Department of Labor or the State Apprenticeship 
Agency, in accordance with the National Apprenticeship Act (29 U.S.C. 
50);
    (ii) Are conducted in concert with local business, industry, labor, 
and other appropriate apprenticeship training entities; and
    (iii) Are designed to prepare participants for an apprenticeable 
occupation or provide information concerning apprenticeable occupations 
and their prerequisites.

(Authority: 20 U.S.C. 2382(a), (b))



Sec. 403.161  How must funds be used under the Comprehensive Career
Guidance and Counseling Programs?

    (a) A State shall use not less than twenty percent of its allotment 
under the Career Guidance and Counseling Program for projects, services, 
and activities designed to eliminate sex, age, and race bias and 
stereotyping under Sec. 403.160(b)(2) to ensure that projects, services, 
and activities under this program are accessible to all segments of the 
population, including women, disadvantaged individuals, individuals with 
disabilities, individuals with limited English proficiency, and 
minorities.
    (b)(1) The State board shall ensure that the experience and 
information gained through carrying out projects, services, and 
activities under this program are shared with program administrators for 
the purpose of program planning.
    (2) The State board shall use funds from its allotment under this 
program to provide State leadership that is qualified by experience and 
knowledge in guidance and counseling.
    (3) For purposes of Comprehensive Career Guidance and Counseling 
Programs, State leadership includes, but is not limited to curriculum 
development, personnel development, research, dissemination activities, 
and technical assistance; and
    (c) A State may use, in addition to funds reserved under 
Sec. 403.180(b)(4), not more than six percent of its allotment under 
this program for State administration of projects, services, and 
activities under this program.

(Authority: 20 U.S.C. 2382(c), 2383)

        Business-Labor-Education Partnership for Training Program



Sec. 403.170  What activities does the Secretary support under the
Business-Labor-Education Partnership for Training Program?

    The State board shall, in accordance with the State plan, from its 
allotment for this program, support the establishment and operation of 
projects, services, and activities, that--

[[Page 55]]

    (a) Provide incentives for the coordination of the Business-Labor-
Education Partnership for Training Program with related efforts under 
the--
    (1) National Tech-Prep Education Program in 34 CFR part 405;
    (2) State-Administered Tech-Prep Education Program in 34 CFR part 
406; and
    (3) JTPA; and
    (b) May only include, in addition to the activities described in 
Sec. 403.32(a)(27) through (30),--
    (1) Training and retraining of instructional and guidance personnel;
    (2) Curriculum development and the development or acquisition of 
instructional and guidance equipment and materials;
    (3) Acquisition and operation of communications and 
telecommunications equipment and other high technology equipment for 
programs authorized by this part;
    (4) Other activities authorized by title III of the Act as may be 
essential to the successful establishment and operation of projects, 
services, and activities under the Business-Labor-Education Partnership 
for Training Program, including activities and related services to 
ensure access of women, minorities, individuals with disabilities, and 
economically disadvantaged individuals; and
    (5) Providing vocational education to individuals in order to assist 
their entry into, or advancement in, high-technology occupations or to 
meet the technological need of other industries or businesses.

(Authority: 20 U.S.C. 2392(b) and 2393 (a), (d)(1))



Sec. 403.171  Who is eligible to apply to a State board for an award?

    (a) The State board awards subgrants or contracts to partnerships 
between--
    (1) An area vocational education school, a State agency, a local 
educational agency, a secondary school funded by the Bureau of Indian 
Affairs, an institution of higher education, a State corrections 
educational agency, or an adult learning center; and
    (2) Business, industry, labor organizations, or apprenticeship 
programs.
    (b) A partnership receiving an award from a State board must include 
as partners at least one entity from paragraph (a)(1) of this section 
and at least one entity from paragraph (a)(2) of this section, and may 
include more than one entity from each group.

(Authority: 20 U.S.C. 2392(a)(1))



Sec. 403.172  What special considerations must the State board give in
approving projects, services, and activities?

    The State board, in approving projects, services, and activities 
assisted under the Business-Labor-Education Partnership Training 
Program, shall give special consideration to the following:
    (a) The level and degree of business and industry participation in 
the development and operation of the program.
    (b) The current and projected demand within the State or relevant 
labor market area for workers with the level and type of skills the 
program is designed to produce.
    (c) The overall quality of the proposal, with particular emphasis on 
the probability of successful completion of the program by prospective 
trainees and the capability of the eligible recipient, with assistance 
from participating business or industry, to provide high quality 
training for skilled workers and technicians in high technology.
    (d) The commitment to serve, as demonstrated by special efforts to 
provide outreach, information, and counseling, and by the provision of 
remedial instruction and other assistance, all segments of the 
population, including women, minorities, individuals with disabilities, 
and economically disadvantaged individuals.
    (e) Projects, services, and activities to provide vocational 
education for individuals who have attained 55 years of age in order to 
assist their entry into, or advancement in, high-technology occupations 
or to meet the technological needs of other industries or businesses.

(Authority: 20 U.S.C. 2393-(b) and (d)(2))



Sec. 403.173  What expenses are allowable?

    The State board shall use funds awarded under the Business-Labor-
Education Partnership for Training Program only for--

[[Page 56]]

    (a) Expenses incurred in carrying out the programs, services, and 
activities described in Sec. 403.170, including, for example, expenses 
for--
    (1) The introduction of new vocational education programs, 
particularly in economically depressed urban and rural areas;
    (2) The introduction or improvement of basic skills instruction, 
including English-as-a-second-language instruction, in order for an 
individual to be eligible for employment, to continue employment, or to 
be eligible for career advancement;
    (3) Costs associated with coordination between vocational education 
programs, business, and industry, including advisory council meetings 
and newsletters; and
    (4) Transportation and child-care services for students necessary to 
ensure access of women, minorities, individuals with disabilities, and 
economically disadvantaged individuals to projects, services, and 
activities authorized by the Business-Labor-Education Partnership for 
Training Program; and
    (b)(1) Subject to paragraph (b)(2) of this section, expenditures for 
necessary and reasonable administrative costs of the State board and of 
eligible partners.
    (2) Total expenditures for administrative costs of the State board 
and of eligible partners may not exceed 10 percent of the State's 
allotment for this program in the first year and five percent of that 
allotment in each subsequent year.

(Authority: 20 U.S.C. 2392(d) and 2393(a)(1))



Sec. 403.174  What additional fiscal requirements apply to the
Business-Labor-Education Partnership for Training Program?

    (a) The business and industrial share of the costs required in 
Sec. 403.32(a)(29) may be in the form of either allowable costs or the 
fair market value of in-kind contributions such as facilities, overhead, 
personnel, and equipment.
    (b) The State board shall use equal amounts from its allotment under 
this program and from its allotment for basic programs to provide the 
Federal share of cost of projects, services, and activities under this 
program.
    (c) If an eligible partner demonstrates to the satisfaction of the 
State that it is incapable of providing all or part of the non-Federal 
portion of the costs of projects, services, and activities, as required 
by Sec. 403.32(a)(29), the State board may designate funds available 
under parts A and C of title II of the Act or funds available from State 
sources in place of the non-Federal portion.

(Authority: 20 U.S.C. 2392(c))



       Subpart G_What Financial Conditions Must Be Met by a State?



Sec. 403.180  How must a State reserve funds for the basic programs?

    (a)(1) Except as provided in paragraph (a)(2) of this section, each 
State shall reserve from its allotment under the basic programs 
authorized by title II of the Act, for--
    (i) The Program for Single Parents, Displaced Homemakers, and Single 
Pregnant Women under Sec. 403.81, and the Sex Equity Program under 
Sec. 403.91, respectively, an amount that is not less than the amount 
the State reserved for each of those programs under section 202 of the 
Carl D. Perkins Vocational Education Act (CDPVEA) from its Fiscal Year 
(FY) 1991 grant from the FY 1990 appropriation; and
    (ii) The Program for Criminal Offenders under Sec. 403.101 an amount 
that is not less than--
    (A) The amount the State reserved for projects, services, or 
activities under section 202(6) of the CDPVEA from its FY 1991 grant 
from the FY 1990 appropriation; and
    (B) The amount of Federal funds under the CDPVEA, other than the one 
percent reserved under section 202(6) of the Act, that the State and its 
eligible recipients obligated for projects, services, and activities for 
criminal offenders in correctional institutions from its FY 1991 grant 
from the FY 1990 appropriation.
    (2) In any year in which a State receives an amount for purposes of 
carrying out programs under title II of the Act that is less than the 
amount the State received for those purposes in its FY 1991 grant award 
from the FY 1990

[[Page 57]]

appropriation under the CDPVEA, the State shall ratably reduce the 
amounts reserved under paragraph (a)(1) of this section in the same 
proportion that the amount for carrying out programs under title II of 
the Act is less than the amount the State received for those purposes 
from the FY 1990 appropriation.
    (b) Except as provided in paragraph (a) of this section, from its 
allotment for the basic programs authorized by title II of the Act, a 
State shall reserve--
    (1) At least 75 percent for the Secondary School Vocational 
Education Program and the Postsecondary and Adult Vocational Education 
Programs described in Sec. 403.111;
    (2) Ten and one-half percent for the Program for Single Parents, 
Displaced Homemakers, and Single Pregnant Women described in Sec. 403.81 
and the Sex Equity Program described in Sec. 403.91, as follows:
    (i) Not less than seven percent for the Program for Single Parents, 
Displaced Homemakers, and Single Pregnant Women.
    (ii) Not less than three percent for the Sex Equity Program;
    (3) Not more than eight and one-half percent for State Programs and 
State Leadership Activities described in Secs. 403.70 and 403.71;
    (4) Not more than five percent or $250,000, whichever is greater, 
for administration of the State plan, of which--
    (i) Not less than $60,000 must be available for carrying out the 
provisions in Sec. 403.13, regarding the personnel requirements for 
eliminating sex discrimination and sex stereotyping; and
    (ii) The remaining amounts may be used for the costs of--
    (A) Developing the State plan;
    (B) Reviewing local applications;
    (C) Monitoring and evaluating program effectiveness;
    (D) Providing technical assistance;
    (E) Ensuring compliance with all applicable Federal laws, including 
required services and activities for individuals who are members of 
special populations; and
    (F) Supporting the activities of the technical committees it 
establishes under Sec. 403.12(b)(1); and
    (5) One percent for Programs for Criminal Offenders described in 
Sec. 403.101.
    (c) The procedure for meeting the ``hold-harmless'' requirements in 
Sec. 403.180(a) and the $250,000 minimum for State administration 
provision in Sec. 403.180(b)(4) is as follows:
    (1) If the five percent reserved for administration is less than the 
$250,000 minimum allowed by paragraph (b)(4) of this section, or if any 
of the amounts reserved for the Program for Single Parents, Displaced 
Homemakers, and Single Pregnant Women in Sec. 403.81, the Sex Equity 
Program in Sec. 403.91, or the Program for Criminal Offenders in 
Sec. 403.101, respectively, is less than the amount reserved for that 
program in FY 1990 (funds from the FY 1990 appropriation awarded in the 
States FY 1991 grant), a State shall subtract any amount necessary to 
satisfy the $250,000 minimum for State administration or any of the 
``hold-harmless'' amounts from the total basic programs award received 
by the State.
    (2) The State shall reserve $250,000 for administration and shall 
reserve for any program not meeting the ``hold-harmless'' requirement an 
amount necessary to meet that requirement.
    (3) The State shall reserve from the remainder of the basic program 
award an amount for each of the remaining programs that is proportionate 
to the amount that program would have received in the absence of a 
shortfall in the amounts reserved for administration or to meet the 
``hold-harmless'' requirements in paragraph (a)(1) of this section.

    Example 1: (a) A State receives a basic programs award of 
$4,000,000. Five percent of the basic programs award equals $200,000, 
which is $50,000 less than the $250,000 minimum that may be reserved for 
State administration. To determine the amount of funds that will be 
reserved for each program under title II, parts A, B, and C of the Act, 
the State first subtracts $250,000 for State administration from the 
$4,000,000 basic programs award ($4,000,000 ^$250,000 = $3,750,000).
    (b) Second, the State determines the amount that would have been 
reserved for each of the programs under title II, parts A,

[[Page 58]]

B, and C of the Act in the absence of a shortfall in the set-aside 
amount for administration, as follows:

3.0%  $4,000,000 =               $120,000  for Sex Equity Programs.
7.5%  $4,000,000 =                300,000  for Programs for Single
                                             Parents, Displaced
                                             Homemakers, and Single
                                             Pregnant Women.
8.5%  $4,000,000 =                340,000  for State Programs and State
                                             Leadership Activities.
1.0%  $4,000,000 =                 40,000  for Programs for Criminal
                                             Offenders.
75%  $4,000,000 =               3,000,000  for part C of title II.
                              -------------
                                 3,800,000
 

    (c) Third, the State converts each of these amounts into a 
percentage by dividing each amount by the sum of the amounts the 
programs would have received in the absence of a shortfall ($3,800,000) 
and multiplies the remaining basic programs award ($3,750,000) by these 
percentages to determine the amount to reserve for each program under 
parts A, B, and C of title II of the Act, as follows:

($120,000/$3,800,000)            $118,421  for Sex Equity Programs.
 $3,750,000 =
($300,000/$3,800,000)             296,053  for Programs for Single
 $3,750,000 =                                Parents, Displaced
                                             Homemakers, and Single
                                             Pregnant Women.
($340,000/$3,800,000)             335,526  for State Programs and State
 $3,750,000 =                                Leadership Activities.
($40,000/$3,800,000)               39,474  for Programs for Criminal
 $3,750,000 =                                Offenders.
($3,000,000/$3,800,000)         2,960,526  for part C of title II.
 $3,750,000 =
                              -------------
                                 3,750,000
 

    This example assumes that amounts reserved meet the ``hold-
harmless'' requirement of section 102(c)(1) of the Act.
    Example 2: A State's seven percent reserve from its FY 1992 grant 
for the Program for Single Parents, Displaced Homemakers, and Single 
Pregnant Women is $1,400,000 and the amount reserved for that program 
from its FY 1991 grant was $1,581,000. Therefore, the amount of FY 1992 
funds reserved for that program is $181,000 less than the amount 
reserved in FY 1991. The State received a basic programs award of 
$20,000,000 in FY 1992. The other programs under title II, part B meet 
the ``hold-harmless'' requirement in Sec. 403.180(a)(1), and the amount 
reserved for State administration exceeds $250,000. The State determines 
the amount of funds to be reserved for each program under title II, 
parts A, B, and C of the Act as follows:
    (a) First, the State subtracts $1,581,000 from the $20,000,000 total 
basic programs award ($20,000,000 ^$1,581,000 = $18,419,000).
    (b) Second, the State determines the amount that would have been 
reserved for each of the programs under parts A, B, and C of title II of 
the Act in the absence of a shortfall in the set-aside amount for the 
Program for Single Parents, Displaced Homemakers, and Single Pregnant 
Women, as follows:

5.0%  $20,000,000 =            $1,000,000  for administration.
3.5%  $20,000,000 =               700,000  for Sex Equity Programs.
8.5%  $20,000,000 =             1,700,000  for State Programs and State
                                             Leadership Activities.
1.0%  $20,000,000 =               200,000  for Programs for Criminal
                                             Offenders.
75.0%  $20,000,000 =           15,000,000  for part C of title II.
                              -------------
                                18,600,000
 

    (c) Third, the State converts each of these amounts into a 
percentage by dividing each amount by the sum of the amounts the 
programs would have earned in the absence of a shortfall ($18,600,000) 
and multiplies the remaining basic programs award ($18,419,000) by these 
percentages to determine the amount to reserve for each program under 
parts A, B, and C of title II of the Act, as follows:

($1,000,000/$18,600,000)         $990,269  for administration.
 $18,419,000 =
($700,000/$18,600,000)            693,188  for Sex Equity Programs.
 $18,419,000 =
($1,700,000/$18,600,000)        1,683,457  for State Programs and State
 $18,419,000 =                               Leadership Activities.
($200,000/$18,600,000)            198,054  for Programs for Criminal
 $18,419,000 =                               Offenders.
($15,000,000/$18,600,000)      14,854,032  for part C of title II.
 $18,419,000 =
                              -------------
                                18,419,000
 

    This example assumes that amounts reserved for the Sex Equity 
Program and Programs for Criminal Offenders meet the ``hold-harmless'' 
requirement of section 102(c) (1) and (2) of the Act.
    Example 3: A State's one percent reserved from its FY 1992 grant for 
Programs for Criminal Offenders is $200,000 and the amount reserved for 
that program under section 202(6) of the CDPVEA plus other amounts 
obligated for projects, services, and activities for criminal offenders 
in correctional institutions from its FY 1991 grant from the FY 1990 
appropriations totals $250,000. Therefore, the amount of FY 1992 funds 
reserved for that program is $50,000 less than the amount reserved and 
obligated for that program in FY 1991. The State received a basic 
programs award of $20,000,000 in FY

[[Page 59]]

1992. The other programs under title II, part B meet the ``hold-
harmless'' requirement of Sec. 403.180(a)(1) and the amount reserved for 
State administration exceeds $250,000. The State determines the amount 
of funds to be reserved for each program under title II, parts A, B, and 
C of the Act as follows:
    (a) First, the State subtracts $250,000 from the $20,000,000 total 
basic programs award ($20,000,000 ^$250,000 = $19,750,000).
    (b) Second, the State determines the amount that would have been 
reserved for each of the programs under parts A, B, and C of title II of 
the Act in the absence of a shortfall in the set-aside amount for the 
Programs for Criminal Offenders, as follows:

5.0%  20,000,000 =             $1,000,000  for administration.
3.5%  20,000,000 =                700,000  for Sex Equity Programs.
7.0%  20,000,000 =              1,400,000  for Programs for Single
                                             Parents, Displaced
                                             Homemakers, and Single
                                             Pregnant Women.
8.5%  20,000,000 =              1,700,000  for State Programs and State
                                             Leadership Activities.
75.0%  20,000,000 =            15,000,000  for part C of title II.
                              -------------
                                19,800,000
 

    (c) Third, the State converts each of these amounts into a 
percentage by dividing each amount by the sum of the amounts the 
programs would have earned in the absence of a shortfall ($19,800,000) 
and multiplies the remaining basic programs award ($19,750,000) by these 
percentages to determine the amount to reserve for each program under 
parts A, B, and C of title II of the Act, as follows:

($1,000,000/$19,800,000)         $997,475  for administration.
 $19,750,000 =
($700,000/$19,800,000)           $698,232  for Sex Equity Programs.
 $19,750,000 =
($1,400,000/$19,800,000)       $1,396,465  for Programs for Single
 $19,750,000 =                               Parents, Displaced
                                             Homemakers, and Single
                                             Pregnant Women.
($1,700,000/$19,800,000)       $1,695,707  for State Programs and State
 $19,750,000 =                               Leadership Activities.
($15,000,000/$19,800,000)     $14,962,121  for part C of title II.
 $19,750,000 =
                             --------------
                               $19,750,000
 

    This example assumes that amounts reserved for the Sex Equity 
Program and for the Program for Single Parents, Displaced Homemakers, 
and Single Pregnant Women meet the ``hold-harmless'' requirement of 
sections 102(c) (1) and (2) of the Act.

    (d) The procedure for meeting the ratable reduction provision in 
paragraph (a)(2) of this section is as follows:
    (1) If a State's basic programs award under title II of the Act for 
FY 1992 or in future years is less than that State's basic grant amount 
in FY 1991, a State shall determine the percentage that the basic 
programs award is of the FY 1991 basic programs award.
    (2) The State shall multiply the amounts reserved in FY 1991 for 
each of the three programs covered by the ``hold-harmless'' provisions 
in paragraph (a)(1) of this section by this percentage.
    (3) The State shall compare the amounts that would be reserved for 
these programs in FY 1992 to determine if these amounts are less than 
the ratably reduced hold-harmless amounts, and if so, shall proceed with 
the calculation required by paragraph (c) of this section except using 
the ratably reduced ``hold-harmless'' amounts.

(Authority: 20 U.S.C. 2312)



Sec. 403.181  What are the cost-sharing requirements applicable to the
basic programs?

    (a) A State shall match, from non-Federal sources and on a dollar-
for-dollar basis, the funds reserved for administration of the State 
plan under Sec. 403.180(b)(4).
    (b) The matching requirement under paragraph (a) of this section may 
be applied overall, rather than line-by-line, to State administrative 
expenditures.
    (c) A State shall provide from non-Federal sources for State 
administration under the Act an amount that is not less than the amount 
provided by the State from non-Federal sources for State administrative 
costs for the preceding fiscal or program year.

    Example for paragraph (b): From the five percent reserved for the 
administration of the State plan, a State must reserve $60,000 to carry 
out the provisions in Sec. 403.13. The $60,000 must be matched, but the 
matching funds need not be used for the activities described in 
Sec. 403.13.

(Authority: 20 U.S.C. 2312(b) and 2468d; H.R. Rep. No. 660, 101st Cong., 
2nd Sess. 103-104 (1990))

[[Page 60]]



Sec. 403.182  What is the maintenance of fiscal effort requirement?

    The Secretary may not make a payment under the Act to a State for 
any fiscal year unless the Secretary determines that the fiscal effort 
per student, or the aggregate expenditures of that State, from State 
sources, for vocational education for the fiscal year (or program year) 
preceding the fiscal year (or program year) for which the determination 
is made, at least equaled its effort or expenditures for vocational 
education for the second preceding fiscal year (or program year).

(Authority: 20 U.S.C. 2463(a))



Sec. 403.183  Under what circumstances may the Secretary waive the
maintenance of effort requirement?

    (a) The Secretary may waive the maintenance of effort requirement in 
Sec. 403.182 for a State for one year only if--
    (1) The Secretary determines that a waiver would be equitable due to 
exceptional or uncontrollable circumstances affecting the State's 
ability to maintain fiscal effort; and
    (2) The State has decreased its expenditures for vocational 
education from non-Federal sources by no more than five percent.
    (b) For purposes of this section, ``exceptional or uncontrollable 
circumstances'' include, but are not limited to, the following:
    (1) A natural disaster.
    (2) An unforeseen and precipitous decline in financial resources.
    (c) The Secretary does not consider tax initiatives or referenda to 
be exceptional or uncontrollable circumstances.

(Authority: 20 U.S.C. 2463(b))



Sec. 403.184  How does a State request a waiver of the maintenance of
effort requirement?

    A State seeking a waiver of the maintenance of effort requirement in 
Sec. 403.182 shall--
    (a) Submit to the Secretary a request for a waiver; and
    (b) Include in the request--
    (1) The reason for the request;
    (2) Information that demonstrates that a waiver is justified; and
    (3) Any additional information the Secretary may require.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2463(b))



Sec. 403.185  How does the Secretary compute maintenance of effort in
the event of a waiver?

    If a State has been granted a waiver of the maintenance of effort 
requirement that allows it to receive a grant for a fiscal year, the 
Secretary determines whether the State has met that requirement for the 
grant to be awarded for the year after the year of the waiver by 
comparing the amount spent for vocational education from non-Federal 
sources in the first preceding fiscal year (or program year) with the 
amount spent in the third preceding fiscal year (or program year).

    Example: Because exceptional or uncontrollable circumstances 
prevented a State from maintaining its level of fiscal effort in a 
program year 1989 (July 1, 1988-June 30, 1989) at the level of its 
fiscal effort in program year 1988 (July 1, 1987-June 30, 1988), the 
Secretary granted the State a waiver of the maintenance of effort 
requirement that permits the State to receive its fiscal year 1990 grant 
(a grant that is awarded on or after July 1, 1990 from funds 
appropriated in the fiscal year 1990 appropriation). To be eligible to 
receive its fiscal year 1991 grant (the grant to be awarded for the year 
after the year of the waiver), the State's expenditures from the first 
preceding program year (July 1, 1989-June 30, 1990) must equal or exceed 
its expenditures from the third preceding program year (July 1, 1987 to 
June 30, 1988).

(Authority: 20 U.S.C. 2463(c))



Sec. 403.186  What are the administrative cost requirements applicable
to a State?

    (a) Basic Programs. A State may use only funds reserved under 
Sec. 403.180(b)(4) to administer the programs under title II of the Act, 
including Programs for Criminal Offenders.
    (b) Special Programs. (1) A State may use the funds reserved under 
Sec. 403.180(b)(4) to administer any of the special programs listed in 
Sec. 403.130.
    (2) In addition to the funds reserved under Sec. 403.180(b)(4), a 
State may use only an amount of funds from its allotment for the State 
Assistance for Vocational Education Support Programs

[[Page 61]]

by Community-Based Organizations that is necessary and reasonable for 
the proper and efficient State administration of that program.
    (3) In addition to the funds reserved under Sec. 403.180(b)(4), a 
State may use the amounts reserved for the Consumer and Homemaking 
Education Program, the Comprehensive Career Guidance and Counseling 
Program, and the Business-Labor-Education Partnership for Training 
Program under Secs. 403.151(c), 403.161(c), and 403.173(b), 
respectively, for the proper and efficient administration of each 
program.

(Authority: 20 U.S.C. 2302(d) (A)-(D) and 2312(a))



Sec. 403.187  How may a State provide technical assistance?

    (a) Except as provided in paragraph (b) of this section, a State may 
use only an amount of the funds reserved for each of the basic programs 
listed in Sec. 403.60 and the special programs listed in Sec. 403.130 to 
pay the costs of providing technical assistance that is necessary and 
reasonable to promote or enhance the quality and effectiveness of that 
program.
    (b) A State may not use funds reserved under Sec. 403.180(b)(1) for 
the Secondary School Vocational Education Program and the Postsecondary 
and Adult Vocational Education Program to pay the costs of providing 
technical assistance.
    (c) In providing technical assistance under paragraph (a) of this 
section, a State may not use amounts to an extent that would interfere 
with achieving the purposes of the program for which the funds were 
awarded.

(Authority: 20 U.S.C. 2302(d) (A)-(D), 2312(a), and 2323(b)(5))



Sec. 403.188  What is a State's responsibility for the cost of services
and activities for members of special populations?

    A State is not required to use non-Federal funds to pay the cost of 
services and activities that it provides to members of special 
populations pursuant to Sec. 403.32(a) (18)-(26) or to pay the cost of 
services and activities that eligible recipients provide to members of 
special populations pursuant to Secs. 403.111 (a)(2)(i) and (c)(3), 
403.190(b), or 403.193, unless this requirement is imposed by other 
applicable laws.

(Authority: 20 U.S.C. 2328)



       Subpart H_What Conditions Must be Met by Local Recipients?



Sec. 403.190  What are the requirements for receiving a subgrant or
contract?

    (a) Each eligible recipient desiring financial assistance under the 
Secondary School Vocational Education Program or the Postsecondary and 
Adult Vocational Education Program must submit to the State board, 
according to requirements established by the State board, an application 
covering the same period as the State plan, for the use of that 
assistance. The State board shall determine requirements for local 
applications, except that each application must--
    (1) Contain a description of--
    (i) The vocational education program to be funded, including--
    (A) The extent to which the program incorporates each of the 
requirements described in Sec. 403.111 (a), (b), and (c); and
    (B) How the eligible recipient will use the funds available under 
Sec. 403.112, Sec. 403.113, or Sec. 403.116 and from other sources to 
improve the program with regard to each requirement and activity 
described in Sec. 403.111 (c) and (d);
    (ii) How the needs of individuals who are members of special 
populations will be assessed and the planned use of funds to meet those 
needs;
    (iii) How access to programs of good quality will be provided to 
students who are economically disadvantaged (including foster children), 
students with disabilities, and students of limited English proficiency 
through affirmative outreach and recruitment efforts;
    (iv) The program evaluation standards the applicant will use to 
measure its progress;
    (v) The methods to be used to coordinate vocational education 
services with relevant programs conducted under the JTPA, including 
cooperative arrangements established with private industry councils 
established under section 102(a) of that Act, in order to avoid 
duplication and to expand the

[[Page 62]]

range of and accessibility to vocational education services;
    (vi) The methods used to develop vocational educational programs in 
consultation with parents and students of special populations;
    (vii) How the eligible recipient coordinates with community-based 
organizations;
    (viii) The manner and the extent to which the eligible recipient 
considered the demonstrated occupational needs of the area in assisting 
programs funded under the Act;
    (ix) How the eligible recipient will provide a vocational education 
program that--
    (A) Integrates academic and occupational disciplines so that 
students participating in the program are able to achieve both academic 
and occupational competence; and
    (B) Offers coherent sequences of courses leading to a job skill; and
    (x) How the eligible recipient will monitor the provision of 
vocational education to individuals who are members of special 
populations, including the provision of vocational education to students 
with individualized education programs developed under the IDEA;
    (2) Provide assurances that--
    (i) The programs funded under Sec. 403.112, Sec. 403.113, or 
Sec. 403.116 will be carried out according to the requirements regarding 
special populations;
    (ii) The eligible recipient will provide a vocational program that--
    (A) Encourages students through counseling to pursue coherent 
sequences of courses;
    (B) Assists students who are economically disadvantaged, students of 
limited English proficiency, and students with disabilities to succeed 
through supportive services such as counseling, English-language 
instruction, child care, and special aids;
    (C) Is of a size, scope, and quality as to bring about improvement 
in the quality of education offered by the school; and
    (D) Seeks to cooperate with the sex equity program carried out under 
Sec. 403.91; and
    (iii) The eligible recipient will provide sufficient information to 
the State to enable the State to comply with the requirements in 
Sec. 403.113; and
    (3) Contain a report on the number of individuals in each of the 
special populations.
    (b) Each eligible recipient desiring financial assistance under 
title II of the Act must provide assurances to the State board that, 
with respect to any project that is funded under a basic program listed 
in Sec. 403.60 or a special program listed in Sec. 403.130, it will--
    (1) Assist students who are members of special populations to enter 
vocational education programs, and, with respect to students with 
disabilities, assist in fulfilling the transitional service requirement 
of section 626 of the IDEA;
    (2) Assess the special needs of students participating in projects 
receiving assistance under a basic program listed in Sec. 403.60 or a 
special program listed in Sec. 403.130, with respect to their successful 
completion of the vocational education program in the most integrated 
setting possible;
    (3) Provide supplementary services, as defined in 34 CFR 400.4(b), 
to students who are members of special populations;
    (4) Provide guidance, counseling, and career development activities 
conducted by professionally trained counselors and teachers who are 
associated with the provision of those special services; and
    (5) Provide counseling and instructional services designed to 
facilitate the transition from school to post-school employment and 
career opportunities.
    (c) Each eligible recipient desiring financial assistance under 
Title II of the Act must provide the services and activities described 
in paragraph (b) of this section, to the extent possible with funds 
awarded under the Act, and indicate in its local application whether any 
non-Federal funds will be used for this purpose.

    Cross Reference: See Sec. 403.193(e).

    (d) Each eligible recipient desiring financial assistance under the 
Act shall provide sufficient information to the State, as the State 
board requires, to demonstrate to the State board that

[[Page 63]]

the eligible recipient's projects comply with Sec. 403.32(a)(18)-(26).
    (e) Each eligible recipient desiring financial assistance under the 
Act shall--
    (1) Provide the assurance described in Sec. 403.14(a)(2); and
    (2) Include in its application, as appropriate--
    (i) The number of disabled students, economically disadvantaged 
students, and students with limited English proficiency in its 
vocational program;
    (ii) An assessment of the vocational needs of its students with 
disabilities, economically disadvantaged students, and students with 
limited English proficiency; and
    (iii) A plan to provide supplementary services sufficient to meet 
the needs identified in the assessment described in paragraph 
(e)(2)(ii).

(Authority: 20 U.S.C. 2321(c)(1), (d), (e); 2328; and 2343)

(Approved by the Office of Management and Budget under Control No. 1830-
0030)



Sec. 403.191  What are the requirements for program evaluation?

    (a)(1) Beginning in the 1992-1993 school year, each recipient of 
financial assistance under Sec. 403.112, Sec. 403.113, or Sec. 403.116 
shall evaluate annually the effectiveness of the particular projects, 
services, and activities receiving assistance under a basic program 
listed in Sec. 403.60, or a special program listed in Sec. 403.130, 
unless the State board determines pursuant to Sec. 403.201(a)(3) that a 
broader evaluation is required. A recipient may conduct the evaluation 
required under this paragraph by evaluating either the entire population 
of participants or a representative sample of participants.
    (2) The annual evaluation must be based on the standards and 
measures developed by the State board in accordance with Secs. 403.201 
and 403.202, including any modifications made by the recipient in 
accordance with paragraph (b) of this section.
    (b)(1) Each recipient may modify the State standards and measures 
based on--
    (i) Economic, geographic, or demographic factors; or
    (ii) The characteristics of the populations to be served.
    (2) Modifications must conform to the assessment criteria contained 
in the State plan.
    (c) Each recipient, as part of the annual evaluation required in 
paragraph (a) of this section, and with the full participation of 
representatives of special populations, shall--
    (1) Identify and adopt strategies to overcome barriers that are 
resulting in lower rates of access to, or success in, vocational 
education programs for members of special populations; and
    (2) Evaluate the progress of individuals who are members of special 
populations.
    (d) Each recipient, as a part of the annual evaluation required in 
paragraph (a) of this section, shall evaluate its progress in providing 
vocational education students with strong experience in and 
understanding of all aspects of the industries the students are 
preparing to enter.
    (e) Each recipient may use funds awarded under a basic program 
listed in Sec. 403.60 or a special program listed in Sec. 403.130 to 
support the cost of conducting the evaluation required under paragraphs 
(a) through (d) of this section to the extent that the costs are--
    (1) Reasonable and necessary;
    (2) Related to the purposes for which the funds were awarded; and
    (3) Consistent with applicable requirements, such as the requirement 
in Sec. 403.196 to use funds awarded under title II of the Act to 
supplement, and not to supplant, State and local funds.

(Authority: 20 U.S.C. 2325(a) and 2327(a))



Sec. 403.192  What are the requirements for program improvement?

    (a) If, beginning not less than one year after implementing the 
program evaluation required in Sec. 403.191, a recipient determines, 
through its annual evaluation, that it is not making substantial 
progress in meeting the standards and measures developed by the State 
under Secs. 403.201 and 403.202, the recipient shall develop a plan for 
program improvement for the succeeding school year.
    (b) The plan must be developed in consultation with teachers, 
parents, and students concerned with or affected by the program, and 
must describe how the recipient will identify

[[Page 64]]

and modify projects, services, and activities receiving assistance under 
the programs listed in Secs. 403.60 and 403.130 that are in need of 
improvement, including a description of--
    (1) Vocational education and career development strategies designed 
to achieve progress in improving the effectiveness of the recipient's 
projects, services, and activities receiving assistance under the 
programs listed in Secs. 403.60 and 403.130 evaluated under 
Sec. 403.191(a)(1); and
    (2) If necessary, the strategies designed to improve supplementary 
services provided to individuals who are members of special populations.

(Authority: 20 U.S.C. 2327(b))

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

    Cross Reference: See 34 CFR 403.204.



Sec. 403.193  What are the information requirements regarding special
populations?

    (a)(1) Each local educational agency that receives funds under Title 
II of the Act shall provide to students who are members of special 
populations and their parents information concerning--
    (i) The opportunities available in vocational education;
    (ii) The requirements for eligibility for enrollment in those 
vocational education programs;
    (iii) Special courses that are available;
    (iv) Special services that are available;
    (v) Employment opportunities; and
    (vi) Placement.
    (2) Each area vocational education school or intermediate 
educational agency that receives funds under title II of the Act shall 
provide the information described in paragraph (a)(1) of this section to 
the students who are members of special populations and their parents in 
any local educational agency whose allocation was distributed in its 
entirety under Sec. 403.113 to the area vocational education school or 
intermediate educational agency.
    (b) The information described in paragraph (a)(1) of this section 
must be provided at least one year before the students enter, or are of 
an appropriate age for, the grade level in which vocational education 
programs are first generally available in the State, but in no case 
later than the beginning of the ninth grade.
    (c) Each eligible institution or consortium of eligible institutions 
that receives funds under Title II of the Act shall--
    (1) Provide the information described in paragraph (a)(1) of this 
section to each individual who requests information concerning, or seeks 
admission to, vocational education programs offered by the institution 
or consortium of eligible institutions; and
    (2) If appropriate, assist in the preparation of applications 
relating to that admission.
    (d) Information described under paragraph (a)(1) of this section 
must, to the extent practicable, be in a language and form that parents 
and students understand.
    (e) An eligible recipient is not required by this part to use non-
Federal funds to pay the cost of services and activities required by 
this section and Secs. 403.111(a)(2)(i) and (c)(3) and 403.190(b) unless 
this requirement is imposed by other applicable laws.

(Authority: 20 U.S.C. 2328(b) and (c) and 2342(a) and (c)(1)(C))

[57 FR 36735, Aug. 14, 1992, as amended at 59 FR 38513, July 28, 1994]



Sec. 403.194  What are the comparability requirements?

    (a) A local educational agency may receive an award of Federal funds 
under the State plan only if--
    (1) The local educational agency uses State and local funds to 
provide services in secondary schools or sites served with Federal funds 
awarded under the State plan that, taken as a whole, are at least 
comparable to those services being provided in secondary schools or 
sites that are not being served with Federal funds awarded under the 
State plan; or
    (2) In the event that the local educational agency serves all its 
secondary schools or sites with Federal funds awarded under the State 
plan, the local educational agency uses State and local funds to provide 
services that, taken as a whole, are substantially comparable in each 
secondary school or site.

[[Page 65]]


    Cross Reference: See appendix B to part 403.

    (b) The comparability requirements in paragraph (a) of this section 
do not apply to--
    (1) A local educational agency with only one secondary school or 
site; or
    (2) A consortium composed of more than one local educational agency, 
except that, within a consortium, each local educational agency itself 
must meet the comparability requirements unless it is exempt under 
paragraph (b)(1) of this section.
    (c)(1) A local educational agency shall develop written procedures 
for complying with the comparability requirements in paragraph (a) of 
this section, including a process for demonstrating annually that State 
and local funds are used to provide services in served schools and sites 
that are at least comparable to the services provided with State and 
local funds in schools or sites in the local educational agency that are 
not served with funds awarded under the State plan.
    (2) In reaching the determination as to whether comparability 
requirements in paragraph (a) of this section were met, the local 
educational agency's written procedures--
    (i) Do not have to take into account unpredictable changes in 
student enrollment or personnel assignments that occur after the 
beginning of a school year; and
    (ii) May not take into account any State and local funds spent in 
carrying out the following types of programs:
    (A) Special local programs designed to meet the educational needs of 
educationally deprived children, including compensatory education for 
educationally deprived children, that were excluded in the preceding 
fiscal year from comparability determinations under section 
1018(d)(1)(B) of chapter 1 (20 U.S.C. 2728(d)(1)(B)).
    (B) Bilingual education for children of limited English proficiency.
    (C) Special education for children with disabilities.
    (D) State phase-in programs that were excluded in the preceding 
fiscal year from comparability determinations under section 
1018(d)(2)(B) of chapter 1 (20 U.S.C. 2728(d)(2)(B)).

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2323(b)(19))



Sec. 403.195  What are the administrative cost requirements applicable
to local recipients?

    (a) Except as provided in paragraphs (b) and (c) of this section, 
each eligible recipient, including a State corrections educational 
agency, that receives an award under a basic program listed in 
Sec. 403.60 or a special program listed in Sec. 403.130, may use no more 
than the amount of funds from each award that is necessary and 
reasonable for the proper and efficient administration of the projects, 
services, and activities for which the award was made.
    (b) Each eligible recipient that receives an award under 
Sec. 403.112, Sec. 403.113, or Sec. 403.116 may use no more than five 
percent of those funds for administrative costs.
    (c) Each eligible partner that receives an award under the Business-
Labor-Education Partnership for Training Program may use no more funds 
under that award for administrative costs than the amounts prescribed in 
Sec. 403.173(b).

(Authority: 20 U.S.C. 2342(c); 2393(a)(1) and (c))



Sec. 403.196  What are the requirements regarding supplanting?

    (a) Funds made available under title II of the Act must be used to 
supplement, and to the extent practicable increase the amount of State 
and local funds that would in the absence of funds under title II of the 
Act be made available for the purposes specified in the State plan and 
the local application.
    (b) Notwithstanding paragraph (a) of this section and 
Sec. 403.32(a)(17), funds made available under title II of the Act may 
be used to pay the costs of vocational education services required by an 
individualized education program developed pursuant to sections 612(4) 
and 614(a)(5) of the IDEA (20 U.S.C. 1412(4) and 1414(a)(5)), in a 
manner consistent with section 614(a)(1) of that Act, and services 
necessary to meet the

[[Page 66]]

requirements of section 504 of the Rehabilitation Act of 1973 with 
respect to ensuring equal access to vocational education.
    (c) Any expenditures pursuant to paragraph (b) of this section must 
increase the amount of funds that would otherwise be available to meet 
the costs of an individualized education program or to comply with 
section 504 of the Rehabilitation Act of 1973.

(Authority: 20 U.S.C. 2468e(a)(1))



Sec. 403.197  What are the requirements for the use of equipment?

    (a) Equipment purchased with funds under Sec. 403.112, Sec. 403.113, 
or Sec. 403.116, when not being used to carry out the purposes of the 
Act for which it was purchased, may be used for other vocational 
education purposes if the acquisition of the equipment was reasonable 
and necessary for the purpose of conducting a properly designed project 
or activity under the Secondary School Vocational Education Program or 
the Postsecondary and Adult Vocational Education Program.
    (b) Equipment purchased with funds under Sec. 403.112, Sec. 403.113, 
or Sec. 403.116, when not being used to carry out the purposes of the 
Act for which it was purchased or other vocational education purposes, 
may be used for other instructional purposes if--
    (1) The acquisition of the equipment was reasonable and necessary 
for the purpose of conducting a properly designed project or activity 
under the Secondary School Vocational Education Program or the 
Postsecondary and Adult Vocational Education Program; and
    (2) The other use of the equipment is after regular school hours or 
on weekends.
    (c) The use of equipment under paragraphs (a) and (b) of this 
section must--
    (1) Be incidental to the use of that equipment for the purposes 
under the Secondary School Vocational Education Program or the 
Postsecondary and Adult Vocational Education Program for which it was 
purchased;
    (2) Not interfere with the use of that equipment for the purposes 
under the Secondary School Vocational Education Program or the 
Postsecondary and Adult Vocational Education Program for which it was 
purchased; and
    (3) Not add to the cost of using that equipment for the purposes 
under the Secondary School Vocational Education Program or the 
Postsecondary and Adult Vocational Education Program for which it was 
purchased.

(Authority: 20 U.S.C. 2342(c)(3))



Subpart I_What Are the Administrative Responsibilities of a State Under 
     the State Vocational and Applied Technology Education Program?



Sec. 403.200  What are the State's responsibilities for ensuring
compliance with the comparability requirements?

    (a) The State board may not make a payment under the Act to a local 
educational agency unless the LEA is in compliance with Sec. 403.194. As 
indicated in Sec. 403.194(a), an LEA may demonstrate its compliance with 
the comparability requirements by filing an appropriate assurance.
    (b) The State board shall monitor each local educational agency's 
compliance with the comparability requirements in Sec. 403.194.
    (c) If, after a local educational agency receives an award of 
Federal funds under the State plan, the local educational agency is 
found not to be in compliance with the comparability requirements, the 
State board shall--
    (1) Withhold all or a portion of the local educational agency's 
grant award, but not less than the amount or percentage by which the 
local educational agency failed to achieve comparability under the local 
educational agency's procedures established pursuant to Sec. 403.194(c); 
or
    (2) Require repayment of the amount or percentage by which the local 
educational agency failed to achieve comparability if the local 
educational agency is found not to be in compliance after the period of 
availability of the funds awarded has ended.

(Authority: 20 U.S.C. 2323(b)(19))

[[Page 67]]



Sec. 403.201  What are the State's responsibilities for developing and
implementing a statewide system of core standards and measures of
performance?

    (a)(1) Each State board receiving funds under the Act shall develop 
and implement a statewide system of core standards and measures of 
performance for secondary, postsecondary, and adult vocational education 
programs.
    (2) This system must--
    (i) Be developed and implemented by September 25, 1992; and
    (ii) Apply to all programs assisted under the Act.
    (3) The State board must determine whether a recipient of funds 
under Sec. 403.112, Sec. 403.113, or Sec. 403.116 must evaluate more 
than the particular projects, services, and activities receiving 
assistance under a basic program listed in Sec. 403.60 or a special 
program listed in Sec. 403.130 in order to carry out a valid, reliable, 
and otherwise meaningful evaluation of the effectiveness of these 
projects, services, and activities as required by Sec. 403.191(a)(1), 
using the standards and measures developed pursuant to paragraph (a)(1) 
of this section.
    (4) If a State board determines under paragraph (a)(3) of this 
section that a recipient must evaluate more than the particular 
projects, services, and activities receiving assistance under a basic or 
special program, the State board shall--
    (i) Determine whether the entire local vocational education 
program--or which projects, services, and activities in addition to the 
ones assisted under a basic or special program--must be evaluated to 
assess the effectiveness of the particular projects, services, and 
activities receiving assistance under a basic program or a special 
program; and
    (ii) Require a recipient to conduct an evaluation consistent with 
the State board's determination under paragraph (a)(4)(i) of this 
section.
    (b) To assist in the development and implementation of the Statewide 
system addressed in paragraph (a) of this section, the State board shall 
appoint a State Committee of Practitioners (Committee), as prescribed in 
34 CFR 400.6.
    (c) The State board shall convene the Committee on a regular basis 
to review, comment on, and propose revisions to the State board's draft 
proposal for a system of core standards and measures of performance for 
vocational education programs assisted under the Act.
    (d) To assist the Committee in formulating recommendations for 
modifying standards and measures of performance, the State board shall 
provide the Committee with information concerning differing types of 
standards and measures including--
    (1) The advantages and disadvantages of each type of standard or 
measure; and
    (2) Instances in which those standards and measures--
    (i) Have been effective; and
    (ii) Have not been effective.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2325(a) and (d))



Sec. 403.202  What must each State's system of core standards and 
measures of performance include?

    (a) The statewide system of core standards and measures of 
performance for vocational education programs must include--
    (1) Measures of learning and competency gains, including student 
progress in the achievement of basic and more advanced academic skills;
    (2) One or more measures of the following:
    (i) Student competency attainment.
    (ii) Job or work skill attainment or enhancement including student 
progress in achieving occupational skills necessary to obtain employment 
in the field for which the student has been prepared, including 
occupational skills in the industry the student is preparing to enter.
    (iii) Retention in school or completion of secondary school or its 
equivalent.
    (iv) Placement into additional training or education, military 
service, or employment;
    (3) Incentives or adjustments that are--
    (i) Designed to encourage service to targeted groups or special 
populations; and

[[Page 68]]

    (ii) Developed for each student, and, if appropriate, consistent 
with the student's individualized education program developed under 
section 614(a)(5) of the IDEA; and
    (4) Procedures for using existing resources and methods developed in 
other programs receiving Federal assistance.
    (b) In developing the standards and measures included in the system 
developed under paragraph (a) of this section, the State board shall 
take into consideration and shall provide, to the extent appropriate, 
for consistency with--
    (1) Standards and measures developed under job opportunities and 
basic skills training programs established and operated under a plan 
approved by the Secretary of Health and Human Services that meets the 
requirements of section 402(a)(19) of the Social Security Act (42 U.S.C. 
687); and
    (2) Standards prescribed by the Secretary of Labor under section 106 
of the JTPA.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

    Cross Reference: See 34 CFR 400.6.



Sec. 403.203  What are the State's responsibilities for a State
assessment?

    (a) Each State board receiving assistance under the Act shall 
conduct an assessment of the quality of vocational education programs 
throughout the State using measurable objective criteria.
    (b) In developing the assessment criteria, the State board shall--
    (1) Consult with representatives of the groups described in 34 CFR 
400.6(c); and
    (2) Use information gathered by the National Occupational 
Information Coordinating Committee and, if appropriate, other 
information.
    (c) Each State board shall--
    (1) Develop assessment criteria no later than the beginning of the 
1991-1992 school year; and
    (2) Widely disseminate those criteria.
    (d) Assessment criteria must include at least the following factors, 
but may include others:
    (1) Integration of academic and vocational education.
    (2) Sequential courses of study leading to both academic and 
occupational competencies.
    (3) Increased student work skill attainment and job placement.
    (4) Increased linkages between secondary and postsecondary 
educational institutions.
    (5) Instruction and experience, to the extent practicable, in all 
aspects of an industry the students are preparing to enter.
    (6) The ability of the eligible recipients to meet the needs of 
special populations with respect to vocational education.
    (7) Raising the quality of vocational education programs in schools 
with a high concentration of poor and low-achieving students.
    (8) The relevance of programs to the workplace and to the 
occupations for which students are to be trained, and the extent to 
which those programs reflect a realistic assessment of current and 
future labor market needs, including needs in areas of emerging 
technologies.
    (9) The ability of the vocational curriculum, equipment, and 
instructional materials to meet the demands of the work force.
    (10) Basic and higher order current and future workplace 
competencies that will reflect the hiring needs of employers.
    (11) The capability of vocational education programs to meet the 
needs of individuals who are members of special populations.
    (12) Other factors considered appropriate by the State board.
    (e) The assessment must include an analysis of--
    (1) The relative academic, occupational, training, and retraining 
needs of secondary, adult, and postsecondary students; and
    (2) The capability of vocational education programs to provide 
vocational education students, to the extent practicable, with--
    (i) Strong experience in, and understanding of, all aspects of the 
industry the students are preparing to enter (including planning, 
management, finances, technical and production skills, underlying 
principles of technology, labor and community issues,

[[Page 69]]

and health, safety, and environmental issues); and
    (ii) Strong development and use of problem-solving skills and basic 
and advanced academic skills (including skills in the areas of 
mathematics, reading, writing, science, and social studies) in a 
technological setting.
    (f)(1) Each State board shall complete the initial assessment 
required by paragraph (a) of this section before March 25, 1991, and, 
therefore, at least six months prior to the required submission of a new 
State plan to the Secretary.
    (2) Each State board shall conduct an assessment under this section 
prior to the submission of each new State plan to the Secretary.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2323(a)(3), (b)(3)(B), and 2326)



Sec. 403.204  What are the State's responsibilities for program evaluation
and improvement?

    (a) If, one year after an eligible recipient has implemented its 
program improvement plan described in Sec. 403.192, the State finds that 
the eligible recipient has not made sufficient progress in meeting the 
standards and measures developed as required by Secs. 403.201 and 
403.202, the State shall work jointly with the recipient and with 
teachers, parents, and students concerned with or affected by the 
program, to develop a joint plan for program improvement.
    (b) Each joint plan required by paragraph (a) of this section must 
contain--
    (1) A description of the technical assistance and program activities 
the State will provide to enhance the performance of the eligible 
recipient;
    (2) A reasonable timetable to improve school performance under the 
plan;
    (3) A description of vocational education strategies designed to 
improve the performance of the program as measured by the local 
evaluation; and
    (4) If necessary, a description of strategies designed to improve 
supplementary services provided to individuals who are members of 
special populations.
    (c) The State, in conjunction with the eligible recipient, shall 
annually review and revise the joint plan developed under paragraph (a) 
of this section and provide appropriate assistance until the recipient 
sustains fulfillment of State and local standards and measures developed 
under Secs. 403.201 and 403.202 for more than one year.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2327(c), (d))



Sec. 403.205  What are the State's responsibilities for members of
special populations?

    The State board shall--
    (a) Establish effective procedures, including an expedited appeals 
procedure, by which students who are members of special populations and 
their parents, teachers, and concerned area residents will be able to 
participate directly in State and local decisions that influence the 
character of programs under the Act affecting their interests; and
    (b) Provide technical assistance and design procedures necessary to 
ensure that those individuals referred to in paragraph (a) of this 
section are given access to the information needed to use those 
procedures.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2328(d))



Sec. 403.206  What are the State's responsibilities regarding a 
State occupational information coordinating committee?

    (a) A State that receives funds under the Act shall establish a 
State occupational information coordinating committee composed of 
representatives of the State board, the State employment security 
agency, the State economic development agency, the State job training 
coordinating council, and the agency administering the vocational 
rehabilitation program.
    (b) With funds made available to it by the National Occupational 
Information Coordinating Committee, the State occupational information 
coordinating committee shall--
    (1) Implement an occupational information system in the State that 
will

[[Page 70]]

meet the common needs for the planning for, and the operation of, 
programs of the State board assisted under the Act and of the 
administering agencies under the JTPA; and
    (2) Use the occupational information system to implement a career 
information delivery system.

(Authority: 20 U.S.C. 2422(b))



Sec. 403.207  What are the State's responsibilities to the National
Center or Centers for Research in Vocational Education?

    A State shall forward to the National Center for Research in 
Vocational Education a copy of an abstract for each new research, 
curriculum development, or personnel development project it supports, 
and the final report on each project.

(Authority: 20 U.S.C. 2404(c))



Sec. 403.208  What are the requirements regarding supplanting?

    (a) The State board is subject to the prohibition against 
supplanting in Sec. 403.196.
    (b) The State board shall monitor each eligible recipient's 
compliance with the supplanting requirements in Sec. 403.196.

(Authority: 20 U.S.C. 2468e(a)(1))



    Sec. Appendix A to Part 403--Examples for 34 CFR 403.111(a) and 
                              403.111(c)(3)

    Illustration of providing full participation under 34 CFR 
403.111(a). An educationally disadvantaged student is enrolled in a 
course that is part of a vocational education program and is having 
trouble understanding a math concept (e.g., negative numbers) necessary 
to succeed in the course. To ensure the student's full participation in 
the course, a local educational agency may use funds awarded under 
Sec. 403.112 as needed to provide tutoring in negative numbers to enable 
the student to understand the concept well enough to complete the 
vocational education course.
    Illustrations of providing equitable participation under 34 CFR 
403.111(c)(3).

    Example 1: An area vocational education school conducts an informal 
meeting to provide the information required in Sec. 403.193(a) regarding 
the area vocational education school's vocational education programs, to 
parents of students who are members of special populations in a local 
educational agency whose allocation was distributed to the area 
vocational education school under Sec. 403.113. The area vocational 
education school conducts the meeting at a time and in a location 
convenient for these parents and students. At the meeting, the area 
vocational education school provides a staff person to assist students 
or their parents to complete any forms necessary to enroll in the area 
vocational education school's vocational education program.
    Example 2: A hearing-impaired student in a local educational agency 
could participate in the vocational education program only if an 
interpreter is provided for that student. The local educational agency 
cannot refuse to admit the student because of the need for an 
interpreter.



Sec. Appendix B to Part 403--Examples for 34 CFR 403.194--Comparability 
                              Requirements

    Methods by which a local educational agency can demonstrate its 
compliance with the comparability requirements in 34 CFR 403.194(a) 
include the following:
    Example 1: The local educational agency files with the State board a 
written assurance that it has established and implemented--
    (a) A district-wide salary schedule;
    (b) A policy to ensure equivalence among secondary schools or sites 
in teachers, administrators, and auxiliary personnel; and
    (c) A policy to ensure equivalency among secondary schools or sites 
in the provision of curriculum materials and instructional supplies.

    Example 2: The local educational agency establishes and implements 
other procedures for ensuring comparability, such as the following:
    (a) Comparing the average number of students per instructional staff 
in each secondary school or site served with Federal funds awarded under 
the State plan with the average number of students per instructional 
staff in secondary schools or sites not served with Federal funds 
awarded under the State plan. A served school is considered comparable 
if its average does not exceed 110 percent of the average of schools or 
sites in the local educational agency not served with Federal funds 
awarded under the State plan; or
    (b) Comparing the average instructional staff salary expenditures 
per student in each secondary school or site served with Federal funds 
awarded under the State plan with the average instructional staff salary 
expenditure per student in schools or sites in the local educational 
agency not served with Federal funds awarded under the State plan. A 
served school is considered comparable if its average is at least 90 
percent of the average of schools or sites not served with Federal funds 
awarded under the State plan.

[[Page 71]]



PART 406_STATE-ADMINISTERED TECH-PREP EDUCATION PROGRAM--Table of Contents



                            Subpart A_General

Sec.
406.1  What is the State-Administered Tech-Prep Education Program?
406.2  Who is eligible for an award?
406.3  What activities may the Secretary fund?
406.4  What regulations apply?
406.5  What definitions apply?

              Subpart B_How Does a State Apply for a Grant?

406.10  What must the State application contain?

        Subpart C_How Does the Secretary Make a Grant to a State?

406.20  How does the Secretary make allotments?
406.21  How does the Secretary make reallotments?

 Subpart D_What Conditions Must Be Met After a State Receives an Award?

406.30  Who is eligible to apply to a State for an award?
406.31  How does a State carry out the State-Administered Tech-Prep 
          Education Program?
406.32  What are the local application requirements?
406.33  What are the reporting requirements?

    Authority: 20 U.S.C. 2394-2394e, unless otherwise noted.

    Source: 57 FR 36763, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 406.1  What is the State-Administered Tech-Prep Education Program?

    If the annual appropriation for tech-prep education exceeds 
$50,000,000, the State-Administered Tech-Prep Education Program provides 
financial assistance for--
    (a) Planning and developing four-year or six-year programs designed 
to provide a tech-prep education program leading to a two-year associate 
degree or certificate; and
    (b) Planning and developing, in a systematic manner, strong, 
comprehensive links between secondary schools and postsecondary 
educational institutions.

(Authority: 20 U.S.C. 2394(b))

[57 FR 36763, Aug. 14, 1992, as amended at 59 FR 38513, July 28, 1994]



Sec. 406.2  Who is eligible for an award?

    A State board of vocational education (State board) in the fifty 
States, Puerto Rico, the District of Columbia, or the Virgin Islands is 
eligible for an allotment under this program.

(Authority: 20 U.S.C. 2394a(b))



Sec. 406.3  What activities may the Secretary fund?

    (a) The Secretary makes allotments to State boards to provide 
funding for consortia described in Sec. 406.30 for tech-prep education 
projects.
    (b) A State board assists projects that must--
    (1) Be carried out under an articulation agreement between the 
members of the consortium;
    (2) Consist of the two years or four years of secondary school 
preceding graduation and two years of higher education, or an 
apprenticeship training program of at least two years following 
secondary instruction, with a common core of required proficiency in 
mathematics, science, communications, and technologies designed to lead 
to an associate degree or certificate in a specific career field;
    (3) Include the development of tech-prep education program curricula 
appropriate to the needs of the consortium participants;
    (4) Include in-service training for teachers that--
    (i) Is designed to train teachers to implement tech-prep education 
program curricula effectively;
    (ii) Provides for joint training for teachers from all participants 
in the consortium; and
    (iii) May provide training on weekends, evenings, or during the 
summer in the form of sessions, institutes, or workshops;
    (5) Include training activities for counselors designed to enable 
counselors to more effectively--
    (i) Recruit students for tech-prep education programs;

[[Page 72]]

    (ii) Ensure that students successfully complete tech-prep education 
programs; and
    (iii) Ensure that students are placed in appropriate employment;
    (6) Provide equal access to the full range of tech-prep education 
programs to individuals who are members of special populations, 
including the development of tech-prep education program services 
appropriate to the needs of these individuals so that these individuals 
have an opportunity to enter tech-prep education that is equal to the 
opportunity afforded to the general student population; and
    (7) Provide preparatory services that assist all populations to 
participate in tech-prep education programs.
    (c) A project assisted under this part may also--
    (1) Provide for the acquisition of tech-prep education program 
equipment; and
    (2) Acquire, as part of the planning activities of the tech-prep 
education program, technical assistance from State or local entities 
that have successfully designed, established, and operated tech-prep 
education programs.

(Authority: 20 U.S.C. 2394a, 2394b)

[57 FR 36763, Aug. 14, 1992, as amended at 59 FR 38514, July 28, 1994]



Sec. 406.4  What regulations apply?

    The following regulations apply to the State-Administered Tech-Prep 
Education Program:
    (a) The regulations in this part 406.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2394-2394e)



Sec. 406.5  What definitions apply?

    (a) The definitions in 34 CFR 400.4 apply to this part.
    (b) The following definitions also apply to this part:
    Articulation agreement means a commitment to a program designed to 
provide students with a non-duplicative sequence of progressive 
achievement leading to competencies in a tech-prep education program.
    Community college--
    (1) Has the meaning provided in 34 CFR 400.4 for the term 
Institution of higher education for an institution that provides not 
less than a two-year program that is acceptable for full credit toward a 
bachelor's degree; and
    (2) Includes tribally controlled community colleges.
    Institution of higher education includes an institution offering 
apprenticeship programs of at least two years beyond the completion of 
secondary school, and includes, in addition to the institutions covered 
by the definition of the term institution of higher education in 34 CFR 
400.4, a--
    (1) Proprietary institution of higher education;
    (2) Postsecondary vocational institution;
    (3) Department, division, or other administrative unit in a college 
or university that provides primarily or exclusively an accredited 
program of education in professional nursing and allied subjects leading 
to the degree of bachelor of nursing, or to be an equivalent degree, or 
to a graduate degree in nursing; and
    (4) Department, division, or other administrative unit in a junior 
college, community college, college, or university that provides 
primarily or exclusively an accredited two-year program of education in 
professional nursing and allied subjects leading to an associate degree 
in nursing or an equivalent degree.
    Tech-prep education program means a combined secondary and 
postsecondary program that--
    (1) Leads to an associate degree or two-year certificate;
    (2) Provides technical preparation in at least one field of 
engineering technology, applied science, mechanical, industrial, or 
practical art or trade, or agriculture, health, or business;
    (3) Builds student competence in mathematics, science, and 
communications (including through applied academics) through a 
sequential course of study; and
    (4) Leads to placement in employment.

(Authority: 20 U.S.C. 1088 and 2394e)

[[Page 73]]



              Subpart B_How Does a State Apply for a Grant?



Sec. 406.10  What must the State application contain?

    To receive a grant under this program, a State board shall submit an 
application to the Secretary at such time, in such manner, as the 
Secretary prescribes. The State board may submit an application along 
with the State plan submitted in accordance with 34 CFR 403.30. The 
application must include a description of--
    (a) The requirements for State board approval of funding of a local 
tech-prep education project, including--
    (1) Whether the State board intends to make awards on a competitive 
basis or on the basis of a formula; and
    (2) If a formula is to be used, a description of that formula;
    (b) How the State board will perform the following:
    (1) Approve applications based on their potential to create an 
effective tech-prep education program as described in Sec. 406.3(b).
    (2) Give special consideration to applicants that--
    (i) Provide for effective employment placement activities or 
transfer of students to four-year baccalaureate degree programs;
    (ii) Are developed in consultation with business, industry, labor 
unions, and institutions of higher education that award baccalaureate 
degrees; and
    (iii) Address effectively the issues of dropout prevention and re-
entry and the needs of minority youth of limited English proficiency, 
youth with disabilities, and disadvantaged youth;
    (3) Ensure an equitable distribution of assistance between urban and 
rural consortium participants;
    (c) How the State board will ensure that local recipients meet the 
requirements of this program; and
    (d) How activities under this program will be coordinated with other 
tech-prep education programs, services, and activities provided under 
the State plan.

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

(Authority: 20 U.S.C. 2394c (b)-(e))

[57 FR 36763, Aug. 14, 1992, as amended at 59 FR 38514, July 28, 1994]



        Subpart C_How Does the Secretary Make a Grant to a State?



Sec. 406.20  How does the Secretary make allotments?

    The Secretary determines the amount of each State's allotment 
according to a formula in section 101(a)(2) of the Act.

(Authority: 20 U.S.C. 2394a(b)(1))



Sec. 406.21  How does the Secretary make reallotments?

    (a)(1) If the Secretary determines that any amount of a State's 
allotment under Sec. 406.20 will not be required for any fiscal year for 
carrying out the program under this part, the Secretary reallots those 
funds to one or more States that demonstrate a current need for 
additional funds and the ability to use them promptly and effectively 
upon reallotment.
    (2) The Secretary announces in the Federal Register the dates on 
which funds will be reallotted.
    (b)(1) No funds reallotted under paragraph (a) of this section may 
be used for any purpose other than the purposes for which they were 
appropriated.
    (2) Any amount reallotted to a State under paragraph (a) of this 
section remains available for obligation during the succeeding fiscal 
year and is deemed to be part of the State's allotment for the fiscal 
year in which the reallotted funds are obligated.

(Authority: 20 U.S.C. 2311(a) and (d) and 2394a(b)(1))

[[Page 74]]



 Subpart D_What Conditions Must Be Met After a State Receives an Award?



Sec. 406.30  Who is eligible to apply to a State for an award?

    (a) A State board shall provide subgrants or contracts to consortia 
between--
    (1) A local educational agency, intermediate educational agency, 
area vocational education school serving secondary school students, or 
secondary school funded by the Bureau of Indian Affairs; and
    (2) A nonprofit institution of higher education that--
    (i) Is qualified as an institution of higher education as defined in 
Sec. 406.5, including institutions receiving assistance under the 
Tribally Controlled Community College Assistance Act of 1978 (25 U.S.C. 
1801 et seq.);
    (ii) Is not prohibited from receiving assistance under part B of the 
Higher Education Act of 1965 pursuant to the provisions of section 
435(a)(3) of that Act; and
    (iii) Offers a two-year associate degree program, a two-year 
certificate program, or a two-year apprenticeship training program that 
follows secondary instruction; or
    (3) A proprietary institution of higher education that--
    (i) Is qualified as an institution of higher education as defined in 
Sec. 406.5;
    (ii) Is not subject to a default management plan required by the 
Secretary; and
    (iii) Offers a two-year associate degree program.
    (b) A consortia must include at least one entity from paragraph 
(a)(1) of this section and at least one entity from either paragraph 
(a)(2) or (a)(3) of this section, and may include more than one entity 
from each group.

(Authority: 20 U.S.C. 2394a)



Sec. 406.31  How does a State carry out the State-Administered Tech-Prep
Education Program?

    (a) A State board carries out the program by--
    (1) Providing State administration of its grant; and
    (2) Awarding subgrants or contracts to eligible consortia on a 
competitive basis or on the basis of a formula determined by the State 
board.
    (b) A State board may use funds reserved under 34 CFR 403.180(b)(3) 
to provide support for the State-administered Tech-Prep Education 
Program.
    (c) A State board may use no more than the amount of funds from its 
award under this part that is necessary and reasonable for--
    (1) The proper and efficient administration of this program; and
    (2) Technical assistance to promote or enhance the quality and 
effectiveness of the State's tech-prep education program.

(Authority: 20 U.S.C. 2331(c)(2); 2394a(b))



Sec. 406.32  What are the local application requirements?

    (a) Each consortium that desires to receive an award shall submit an 
application to the State board.
    (b) The application must be submitted at the time and contain the 
information prescribed by the State board, and must contain--
    (1) An articulation agreement between the participants in the 
consortium; and
    (2) A three-year plan for the development and implementation of 
activities under this part.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2394c(a)-(b))



Sec. 406.33  What are the reporting requirements?

    The State board shall, in conjunction with recipients of subgrants 
and contracts, with respect to assistance received under this part, 
submit to the Secretary reports as may be required by the Secretary to 
ensure that grantees are complying with the requirements of this part.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2394a-2394e)

[[Page 75]]



PART 410_TRIBALLY CONTROLLED POSTSECONDARY VOCATIONAL INSTITUTIONS
PROGRAM--Table of Contents



                            Subpart A_General

Sec.
410.1  What is the Tribally Controlled Postsecondary Vocational 
          Institutions Program?
410.2  Who is eligible for an award?
410.3  What activities may the Secretary fund?
410.4  What regulations apply?
410.5  What definitions apply?

               Subpart B_How Does One Apply for an Award?

410.10  What must an application contain?

             Subpart C_How Does the Secretary Make an Award?

410.20  How does the Secretary apply the selection criteria in 
          Sec. 410.21?
410.21  What selection criteria does the Secretary use for institutional 
          support grants?
410.22  What additional factors does the Secretary consider?
410.23  How does the Secretary select grantees for institutional support 
          grants?
410.24  How does the Secretary award additional grants?

          Subpart D_What Conditions Must Be Met After an Award?

410.30  What expenses are allowable under an institutional support 
          grant?
410.31  What other provisions apply to this program?

    Authority: 20 U.S.C. 2397-2397h, unless otherwise noted.

    Source: 57 FR 36773, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 410.1  What is the Tribally Controlled Postsecondary Vocational
Institutions Program?

    The Tribally Controlled Postsecondary Vocational Institutions 
Program provides grants for the operation and improvement of tribally 
controlled postsecondary vocational institutions to ensure continued and 
expanded educational opportunities for Indian students, and to allow for 
the improvement and expansion of the physical resources of those 
institutions.

(Authority: 20 U.S.C. 2397 and 2397c)



Sec. 410.2  Who is eligible for an award?

    A tribally controlled postsecondary vocational institution is 
eligible for assistance under this part if it--
    (a) Is governed by a board of directors or trustees, a majority of 
whom are Indians;
    (b) Demonstrates adherence to stated goals, a philosophy, or a plan 
of operation that fosters individual Indian economic and self-
sufficiency opportunity, including programs that are appropriate to 
stated tribal goals of developing individual entrepreneurships and self-
sustaining economic infrastructures on reservations;
    (c) Has been in operation for at least three years;
    (d) Holds accreditation with or is a candidate for accreditation by 
a nationally recognized accrediting authority for postsecondary 
vocational education; and
    (e) Enrolls the full-time equivalency of not fewer than 100 
students, of whom a majority are Indians.

(Authority: 20 U.S.C. 2397b)



Sec. 410.3  What activities may the Secretary fund?

    The Secretary provides grants for basic support for the education 
and training of Indian students, including--
    (a) Training costs;
    (b) Educational costs;
    (c) Equipment costs;
    (d) Administrative costs; and
    (e) Costs of operation and maintenance of the institution.

(Authority: 20 U.S.C. 2397a)



Sec. 410.4  What regulations apply?

    The following regulations apply to the Tribally Controlled 
Postsecondary Vocational Institutions Program:
    (a) The regulations in this part 410.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2397-2397h)

[[Page 76]]



Sec. 410.5  What definitions apply?

    (a) The definitions in 34 CFR 400.4 apply to this part, except for 
the definition of the term Act.
    (b) The following definitions also apply to this part:
    Act means the Tribally Controlled Vocational Institutions Support 
Act of 1990.
    Indian means a person who is a member of an Indian tribe.
    Indian student count means a number equal to the total number of 
Indian students enrolled in each tribally controlled vocational 
institution, determined as follows:
    (1) The registrations of Indian students as in effect on October 1 
of each year.
    (2) Credits or clock hours toward a certificate earned in classes 
offered during a summer term must be counted toward the computation of 
the Indian student count in the succeeding fall term.
    (3) Credits or clock hours toward a certificate earned in classes 
during a summer term must be counted toward the computation of the 
Indian student count if the institution at which the student is in 
attendance has established criteria for the admission of the student on 
the basis of the student's ability to benefit from the education or 
training offered. The institution is presumed to have established those 
criteria if the admission procedures for those studies include 
counseling or testing that measures the student's aptitude to 
successfully complete the course in which the student has enrolled. 
Credit earned by the student for purposes of obtaining a high school 
degree or its equivalent may not be counted toward the computation of 
the Indian student count.
    (4) Indian students earning credits in any continuing education 
program of a tribally controlled vocational institution must be included 
in determining the sum of all credit or clock hours.
    (5) Credits or clock hours earned in a continuing education program 
must be converted to the basis that is in accordance with the 
institution's system for providing credit for participation in those 
programs.
    Indian tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaskan native village or 
regional or village corporation as defined in or established pursuant to 
the Alaskan Native Claims Settlement Act (43 U.S.C. 1601 et seq.), that 
is federally recognized as eligible for the special programs and 
services provided by the United States to Indians because of their 
status as Indians.
    Tribally controlled postsecondary vocational institution means an 
institution of higher education that is formally controlled, or has been 
formally sanctioned or chartered by the governing body of an Indian 
tribe or tribes, and that offers technical degrees or certificate 
granting programs. This term does not include an institution that is a 
tribally controlled community college as defined in 34 CFR 400.4. (See 
Cong. Rec. S4116 (daily ed. April 5, 1990) (Statement of Senator 
Bingaman); Cong. Rec. H1708 (daily ed. May 9, 1989) (Statement of Rep. 
Richardson)).

(Authority: 20 U.S.C. 2397h and 25 U.S.C. 1801 (1) and (2))



               Subpart B_How Does One Apply for an Award?



Sec. 410.10  What must an application contain?

    (a) An application for a grant under the Tribally Controlled 
Postsecondary Vocational Institutions Program must include the 
following:
    (1) Documentation showing that the institution is eligible according 
to the requirements in Sec. 410.2.
    (2) A description of the fiscal control and fund accounting 
procedures to be used for all funds received under this program that 
will allow the Secretary to monitor expenditures and the Education 
Department Inspector General, the U.S. Comptroller General, or an 
independent non-Federal auditor to audit the institution's programs.
    (3) The institution's operating expenses for the preceding fiscal 
year, including allowable expenses listed in Sec. 410.30.
    (4) The institution's Indian student count.
    (b) An application for an institutional support grant must also 
contain a comprehensive development plan addressing the following:

[[Page 77]]

    (1) The institutional mission statement, i.e., a broad statement of 
purpose, that identifies the institution's distinguishing 
characteristics, including the characteristics of the students the 
institution serves and plans to serve and the programs of study it 
offers and proposes to offer.
    (2) Data for the past three academic years reflecting the number and 
required qualifications of the teaching and administrative staff, the 
number of students enrolled, attendance rates, dropout rates, graduation 
rates, rate of job placement or college enrollment after graduation, and 
the most significant scholastic problems affecting the student 
population.
    (3) A description of how the institution is responsive to the 
current and projected labor market needs in its geographic area, 
including the institution's plans for placement of students.
    (4) Assumptions concerning the institutional environment, the 
potential number of students to be served, enrollment trends, and 
economic factors that could affect the institution.
    (5) Major problems or deficiencies that inhibit the institution from 
realizing its mission.
    (6) Long-range and short-range goals that will chart the growth and 
development of the institution and address the problems identified under 
paragraph (b)(5) of this section.
    (7) Measurable objectives related to reaching each goal.
    (8) Time-frames for achieving the goals and objectives described in 
paragraphs (b)(6) and (7) of this section.
    (9) Priorities for implementing improvements concerning 
instructional and student support, capital expenditures, equipment, and 
other priority areas.
    (10) Major resource requirements necessary to achieve the 
institution's goals and objectives, including personnel, finances, 
equipment, and facilities.
    (11) A detailed budget identifying the costs to be paid with a grant 
under this program and resources available from other Federal, State, 
and local sources that will be used to achieve the institution's goals 
and objectives. Budget and cost information must be sufficiently 
detailed to enable the Secretary to determine the amount of payments 
pursuant to section 386(b)(2) of the Act. The statement must include 
information on allowable expenses listed in Sec. 410.30.
    (12) Strategies and resources for objectively evaluating the 
institution's progress towards, and success in, achieving its goals and 
objectives.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2397b, 2397c(a), 2397d(b)(2)(B), and 2397f)



             Subpart C_How Does the Secretary Make an Award?



Sec. 410.20  How does the Secretary apply the selection criteria in
Sec. 410.21?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec. 410.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 410.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion in Sec. 410.21 is indicated in parentheses 
after the heading for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 410.21.

(Authority: 20 U.S.C. 2397-2397h)



Sec. 410.21  What selection criteria does the Secretary use for 
institutional support grants?

    The Secretary uses the following criteria to evaluate an application 
for an institutional support grant:
    (a) Institutional goals and objectives. (10 points) The Secretary 
reviews each application to determine the extent to which the 
applicant's current and future institutional goals and objectives are--
    (1) Realistic and defined in terms of measurable results; and
    (2) Directly related to the problems to be solved.
    (b) Comprehensive development plan. (25 points) The Secretary 
reviews each application to determine the extent to

[[Page 78]]

which the plan is effectively designed to meet the applicant's current 
and future institutional goals and objectives, including instructional 
and student support needs, and equipment and capital requirements.
    (c) Implementation strategy. (20 points) The Secretary reviews each 
application to determine the extent to which an applicant's 
implementation strategy--
    (1) For each major activity funded under this program, is 
comprehensive and likely to be effective, taking into account the 
applicant's past performance and the data for the past three academic 
years reflecting the number and required qualifications of the teaching 
and administrative staff, the number of students enrolled, attendance 
rates, dropout rates, graduation rates, rate of job placement or college 
enrollment after graduation, and the most significant scholastic 
problems affecting the student population;
    (2) Includes a realistic timetable for each such activity; and
    (3) Includes a staff management plan likely to ensure effective 
administration of the project activities.
    (d) Budget and cost effectiveness. (20 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is adequate to support the proposed activities to be 
funded under this program, including capital expenditures and 
acquisition of equipment, if applicable;
    (2) Costs are necessary and reasonable in relation to similar 
activities the institution carried out in previous years; and
    (3) The budget narrative justifies the expenditures.
    (e) Evaluation plan. (10 points) The Secretary reviews each 
application to determine the quality of the evaluation plan the 
institution plans to use to determine its progress towards, and success 
in, achieving its goals and objectives, including the extent to which--
    (1) The plan identifies, at a minimum, types of data to be 
collected, expected outcomes, and how those outcomes will be measured;
    (2) The methods of evaluation are appropriate and, to the extent 
possible, are objective and produce data that are quantifiable; and
    (3) The methods of evaluation provide periodic data that can be used 
for ongoing program improvement.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2397-2397h)



Sec. 410.22  What additional factors does the Secretary consider?

    (a) After evaluating applications according to the criteria in 
Sec. 410.21 and consulting, to the extent practicable, with boards of 
trustees and the tribal governments chartering the institutions being 
considered, the Secretary determines whether the most highly rated 
applications are equitably distributed among Indian tribes.
    (b) The Secretary may select other applications for funding if doing 
so would improve the distribution of projects among Indian tribes.
    (c) In addition to the criteria in Sec. 410.21, the Secretary 
considers whether funding a particular applicant duplicates an effort 
already being made.

(Authority: 20 U.S.C. 2397-2397h)



Sec. 410.23  How does the Secretary select grantees for institutional
support grants?

    (a) The Secretary selects at least two eligible applicants for 
funding.
    (b) If only one or two applicants are eligible, the Secretary 
selects each eligible applicant. The amount of each grant is determined 
by the quality of the application, based on the selection criteria in 
Sec. 410.22, and the respective needs of the applicants.
    (c) If there are more than two eligible applicants, the Secretary 
ranks each application using the selection criteria in Sec. 410.22. The 
Secretary funds two or more applicants. The number of grants made and 
the amount of each grant is determined by taking into account the 
quality of the applications and the respective needs of the applicants.
    (d) For fiscal years subsequent to the first year of funding, the 
Secretary follows the procedure in paragraphs (a) through (c) of this 
section, except that if appropriations for that fiscal year are not 
sufficient to pay in full the total amount that approved applicants are 
eligible to receive, the Secretary

[[Page 79]]

allocates the available grant amounts as required by section 388(a) of 
the Act.

(Authority: 20 U.S.C. 2397c(b))



Sec. 410.24  How does the Secretary award additional grants?

    If funds remain after providing grants to all eligible institutions, 
the Secretary makes awards as follows:
    (a) The Secretary allocates funds to institutions receiving their 
first grant under this part in an amount equal to the training equipment 
costs necessary to implement training programs.
    (b) If funds remain after the Secretary makes awards under paragraph 
(a) of this section, the Secretary reviews training equipment needs at 
each institution receiving assistance under this part at the end of the 
five-year period beginning on the first day of the first year for which 
the institution received a grant under this part, and provides 
allocations for other training equipment needs if it is demonstrated by 
the institution that its training equipment has become obsolete for its 
purposes, or that the development of other training programs is 
appropriate.

(Authority: 20 U.S.C. 2397d(d))



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 410.30  What expenses are allowable under an institutional support
grant?

    An institutional support grant may only be used to pay expenses 
associated with the following:
    (a) The maintenance and operation of the program, including--
    (1) Development costs;
    (2) Costs of basic and special instruction, including special 
programs for individuals with disabilities and academic instruction;
    (3) Materials;
    (4) Student costs;
    (5) Administrative expenses;
    (6) Boarding costs;
    (7) Transportation;
    (8) Student services;
    (9) Day care and family support programs for students and their 
families, including contributions to the costs of education for 
dependents; and
    (10) Training equipment costs necessary to implement training 
programs.
    (b) Capital expenditures, including operations and maintenance, 
minor improvements and repair, and physical plant maintenance costs.
    (c) Costs associated with repair, upkeep, replacement, and upgrading 
of instructional equipment.

(Authority: 20 U.S.C. 2397d(a), (d))



Sec. 410.31  What other provisions apply to this program?

    (a) Except as specifically provided in the Act, eligibility for 
assistance under this part may not preclude any tribally controlled 
postsecondary vocational institution from receiving Federal financial 
assistance under any program authorized under the Higher Education Act 
of 1965 (20 U.S.C. 1001 et seq.) or any other applicable program for the 
benefit of institutions of higher education or vocational education.
    (b) No tribally controlled postsecondary vocational institution for 
which an Indian tribe has designated a portion of the funds appropriated 
for the tribe from funds appropriated under the Act of November 2, 1921 
(25 U.S.C. 13) may be denied a contract for that portion under the 
Indian Self-Determination and Education Assistance Act (25 U.S.C. 450 et 
seq.) (except as provided in that Act), or denied appropriate contract 
support to administer that portion of the appropriated funds.

(Authority: 20 U.S.C. 2397e)



PART 411_VOCATIONAL EDUCATION RESEARCH PROGRAM--Table of Contents



                            Subpart A_General

Sec.
411.1  What is the Vocational Education Research Program?
411.2  Who is eligible for an award?
411.3  What activities may the Secretary fund?
411.4  What regulations apply?
411.5  What definitions apply?

Subpart B [Reserved]

[[Page 80]]

             Subpart C_How Does the Secretary Make a Grant?

411.20  How does the Secretary evaluate an application?
411.21  What selection criteria does the Secretary use?
411.22  What additional factors may the Secretary consider?
411.23  How does the Secretary evaluate unsolicited applications?
411.24  How does the Secretary select an unsolicited application for 
          funding?

    Authority: 20 U.S.C. 2401 and 2402, unless otherwise noted.

    Source: 57 FR 36776, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 411.1  What is the Vocational Education Research Program?

    The Vocational Education Research Program is designed to--
    (a) Improve access to vocational educational programs for 
individuals with disabilities, individuals who are disadvantaged, men 
and women who are entering nontraditional occupations, adults who are in 
need of retraining, single parents, displaced homemakers, single 
pregnant women, individuals with limited English proficiency, and 
individuals who are incarcerated in correctional institutions;
    (b) Support research and development activities that make the United 
States more competitive in the world economy by developing more fully 
the academic and occupational skills of all segments of the population 
by concentrating resources on improving educational programs leading to 
academic and occupational skill competencies needed to work in a 
technologically advanced society;
    (c) Improve the competitive process by which research projects are 
awarded;
    (d) Encourage the dissemination of findings of research projects 
assisted under the Act to all States; and
    (e) Support research activities that are readily applicable to the 
vocational education setting and are of practical application to 
vocational education administrators, counselors, instructors, and others 
involved in vocational education.

(Authority: 20 U.S.C. 2401)



Sec. 411.2  Who is eligible for an award?

    (a) Any individual or public or private agency, organization, or 
institution may apply for an award under this part.
    (b) Any individual researcher, community college, State advisory 
council, or State or local educator may submit an unsolicited research 
application.

(Authority: 20 U.S.C. 2402(a), (b))



Sec. 411.3  What activities may the Secretary fund?

    The Secretary may directly, or through grants, cooperative 
agreements, or contracts, conduct applied research on aspects of 
vocational education that are specially related to the Act, including 
the following:
    (a) Applied research on--
    (1) Effective methods for providing quality vocational education to 
individuals with disabilities, disadvantaged individuals, men and women 
in nontraditional fields, adults, single parents, displaced homemakers, 
single pregnant women, individuals with limited English proficiency, and 
individuals who are incarcerated in correctional institutions;
    (2) The development and implementation of performance standards and 
measures that fit within the needs of State boards of vocational 
education or eligible recipients as defined in 34 CFR 400.4 in carrying 
out the provisions of the Act and on the relationship of those standards 
and measures to the data system established under section 421 of the 
Act. Research may include an evaluation of existing performance 
standards and measures and dissemination of that information to State 
boards of vocational education and eligible recipients;
    (3) Strategies for coordinating local, State, and Federal vocational 
education, employment training, and economic development programs to 
maximize their efficacy and for improving worker training and 
retraining;
    (4) The constructive involvement of the private sector in public 
vocational education;
    (5) Successful methods of reinforcing and enhancing basic and more 
advanced academic and problem-solving skills in vocational settings;

[[Page 81]]

    (6) Successful methods for providing students, to the maximum extent 
practicable, with experience in and understanding of all aspects of the 
industry those students are preparing to enter; and
    (7) The development of effective methods for providing quality 
vocational education to individuals with limited English proficiency, 
including research related to bilingual vocational training.
    (b) An evaluation of the use of performance standards and measures 
under the Act and the effect of those standards and measures on the 
participation of students in vocational education programs and on the 
outcomes of students in those programs, especially students who are 
members of special populations as defined in 34 CFR 400.4.

(Authority: 20 U.S.C. 2402(a))



Sec. 411.4  What regulations apply?

    The following regulations apply to the Vocational Education Research 
Program:
    (a) The regulations in this part 411.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2401 and 2402)



Sec. 411.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part.

(Authority: 20 U.S.C. 2401 and 2402)

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make a Grant?



Sec. 411.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 411.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of the 
section, based on the criteria in Sec. 411.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 411.21.
    (e) The Secretary awards five points to applications submitted by 
public or private postsecondary institutions.

(Authority: 20 U.S.C. 2402)



Sec. 411.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) National need. (20 points) The Secretary reviews each 
application to determine the extent to which the project would make a 
contribution of national significance, as measured by such factors as--
    (1) The need for the project in relation to any program priority 
announced in the Federal Register; and
    (2) The likelihood that the project will make an important 
contribution to vocational education.
    (b) Plan of operation. (25 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including--
    (1) High quality in the design of the project;
    (2) An effective plan of management that ensures proper and 
efficient administration of the project;
    (3) A clear description of how the objectives of the project relate 
to the purposes of the program;
    (4) The quality of the applicant's plans to use its resources and 
personnel to achieve each objective; and
    (5) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, gender, age, or disability.
    (c) Key personnel. (15 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications of the project director;
    (ii) The qualifications of each of the other key personnel to be 
used in the project;

[[Page 82]]

    (iii) The appropriateness of the time that each one of the key 
personnel, including the project director, will commit to the project; 
and
    (iv) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age, or 
disability.
    (2) To determine personnel qualifications under paragraphs (c)(1)(i) 
and (ii) of this section, the Secretary considers--
    (i) Experience and training in fields related to the objectives of 
the project;
    (ii) Experience and training in project management; and
    (iii) Any other qualifications that pertain to the quality of the 
project.
    (d) Budget and cost effectiveness. (10 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget for the project is adequate to support the project 
activities; and
    (2) Costs are reasonable and necessary in relation to the objectives 
of the project.
    (e) Evaluation plan. (5 points) The Secretary reviews each 
application to determine the quality of the evaluation plan for the 
project, including the extent to which the applicant's methods of 
evaluation--
    (1) Are clearly explained and appropriate to the project;
    (2) To the extent possible, are objective and produce data that are 
quantifiable;
    (3) Includes activities during the formative stages of the project 
to help guide and improve the project, as well as a summative evaluation 
that includes recommendations for replicating project activities and 
results;
    (4) If appropriate, identifies expected outcomes of the project 
participants and how those outcomes will be measured;
    (5) If appropriate, will provide a comparison between intended and 
observed results, and lead to the demonstration of a clear link between 
the observed results and the specific treatment of project participants; 
and
    (6) To the extent possible, include a third party evaluation.
    (f) Adequacy of resources. (5 points) The Secretary reviews each 
application to determine the adequacy of the resources that the 
applicant plans to devote to the project, including facilities, 
equipment, and supplies.
    (g) Dissemination plan. (5 points) The Secretary reviews each 
application to determine the quality of the dissemination plan for the 
project, including--
    (1) The extent to which the project is designed to yield outcomes 
that can be readily disseminated;
    (2) A clear description of the project outcomes; and
    (3) A detailed description of how information and materials will be 
disseminated, including--
    (i) Provisions for publicizing the project at the local, State, and 
national levels by conducting or delivering presentations at 
conferences, workshops, and other professional meetings and by preparing 
materials for journals articles, newsletters, and brochures;
    (ii) Provisions for demonstrating the methods and techniques used by 
the project to others interested in replicating these methods and 
techniques; and
    (iii) Provisions for assisting others to adopt and successfully 
implement the project or methods and techniques used by the project.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2402)



Sec. 411.22  What additional factors may the Secretary consider?

    After evaluating the applications according to the criteria in 
Sec. 411.21 the Secretary may select other than the most highly rated 
applications for funding if doing so would--
    (a) Improve the geographical distribution of projects funded under 
this program; or
    (b) Contribute to the funding of a variety of approaches for 
carrying out the activities under this part.

(Authority: 20 U.S.C. 2401 and 2402)



Sec. 411.23  How does the Secretary evaluate unsolicited applications?

    (a) At any time during a fiscal year, the Secretary may accept and 
consider

[[Page 83]]

for funding an unsolicited application that has not been submitted under 
a competition announced in the Federal Register for that fiscal year, if 
the project proposes activities described in Sec. 411.3.
    (b) Notwithstanding the provisions of 34 CFR 75.100, the Secretary 
may fund an unsolicited application without publishing an application 
notice in the Federal Register.
    (c) The Secretary may select an unsolicited application for funding 
in accordance with the procedures in Secs. 411.20(e) and 411.24.
    (d) The Secretary assigns the 15 points reserved under 
Sec. 411.20(b) as follows:
    (1) Ten points to the selection criterion in Sec. 411.21(a)--
national need.
    (2) Five points to the selection criterion in Sec. 411.21(b)--plan 
of operation.

(Authority: 20 U.S.C. 2402)



Sec. 411.24  How does the Secretary select an unsolicited application
for funding?

    (a) After evaluating an unsolicited research application on the 
basis of the criteria in Sec. 411.21, the Secretary compares that 
application to other unsolicited research applications the Secretary has 
received.
    (b) The Secretary may fund an unsolicited research application at 
any time during the fiscal year.

(Authority: 20 U.S.C. 2402)



PART 412_NATIONAL NETWORK FOR CURRICULUM COORDINATION IN VOCATIONAL
AND TECHNICAL EDUCATION--Table of Contents



                            Subpart A_General

Sec.
412.1  What is the National Network for Curriculum Coordination in 
          Vocational and Technical Education?
412.2  Who is eligible for an award?
412.3  What activities may the Secretary fund?
412.4  What is the National Network of Directors Council?
412.5  What regulations apply?
412.6  What definitions apply?

Subpart B [Reserved]

             Subpart C_How Does the Secretary Make an Award?

412.20  How does the Secretary evaluate an application?
412.21  What selection criteria does the Secretary use?

          Subpart D_What Conditions Must Be Met After an Award?

412.30  What additional activities must be carried out by Curriculum 
          Coordination Centers?
412.31  What existing dissemination systems must be used?

    Authority: 20 U.S.C. 2402(c), unless otherwise noted.

    Source: 57 FR 36778, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 412.1  What is the National Network for Curriculum Coordination
in Vocational and Technical Education?

    The National Network for Curriculum Coordination in Vocational and 
Technical Education (Network) is a system of six curriculum coordination 
centers that disseminate information resulting from research and 
development activities carried out under the Act, in order to ensure 
broad access at the State and local levels to the information being 
disseminated.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.2  Who is eligible for an award?

    State and local educational agencies, postsecondary educational 
institutions, and other public and private agencies, organizations, and 
institutions are eligible for an award under this program.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.3  What activities may the Secretary fund?

    (a) The Secretary provides grants, cooperative agreements, or 
contracts to six regional curriculum coordination centers (CCCs).
    (b) Each CCC must--(1) Provide for national dissemination of 
information on effective vocational and technical education programs and 
materials, with particular attention to regional programs;
    (2) Be accessible by electronic means;

[[Page 84]]

    (3) Provide leadership and technical assistance in the design, 
development, and dissemination of curricula for vocational education;
    (4) Coordinate the sharing of information among the States with 
respect to vocational and technical education curricula;
    (5) Reduce duplication of effort in State activities for the 
development of vocational and technical education curricula; and
    (6) Promote the use of research findings with respect to vocational 
education curricula.
    (c) The six regional CCCs assisted with funds under this program 
must serve States according to the Department of Education's regional 
alignment as follows:
    (1) The Northeast Curriculum Coordination Center serves Connecticut, 
Maine, Massachusetts, New Hampshire, New Jersey, New York, Puerto Rico, 
Rhode Island, Vermont, and the Virgin Islands.
    (2) The Southeast Curriculum Coordination Center serves Alabama, 
Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, 
and Tennessee.
    (3) The East Central Curriculum Coordination Center serves Delaware, 
the District of Columbia, Indiana, Illinois, Maryland, Michigan, 
Minnesota, Ohio, Pennsylvania, Virginia, West Virginia, and Wisconsin.
    (4) The Midwest Curriculum Coordination Center serves Arkansas, 
Iowa, Kansas, Louisiana, Missouri, Nebraska, New Mexico, Oklahoma, and 
Texas.
    (5) The Northwest Curriculum Coordination Center serves Alaska, 
Colorado, Idaho, Montana, North Dakota, Oregon, South Dakota, Utah, 
Washington, and Wyoming.
    (6) The Western Curriculum Coordination Center serves American 
Samoa, Arizona, California, Guam, Hawaii, Nevada, the Northern Mariana 
Islands, and Palau until the Compact of Free Association with Palau 
takes effect.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.4  What is the National Network of Directors Council?

    (a) The National Network of Directors Council (Council) enhances the 
effectiveness of the Network by--
    (1) Planning for inter-center coordination, dissemination, and 
diffusion activities;
    (2) Providing leadership to ensure cohesiveness for overall Network 
functions;
    (3) Promoting the adoption and adaptation of curriculum materials;
    (4) Maintaining liaison with dissemination systems described in 
Sec. 412.32;
    (5) Convening at least twice a year; and
    (6) Planning for and participating in an annual meeting of CCCs that 
includes activities such as displays of current curriculum materials 
from each CCC, inservice training sessions, and hands-on experience with 
new technologies in vocational and technical education. This meeting 
must be held in a different region each year.
    (b) The Council is composed of the six CCC directors and a liaison 
from the Department. One of the CCC directors serves as chair for the 
Council and has responsibilities for submitting minutes of Council 
meetings to the Secretary.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.5  What regulations apply?

    The following regulations apply to the National Network for 
Curriculum Coordination in Vocational and Technical Education:
    (a) The regulations in this part 412.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.6  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part.

(Authority: 20 U.S.C. 2402(c))

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 412.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 412.21.

[[Page 85]]

    (b) The Secretary may award up to 100 points, including 15 points to 
be distributed in accordance with paragraph (d) of this section, based 
on the criteria in Sec. 412.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 412.21.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) Regional need. (30 points) The Secretary reviews each 
application to determine the applicant's understanding of and 
responsiveness to the needs of the region, including the extent to which 
the applicant--
    (1) Demonstrates an understanding of the leadership responsibilities 
associated with serving as a resource center and facilitator for States 
in a region, including the region's need for inservice training, holding 
regional meetings, providing technical assistance, coordinating with 
State directors of vocational education, maintaining a lending library, 
and disseminating information regularly;
    (2) Proposes adequate mechanisms and procedures for reporting the 
results of curriculum networking services and activities of the 50 
States, District of Columbia, Puerto Rico, and the Outlying Areas;
    (3) Demonstrates the capacity to disseminate information on 
effective vocational education materials, including curriculum 
materials;
    (4) Demonstrates an understanding of the operation of the Vocational 
Education Curriculum Materials and ADVOCNET Systems and the need for 
establishing a Tech-Prep education clearinghouse; and
    (5) Demonstrates the capacity to undertake the responsibilities 
associated with participation as a member of the Network Directors 
Council described in Sec. 412.4.
    (b) Plan of operation. (25 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including--
    (1) The quality of the design of the project;
    (2) The extent to which the management plan ensures proper and 
efficient administration of the project;
    (3) How well the objectives of the project relate to the purpose of 
the program;
    (4) The quality of the applicant's plan to use its resources and 
personnel to achieve each objective; and
    (5) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, gender, age, or disability.
    (c) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the proposed project, including--
    (i) The qualifications of the project director;
    (ii) The qualifications of each of the other key personnel to be 
used in the project;
    (iii) The appropriateness of the time that each person referred to 
in paragraphs (c)(1) (i) and (ii) of this section will commit to the 
project; and
    (iv) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age, or 
disability.
    (2) To determine the personnel qualifications under paragraphs 
(c)(1)(i) and (ii) of this section, the Secretary considers--
    (i) The experience and training of key personnel in project 
management and in the fields related to the objectives of the project; 
and
    (ii) Any other qualifications of key personnel that pertain to the 
quality of the project.
    (d) Institutional commitment. (10 points) The Secretary reviews each 
application to determine the extent to which the applicant--
    (1) Has experience with vocational education curriculum and 
dissemination;

[[Page 86]]

    (2) Will initiate and maintain liaison functions with regional 
States; and
    (3) Will provide adequate facilities, equipment, and supplies.
    (e) Budget and cost effectiveness. (5 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is cost effective and adequate to support the project 
activities; and
    (2) The budget contains costs that are reasonable in relation to the 
objectives of the project.
    (f) Evaluation plan. (5 points) The Secretary reviews each 
application to determine the quality of the project's evaluation plan, 
including the extent to which the plan--
    (1) Is clearly explained and is appropriate to the project; and
    (2) Identifies expected outcomes of the services provided and how 
those services will be measured.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2402(c))



          Subpart D_What Conditions Must Be Met After An Award?



Sec. 412.30  What additional activities must be carried out by Curriculum
Coordination Centers?

    In carrying out the activities described in Sec. 412.3, each CCC 
must perform the following activities:
    (a) Assist States in the development, adaptation, adoption, 
dissemination, and use of curriculum materials and services and other 
information resulting from research and development activities carried 
out under the Act, including performing these activities during at least 
two regional meetings involving States served by the CCC. One of these 
regional meetings must be conducted jointly with the other five CCCs and 
their regional States at the meeting described in Sec. 412.4(a)(6).
    (b) Coordinate with other curriculum coordination centers funded 
under this part.
    (c) Coordinate with the State salaried State liaison representative 
(SLR), who is appointed by the State director of vocational education. 
The SLR has primary responsibilities for liaison activities within the 
States, including--
    (1) Obtaining new curriculum and research and development materials 
for Network sharing;
    (2) Informing localities and State agencies of Network services;
    (3) Disseminating CCC related materials;
    (4) Arranging for intrastate and interstate development and 
dissemination activities;
    (5) Arranging for technical assistance and inservice training 
workshops;
    (6) Participating in regional CCC meetings; and
    (7) Fostering adoption and adaptations of materials available 
through the CCC.
    (d) Maintain a lending library with a collection of vocational 
education curriculum, research, and development materials for use by the 
States served by the CCC.
    (e) Each CCC must participate in the Council activities described in 
Sec. 412.4.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.31  What existing dissemination systems must be used?

    In carrying out its activities, each CCC must use existing 
dissemination systems, including the National Diffusion Network and the 
National Center or Centers for Research in Vocational Education, in 
order to ensure broad access at the State and local levels to the 
information being disseminated.

(Authority: 20 U.S.C. 2402(c))



PART 413_NATIONAL CENTER OR CENTERS FOR RESEARCH IN VOCATIONAL EDUCATION
--Table of Contents



                            Subpart A_General

Sec.
413.1  What is the National Center or Centers for Research in Vocational 
          Education?
413.2  Who is eligible to apply for the National Center or Centers?
413.3  What kinds of activities are carried out?
413.4  How does the Secretary designate a National Center or Centers?
413.5  What regulations apply?
413.6  What definitions apply?

Subpart B [Reserved]

[[Page 87]]

             Subpart C_How Does the Secretary Make an Award?

413.20  How does the Secretary evaluate an application?
413.21  What selection criteria does the Secretary use to evaluate an 
          application proposing research and development activities?
413.22  What selection criteria does the Secretary use to evaluate an 
          application proposing dissemination and training activities?

          Subpart D_What Conditions Must Be Met After an Award?

413.30  What are the restrictions on the use of funds?
413.31  Must a National Center have a director?
413.32  What are the requirements for coordination?
413.33  What substantive studies must the National Center or Centers 
          conduct and submit?
413.34  What activities must be performed during the final year of an 
          award?

    Authority: 20 U.S.C. 2404, unless otherwise noted.

    Source: 57 FR 36780, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 413.1  What is the National Center or Centers for Research in 
Vocational Education?

    The Secretary supports the establishment of one or two National 
Centers for Research in Vocational Education (National Center) in the 
areas of--
    (a) Applied research and development; and
    (b) Dissemination and training.

(Authority: 20 U.S.C. 2404)



Sec. 413.2  Who is eligible to apply for the National Center or Centers?

    An institution of higher education or consortium of institutions of 
higher education may apply to be a National Center under this part.

(Authority: 20 U.S.C. 2404(a)(5))

    Cross Reference: See 34 CFR 75.127 through 75.129, Group 
Applications.



Sec. 413.3  What kinds of activities are carried out?

    The Secretary provides a grant or cooperative agreement to a 
National Center or Centers that are designed to perform either one or 
both of the following activities:
    (a) Applied research and development activities. (1) A major purpose 
of the National Center is to design and conduct research and development 
activities that are consistent with the purposes of the Act, including--
    (i) Longitudinal studies that extend over a period of years;
    (ii) Supplementary and short-term activities; and
    (iii) Upon negotiation with the center, and if funds are provided 
pursuant to section 404(d) of the Act, such other topics as the 
Secretary may designate.
    (2) The National Center shall conduct applied research and 
development activities that include examination of the following:
    (i) Economic changes that affect the skills that employers seek and 
entrepreneurs need.
    (ii) Integration of academic and vocational education.
    (iii) Efficient and effective practices for addressing the needs of 
special populations.
    (iv) Efficient and effective methods for delivering vocational 
education.
    (v) Articulation of school and college instruction with high quality 
work experience.
    (vi) Recruitment, education, and enhancement of vocational teachers 
and other professionals in the field.
    (vii) Accountability processes in vocational education, including 
identification and evaluation of the use of appropriate performance 
standards for student, program, and State-level outcomes.
    (viii) Effective practices that educate students in all aspects of 
the industry the students are preparing to enter.
    (ix) Effective methods for identifying and inculcating literacy and 
other communication skills essential for effective job preparation and 
job performance.
    (x) Identification of strategic, high priority occupational skills 
and skills formation approaches needed to maintain the competitiveness 
of the United States workforce, sustain high-wage, high-technology jobs, 
and address national priorities such as technical jobs

[[Page 88]]

needed to protect and restore the environment.
    (xi) Identification of practices and strategies that address 
entrepreneurial development for minority-owned enterprises.
    (3) The applied research and development activities must include--
    (i) An emphasis on the recruitment, education, and enhancement of 
minority and female vocational teachers and professionals; and
    (ii) Activities that aid in the development of minorities and women 
for leadership roles in vocational education.
    (b) Dissemination and training activities. (1) A major purpose of 
the National Center is to design and conduct dissemination and training 
activities that are consistent with the purposes of the Act, including--
    (i) The broad dissemination of the results of the research and 
development conducted by the National Center;
    (ii) The development and utilization of a national level 
dissemination network including functions such as clearinghouses, 
databases, and telecommunications;
    (iii) Planning, developing, and conducting training activities; and
    (iv) Upon negotiation with the Center and if funds are provided 
pursuant to section 404(d) of the Act, such other topics as the 
Secretary may designate.
    (2) The National Center shall conduct dissemination and training 
activities that include the following:
    (i) Teacher and administrator training and leadership development.
    (ii) Technical assistance to ensure that programs serving special 
populations are effective in delivering well-integrated and 
appropriately articulated vocational and academic offerings for 
secondary, postsecondary, and adult students.
    (iii) Needs assessment, design, and implementation of new and 
revised programs with related curriculum materials to facilitate 
vocational-academic integration.
    (iv) Evaluation and follow-through to maintain and extend quality 
programs.
    (v) Assistance in technology transfer and articulation of program 
offerings from advanced technology centers to minority enterprises.
    (vi) Assistance to programs and States on the use of accountability 
indicators, including appropriate and innovative performance standards.
    (vii) Delivery of information and services using advanced 
technology, if appropriate, to increase the effectiveness and efficiency 
of knowledge transfer.
    (viii) Development of processes for synthesis of research, in 
cooperation with a broad array of users, including vocational and non-
vocational educators, employers and labor organizations.
    (ix) Dissemination of exemplary curriculum and instructional 
materials, and development and publication of curriculum materials (in 
conjunction with vocational and nonvocational constituency groups, if 
appropriate).
    (x) Technical assistance in recruiting, hiring, and advancing 
minorities in vocational education.
    (3) The training and leadership development activities must include 
an emphasis on--
    (i) Training minority and female teachers; and
    (ii) Programs and activities that aid in the development of 
minorities and women for leadership roles in vocational education.
    (4) Advanced technology may include audio-video cassettes, 
electronic networking, satellite-assisted programming, computer-based 
conferencing, and interactive video.

(Authority: 20 U.S.C. 2404 (b) and (c); House Report No. 101-660, 101st 
Cong. 2nd Sess. p. 143 (1990))



Sec. 413.4  How does the Secretary designate a National Center or Centers?

    (a) The Secretary designates a National Center or Centers once every 
five years.
    (b) In designating the National Center or Centers for Research in 
Vocational Education, the Secretary may support--
    (1) One National Center that conducts both research and development 
activities and dissemination and training activities; or

[[Page 89]]

    (2) Two National Centers: one that conducts research and development 
activities and one that conducts dissemination and training activities.

(Authority: 20 U.S.C. 2404)



Sec. 413.5  What regulations apply?

    The following regulations apply to the National Center or Centers:
    (a) The regulations in this part 413.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2404)



Sec. 413.6  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part, except that the 
term ``institution of higher education'' has the same meaning as 
provided in 34 CFR 403.117(b).

(Authority: 20 U.S.C. 1085(b) and 2404)

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 413.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Secs. 413.21 and 413.22.
    (b) The Secretary may award up to 100 points to each set of criteria 
in Secs. 413.21 and 413.22, including a reserved 10 points for each set 
of criteria to be distributed in accordance with paragraph (d) of this 
section.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Secs. 413.21 and 413.22.
    (e) The Secretary may hold two separate competitions, with the same 
closing date, for the National Center or Centers. One competition will 
be held for research and development activities and the second 
competition will be held for dissemination and training activities. An 
institution of higher education or consortium of higher education 
institutions may submit a research and development application; a 
dissemination and training application; or both as separate applications 
under separate covers.
    (f) The Secretary evaluates applications for the research and 
development center and the dissemination and training center 
independently against the criteria in Secs. 413.21 and 413.22 whether an 
institution or consortium of institutions is competing for either or 
both sets of activities.
    (g) In accordance with section 404(a)(5) of the Act, the Secretary 
will give preference in grant selection to institutions or consortia of 
institutions that demonstrate the ability to carry out both the research 
and development and the dissemination and training activities 
effectively, either directly or by contract.
    (h) An institution or consortium of institutions that has submitted 
two applications and applied for a single grant for the purpose of 
carrying out both activities and that has earned 80 points or higher on 
each of its two applications, will be deemed by the Secretary to have 
demonstrated the ability to carry out both activities effectively.
    (i) The Secretary will award a single grant to an institution or 
consortium of institutions that has both--
    (1) Demonstrated the ability to carry out both program activities 
effectively, in accordance with paragraph (h) of this section; and
    (2) Earned the highest combined score among those institutions or 
consortia of institutions that have demonstrated the ability to carry 
out both activities effectively.
    (j) If no institution or consortium of institutions is selected for 
a single grant award, the institution or consortia of institutions 
ranking highest in each of the two competitions will each receive a 
grant award.

(Authority: 20 U.S.C. 2404)



Sec. 413.21  What selection criteria does the Secretary use to 
evaluate an application proposing research and development 
activities?

    The Secretary uses the following selection criteria in evaluating 
each research and development application:

[[Page 90]]

    (a) Program factors. (20 points) The Secretary reviews each 
application to determine the extent to which each of the required 
research and development activities described in Sec. 413.3(a)(2) will 
be of high quality and effective.
    (b) Plan of operation. (35 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
proposed center, including--
    (1) The applicant's plan for managing the National Center;
    (2) The procedures the applicant will use to implement the National 
Center particularly with regard to the public or private nonprofit 
institution of higher education with which it is associated and, in the 
case of a consortium, with the other member institutions of the 
consortium;
    (3) The applicant's plan for managing the National Center's 
activities and personnel, including--
    (i) Quality control procedures for its activities;
    (ii) Procedures for assuring compliance with timelines;
    (iii) Coordination procedures for communicating among staff, 
subcontractors, members of the consortium, if any, and the Department of 
Education;
    (iv) Procedures for ensuring that adequate progress is being made 
toward achieving the goals of the grantee by subcontractors, and members 
of a consortium; and
    (v) Procedures for ensuring that adequate budget, accounting, and 
recordkeeping procedures will be used;
    (4) The quality of the applicant's detailed plans for year one of 
the National Center, including--
    (i) Methodology and plan of operation;
    (ii) Tasks and timelines;
    (iii) Deliverables; and
    (iv) Dissemination plans for each project; and
    (5) The quality of the applicant's general plans for developing 
appropriate, coherent, and effective vocational education research and 
development activities, or dissemination and training activities, or 
both, for years two through five.
    (c) Key personnel. (10 points) The Secretary reviews each 
application to determine the qualifications of the key personnel the 
applicant plans to use for the National Center, including--
    (1) The extent to which the Director of the National Center has--
    (i) Appropriate professional qualifications, relevant project 
management experience, and administrative skills;
    (ii) A commitment to work full-time at the National Center;
    (iii) A clear commitment to the goals of the project; and
    (iv) Sufficient authority to effectively manage the activities of 
the National Center;
    (2) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age, or 
disability; and
    (3) The extent to which other key personnel to be used for the 
National Center--
    (i) Have experience and training in project management and in fields 
related to the proposed activities they will be carrying out; and
    (ii) Will commit sufficient time to the project.
    (d) Vocational education experience. (10 points) The Secretary 
reviews each application to determine the extent to which the applicant 
understands the state of knowledge and practice related to vocational 
education, including--
    (1) The applicant's experience in conducting applied research and 
development activities, dissemination and training activities, or both, 
in the field of vocational education of the type described in 
Sec. 413.3;
    (2) The applicant's capacity for conducting applied research and 
development activities, dissemination and training activities, or both, 
in the field of vocational education of the type described in 
Sec. 413.3; and
    (3) How the activities of the National Center will contribute to the 
advancement of relevant theory and practice in vocational education.
    (e) Budget and cost effectiveness. (10 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The Center has an adequate budget that is cost effective;

[[Page 91]]

    (2) The budget is adequate to support the Center's activities; and
    (3) Costs are reasonable in relation to the objectives of the 
Center.
    (f) Coordination activities. (5 points) The Secretary reviews each 
application to determine the extent to which there is an effective plan 
for the coordination of activities described in Sec. 413.3 (a) and (b), 
and whether these activities are carried out between two institutions or 
within one institution.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2404)



Sec. 413.22  What selection criteria does the Secretary use to evaluate
an application proposing dissemination and training activities?

    The Secretary uses the following selection criteria in evaluating 
each dissemination and training application:
    (a) Program factors. (20 points) The Secretary reviews each 
application to determine the extent to which each of the required 
dissemination and training activities, described in Sec. 413.3(b), will 
be of high quality and effective.
    (b) The selection criteria and points in Sec. 413.21 (b), (c), (d), 
(e), and (f).

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2404)



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 413.30  What are the restrictions on the use of funds?

    (a) A National Center that performs both research and development 
activities and dissemination and training activities shall use at least 
two-thirds of its award for applied research and development.
    (b) Not more than 10 percent of each year's budget for a National 
Center may be used to respond to field-initiated needs unanticipated 
prior to the annual funding period and that are in the mission of the 
National Center, but not part of the scope of work of the grant or 
cooperative agreement.

(Authority: 20 U.S.C. 2404(a)(3) and (b))



Sec. 413.31  Must a National Center have a director?

    A National Center must have a full-time director who is appointed by 
the institution serving as the grantee.

(Authority: 20 U.S.C. 2404)



Sec. 413.32  What are the requirements for coordination?

    If the Secretary designates two National Centers, the two centers 
must coordinate their activities.

(Authority: 20 U.S.C. 2404)



Sec. 413.33  What substantive studies must the National Center or
Centers conduct and submit?

    (a) The National Center conducting research and development 
activities shall annually prepare a study on the research conducted on 
approaches that lead to effective articulation for the education-to-work 
transition, including tech-prep programs, cooperative education or other 
work-based programs, such as innovative apprenticeship or mentoring 
approaches.
    (b) The National Center conducting dissemination and training 
activities shall annually prepare a study of its dissemination and 
training activities.
    (c) Annual studies described in paragraphs (a) and (b) of this 
section must be submitted to the Secretary of Education, the Secretary 
of Labor, the Secretary of Health and Human Services, the Committee on 
Labor and Human Resources of the Senate, and the Committee on Education 
and Labor of the House of Representatives.

(Authority: 20 U.S.C. 2404 (b)(2) and (c)(2))



Sec. 413.34  What activities must be performed during the final year
of an award?

    During the fifth year of the award cycle, the National Center or 
Centers shall develop and remain prepared to implement a contingency 
plan for completing all substantive work by the end of the eleventh 
month of that year and transferring all projects, services, and 
activities to a successor during the twelfth month of that year.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2404)

[[Page 92]]



PART 415_DEMONSTRATION CENTERS FOR THE TRAINING OF DISLOCATED WORKERS
PROGRAM--Table of Contents



                            Subpart A_General

Sec.
415.1  What is the Demonstration Centers for the Training of Dislocated 
          Workers Program?
415.2  Who is eligible for an award?
415.3  What activities may the Secretary fund?
415.4  What regulations apply?
415.5  What definitions apply?

Subpart B [Reserved]

             Subpart C_How Does the Secretary Make an Award?

415.20  How does the Secretary evaluate an application?
415.21  What selection criteria does the Secretary use?
415.22  What additional factors may the Secretary consider?

          Subpart D_What Conditions Must Be Met After an Award?

415.30  What are the evaluation requirements?

    Authority: 20 U.S.C. 2413, unless otherwise noted.

    Source: 57 FR 36784, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 415.1  What is the Demonstration Centers for the Training of
Dislocated Workers Program?

    The Demonstration Centers for the Training of Dislocated Workers 
Program provides financial assistance for establishing one or more 
demonstration centers for the retraining of dislocated workers.

(Authority: 20 U.S.C. 2413(a))



Sec. 415.2  Who is eligible for an award?

    A private nonprofit organization that is eligible to receive funding 
under title III of the Job Training Partnership Act (29 U.S.C. 1651 et 
seq.) is eligible to receive an award under this program.

(Authority: 20 U.S.C. 2413(d))



Sec. 415.3  What activities may the Secretary fund?

    (a) The Secretary provides grants or cooperative agreements for one 
or more centers that demonstrate the retraining of dislocated workers.
    (b) Each center funded by the Secretary must be designed and 
operated to provide for the use of appropriate existing Federal, State, 
and local programs and resources.
    (c) Each center may use funds to provide for--
    (1) The recruitment of unemployed workers;
    (2) Vocational evaluation;
    (3) Assessment and counseling services;
    (4) Vocational and technical training;
    (5) Support services; or
    (6) Job placement assistance.

(Authority: 20 U.S.C. 2413(a))



Sec. 415.4  What regulations apply?

    The following regulations apply to the Demonstration Centers for the 
Training of Dislocated Workers Program:
    (a) The regulations in this part 415.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2413)



Sec. 415.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part.

(Authority: 20 U.S.C. 2413)

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 415.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec. 415.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 415.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score

[[Page 93]]

for each criterion is indicated in parentheses after the heading for 
each criterion.
    (d) For each competition, as announced in a notice published in the 
Federal Register, the Secretary may assign the reserved 15 points among 
the criteria in Sec. 415.21.

(Authority: 20 U.S.C. 2413)



Sec. 415.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) Program factors. (10 points) The Secretary reviews each 
application to assess the extent to which the proposed demonstration 
center for the training of dislocated workers will--
    (1) Be located in a service area with a high concentration of 
dislocated workers, as supported by specific evidence of the need for 
the proposed demonstration center;
    (2) Provide vocational education and technical training to meet 
current and projected occupational needs;
    (3) Provide trainees with appropriate vocational evaluation, 
assessment, and counseling, support services, and job placement 
assistance;
    (4) Result in trainees becoming employed in jobs related to their 
training upon completion of their training; and
    (5) Use other appropriate Federal, State, and local programs to 
retrain, or provide services to, dislocated workers.
    (b) Educational significance. (10 points) The Secretary reviews each 
application to determine the extent to which the applicant--
    (1) Bases the proposed demonstration center for the training of 
dislocated workers on successful model vocational education programs 
that include components similar to the components required by this 
program, as evidenced by empirical data from those programs, in such 
factors as--
    (i) Student performance and achievement in vocational and technical 
training;
    (ii) High school graduation;
    (iii) Placement of students in jobs, including military service; and
    (iv) Successful transfer of students to a variety of postsecondary 
education programs;
    (2) Proposes project objectives that contribute to the improvement 
of education; and
    (3) Proposes to use innovative techniques to address educational 
problems and needs that are of national significance.
    (c) Plan of operation. (15 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including--
    (1) The quality of the project design, especially the establishment 
of measurable objectives for the project that are based on the project's 
overall goals;
    (2) The extent to which the plan of management is effective and 
ensures proper and efficient administration of the project over the 
award period;
    (3) How well the objectives of the project relate to the purpose of 
the program;
    (4) The quality of the applicant's plan to use its resources and 
personnel to achieve each objective including the use of appropriate 
existing Federal, State, and local programs; and
    (5) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, gender, age, or disability.
    (d) Evaluation plan. (15 points) The Secretary reviews each 
application to determine the quality of the project's evaluation plan, 
including the extent to which the plan--
    (1) Is clearly explained and is appropriate to the project;
    (2) To the extent possible, is objective and will produce data that 
are quantifiable;
    (3) Identifies expected outcomes of the participants and how those 
outcomes will be measured;
    (4) Includes activities during the formative stages of the project 
to help guide and improve the project, as well as a summative evaluation 
that includes recommendations for replicating project activities and 
results;
    (5) Will provide a comparison between intended and observed results, 
and lead to the demonstration of a clear link between the observed 
results and the specific treatment of project participants; and

[[Page 94]]

    (6) Will yield results that can be summarized and submitted to the 
Secretary for review by the Department's Program Effectiveness Panel as 
defined in 34 CFR 400.4(b).
    (e) Demonstration and dissemination. (10 points) The Secretary 
reviews each application for information to determine the effectiveness 
and efficiency of the plan for demonstrating and disseminating 
information about project activities and results throughout the project 
period, including--
    (1) High quality in the design of the dissemination plan and 
procedures for evaluating the effectiveness of the dissemination plan;
    (2) Provisions for publicizing the project at the local, State, and 
national levels by conducting or delivering presentations at 
conferences, workshops, and other professional meetings and by preparing 
materials for journal articles, newsletters, and brochures;
    (3) Identification of target groups and provisions for demonstrating 
the methods and techniques used by the project to others interested in 
replicating these methods and techniques, such as by inviting them to 
observe project activities;
    (4) A description of the types of materials the applicant plans to 
make available to help others replicate project activities and the 
methods for making the materials available; and
    (5) Provisions for assisting others to adopt and successfully 
implement the project or methods and techniques used by the project.
    (f) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications, in relation to project requirements, of the 
project director;
    (ii) The qualifications, in relation to project requirements, of 
each of the other key personnel to be used in the project;
    (iii) The appropriateness of the time that each person referred to 
in paragraphs (f)(1) (i) and (ii) of this section will commit to the 
project; and
    (iv) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age, or 
disability.
    (2) To determine personnel qualifications under paragraphs (f)(1) 
(i) and (ii) of this section, the Secretary considers--
    (i) The experience and training of key personnel in project 
management and in fields related to the objectives of the project; and
    (ii) Any other qualifications of key personnel that pertain to the 
quality of the project.
    (g) Budget and cost effectiveness. (10 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is cost effective and adequate to support the project 
activities;
    (2) The budget contains costs that are reasonable and necessary in 
relation to the objectives of the project; and
    (3) The budget proposes using non-Federal resources available from 
appropriate employment, training, and education agencies in the State to 
provide project services and activities and to acquire demonstration 
center equipment and facilities.
    (h) Adequacy of resources and commitment. (5 points) (1) The 
Secretary reviews each application to determine the extent to which the 
applicant plans to devote adequate resources to the project. The 
Secretary considers the extent to which--
    (i) The facilities that the applicant plans to use are adequate; and
    (ii) The equipment and supplies that the applicant plans to use are 
adequate.
    (2) The Secretary reviews each application to determine the 
commitment to the project, including whether the--
    (i) Uses of non-Federal resources are adequate to provide project 
services and activities, especially resources of community organizations 
and State and local educational agencies; and
    (ii) Applicant has the capacity to continue, expand, and build upon 
the

[[Page 95]]

project when Federal assistance under this part ends.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2413)



Sec. 415.22  What additional factors may the Secretary consider?

    After evaluating the applications according to the criteria in 
Sec. 415.21, the Secretary may select applications other than the most 
highly rated applications if doing so would improve the geographical 
distribution of projects funded under this program.

(Authority: U.S.C. 2413)



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 415.30  What are the evaluation requirements?

    (a) Each grantee shall provide and budget for an independent 
evaluation of grant activities.
    (b) The evaluation must be both formative and summative in nature.
    (c) The evaluation must be based on student achievement, completion, 
and placement rates and project and product spread and transportability.
    (d) A proposed project evaluation design must be submitted to the 
Secretary for review and approval prior to the end of the first year of 
the project period.
    (e) A summary of evaluation activities and results that can be 
reviewed by the Department's Program Effectiveness Panel, as defined in 
34 CFR 400.4(b), must be submitted to the Secretary during the last year 
of the project period.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2413)



PART 421_BUSINESS AND EDUCATION STANDARDS PROGRAM--Table of Contents



                            Subpart A_General

Sec.
421.1  What is the Business and Education Standards Program?
421.2  Who is eligible for an award?
421.3  What activities may the Secretary fund?
421.4  What regulations apply?
421.5  What definitions apply?

Subpart B [Reserved]

             Subpart C_How Does the Secretary Make an Award?

421.20  How does the Secretary evaluate an application?
421.21  What selection criteria does the Secretary use?

          Subpart D_What Conditions Must Be Met After an Award?

421.30  What is the cost-sharing requirement?

    Authority: 20 U.S.C. 2416, unless otherwise noted.

    Source: 57 FR 36796, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 421.1  What is the Business and Education Standards Program?

    The Business and Education Standards Program provides financial 
assistance for organizing and operating business-education-labor 
technical committees that will develop national standards for 
competencies in industries and trades.

(Authority: 20 U.S.C. 2416)



Sec. 421.2  Who is eligible for an award?

    The following entities are eligible for an award under this program:
    (a) Industrial trade associations.
    (b) Labor organizations.
    (c) National joint apprenticeship committees.
    (d) Comparable national organizations, such as educational 
associations, industry councils, business and industry organizations, 
and associations of private or national research organizations.

(Authority: 20 U.S.C. 2416)



Sec. 421.3  What activities may the Secretary fund?

    The Secretary provides grants and cooperative agreements for 
projects that organize and operate business-labor-education technical 
committees that propose national standards for competencies in 
industries and trades, including standards for--

[[Page 96]]

    (a) Major divisions or specialty areas identified within occupations 
studied;
    (b) Minimum hours of study to be competent in those divisions or 
specialty areas;
    (c) Minimum tools and equipment required in those divisions or 
specialty areas;
    (d) Minimum qualifications for instructional staff; and
    (e) Minimum tasks to be included in any course of study purporting 
to prepare individuals for work in those divisions or specialty areas.

(Authority: 20 U.S.C. 2416)



Sec. 421.4  What regulations apply?

    The following regulations apply to the Business and Education 
Standards Program:
    (a) The regulations in this part 421.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2416)



Sec. 421.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part.

(Authority: 20 U.S.C. 2416)

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 421.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperation agreement on the basis of the criteria in Sec. 421.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 421.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 421.21.

(Authority: 20 U.S.C. 2416)



Sec. 421.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) Program factors. (15 points) The Secretary reviews each 
application to assess the quality and effectiveness of the applicant's 
approach to developing national standards for competencies in industries 
and trades, including the extent to which the application proposes--
    (1) To develop standards for--
    (i) The competencies required for actual jobs, including the 
increased competency requirements created by the changing workplace;
    (ii) Major divisions or specialty areas identified within the 
occupations the applicant proposes to study;
    (iii) The minimum hours of study needed to be competent in those 
divisions or specialty areas;
    (iv) Minimum tools and equipment required in those divisions or 
specialty areas;
    (v) Minimum tasks to be included in any course of study purporting 
to prepare individuals for work in those divisions or specialty areas; 
and
    (vi) Minimum qualifications for instructional staff in those 
divisions or specialty areas; and
    (2) An adequate needs assessment of the program factors described in 
paragraph (a)(1) of this section as a part of the project.
    (b) Extent of need for the project. (15 points) The Secretary 
reviews each application to determine the extent to which the project 
meets specific needs, including--
    (1) The extent of the need for national standards for competencies 
in the major division or specialty areas identified within the 
occupations that the applicant proposes to study;
    (2) How the applicant identified and documented those needs;
    (3) How the standards to be developed will meet those needs, 
including the need of business for competent entry-level workers in the 
occupations to be studied; and
    (4) The benefits to business, labor, and education that will result 
from meeting those needs.
    (c) Plan of operation. (15 points) The Secretary reviews each 
application to

[[Page 97]]

determine the quality of the plan of operation for the project, 
including the extent to which--
    (1) The plan of management will be effective, will ensure proper and 
efficient administration of the program, and includes timelines that 
show starting and ending dates for all tasks;
    (2) The specific procedures proposed will accomplish the project's 
objectives, including how the procedures for selecting the business-
labor-education technical committees will ensure that the members are 
knowledgeable about the occupations to be studied and include 
representatives of business, labor, and education;
    (3) The applicant plans to organize and operate the business-labor-
education technical committees effectively in developing national 
standards for competencies in industries and trades;
    (4) The development of proposed competencies for major divisions or 
specialty areas within occupations will be coordinated with education 
and industrial trade associations, labor organizations, and businesses;
    (5) The methods the applicant proposes to use to select project 
participants, if applicable, will ensure that project participants who 
are otherwise eligible to participate are selected without regard to 
race, color, national origin, gender, age, or disability.
    (d) Evaluation plan. (10 points) The Secretary reviews each 
application to determine the quality of the evaluation plan for the 
project, including the extent to which the plan includes specific 
procedures for--
    (1) A formative evaluation to help assess and improve the accuracy 
of standards for competencies; and
    (2) A summative evaluation conducted by an independent evaluator.
    (e) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the extent of the applicant's experience in 
fields related to the objectives of the project.
    (2) The Secretary reviews each application to determine the quality 
of key personnel the applicant plans to use including--
    (i) The qualifications, in relation to project requirements, of the 
project director, if one is to be used;
    (ii) The qualifications, in relation to project requirements, of 
each of the other key personnel to be used in the project;
    (iii) The appropriateness of the time that each person referred to 
in paragraphs (e)(2) (i) and (ii) of this section will commit to the 
project; and
    (iv) The experience and training of the project director and key 
personnel in project management.
    (f) Budget and cost effectiveness. (10 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is adequate to support the project; and
    (2) Costs are reasonable in relation to the objectives of the 
project.
    (g) Dissemination plan. (10 points) The Secretary reviews each 
application to determine the quality of the dissemination plan for the 
project, including--
    (1) A clear description of the dissemination procedures;
    (2) A description of the types of materials the applicant plans to 
make available;
    (3) Provisions for publicizing the proposed national standards for 
competencies in industries and trades; and
    (4) Provisions for encouraging the adoption and use of the proposed 
standards by education and training programs.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2416)



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 421.30  What is the cost-sharing requirement?

    (a) The Secretary pays no more than 50 percent of the cost of a 
project.
    (b) Each recipient of an award under this part shall provide at 
least 50 percent of the cost of the business-labor-education technical 
committees established under the award.

(Authority: 20 U.S.C. 2416(c))

[[Page 98]]



PART 425_DEMONSTRATION PROJECTS FOR THE INTEGRATION OF VOCATIONAL AND ACADEMIC LEARNING PROGRAM--Table of Contents



                            Subpart A_General

Sec.
425.1  What is the Demonstration Projects for the Integration of 
          Vocational and Academic Learning Program?
425.2  Who is eligible for an award?
425.3  What activities may the Secretary fund?
425.4  What regulations apply?
425.5  What definitions apply?

Subpart B [Reserved]

             Subpart C_How Does the Secretary Make an Award?

425.20  How does the Secretary evaluate an application?
425.21  What selection criteria does the Secretary use?
425.22  What additional factors does the Secretary consider?

          Subpart D_What Conditions Must Be Met After an Award?

425.30  What are the evaluation requirements?

    Authority: 20 U.S.C. 2420, unless otherwise noted.

    Source: 57 FR 36803, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 425.1  What is the Demonstration Projects for the Integration of
Vocational and Academic Learning Program?

    The Demonstration Projects for the Integration of Vocational and 
Academic Learning Program provides financial assistance to projects that 
develop, implement, and operate programs using different models of 
curricula that integrate vocational and academic learning.

(Authority: 20 U.S.C. 2420(a))



Sec. 425.2  Who is eligible for an award?

    (a) The following entities are eligible for an award under the 
Demonstration Projects for the Integration of Vocational and Academic 
Learning Program:
    (1) An institution of higher education.
    (2) An area vocational education school.
    (3) A secondary school funded by the Bureau of Indian Affairs.
    (4) A State board of vocational education.
    (5) A public or private nonprofit organization.
    (6) A local educational agency.
    (b) Consortia composed of the entities described in paragraph (a) of 
this section also are eligible for awards under this program.

(Authority: 20 U.S.C. 2420(a))



Sec. 425.3  What activities may the Secretary fund?

    (a) The Secretary provides grants or cooperative agreements to 
projects that develop, implement, and operate programs using different 
models of curricula that integrate vocational and academic learning by--
    (1) Designing integrated curricula and courses;
    (2) Providing inservice training for teachers of vocational 
education students and administrators in integrated curricula; and
    (3) Disseminating information regarding effective integrative 
strategies to other school districts through the National Diffusion 
Network (NDN) under section 1562 of the Elementary and Secondary 
Education Act of 1965, as amended (20 U.S.C. 2962), or, in the case of 
projects that will be funded for less than three years, disseminating 
information about the design of a project necessary for effective 
integrative strategies to be supported, so that they may be disseminated 
through the NDN.
    (b) Each project supported under this part must serve--
    (1) Individuals who are members of special populations;
    (2) Vocational students in secondary schools;
    (3) Vocational students at postsecondary institutions;
    (4) Individuals enrolled in adult programs; or
    (5) Single parents, displaced homemakers, and single pregnant women.

(Authority: 20 U.S.C. 2420(a), (b)(3) and (4))

[[Page 99]]



Sec. 425.4  What regulations apply?

    The following regulations apply to the Demonstration Projects for 
the Integration of Vocational and Academic Learning Program:
    (a) The regulations in this part 425.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2420)



Sec. 425.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part.

(Authority: 20 U.S.C. 2420)

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 425.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec. 425.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 425.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses.
    (d) For each competition, as announced in a notice published in the 
Federal Register, the Secretary may assign the reserved 15 points among 
the criteria in Sec. 425.21.

(Authority: 20 U.S.C. 2420)



Sec. 425.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) Program factors. (10 points) The Secretary reviews each 
application to assess the quality of the proposed project, including--
    (1) The extent to which the project involves creative or innovative 
methods for integrating vocational and academic learning; and
    (2) The quality of the services that the project will provide to--
    (i) Individuals who are members of special populations;
    (ii) Vocational students in secondary schools and at postsecondary 
institutions;
    (iii) Individuals enrolled in adult programs; or
    (iv) Single parents, displaced homemakers, and single pregnant 
women.
    (b) Educational significance. (10 points) The Secretary reviews each 
application to determine the extent to which the applicant--
    (1) Bases the proposed project on successful model vocational 
education programs that include components similar to the components 
required by this program, as evidenced by empirical data from those 
programs in such factors as--
    (i) Student performance and achievement;
    (ii) High school graduation;
    (iii) Placement of students in jobs, including military service; and
    (iv) Successful transfer of students to a variety of postsecondary 
education programs;
    (2) Proposes project objectives that contribute to the improvement 
of education; and
    (3) Proposes to use unique and innovative techniques that address 
the need to integrate vocational and academic learning, and produce 
benefits that are of national significance.
    (c) Plan of operation. (15 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including--
    (1) The quality of the project design, especially the establishment 
of measurable objectives for the project that are based on the project's 
overall goals;
    (2) The extent to which the plan of management is effective and 
ensures proper and efficient administration of the project over the 
award period;
    (3) How well the objectives of the project relate to the purpose of 
the program;
    (4) The quality of the applicant's plan to use its resources and 
personnel to achieve each objective; and
    (5) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, gender, age, or disability.

[[Page 100]]

    (d) Evaluation plan. (15 points) The Secretary reviews each 
application to determine the quality of the project's evaluation plan, 
including the extent to which the plan--
    (1) Carries out the requirements in Sec. 425.30;
    (2) Is clearly explained and is appropriate to the project;
    (3) To the extent possible, is objective and will produce data that 
are quantifiable;
    (4) Includes quality measures to assess the effectiveness of the 
curricular developed by the project;
    (5) Identifies expected outcomes of the participants and how those 
outcomes will be measured;
    (6) Includes activities during the formative stages of the project 
to help guide and improve the project, as well as a summative evaluation 
that includes recommendations for replicating project activities and 
results;
    (7) Will provide a comparison between intended and observed results, 
and lead to the demonstration of a clear link between the observed 
results and the specific treatment of project participants; and
    (8) Will yield results that can be summarized and submitted to the 
Secretary for review by the Department's Program Effectiveness Panel as 
defined in 34 CFR 400.4(b).
    (e) Demonstration and dissemination. (10 points) The Secretary 
reviews each application for information to determine the effectiveness 
and efficiency of the plan for demonstrating and disseminating 
information about project activities and results throughout the project 
period, including--
    (1) High quality in the design of the dissemination plan and 
procedures for evaluating the effectiveness of the dissemination plan;
    (2) Identification of the audience to which the project activities 
will be disseminated and provisions for publicizing the project at the 
local, State, and national levels by conducting, or delivering 
presentations at, conferences, workshops, and other professional 
meetings and by preparing materials for journal articles, newsletters, 
and brochures;
    (3) Provisions for demonstrating the methods and techniques used by 
the project to others interested in replicating these methods and 
techniques, such as by inviting them to observe project activities;
    (4) A description of the types of materials the applicant plans to 
make available to help others replicate project activities and the 
methods for making the materials available; and
    (5) Provisions for assisting others to adopt and successfully 
implement the methods, approaches, and techniques developed by the 
project.
    (f) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications, in relation to project requirements, of the 
project director;
    (ii) The qualifications, in relation to project requirements, of 
each of the other key personnel to be used in the project;
    (iii) The appropriateness of the time that each person referred to 
in paragraphs (f)(1) (i) and (ii) of this section will commit to the 
project; and
    (iv) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age, or 
disability.
    (2) To determine personnel qualifications under paragraphs (f)(1) 
(i) and (ii) of this section, the Secretary considers--
    (i) The experience and training of key personnel in project 
management and in fields related to the objectives of the project; and
    (ii) Any other qualifications of key personnel that pertain to the 
quality of the project.
    (g) Budget and cost effectiveness. (10 points) The Secretary reviews 
each application to determine the extent to which the budget--
    (1) Is cost effective and adequate to support the project 
activities;
    (2) Contains costs that are reasonable and necessary in relation to 
the objectives of the project; and
    (3) Proposes using non-Federal resources available from appropriate 
employment, training, and education agencies in the State to provide 
project

[[Page 101]]

services and activities and to acquire project equipment and facilities, 
to ensure that funds awarded under this part are used to provide 
instructional services.
    (h) Adequacy of resources and commitment. (5 points) (1) The 
Secretary reviews each application to determine the extent to which the 
applicant plans to devote adequate resources to the project. The 
Secretary considers the extent to which--
    (i) The facilities that the applicant plans to use are adequate; and
    (ii) The equipment and supplies that the applicant plans to use are 
adequate.
    (2) The Secretary reviews each application to determine the 
commitment to the project including whether the--
    (i) Uses of non-Federal resources are adequate to provide project 
services and activities, especially resources of community organizations 
and State and local educational agencies; and
    (ii) Applicant has the capacity to continue, expand, and build upon 
the project when Federal assistance under this part ends.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2420)



Sec. 425.22  What additional factors does the Secretary consider?

    (a) After evaluating the applications according to the criteria in 
Sec. 425.21, the Secretary determines whether the most highly rated 
applications--
    (1) Are equitably distributed throughout the Nation;
    (2) Offer significantly different approaches to integrating 
vocational and academic curricula; and
    (3) Serve individuals described in Sec. 425.3(b).
    (b) The Secretary may select other applications for funding if doing 
so would improve the geographical distribution of, diversity of 
approaches in, or the diversity of populations to be served by projects 
funded under this program.

(Authority: 20 U.S.C. 2420(b))



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 425.30  What are the evaluation requirements?

    (a) Each grantee shall provide and budget for an independent 
evaluation of grant activities.
    (b) The evaluation must be both formative and summative in nature.
    (c) Each grantee shall employ adequate measures to evaluate the 
effectiveness of the curriculum approaches supported by the project.
    (d) The evaluation must be based on student achievement, completion, 
and placement rates and project and product spread and transportability.
    (e) A proposed project evaluation design must be submitted to the 
Secretary for review and approval prior to the end of the first year of 
the project period.
    (f) A summary of evaluation activities and results that can be 
reviewed by the Department's Program Effectiveness Panel, as defined in 
34 CFR 400.4(b), must be submitted to the Secretary during the last year 
of the project period.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2420(b)(5))

                           PART 426 [RESERVED]



PART 427_BILINGUAL VOCATIONAL TRAINING PROGRAM--Table of Contents



                            Subpart A_General

Sec.
427.1  What is the Bilingual Vocational Training Program?
427.2  Who is eligible for an award?
427.3  What activities may the Secretary fund?
427.4  What regulations apply?
427.5  What definitions apply?

               Subpart B_How Does One Apply for an Award?

427.10  What must an application contain?

             Subpart C_How Does the Secretary Make an Award?

427.20  How does the Secretary evaluate an application?

[[Page 102]]

427.21  What selection criteria does the Secretary use?
427.22  What additional factors does the Secretary consider?

          Subpart D_What Conditions Must Be Met After an Award?

427.30  What are the evaluation requirements?

    Authority: 20 U.S.C. 2441(a), unless otherwise noted.

    Source: 57 FR 36810, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 427.1  What is the Bilingual Vocational Training Program?

    The Bilingual Vocational Training Program provides financial 
assistance for bilingual vocational education and training for limited 
English proficient out-of-school youth and adults, to prepare these 
individuals for jobs in recognized occupations and new and emerging 
occupations.

(Authority: 20 U.S.C. 2441(a))



Sec. 427.2  Who is eligible for an award?

    (a) The following entities are eligible for an award under this 
program:
    (1) State agencies.
    (2) Local educational agencies (LEAs).
    (3) Postsecondary educational institutions.
    (4) Private nonprofit vocational training institutions.
    (5) Other nonprofit organizations specially created to serve or 
currently serving individuals who normally use a language other than 
English.
    (b) Private for-profit agencies and organizations are eligible only 
for contracts under this program.

(Authority: 20 U.S.C. 2441(a))



Sec. 427.3  What activities may the Secretary fund?

    (a) The Secretary provides grants, cooperative agreements, or 
contracts for--
    (1) Bilingual vocational training projects for limited English 
proficient out-of-school youth and adults who are available for training 
and employment;
    (2) Bilingual vocational education and training projects for limited 
English proficient out-of-school youth and adults who have already 
entered the labor market but who desire or need English language skills 
and job skills training or retraining to achieve employment in a 
recognized occupation or new and emerging occupations, adjust to 
changing work force needs, expand their range of skills, or advance in 
employment; and
    (3) Training stipends for participants in bilingual vocational 
training projects.
    (b) Bilingual vocational training projects must include instruction 
in the English language to ensure that participants in that training 
will be equipped to pursue occupations in an English language 
environment.
    (c) In the Commonwealth of Puerto Rico, the Bilingual Vocational 
Training Program may provide for the needs of students of limited 
Spanish proficiency.

(Authority: 20 U.S.C. 2441(a), (e)(2))



Sec. 427.4  What regulations apply?

    The following regulations apply to the Bilingual Vocational Training 
Program:
    (a) The regulations in 34 CFR part 400.
    (b) The regulations in this part 427.

(Authority: 20 U.S.C. 2441(a))



Sec. 427.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this program.

(Authority: 20 U.S.C. 2441(a))



               Subpart B_How Does One Apply for an Award?



Sec. 427.10  What must an application contain?

    (a) An application must--
    (1) Provide an assurance that the activities and services for which 
assistance is sought will be administered by or under the supervision of 
the applicant;
    (2) Propose a project of a size, scope, and design that will make a 
substantial contribution toward carrying out the purpose of the 
Bilingual Vocational Training Program;

[[Page 103]]

    (3) Contain measurable goals for the enrollment, completion, and 
placement of program participants;
    (4) Include a comparison of how the applicant's goals take into 
consideration any related standards and measures in the geographic area 
for the Job Opportunities and Basic Skills Training (JOBS) program (42 
U.S.C. 681 et seq.) and any Job Training Partnership Act (JTPA) programs 
(29 U.S.C. 1501 et seq.) and any standards set by the State Board for 
Vocational Education for the occupational and geographic area;
    (5) Describe, for each occupation for which training is to be 
provided, how successful program completion will be determined and 
reported to the Secretary in terms of the academic and vocational 
competencies to be demonstrated by enrollees prior to successful 
completion and any academic or work credentials expected to be acquired 
upon completion; and
    (6) Be submitted to the State board for vocational education (State 
board) established under section 111 of the Act for review and comment, 
including comment on the relationship of the proposed project to the 
State's vocational education program.
    (b) An applicant shall include any comments received under paragraph 
(a)(6) of this section with the application.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2441(a), (d)(1) and (2))



             Subpart C_How Does the Secretary Make an Award?



Sec. 427.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 427.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 427.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
points for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 427.21.

(Authority: 20 U.S.C. 2441(a))



Sec. 427.21  What selection criteria does the Secretary use?

    The Secretary uses the following selection criteria to evaluate an 
application:
    (a) Need. (15 points) The Secretary reviews each application for 
specific information that shows the need for the proposed bilingual 
vocational training project in the local geographic area, including--
    (1) The employment training need of limited English proficient 
individuals to be met;
    (2) The labor market need to be met; and
    (3) The relationship of the proposed project to other employment 
training programs in the community.
    (b) Plan of operation. (15 points) (1) The Secretary reviews each 
application to determine the extent to which the project proposes 
measurable goals for student enrollment, completion, and placement and 
describes how the applicant sets the goals taking into consideration the 
standards and measures for JOBS programs and JTPA programs and any 
standards set by the State Board established under section 111 of the 
Act for the occupation and geographic area.
    (2) The Secretary reviews each application to determine the extent 
to which the project defines successful program completion (or describes 
how successful program completion will be defined and reported to the 
Secretary) in a way consistent with the goals of the program for each 
occupation for which training is to be provided.
    (3)(i) The Secretary reviews each application for specific 
information that, upon completion of their training, more than 65 
percent of the trainees will be employed in jobs (including military 
specialties) related to their training, or will be enrolled for further 
training related to their training under this program. This information 
must correspond to the information described in paragraph (a) of this 
section.

[[Page 104]]

    (ii) The estimated job placement rate must be supported by past 
records, actual employer job commitments, anticipated job openings, or 
other pertinent information.
    (4) The Secretary reviews each application for an effective plan of 
management that ensures proper and efficient administration of the 
project, including--
    (i) Clearly defined project objectives that relate to the purpose of 
the Bilingual Vocational Training Program;
    (ii) For each objective, the specific tasks to be performed in order 
to achieve the specified project objective;
    (iii) How the applicant plans to use its resources and personnel to 
achieve each objective; and
    (iv) If the applicant plans to use a project advisory committee, a 
clear plan for using a project advisory committee to assist in project 
development, to review curriculum materials, and to make recommendations 
about job placements.
    (c) Program factors. (20 points) (1) The Secretary reviews each 
application to determine the quality of training to be provided, 
including--
    (i) Provision of vocational skills instruction in English and the 
trainees' native languages;
    (ii) Provision of job-related English-as-a-second language 
instruction;
    (iii) Coordination of the job-related English-as-a-second language 
instruction with the vocational skills instruction;
    (iv) Recruitment procedures that are targeted towards limited 
English proficient out-of-school youth and adults who have the greatest 
need for bilingual vocational training;
    (v) Assessment procedures that evaluate the language and vocational 
training needs of the trainees;
    (vi) Provision of counseling activities and employability skills 
instruction that prepare trainees for employment in an English language 
environment; and
    (vii) Job development and job placement procedures that provide 
opportunities for career advancement or entrepreneurship.
    (2) The Secretary reviews each application to determine the 
project's potential to have a lasting impact in the local geographic 
area, including the potential impact of the project on--
    (i) Program participants;
    (ii) The agency or agencies responsible for administering the 
bilingual vocational training program;
    (iii) Other employment training services in the local area; and
    (iv) The community.
    (d) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications of the director and other key personnel to be 
used in the project;
    (ii) The appropriateness of the time that each person referred to in 
paragraph (d)(1)(i) of this section will commit to the project; and
    (iii) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that personnel will be selected without regard to 
race, color, national origin, gender, age, or disability.
    (2) To determine personnel qualifications under paragraph (d)(1)(i) 
of this section, the Secretary considers--
    (i) Experience and training in fields related to the objectives of 
the project;
    (ii) Experience and training in project management; and
    (iii) Any other qualifications that pertain to the quality of the 
project.
    (e) Budget and cost effectiveness. (5 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is sufficient to support the proposed project, and 
that it represents a cost effective use of Bilingual Vocational Training 
Program funds;
    (2) Costs are necessary and reasonable in relation to the objectives 
of the proposed project; and
    (3) The facilities, equipment, and supplies that the applicant plans 
to use are adequate for the proposed project.
    (f) Evaluation plan. (10 points) The Secretary reviews each 
application to determine the quality of the project's evaluation plan, 
including the extent to which the plan--
    (1) Is clearly explained and appropriate for the project;
    (2) Identifies at a minimum, types of data to be collected and 
reported with

[[Page 105]]

respect to the English-language competencies and academic and vocational 
competencies demonstrated by participants and the number and kinds of 
academic and work credentials acquired by individuals who complete the 
training;
    (3) Identifies at a minimum, types of data to be collected and 
reported with respect to enrollment, completion, and placement of 
participants by sex, racial or ethnic group, socio-economic status, and 
if appropriate, by level of English proficiency, for each occupation for 
which training is provided;
    (4) Includes activities during the formative stages of the project 
to help guide and improve the project, as well as a summative evaluation 
that includes recommendations for replicating project activities and 
results; and
    (5) Makes use of an external evaluator.
    (g) Demonstration and dissemination. (10 points) The Secretary 
reviews each application for information to determine the effectiveness 
and efficiency of the plan for demonstrating and disseminating 
information about project activities and results throughout the project 
period, including--
    (1) High quality in the design of the demonstration and 
dissemination plan and procedures for evaluating the effectiveness of 
the dissemination plan;
    (2) Provisions for publicizing the project at the local, State, and 
national levels by conducting or delivering presentations at 
conferences, workshops, and other professional meetings and by preparing 
materials for journal articles, newsletters, and brochures;
    (3) Provisions for making available the methods and techniques used 
by the project to others interested in replicating these methods and 
techniques, such as by inviting them to observe project activities;
    (4) A description of the types of materials the applicant plans to 
make available to help others replicate project activities and the 
methods for making the materials available; and
    (5) Provisions for assisting others to adopt and successfully 
implement the project or methods and techniques used by the project.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2441(a))



Sec. 427.22  What additional factors does the Secretary consider?

    (a) After evaluating the applications according to the criteria in 
Sec. 427.21 and consulting with the appropriate State board established 
under section 111 of the Act, the Secretary determines whether the most 
highly rated applications are equitably distributed among populations of 
individuals with limited English proficiency within the affected State.
    (b) The Secretary may select other applications for funding if doing 
so would improve the--
    (1) Equitable distribution of assistance among populations of 
individuals with limited English proficiency within a State; or
    (2) Geographical distribution of projects funded under this program.

(Authority: 20 U.S.C. 2441(d)(5))



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 427.30  What are the evaluation requirements?

    (a) Each grantee shall annually provide and budget for an 
independent evaluation of its activities.
    (b) The evaluation must be both formative and summative in nature.
    (c) The annual evaluation must include descriptions and analyses of 
the accuracy of records and validity of measures by the project to 
establish and report on the English-language competencies and academic 
and vocational competencies demonstrated and the academic and work 
credentials acquired.
    (d) The annual evaluation must contain descriptions and analyses of 
the accuracy of records and validity of measures used by the project to 
establish and report on participant enrollment, completion, and 
placement by sex, racial or ethnic group, socio-economic status, and, if 
appropriate, by

[[Page 106]]

level of English proficiency for each occupation for which training has 
been provided.
    (e) The annual evaluation must also include--
    (1) The grantee's progress in achieving the objectives in its 
approved application, including any approved revisions of the 
application;
    (2) If applicable, actions taken by the grantee to address 
significant barriers impeding progress; and
    (3) The effectiveness of the project in promoting key elements for 
participants' job readiness, including--
    (i) Coordination of services; and
    (ii) Improved English-language, academic, and vocational skills 
competencies.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2441(a))



PART 428_BILINGUAL VOCATIONAL INSTRUCTOR TRAINING PROGRAM--Table of Contents



                            Subpart A_General

Sec.
428.1  What is the Bilingual Vocational Instructor Training Program?
428.2  Who is eligible for an award?
428.3  What activities may the Secretary fund?
428.4  What regulations apply?
428.5  What definitions apply?

               Subpart B_How Does One Apply for an Award?

428.10  What must an application contain?

             Subpart C_How Does the Secretary Make an Award?

428.20  How does the Secretary evaluate an application?
428.21  What selection criteria does the Secretary use?
428.22  What additional factors does the Secretary consider?

    Authority: 20 U.S.C. 2441(b), unless otherwise noted.

    Source: 57 FR 36812, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 428.1  What is the Bilingual Vocational Instructor Training Program?

    The Bilingual Vocational Instructor Training Program provides 
financial assistance for preservice and inservice training for personnel 
participating in or preparing to participate in bilingual vocational 
education and training programs for limited English proficient 
individuals.

(Authority: 20 U.S.C. 2441(b))



Sec. 428.2  Who is eligible for an award?

    (a) The following entities are eligible for grants, contracts, or 
cooperative agreements under this program:
    (1) State agencies.
    (2) Public and private nonprofit educational institutions.
    (b) Private for-profit educational institutions are eligible only 
for contracts under this program.

(Authority: 20 U.S.C. 2441(b)(1))



Sec. 428.3  What activities may the Secretary fund?

    (a) The Secretary provides assistance through grants, contracts, or 
cooperative agreements for--
    (1) Preservice and inservice training for instructors, aides, 
counselors, or other ancillary personnel participating in or preparing 
to participate in bilingual vocational training programs; and
    (2) Fellowships and traineeships for individuals participating in 
preservice or inservice training.
    (b) The Secretary does not make an award under this program unless 
the Secretary determines that the applicant has an ongoing vocational 
education program in the field in which participants will be trained, 
and can provide instructors with adequate language capabilities in the 
language other than English to be used in the bilingual vocational 
training project.

(Authority: 20 U.S.C. 2441(b))



Sec. 428.4  What regulations apply?

    The following regulations apply to the Bilingual Vocational Training 
Program:
    (a) The regulations in 34 CFR part 400.

[[Page 107]]

    (b) The regulations in this part 428.

(Authority: 20 U.S.C. 2441(b))



Sec. 428.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this program.

(Authority: 20 U.S.C. 2441(b))



               Subpart B_How Does One Apply for an Award?



Sec. 428.10  What must an application contain?

    An application must--
    (a) Provide an assurance that the activities and services for which 
assistance is sought will be administered by or under the supervision of 
the applicant;
    (b) Propose a project of a size, scope and design that will make a 
substantial contribution toward carrying out the purpose of the 
Bilingual Vocational Instructor Training Program;
    (c) Describe the capabilities of the applicant, including vocational 
training or education courses offered by the applicant, accreditation, 
and any certification of courses by appropriate State agencies;
    (d) Describe the qualifications of principal staff to be used in the 
bilingual vocational instructor training project;
    (e) Describe the number of participants to be served, the minimum 
qualifications for project participants, and the selection process for 
project participants;
    (f) Include the projected amount of the fellowships or traineeships, 
if any;
    (g) Contain sufficient information for the Secretary to make the 
determination required by Sec. 428.3(b); and
    (h) Provide an assurance that preservice training will be provided 
to individuals who have indicated their intent to engage as personnel in 
a vocational education program that serves limited English proficient 
individuals.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2441(d)(1), (4))



             Subpart C_How Does the Secretary Make an Award?



Sec. 428.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 428.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) or this 
section, based on the criteria in Sec. 428.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
points for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition, in a notice published in the Federal 
Register, the Secretary may assign the reserved 15 points among the 
criteria in Sec. 428.21.

(Authority: 20 U.S.C. 2441(b), (d)(5))



Sec. 428.21  What selection criteria does the Secretary use?

    The Secretary uses the following selection criteria in evaluating 
each application:
    (a) Need. (15 points) (1) The Secretary reviews each application to 
determine the need for the proposed bilingual vocational instructor 
training project, including--
    (i) The need for the project in the specific geographic area or 
areas to be served by the proposed project;
    (ii) The training needs of program participants to be served by the 
proposed project;
    (iii) How these needs will be met through the proposed project; and
    (iv) The relationship of the proposed project to other ongoing 
personnel development programs in the geographic area or areas to be 
served by the proposed project.
    (2) The Secretary reviews each application to determine the extent 
to which, upon completion of their training, program participants will 
work with programs that provide vocational education to limited English 
proficient individuals.
    (b) Program design. (20 points) The Secretary reviews each 
application to determine the quality of the program design and the 
potential of the project

[[Page 108]]

to have a lasting impact on the geographic area or areas to be served by 
the proposed project, including--
    (1) Potential to increase the skill level of program participants, 
with particular regard to the following areas:
    (i) Knowledge of the needs of limited English proficient individuals 
enrolled in vocational education programs, and how those needs should 
influence teaching strategies and program design.
    (ii) Understanding of bilingual vocational training methodologies.
    (iii) Techniques for preparing limited English proficient 
individuals for employment; and
    (2) Potential to increase access to vocational education for limited 
English proficient individuals.
    (c) Plan of operation. (15 points) The Secretary reviews each 
application for an effective plan of management that ensures proper and 
efficient administration of the project, including--
    (1) Clearly defined project objectives that relate to the purpose of 
the Bilingual Vocational Instructor Training Program;
    (2) For each objective, the specific tasks to be performed in order 
to achieve the specified project objective; and
    (3) How the applicant plans to use its resources and personnel to 
achieve each objective.
    (d) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications of the director and other key personnel to be 
used in the project;
    (ii) The appropriateness of the time that each person referred to in 
paragraph (d)(1)(i) of this section will commit to the project; and
    (iii) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that personnel will be selected without regard to 
race, color, national origin, gender, age, or disability.
    (2) To determine personnel qualifications under paragraph (d)(1)(i) 
of this section, the Secretary considers--
    (i) Experience and training in fields related to the objectives of 
the project;
    (ii) Experience and training in project management; and
    (iii) Any other qualifications that pertain to the quality of the 
project.
    (e) Budget and cost effectiveness. (5 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is sufficient to support the proposed project, and 
that it represents a cost effective use of Bilingual Vocational 
Instructor Training Program funds;
    (2) Costs are necessary and reasonable in relation to the objectives 
of the proposed project; and
    (3) The facilities that the applicant plans to use are adequate for 
the proposed project;
    (f) Evaluation plan. (10 points) The Secretary reviews each 
application to determine the quality of the project's evaluation plan, 
including the extent to which the plan--
    (1) Is clearly explained and appropriate for the bilingual 
vocational instructor training project;
    (2) To the extent possible, is objective and will produce data that 
are quantifiable;
    (3) Identifies outcomes of the project in terms of enrollment, 
completion and after-training work commitments of participants by sex, 
racial or ethnic group, and by level and kinds of language proficiency;
    (4) Identifies expected learning and skills outcomes for 
participants and how those outcomes will be measured; and
    (5) Includes activities during the formative stages of the project 
to help guide and improve the project, as well as a summative evaluation 
that includes recommendations for replicating project activities and 
results.
    (g) Dissemination plan. (10 points) The Secretary reviews each 
application to determine the effectiveness and efficiency of the plan to 
disseminate information about the project and demonstrate project 
activities and results, including--
    (1) High quality in its design and procedures for evaluating the 
effectiveness of the dissemination plan; and
    (2) A description of the types of materials the applicant plans to 
develop

[[Page 109]]

and make available to help others replicate project activities, and the 
methods to be used to make the materials available.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2441(b))



Sec. 428.22  What additional factors does the Secretary consider?

    (a) After evaluating the applications according to the criteria in 
Sec. 428.21, and consulting with the appropriate State board established 
under section 111 of the Act, the Secretary determines whether the most 
highly rated applications are equitably distributed among populations of 
individuals with limited English proficiency within the affected State.
    (b) The Secretary may select other applications for funding if doing 
so would improve the--
    (1) Equitable distribution of assistance among populations of 
individuals with limited English proficiency within the affected State; 
or
    (2) Geographical distribution of projects funded under this program.

(Authority: 20 U.S.C. 2441(d)(5))



PART 429_BILINGUAL VOCATIONAL MATERIALS, METHODS, AND TECHNIQUES PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
429.1  What is the Bilingual Vocational Materials, Methods, and 
          Techniques Program?
429.2  Who is eligible to apply for assistance under this program?
429.3  What regulations apply to this program?
429.4  What definitions apply to this program?

Subpart B_What Kinds of Activities Does the Secretary Assist Under This 
                                Program?

429.10  What types of projects may be funded?
429.11  How does the Secretary establish priorities for this program?

                Subpart C_How Does One Apply for a Grant?

429.20  What must an application include?

             Subpart D_How Does the Secretary Make a Grant?

429.30  How does the Secretary evaluate an application?
429.31  What selection criteria does the Secretary use?

    Authority: Sec. 441(c) of the Carl D. Perkins Vocational Education 
Act, 20 U.S.C. 2441(c), as enacted by Pub. L. 98-524, unless otherwise 
noted.

    Source: 50 FR 33255, Aug. 16, 1985, unless otherwise noted. 
Redesignated at 57 FR 36771, Aug. 14, 1992.



                            Subpart A_General



Sec. 429.1  What is the Bilingual Vocational Materials, Methods, and
Techniques Program?

    The Bilingual Vocational Materials, Methods, and Techniques Program 
provides financial assistance for the development of instructional and 
curriculum materials, methods, or techniques for bilingual vocational 
training for individuals with limited English proficiency.

(Authority: Sec. 441(c)(1); 20 U.S.C. 2441(c)(1))



Sec. 429.2  Who is eligible to apply for assistance under this program?

    (a) The following are eligible to apply for grants, contracts, or 
cooperative agreements under this program:
    (1) State agencies.
    (2) Educational institutions.
    (3) Nonprofit organizations.
    (b) The following are eligible for contracts under this program:
    (1) Private for-profit organizations.
    (2) Individuals.

(Authority: Sec. 441(c)(1); 20 U.S.C. 2441(c)(1))



Sec. 429.3  What regulations apply to this program?

    The following regulations apply to the Bilingual Vocational 
Materials, Methods, and Techniques Program:
    (a) The regulations in 34 CFR part 400.
    (b) The regulations in this part.

(Authority: Sec. 441(c); 20 U.S.C. 2441(c))

[[Page 110]]



Sec. 429.4  What definitions apply to this program?

    The definitions in 34 CFR 400.4 apply to this program.

(Authority: Sec. 441(c); 20 U.S.C. 2441(c))



Subpart B_What Kinds of Activities Does the Secretary Assist Under This 
                                Program?



Sec. 429.10  What types of projects may be funded?

    The Secretary provides assistance through grants, contracts, or 
cooperative agreements for--
    (a) Research in bilingual vocational training;
    (b) The development of instructional and curriculum materials, 
methods, or techniques;
    (c) Training projects to familiarize State agencies and training 
institutions with research findings and with successful pilot and 
demonstration projects in bilingual vocational education and training; 
and
    (d) Experimental, developmental, pilot, and demonstration projects.

(Authority: Sec. 441.(c)(2); 20 U.S.C. 2441(c)(2))



Sec. 429.11  How does the Secretary establish priorities for this program?

    (a) The Secretary may announce, through one or more notices 
published in the Federal Register, the priorities for this program, if 
any, from the types of projects described in Sec. 429.10.
    (b) The Secretary may establish a separate competition for one or 
more of the priorities selected. If a separate competition is 
established for one or more priorities, the Secretary may reserve all 
applications that relate to those priorities for review as part of the 
separate competition.

(Authority: Sec. 441(c)(2); 20 U.S.C. 2441(c)(2))

[50 FR 33255, Aug. 16, 1985. Redesignated at 57 FR 36771, Aug. 14, 1992, 
and amended at 59 FR 1652, Jan. 12, 1994]



                Subpart C_How Does One Apply for a Grant?



Sec. 429.20  What must an application include?

    An application under this part must--
    (a) Describe the qualifications of staff responsible for the 
project; and
    (b) Provide that the activities and services for which assistance is 
sought will be administered by or under the supervision of the 
applicant.

(Approved by the Office of Management and Budget under control number 
1830-0013)

(Authority: Sec. 441(d)(1), (3); 20 U.S.C. 2441(d)(1), (3))



             Subpart D_How Does the Secretary Make a Grant?



Sec. 429.30  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 429.31.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 429.31.
    (c) Subject to paragraph (d) of this section, the maximum possible 
points for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition, as announced in a notice published in the 
Federal Register, the Secretary may assign the reserved 15 points among 
the criteria in Sec. 429.31.

(Authority: Sec. 441(c), 20 U.S.C. 2441(c))

[50 FR 33255, Aug. 16, 1985. Redesignated at 57 FR 36771, Aug. 14, 1992, 
and amended at 59 FR 1652, Jan. 12, 1994]



Sec. 429.31  What selection criteria does the Secretary use?

    The Secretary uses the following selection criteria in evaluating 
each application:
    (a) Need. (20 points) (1) The Secretary reviews each application for 
information that shows the need for the proposed services and activities 
for individuals with limited English proficiency.

[[Page 111]]

    (2) The Secretary looks for information that shows--
    (i) Specific evidence of the need; and
    (ii) Specific information about how the need will be met.
    (b) Plan of operation. (20 points)
    (1) The Secretary reviews each application for information that 
shows the quality of the plan of operation for the project.
    (2) The Secretary looks for information that shows--
    (i) High quality in the design of the project;
    (ii) An effective plan of management that ensures proper and 
efficient administration of the project;
    (iii) A clear description of how the objectives of the project 
relate to the purpose of the program;
    (iv) The way the applicant plans to use its resources and personnel 
to achieve each objective; and
    (v) A clear description of how the applicant will provide equal 
access and treatment for eligible project participants who are members 
of groups that have been traditionally underrepresented, such as--
    (A) Members of racial or ethnic minority groups;
    (B) Women;
    (C) Handicapped persons; and
    (D) The elderly.
    (c) Quality of key personnel. (20 points)
    (1) The Secretary reviews each application for information that 
shows the qualifications of the key personnel the applicant plans to use 
on the project.
    (2) The Secretary looks for information that shows--
    (i) The qualifications of the project director (if one is to be 
used);
    (ii) The qualifications of each of the other key personnel to be 
used in the project;
    (iii) The time that each person referred to in paragraphs (c)(2) (i) 
and (ii) of this section will commit to the project; and
    (iv) The extent to which the applicant, as part of its 
nondiscriminatory employment practices, encourages applications for 
employment from persons who are members of groups that have been 
traditionally underrepresented, such as--
    (A) Members of racial or ethnic minority groups;
    (B) Women;
    (C) Handicapped persons; and
    (D) The elderly.
    (3) To determine personnel qualifications, the Secretary considers 
experience and training, in fields related to the objectives of the 
project, as well as other information that the applicant provides.
    (d) Budget and cost effectiveness. (10 points)
    (1) The Secretary reviews each application for information that 
shows that the project has an adequate budget and is cost effective.
    (2) The Secretary looks for information that shows--
    (i) The budget for the project is adequate to support the project 
activities; and
    (ii) Costs are reasonable in relation to the objectives of the 
project.
    (e) Evaluation plan. (10 points)
    (1) The Secretary reviews each application for information that 
shows the quality of the evaluation plan for the project.

    Cross Reference: See 34 CFR 75.590 (Evaluation by the grantee).

    (2) The Secretary looks for information that shows methods of 
evaluation that are appropriate for the project and, to the extent 
possible, are objective and produce data that are quantifiable.
    (f) Adequacy of resources. (5 points)
    (1) The Secretary reviews each application for information that 
shows that the applicant plans to devote adequate resources to the 
project.
    (2) The Secretary looks for information that shows--
    (i) The facilities that the applicant plans to use are adequate; and
    (ii) The equipment and supplies that the applicant plans to use are 
adequate.

(Authority: Sec. 441(c); 20 U.S.C. 2441(c))

(Approved by the Office of Management and Budget under control number 
1830-0013)

[50 FR 33255, Aug. 16, 1985; 50 FR 38802, Sept. 25, 1985]

                          PARTS 460 [RESERVED]

[[Page 112]]



PART 461_ADULT EDUCATION STATE-ADMINISTERED BASIC GRANT PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
461.1  What is the Adult Education State-administered Basic Grant 
          Program?
461.2  Who is eligible for an award?
461.3  What are the general responsibilities of the State educational 
          agency?
461.4  What regulations apply?
461.5  What definitions apply?

              Subpart B_How Does a State Apply for a Grant?

461.10  What documents must a State submit to receive a grant?
461.11  How is the State plan developed?
461.12  What must the State plan contain?
461.13  What procedures does a State use to submit its State plan?
461.14  When are amendments to a State plan required?

        Subpart C_How Does the Secretary Make a Grant to a State?

461.20  How does the Secretary make allotments?
461.21  How does the Secretary make reallotments?
461.22  What criteria does the Secretary use in approving a State's 
          description of efforts relating to program reviews and 
          evaluations?
461.23  How does the Secretary approve State plans and amendments?

   Subpart D_How Does a State Make an Award to an Eligible Recipient?

461.30  Who is eligible for a subgrant or contract?
461.31  How does a State award funds?
461.32  What are programs for corrections education and education for 
          other institutionalized adults?
461.33  What are special experimental demonstration projects and teacher 
          training projects?

            Subpart E_What Conditions Must Be Met by a State?

461.40  What are the State and local administrative costs requirements?
461.41  What are the cost-sharing requirements?
461.42  What is the maintenance of effort requirement?
461.43  Under what circumstances may the Secretary waive the maintenance 
          of effort requirement?
461.44  How does a State request a waiver of the maintenance of effort 
          requirement?
461.45  How does the Secretary compute maintenance of effort in the 
          event of a waiver?
461.46  What requirements for program reviews and evaluations must be 
          met by a State?

   Subpart F_What Are the Administrative Responsibilities of a State?

461.50  What are a State's responsibilities regarding a State advisory 
          council on adult education and literacy?
461.51  What are the membership requirements of a State advisory 
          council?
461.52  What are the responsibilities of a State advisory council?
461.53  May a State establish an advisory body other than a State 
          advisory council?

    Authority: 20 U.S.C. 1201 et seq., unless otherwise noted.

    Source: 57 FR 24092, June 5, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 461.1  What is the Adult Education State-administered Basic Grant
Program?

    The Adult Education State-administered basic Grant Program (the 
program) is a cooperative effort between the Federal Government and the 
States to provide adult education. Federal funds are granted to the 
States on a formula basis. Based on need and resources available, States 
fund local programs of adult basic education, programs of adult 
secondary education, and programs for adults with limited English 
proficiency.

(Authority: 20 U.S.C. 1203)



Sec. 461.2  Who is eligible for an award?

    State educational agencies (SEAs) are eligible for awards under this 
part.

(Authority: 20 U.S.C. 1203)



Sec. 461.3  What are the general responsibilities of the State educational
agency?

    (a) A State that desires to participate in the program shall 
designate the SEA as the sole State agency responsible for the 
administration and supervision of the program under this part.

[[Page 113]]

    (b) The SEA has the following general responsibilities:
    (1) Development, submission, and implementation of the State 
application and plan, and any amendments to these documents.
    (2) Evaluation of activities, as described in section 352 of the Act 
and Sec. 461.46.
    (3) Consultation with the State advisory council, if a State 
advisory council has been established under section 332 of the Act and 
Sec. 461.50.
    (4) Consultation with other appropriate agencies, groups, and 
individuals involved in the planning, administration, evaluation, and 
coordination of programs funded under the Act.
    (5)(i) Assignment of personnel as may be necessary for State 
administration of programs under the Act.
    (ii) The SEA must ensure that--
    (A) These personnel are sufficiently qualified by education and 
experience; and
    (B) There is a sufficient number of these personnel to carry out the 
responsibilities of the State.
    (6) If the State imposes any rule or policy relating to the 
administration and operation of programs under the Act (including any 
rule or policy based on State interpretation of any Federal law, 
regulation, or guidance), the SEA shall identify the rule or policy as a 
State-imposed requirement.
    (7) By July 25, 1993, development and implementation, in 
consultation with a widely representative group of appropriate experts, 
educators, and administrators, of indicators of program quality to be 
used to evaluate programs assisted under this part, as required by 
section 352 of the Act and Sec. 461.46, to determine whether those 
programs are effective, including whether those programs are 
successfully recruiting, retaining, and improving the literacy skills of 
the individuals served under those programs.

(Authority: 20 U.S.C. 1205 (a) and (b)



Sec. 461.4  What regulations apply?

    The following regulations apply to the program:
    (a) The regulations in this part 461.
    (b) The regulations in 34 CFR part 460.

(Authority: 20 U.S.C. 1201 et seq.)



Sec. 461.5  What definitions apply?

    (a) The definitions in 34 CFR 460.4 apply to this part.
    (b) For the purposes of this part, ``State'' includes the Federated 
States of Micronesia and the Republic of the Marshall Island.

(Authority: 20 U.S.C. 1201 et seq.)



              Subpart B_How Does a State Apply for a Grant?



Sec. 461.10  What documents must a State submit to receive a grant?

    An SEA shall submit the following to the Secretary as one document:
    (a) A State plan, developed once every four years, that meets the 
requirements of the Act and contains the information required in 
Sec. 461.12.
    (b) A State application consisting of program assurances, signed by 
an authorized official of the SEA, to provide that--
    (1) The SEA will provide such methods of administration as are 
necessary for the proper and efficient administration of the Act;
    (2) Federal funds granted to the State under the Act will be used to 
supplement, and not supplant, the amount of State and local funds 
available for uses specified in the Act;
    (3) Programs, services, and activities funded in accordance with the 
uses specified in section 322 of the Act are designed to expand or 
improve the quality of adult education programs, including programs for 
educationally disadvantaged adults, to initiate new programs of high 
quality, or, if necessary, to maintain programs;
    (4) The SEA will provide such fiscal control and fund accounting 
procedures as may be necessary to ensure proper disbursement of, and 
accounting for, Federal funds paid to the State (including Federal funds 
paid by the State to eligible recipients under the Act);
    (5) The SEA has instituted policies and procedures to ensure that 
copies of the State plan and all statements of general policy, rules, 
regulations, and

[[Page 114]]

procedures will be made available to the public;
    (6) The SEA will comply with the maintenance of effort requirements 
in section 361(b) of the Act;

    Cross Reference: See Sec. 461.42 What is the maintenance of effort 
requirement?

    (7) Adults enrolled in adult basic education programs, including 
programs for adults with limited English proficiency, will not be 
charged tuition, fees, or any other charges, or be required to purchase 
any books or any other materials that are needed for participation in 
the program;
    (8) The SEA may use not more than 20 percent of the funds granted to 
the State under the Act for programs of equivalency for a certificate of 
graduation from secondary school;
    (9) As may be required by the Secretary, the SEA will report 
information concerning special experimental demonstration projects and 
teacher training projects supported under section 353 of the Act; and
    (10) The SEA annually will report information abut the State's adult 
education students, programs, expenditures, and goals, as may be 
required by the Secretary.

(Authority: 20 U.S.C. 1203a(b)(2), 1206(a), 1206b, 1207a, 1208, and 
1209(b))

(Approved by the Office of Management and Budget under control number 
1830-0026)



Sec. 461.11  How is the State plan developed?

    In formulating the State plan, the SEA shall--
    (a) Meet with and utilize the State advisory council, if a council 
is established under section 332 of the Act and Sec. 461.50;
    (b) After providing appropriate and sufficient notice to the public, 
conduct at least two public hearings in the State for the purpose of 
affording all segments of the public, including groups serving 
educationally disadvantaged adults, and interested organizations and 
groups, an opportunity to present their views and make recommendations 
regarding the State plan;
    (c) Make a thorough assessment of--
    (1) The needs of adults, including educationally disadvantaged 
adults, eligible to be served as well as adults proposed to be served 
and those currently served by the program; and
    (2) The capability of existing programs and institutions to meet 
those needs; and
    (d) State the changes and improvements required in adult education 
to fulfill the purposes of the Act and the options for implementing 
these changes and improvements.

(Approved by the Office of Management and Budget under control number 
1830-0026)

(Authority: 20 U.S.C. 1206a(a)(1) and (2), (b))



Sec. 461.12  What must the State plan contain?

    (a) Consistent with the assessment described in Sec. 461.11(c), a 
State plan must, for the four-year period covered by the plan--
    (1) Describe the adult education needs of all segments of the adult 
population in the State identified in the assessment, including the 
needs of those adults who are educationally disadvantaged:
    (2) Describe and provide for the fulfillment of the literacy needs 
of individuals in the State;
    (3) Set forth measurable goals for improving literacy levels, 
retention in literacy programs, and long-term learning gains of 
individuals in the State and describe a comprehensive approach for 
achieving those goals, including the development of indicators of 
program quality as required by section 331(a)(2) of the Act and 
Sec. 461.3(b)(7).
    (4) Describe the curriculum, equipment, and instruments that are 
being used by instructional personnel in programs and indicate how 
current these elements are;
    (5) Describe the means by which the delivery of adult education 
services will be significantly expanded (including efforts to reach 
typically underserved groups such as educationally disadvantaged adults, 
individuals of limited English proficiency, and adults with 
disabilities) through coordination by agencies, institutions, and 
organizations including the public school system, businesses, labor 
unions, libraries, institutions of higher education, public health 
authorities, employment or

[[Page 115]]

training programs, antipoverty programs, organizations providing 
assistance to the homeless, and community and voluntary organizations;
    (6) Describe the means by which representatives of the public and 
private sectors were involved in the development of the State plan and 
how they will continue to be involved in the implementation of the plan, 
especially in the expansion of the delivery of adult education services 
by cooperation and collaboration with those public and private agencies, 
institutions, and organizations;
    (7) Describe the capability of existing programs and institutions to 
meet the needs described in paragraph (a)(1) of this section, including 
the other Federal and non-Federal resources available to meet those 
needs;
    (8) Describe the outreach activities that the State intends to carry 
out during the period covered by the plan, including specialized 
efforts--such as flexible course schedules, auxiliary aids and services, 
convenient locations, adequate transportation, and child care services--
to attract and assist meaningful participation in adult education 
programs;
    (9)(i) Describe the manner in which the SEA will provide for the 
needs of adults of limited English proficiency or no English proficiency 
by providing programs designed to teach English and, as appropriate, to 
allow these adults to progress effectively through the adult education 
program or to prepare them to enter the regular program of adult 
education as quickly as possible.
    (ii) These programs may, to the extent necessary, provide 
instruction in the native language of these adults or may provide 
instruction exclusively in English.
    (iii) These programs must be carried out in coordination with 
programs assisted under the Bilingual Education Act and with bilingual 
vocational education programs under the Carl D. Perkins Vocational and 
Applied Technology Education Act;
    (10) Describe how the particular education needs of adult 
immigrants, the incarcerated, adults with disabilities, the chronically 
unemployed, homeless adults, the disadvantaged, and minorities in the 
State will be addressed;
    (11)(i) Describe the progress the SEA has made in achieving the 
goals set forth in each State plan subsequent to the initial State plan 
filed in 1989; and
    (ii) Describe how the assessment of accomplishments and the findings 
of program reviews and evaluations required by section 352 of the Act 
and Sec. 461.46 were considered in establishing the State's goals for 
adult education in the plan being submitted;
    (12) Describe the criteria the SEA will use in approving 
applications by eligible recipients and allocating funds made available 
under the Act to those recipients;
    (13) Describe the methods proposed for joint planning and 
coordination of programs carried out under the Act with programs 
conducted under applicable Federal and State programs, including the 
Carl D. Perkins Vocational and Applied Technology Education Act, the Job 
Training Partnership Act, the Rehabilitation Act of 1973, the 
Individuals with Disabilities Education Act, the Immigration Reform and 
Control Act of 1986, the Higher Education Act of 1965, and the Domestic 
Volunteer Service Act, to ensure maximum use of funds and to avoid 
duplication of services;
    (14) Describe the steps taken to utilize volunteers, particularly 
volunteers assigned to the Literacy Corps established under the Domestic 
Volunteer Service Act and volunteers trained in programs carried out 
under section 382 of the Act and 34 CFR part 476, but only to the extent 
that those volunteers supplement and do not supplant salaried employees;
    (15) Describe the measures to be taken to ensure that adult 
education programs, services, and activities under the Act will take 
into account the findings of program reviews and evaluations required by 
section 352 of the Act and Sec. 461.46;

    Cross Reference: See Sec. 461.22. What criteria does the Secretary 
use in approving a State's description of efforts relating to program 
reviews and evaluation?

    (16) Report the amount of administrative funds to be spent on 
program improvements;

[[Page 116]]

    (17) Contain assurances that financial assistance provided under 
this part is used to assist and expand existing programs and to develop 
new programs for--
    (i) Adults whose lack of basic skills renders them unemployable;
    (ii) Adults whose lack of basic skills keeps them, whether employed 
or unemployed, from functioning independently in society; and
    (iii) Adults whose lack of basic skills severely reduces their 
ability to have a positive effect on the literacy of their children;
    (18) Describe the SEA's policies, procedures, and activities for 
carrying out special experimental demonstration projects and teacher 
training projects that meet the requirements of Sec. 461.33;
    (19) Describe the SEA's policies, procedures, and activities for 
carrying out corrections education and education for other 
institutionalized adults that meet the requirements of Sec. 461.32;
    (20) Describe the SEA's planned use of Federal funds for 
administrative costs under Sec. 461.40(a), including any planned 
expenditures for a State advisory council under Sec. 461.50.

    Note: An additional source of funding exists under section 356(g) of 
the Act and 34 CFR part 464, but need not be reported under this 
paragraph.


and
    (21) Include a summary of recommendations received and the SEA's 
responses to the recommendations made through the State plan development 
process required under Sec. 461.11(b).
    (b) Each State plan must provide assurance that public or private 
non-profit entities eligible under Sec. 461.30--local educational 
agencies, public or private nonprofit agencies, community-based 
organizations, correctional education agencies, postsecondary 
educational institutions, institutions that serve educationally 
disadvantaged adults, and any other institution that has the ability to 
provide literacy services to adults and families--will be provided 
direct and equitable access to all Federal funds provided under this 
part, including--
    (1) The right to submit applications directly to the SEA for those 
funds; and
    (2) Use by the SEA of a process for selecting recipients of those 
funds that gives each agency, institution, and organization a fair 
chance of receiving an award.
    (c) To be eligible to participate in the State-administered 
Workplace Literacy Program under section 371(b) of the Act, an SEA shall 
comply with the requirements in 34 CFR 462.10.
    (d) To be eligible to participate in the State-administered English 
Literacy Program under section 372(a) of the Act, an SEA shall comply 
with the requirements in 34 CFR 463.10.
    (e) In order for a State, or the local recipients within the State, 
to be eligible to apply for funds under the Adult Migrant Farmworker and 
Immigrant Education Program under section 381 of the Act and 34 CFR part 
475, an SEA shall describe the types of projects appropriate for meeting 
the educational needs of adult migrant farm workers and immigrants under 
section 381 of the Act.

(Approved by the Office of Management and Budget under control number 
1830-0026)

(Authority: 20 U.S.C. 1203a(a)(1); 1204; 1205(c); 1206a(a)(2), 
(b)(1)(B), (c), (d); 1208; 1211(b)(3)(A); 1211a(a)(2); and 1213(a))



Sec. 461.13  What procedures does a State use to submit its State plan?

    (a) An SEA shall submit its State plan to the Secretary not later 
than 90 days prior to the first program year for which the plan is in 
effect.
    (b)(1) Not less than sixty days prior to submitting the State plan 
to the Secretary, the SEA shall give the State advisory council, if one 
is established under section 332 of the Act and Sec. 461.50, an 
opportunity to review and comment on the plan.
    (2) The SEA shall respond to all timely and substantive objections 
of the State advisory council and include with the State plan a copy of 
those objections and its response.
    (c)(1) Not less than sixty days prior to submitting the State plan 
to the Secretary, the SEA shall give the following entities an 
opportunity to review and comment on the plan:
    (i) The State board or agency for vocational education.

[[Page 117]]

    (ii) The State Job Training Coordinating Council under the Job 
Training Partnership Act.
    (iii) The State board or agency for postsecondary education.
    (2) Comments (to the extent those comments are received in a timely 
fashion) of entities listed in paragraph (c)(1) of this section and the 
SEA's response must be included with the State plan.

(Approved by the Office of Management and Budget under control number 
1830-0026)

(Authority: 20 U.S.C. 1206(b) and 1206a(a)(3) (A) and (B))



Sec. 461.14  When are amendments to a State plan required?

    (a) General. If an amendment to the State plan is necessary, the SEA 
shall submit the amendment to the Secretary not later than 90 days prior 
to the program year of operation to which the amendment applies.
    (b) Indicators of program quality. Each SEA shall amend its plan by 
July 25, 1993, to include the indicators of program quality required by 
section 331 of the Act and Sec. 461.3(b)(7). Cross-Reference: See 34 CFR 
76.140-76.142 Amendments.

(Approved by the Office of Management and Budget under control number 
1830-0026)

(Authority: 20 U.S.C. 1207(a))



        Subpart C_How Does the Secretary Make a Grant to a State?



Sec. 461.20  How does the Secretary make allotments?

    The Secretary determines the amount of each State's grant according 
to the formula in section 313(b) of the Act.

(Authority: 20 U.S.C. 1201b(b))



Sec. 461.21  How does the Secretary make reallotments?

    (a) Any amount of any State's allotment under section 313(b) of the 
Act that the Secretary determines is not required, for the period the 
allotment is available, for carrying out that State's plan, is 
reallotted to other States on dates that the Secretary may fix.
    (b) The Secretary determines any amounts to be reallotted on the 
basis of--
    (1) Reports, filed by the States, of the amounts required to carry 
out their State plans; and
    (2) Other information available to the Secretary.
    (c) Reallotments are made to other States in proportion to those 
State's original allotments for the fiscal year in which allotments 
originally were made, unless the Secretary reduces a State's 
proportionate share by the amount the Secretary estimates will exceed 
the sum the State needs and will be able to use under its plan.
    (d) The total of any reductions made under paragraph (c) of this 
section is reallotted among those States whose proportionate shares were 
not reduced.
    (e)(1) Any amount reallotted to a State during a fiscal year is 
deemed part of the State's allotment for that fiscal year.
    (2) A reallotment of funds from one State to another State does not 
extend the period of time in which the funds must be obligated.

(Authority: 20 U.S.C. 1201b(c))



Sec. 461.22  What criteria does the Secretary use in approving a
State's description of efforts relating to program reviews and
evaluations?

    The Secretary considers the following criteria in approving a 
State's description of efforts relating to program reviews and 
evaluations under section 342(c)(13) of the Act and Sec. 461.12(a)(15):
    (a) The extent to which the State will have effective procedures for 
using the findings of program reviews and evaluations to identify, on a 
timely basis, those programs, services, and activities under the Act 
that are not meeting the educational goals set forth in the State plan 
and approved applications of eligible recipients.
    (b) The adequacy of the State's procedures for effecting timely 
changes that will enable programs, services, and activities identified 
under paragraph (a) of this section to meet the educational goals in the 
State plan and approved applications of eligible recipients.

[[Page 118]]

    (c) The extent to which the State will continue to review those 
programs, activities, and services, and affect further changes as 
necessary to meet those educational goals.

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1206a(c)(13) and 1207a)



Sec. 461.23  How does the Secretary approve State plans and amendments?

    (a) The Secretary approves, within 60 days of receipt, a State plan 
or amendment that the Secretary determines complies with the applicable 
provisions of the Act and the regulations in this part.
    (b) In approving a State plan or amendment, the Secretary considers 
any information submitted in accordance with Sec. 461.13 (b) and (c).
    (c) The Secretary notifies the SEA, in writing, of the granting or 
withholding of approval.
    (d) The Secretary does not finally disapprove a State plan or 
amendment without first affording the State reasonable notice and 
opportunity for a hearing.

(Authority: 20 U.S.C. 1206(b), 1206a(a)(3), and 1207(b))



   Subpart D_How Does a State Make an Award to an Eligible Recipient?



Sec. 461.30  Who is eligible for a subgrant or contract?

    (a) The following public or private nonprofit entities are eligible 
to apply to the SEA for an award:
    (1) A local educational agency (LEA).
    (2) A public or private nonprofit agency.
    (3) A correctional education agency.
    (4) A community-based organization.
    (5) A postsecondary educational institution.
    (6) An institution that serves educationally disadvantaged adults.
    (7) Any other institution that has the ability to provide literacy 
services to adults and families.
    (b) A public or private nonprofit entity listed in paragraph (a) of 
this section may apply on behalf of a consortium that includes a for-
profit agency, organization, or institution that can make a significant 
contribution to attaining the objectives of the Act.
    (c)(1) Each State shall also use an amount of funds provided under 
this part, as determined by the State given the State's needs and 
resources for adult education, for competitive 2-year grants to public 
housing authorities for literacy programs and related activities. Any 
public housing authority that receives a grant under this paragraph 
shall consult with local adult education providers in conducting 
programs and activities with assistance provided under the grant. Any 
grant provided under this paragraph is referred to as a ``Gateway 
Grant.''
    (2) For the purposes of this part, ``public housing authority'' 
means a public housing agency, as defined in 42 U.S.C. 1437a(b)(6), that 
participates in public housing, as defined in 42 U.S.C. 1437a(b)(1).

(Authority: 20 U.S.C. 1203a(a)(1), (2), (3)(A))



Sec. 461.31  How does a State award funds?

    (a) In selecting local recipients, an SEA shall give preference to 
those local applicants that have demonstrated or can demonstrate a 
capability to recruit and serve educationally disadvantaged adults, 
particularly in areas with a high proportion of adults who do not have a 
certificate of graduation from a school providing secondary education or 
its equivalent.
    (b) An SEA shall award funds on the basis of applications submitted 
by eligible recipients.
    (c) In reviewing a local application, an SEA shall determine that 
the application contains the following:
    (1) A description of current programs, activities, and services 
receiving assistance from Federal, State, and local sources that provide 
adult education in the geographic area proposed to be served by the 
applicant.
    (2) A description of cooperative arrangements (including 
arrangements with business, industry, and volunteer literacy 
organizations as appropriate) that have been made to deliver services to 
adults.
    (3) Assurances that the adult educational programs, services, or 
activities that the applicant proposes to provide are coordinated with 
and do not

[[Page 119]]

duplicate programs, services, or activities made available to adults 
under other Federal, State, and local programs, including the Job 
Training Partnership Act, the Carl D. Perkins Vocational and Applied 
Technology Education Act, the Rehabilitation Act of 1973, the 
Individuals with Disabilities Education Act, the Indian Education Act, 
the Higher Education Act of 1965, and the Domestic Volunteer Service 
Act.
    (4) The projected goals of the applicant with respect to participant 
recruitment, retention, and educational achievement and how the 
applicant will measure and report progress in meeting its goals.
    (5) Any other information the SEA considers necessary.
    (d) In determining which programs receive assistance, the SEA shall 
consider--
    (1) The past effectiveness of applicants in providing services 
(especially with respect to recruitment and retention of educationally 
disadvantaged adults and the learning gains demonstrated by those 
adults);
    (2) The degree to which the applicant will coordinate and utilize 
other literacy and social services available in the community; and
    (3) The commitment of the applicant to serve individuals in the 
community who are most in need of literacy services.
    (e) In reviewing a local application, an SEA may consider the extent 
to which the application--
    (1) Identifies the needs of the population proposed to be served by 
the applicant;
    (2) Proposes activities that are designed to reach educationally 
disadvantaged adults;
    (3) Describes a project that gives special emphasis to adult basic 
education;
    (4) Describes adequate outreach activities, such as--
    (i) Flexible schedules to accommodate the greatest number of adults 
who are educationally disadvantaged;
    (ii) Location of facilities offering programs that are convenient to 
large concentrations of the adult populations identified by the State in 
its four-year State plan or how the locations of facilities will be 
convenient to public transportation; and
    (iii) The availability of day care and transportation services to 
participants in the project;
    (5) Describes proposed programs, activities, and services that 
address the identified needs;
    (6) Describes the resources available to the applicant--other than 
Federal and State adult education funds--to meet those needs (for 
example, funds provided under the Job Training Partnership Act, the Carl 
D. Perkins Vocational and Applied Technology Education Act, the 
Rehabilitation Act of 1973, the Individuals with Disabilities Education 
Act, the Indian Education Act, the Higher Education Act of 1965, or the 
Domestic Volunteer Service Act, and local cash or in-kind 
contributions); and
    (7) Describes project objectives that can be accomplished within the 
amount of the applicant's budget request.
    (f) An SEA may not approve an application for a consortium that 
includes a for-profit agency, organization or institution unless the 
State has first determined that--
    (1) The for-profit entity can make a significant contribution to 
attaining the objectives of the Act; and
    (2) The public or private nonprofit agency, organization, or 
institution will enter into a contract with the for-profit agency, 
organization, or institution for the establishment or expansion of 
programs.
    (g) If an SEA awards funds to a consortium that includes a for-
profit agency, organization, or institution, the award must be made 
directly to the public or private nonprofit agency, organization, or 
institution that applies on behalf of the consortium.

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1203a(a) and 1206a(c)(4))



Sec. 461.32  What are programs for corrections education and education
for other institutionalized adults?

    (a) An SEA shall use not less than 10 percent of its grant for 
educational

[[Page 120]]

programs for criminal offenders in corrections institutions and for 
other institutionalized adults. Those programs may include--
    (1) Academic programs for--(i) Basic education with special emphasis 
on reading, writing, vocabulary, and arithmetic;
    (ii) Special education, as defined by State law;
    (iii) Bilingual education or English-as-a-second-language 
instruction; and
    (iv) Secondary school credit;
    (2) Vocational training programs;
    (3) Library development and library service programs;
    (4) Corrections education programs, including training for teacher 
personnel specializing in corrections education, such as courses in 
social education, basis skills instruction, and abnormal psychology;
    (5) Guidance and counseling programs;
    (6) Supportive services for criminal offenders, with special 
emphasis on the coordination of educational services with agencies 
furnishing services to criminal offenders after their release; and
    (7) Cooperative programs with educational institutions, community-
based organizations of demonstrated effectiveness, and the private 
sector, that are designed to provide education and training.
    (b)(1) An SEA shall establish its own statewide criteria and 
priorities for administering programs for corrections education and 
education for other institutionalized adults.
    (2) The SEA shall determine that an application proposing a project 
under paragraph (a) of this section contains the information in 
Sec. 461.31(c) and any other information the SEA considers necessary.

(Authority: 20 U.S.C. 1203a(b)(1) and 1204)



Sec. 461.33  What are special experimental demonstration projects and
teacher training projects?

    (a) In accordance with paragraph (b) of this section, an SEA shall 
use at least 15 percent of its grant for--
    (1) Special projects that--
    (i) Will be carried out in furtherance of the purposes of the Act;
    (ii) Will be coordinated with other programs funded under the Act; 
and
    (iii)(A) Involve the use of innovative methods (including methods 
for educating adults with disabilities, homeless adults, and adults of 
limited English proficiency), systems, materials, or programs that may 
have national significance or will be of special value in promoting 
effective programs under the Act; or
    (B) Involve programs of adult education, including education for 
adults with disabilities, homeless adults, and adults of limited English 
proficiency, that are part of community school programs, carried out in 
cooperation with other Federal, State, or local programs that have 
unusual promise in promoting a comprehensive or coordinated approach to 
the problems of adults with educational deficiencies; and
    (2)(i) Training persons engaged, or preparing to engage, as 
personnel in programs designed to carry out the purposes of the Act; and
    (ii) Training professional teachers, volunteers, and administrators, 
with particular emphasis on--
    (A) Training--(1) Full-time professional adult educators;
    (2) Minority adult educators; and
    (3) Educators of adults with limited English proficiency; and
    (B) Training teachers to recognize and more effectively serve 
illiterate individuals with learning disabilities and individuals who 
have reading ability below the fifth grade level.
    (b) An SEA shall use at least--
    (1) 10 percent of its grant for the purposes in paragraph (a)(2) of 
this section; and
    (2) Five percent of its grant for the purposes in paragraph (a)(1) 
or (a)(2) of this section, or both.
    (c)(1) An SEA shall establish its own statewide criteria and 
priorities for providing and administering special experimental 
demonstration projects and teacher training projects.
    (2) The SEA shall determine that an application proposing a project 
under paragraph (a) of this section contains--
    (i) The information in Sec. 461.31(c); and
    (ii) Any other information the SEA considers necessary.

(Authority: 20 U.S.C. 1208)

[[Page 121]]



            Subpart E_What Conditions Must be Met by a State?



Sec. 461.40  What are the State and local administrative costs
requirements?

    (a)(1) Beginning with the fiscal year 1991 grant (a grant that is 
awarded on or after July 1, 1991 from funds appropriated in the fiscal 
year 1991 appropriation), an SEA may use no more than 5 percent of its 
grant or $50,000--whichever is greater--for necessary and reasonable 
State administrative costs.
    (2) For grants awarded from funds appropriated for fiscal years 
prior to fiscal year 1991 (grants awarded before July 1, 1991), an SEA 
may determine what percent of its grant is necessary and reasonable for 
State administrative costs.
    (b)(1) At least 95 percent of an eligible recipient's award from the 
SEA must be expended for adult education instructional activities.
    (2) The remainder may be used for local administrative costs--
noninstructional expenses, including planning, administration, 
evaluation, personnel development, and coordination--that are necessary 
and reasonable.
    (3) If the administrative cost limits under paragraph (b)(2) of this 
section are insufficient for adequate planning, administration, 
evaluation, personnel development, and coordination of programs 
supported under the Act, the SEA shall negotiate with local grant 
recipients in order to determine an adequate level of funds to be used 
for noninstructional purposes.

(Authority: 20 U.S.C. 1203b and 1205(c))



Sec. 461.41  What are the cost-sharing requirements?

    (a) The Federal share of expenditures made under a State plan for 
any of the 50 States, the District of Columbia, and the Commonwealth of 
Puerto Rico may not exceed--
    (1) 90 percent of the costs of programs carried out with the fiscal 
year 1988 grant (a grant that is awarded on or after July 1, 1988 from 
funds appropriated in the fiscal year 1988 appropriation);
    (2) 90 percent of the costs of programs carried out with the fiscal 
year 1989 (a grant that is awarded on or after July 1, 1989 from funds 
appropriated in the fiscal year 1989 appropriation);
    (3) 85 percent of the costs of programs carried out with the fiscal 
year 1990 grant (a grant that is awarded on or after July 1, 1990 from 
funds appropriated in the fiscal year 1990 appropriation);
    (4) 80 percent of the costs of programs carried out with the fiscal 
year 1991 grant (a grant that is awarded on or after July 1, 1991 from 
funds appropriated in the fiscal year 1991 appropriation); and
    (5) 75 percent of the costs of programs carried out with the fiscal 
year 1992 grant (a grant that is awarded on or after July 1, 1992 from 
funds appropriated in the fiscal year 1992 appropriation) and from each 
grant thereafter.
    (b) The Federal share for American Samoa, Guam, the Northern Mariana 
Islands, the Federated States of Micronesia, the Republic of the 
Marshall Islands, Palau, and the Virgin Islands is 100 percent.
    (c) The Secretary determines the non-Federal share of expenditures 
under the State plan by considering--
    (1) Expenditures from State, local, and other non-Federal sources 
for programs, services, and activities of adult education, as defined in 
the Act, made by public or private entities that receive from the State 
Federal funds made available under the Act or State funds for adult 
education; and
    (2) Expenditures made directly by the State for programs, services, 
and activities of adult education as defined in the Act.

(Authority: 20 U.S.C. 1209(a); 48 U.S.C. 1681)



Sec. 461.42  What is the maintenance of effort requirement?

    (a) Basic standard. (1)(i) Except as provided in Sec. 461.43, a 
State is eligible for a grant from appropriations for any fiscal year 
only if the Secretary determines that the State has expended for adult 
education from non-Federal sources during the second preceding fiscal 
year (or program year) an amount not less than the amount expended 
during the third preceding fiscal year (or program year).

[[Page 122]]

    (ii) The Secretary determines maintenance of effort on a per student 
expenditure basis or on a total expenditure basis.
    (2) For purposes of determining maintenance of effort, the ``second 
preceding fiscal year (or program year)'' is the fiscal year (or program 
year) two years prior to the year of the grant for which the Secretary 
is determining the State's eligibility. The ``third preceding fiscal 
year (or program year)'' is the fiscal year (or program year) three 
years prior to the year of the grant for which the Secretary is 
determining the State's eligibility.

    Example: Computation based on fiscal year. If a State chooses to use 
the fiscal year as the basis for its maintenance of effort computations, 
the Secretary determines whether a State is eligible for the fiscal year 
1992 grant (a grant that is awarded on or after July 1, 1992 from funds 
appropriated in the fiscal year 1992 appropriation) by comparing 
expenditures from the second preceding fiscal year--fiscal year 1990 
(October 1, 1989-September 30, 1990)--with expenditures from the third 
preceding fiscal year--fiscal year 1989 (October 1, 1988-September 30, 
1989). If there has been no decrease in expenditures from fiscal year 
1989 to fiscal year 1990, the State has maintained effort and is 
eligible for its fiscal year 1992 grant.
    Computation based on program year. If a State chooses to use a 
program year running from July 1 to June 30 as the basis for its 
maintenance of effort computation, the Secretary determines whether a 
State is eligible for funds for the fiscal year 1992 grant by comparing 
expenditures from the second preceding program year--program year 1990 
(July 1, 1989-June 30, 1990)--with expenditures from the third preceding 
program year--program year 1989 (July 1, 1988-June 30, 1989). If there 
has been no decrease in expenditures from program year 1989 to program 
year 1990, the State has maintained effort and is eligible for its 
fiscal year 1992 grant.

    (b) Expenditures to be considered. In determining a State's 
compliance with the maintenance of effort requirement, the Secretary 
considers the expenditures described in Sec. 461.41(c).

(Authority: 20 U.S.C. 1209(b))



Sec. 461.43  Under what circumstances may the Secretary waive the 
maintenance of effort requirement?

    (a) The Secretary may waive, for one year only, the maintenance of 
effort requirement in Sec. 461.42 if the Secretary determines that a 
waiver would be equitable due to exceptional or uncontrollable 
circumstances. These circumstances include, but are not limited to, the 
following:
    (1) A natural disaster.
    (2) An unforeseen and precipitous decline in financial resources.
    (b) The Secretary does not consider a tax initiative or referendum 
to be an exceptional or uncontrollable circumstance.

(Authority: 20 U.S.C. 1209(b)(2))



Sec. 461.44  How does a State request a waiver of the maintenance of
effort requirement?

    An SEA seeking a waiver of the maintenance of effort requirement in 
Sec. 461.42 shall--
    (a) Submit to the Secretary a request for a waiver; and
    (b) Include in the request--
    (1) The reason for the request; and
    (2) Any additional information the Secretary may require.

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1209(b)(2))



Sec. 461.45  How does the Secretary compute maintenance of effort in
the event of a waiver?

    If a State has been granted a waiver of the maintenance of effort 
requirement that allows it to receive a grant from appropriations for a 
fiscal year, the Secretary determines whether the State has meet that 
requirement for the grant to be awarded for the year after the year of 
the waiver by comparing the amount spent for adult education from non-
Federal sources in the second preceding fiscal year (or program year) 
with the amount spent in the fourth preceding fiscal year (or program 
year.)

    Example: Because exceptional or uncontrollable circumstances 
prevented a State from maintaining effort in fiscal year 1990 (October 
1, 1989-September 30, 1990) or in program year 1990 (July 1, 1989-June 
30, 1990) at the level of fiscal year 1989 (October 1, 1988-September 
30, 1989) or program year 1989 (July 1, 1988-June 30, 1989), 
respectively, the Secretary grants the State a waiver of the maintenance 
of effort requirement that permits the State to receive its fiscal year 
1992 grant (a grant that is awarded on or after July 1,

[[Page 123]]

1992 from funds appropriated in the fiscal year 1992 appropriation). In 
order to determine whether a State has met the maintenance of effort 
requirement and therefore is eligible to receive its fiscal year 1993 
grant (the grant to be awarded for the year after the year of the 
waiver), the Secretary compares the State's expenditures from the second 
preceding fiscal year (or program year--fiscal year 1991 (October 1, 
1990-September 30, 1991) or program year 1991 (July 1, 1990-June 30, 
1991)--with expenditures from the fourth preceding fiscal year--fiscal 
year 1989 (October 1, 1988-September 30, 1989) or program year 1989 
(July 1, 1988-June 30, 1989). If the expenditures from fiscal year (or 
program year) 1991 are not less than the expenditures from fiscal year 
(or program year) 1989, the State has maintained effort and is eligible 
for its fiscal year 1993 grant.

(Authority: 20 U.S.C. 1209(b)(2))



Sec. 461.46  What requirements for program reviews and evaluations must
be met by a State?

    (a) An SEA shall provide for program reviews and evaluations of all 
State-administered adult education programs, services, and activities it 
assists under the Act. The SEA shall use its program reviews and 
evaluations to assist LEAs and other recipients of funds in planning and 
operating the best possible programs of adult education and to improve 
the State's programs of adult education.
    (b) In reviewing programs, an SEA shall, during the four-year period 
of the State plan, gather and analyze data--including standardized test 
data--on the effectiveness of State-administered adult education 
programs, services, and activities to determine the extent to which--
    (1) The State's adult education programs are achieving the goals in 
the State plan, including the goal of serving educationally 
disadvantaged adults; and
    (2) Grant recipients have improved their capacity to achieve the 
purposes of the Act.
    (c)(1) An SEA shall, each year during the four-year period of the 
State plan, evaluate in qualitative and quantitative terms the 
effectiveness of programs, services, and activities conducted by at 
least 20 percent of the local recipients of funds so that at the end of 
that period 80 percent of all local recipients have been evaluated once.
    (2) An evaluation must consider the following factors:
    (i) Projected goals of the recipient as described in its application 
pursuant to section 322(a)(4) of the Act and Sec. 461.31(c)(4).
    (ii) Planning and content of the programs, services, and activities.
    (iii) Curriculum, instructional materials, and equipment.
    (iv) Adequacy and qualifications of all personnel.
    (v) Achievement of the goals set forth in the State plan.
    (vi) Extent to which educationally disadvantaged adults are being 
served.
    (vii) Extent to which local recipients of funds have improved their 
capacity to achieve the purposes of the Act.
    (viii) Success of the recipient in meeting the State's indicators of 
program quality after those indicators are developed as required by 
section 331(a)(2) of the Act and Sec. 461.3(b)(7).
    (ix) Other factors that affect program operations, as determined by 
the SEA.
    (d)(1) Within 90 days of the close of each program year, the SEA 
shall submit to the Secretary and make public within the State the 
following:
    (i) With respect to local recipients--
    (A) The number and percentage of local educational agencies, 
community-based organizations, volunteer groups, and other organizations 
that are grant recipients;
    (B) The amount of funds provided to local educational agencies, 
community-based organizations, volunteer groups, and other organizations 
that are grant recipients; and
    (C) The results of the evaluations carried out as required by 
paragraph (c)(1) of this section in the year preceding the year for 
which the data are submitted.
    (ii) The information required under Sec. 461.10(b)(10).
    (iii) A report on the SEA's activities under paragraph (b) of this 
section.
    (iv) A report on the SEA's activities under paragraph (c) of this 
section.
    (2) The reports described in paragraphs (d)(1)(ii) and (iii) of this 
section must include--

[[Page 124]]

    (i) The results of any program reviews and evaluations performed 
during the program year, and a description of how the SEA used the 
program reviews and evaluation process to make necessary changes to 
improve programs; and
    (ii) The comments and recommendations of the State advisory council, 
if a council has been established under Sec. 461.50.
    (e) If an SEA has established a State advisory council, the SEA 
shall--
    (1) Obtain approval of the plan for program reviews and evaluation 
from the State advisory council; and
    (2) Inform the State advisory council of the results of program 
reviews and evaluations so that the State advisory council may perform 
its duties under section 332(f)(7) of the Act.

    Note to Sec. 461.46: In addition to the Adult Education State-
administered Basic Grant Program in this part 461, State-administered 
adult education programs include the State-administered Workplace 
Literacy Program (See 34 CFR part 462) and the State-administered 
English Literacy Program (See 34 CFR part 463).

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1205a(f)(7) and 1207a)



   Subpart F_What are the Administrative Responsibilities of a State?



Sec. 461.50  What are a State's responsibilities regarding a State
advisory council on adult education and literacy?

    (a) A State that receives funds under section 313 of the Act may--
    (1) Establish a State advisory council on adult education and 
literacy; or
    (2) Designate an existing body as the State advisory council.
    (b) If a State elects to establish or designate a State advisory 
council on adult education, the following provisions apply:
    (1) The State advisory council must comply with Secs. 461.51 and 
461.52.
    (2) Members to the State advisory council must be appointed by, and 
be responsible to, the Governor. The Governor shall appoint members in 
accordance with section 332(e) of the Act.
    (3) Costs incurred for a State advisory council that are paid for 
with funds under this part must be counted as part of the allowable 
State administrative costs under the Act.
    (4) The Governor of the State shall determine the amount of funding 
available to a State advisory council.
    (5) A State advisory council's staffing may include professional, 
technical, and clerical personnel as may be necessary to enable the 
council to carry out its functions under the Act.
    (6) Members of a State advisory council and its staff, while serving 
on the business of the council, may receive subsistence, travel 
allowances, and compensation in accordance with State law and 
regulations and State practices applicable to persons performing 
comparable duties and services.

(Authority: 20 U.S.C. 1205a(a)(1), (d)(1), (e))



Sec. 461.51  What are the membership requirements of a State advisory
council?

    (a)(1) The membership of a State advisory council must be broadly 
representative of citizens and groups within the State having an 
interest in adult education and literacy. The council must consist of--
    (i) Representatives of public education;
    (ii) Representatives of private and public sector employment;
    (iii) Representatives of recognized State labor organizations;
    (iv) Representatives of private literacy organizations, voluntary 
literacy organizations, and community-based literacy organizations;
    (v) The Governor of a State, or the designee of the Governor;
    (vi) Representatives of--
    (A) The SEA;
    (B) The State job training agency;
    (C) The State human services agency;
    (D) The State public assistance agency;
    (E) The State library program; and
    (F) The State economic development agency;
    (vii) Officers of the State government whose agencies provide 
funding for literacy services or who may be designated by the Governor 
or the Chairperson of the council to serve whenever matters within the 
jurisdiction of the

[[Page 125]]

agency headed by such an officer are to be considered by the council; 
and
    (viii) Classroom teachers who have demonstrated outstanding results 
in teaching children or adults to read.
    (2) The State shall ensure that there is appropriate representation 
on the State advisory council of--
    (i) Urban and rural areas;
    (ii) Women;
    (iii) Persons with disabilities; and
    (iv) Racial and ethnic minorities.
    (b)(1) A State shall certify to the Secretary the establishment of, 
and membership of, its State advisory council.
    (2) The certification must be submitted to the Secretary prior to 
the beginning of any program year in which the State desires to receive 
a grant under the Act.
    (c) Members must be appointed for fixed and staggered terms and may 
serve until their successors are appointed. Any vacancy in the 
membership of the council must be filled in the same manner as the 
original appointment. Any member of the council may be removed for cause 
in accordance with procedures established by the council.

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1205a (a)(1), (b), (c), and (e))



Sec. 461.52  What are the responsibilities of a State advisory council?

    (a) Subject to paragraphs (b) and (c) of this section, the State 
advisory council shall determine its own procedures, staffing needs 
(subject to funding levels authorized by the Governor of the State), and 
the number, time, place, and conduct of meetings.
    (b) The State advisory council shall meet at least four times each 
year. At least one of those meetings must provide an opportunity for the 
genral public to express views concerning adult education in the State.
    (c) One member more than one-half of the members on the council 
constitute a quorum for the purpose of transmitting recommendations and 
proposals to the Governor of the State, but a lesser number of members 
may constitute a quorum for other purposes.
    (d) A State advisory council shall--
    (1) Meet with the State agencies responsible for literacy training 
during the planning year to advise on the development of a State plan 
for literacy and for adult education that fulfills the literacy and 
adult educations needs of the State, especially with respect to the 
needs of the labor market, economic development goals, and the needs of 
the individuals in the State;
    (2) Advise the Governor, the SEA, and other State agencies 
concerning--
    (i) The development and implementation of measurable State literacy 
and adult education goals consistent with section 342(c)(2) of the Act, 
especially with respect to--
    (A) Improving levels of literacy in the State by ensuring that all 
appropriate State agencies have specific objectives and strategies for 
those goals in a comprehensive approach;
    (B) Improving literacy programs in the State; and
    (C) Fulfilling the long-term literacy goals of the State;
    (ii) The coordination and monitoring of State literacy training 
programs in order to progress toward the long-term literacy goals of the 
State;
    (iii) The improvement of the quality of literacy programs in the 
State by supporting the integration of services, staff training, and 
technology-based learning and the integration of resources of literacy 
programs conducted by various agencies of State government; and
    (iv) Private sector initiatives that would improve adult education 
programs and literacy programs, especially through public-private 
partnerships;
    (3) Review and comment on the plan submitted pursuant to section 
356(h) of the Act and submit those comments to the Secretary;
    (4) Measure progress on meeting the goals and objectives established 
pursuant to paragraph (d)(2)(i) of this section;
    (5) Recommend model systems for implementing and coordinating State 
literacy programs for replication at the local level;
    (6) Develop reporting requirements, standards for outcomes, 
performance measures, and program effectiveness in State program that 
are consistent with

[[Page 126]]

those proposed by the Federal Interagency Task Force on Literacy; and
    (7)(i) Approve the plan for the program reviews and evaluations 
required in section 352 of the Act and Sec. 461.46 and participate in 
implementing and disseminating the program reviews and evaluations. In 
approving the plan for the program reviews and evaluations, the State 
advisory council shall ensure that persons knowledgeable of the daily 
operation of adult education programs are involved;
    (ii) Advise the Governor, the State legislature, and the general 
public of the State with respect to the findings of the program reviews 
and evaluations; and
    (iii) Include in any reports of the program reviews and evaluations 
the council's comments and recommendations.

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1205a (d) and (f), 1206a(a)(3)(B))



Sec. 461.53  May a State establish an advisory body other than a State
advisory council?

    (a) A State may establish an advisory body that is funded solely 
from non-Federal sources.
    (b) The advisory body described in paragraph (a) of this section is 
not required to comply with the requirements of section 332 of the Act 
and this part.
    (c) The non-Federal funds used to support the advisory body may not 
be included in the non-Federal share of expenditures described in 
Sec. 461.41(c).

(Authority: 20 U.S.C. 1205a and 1209)



PART 462_MEASURING EDUCATIONAL GAIN IN THE NATIONAL REPORTING SYSTEM
FOR ADULT EDUCATION--Table of Contents



                            Subpart A_General

Sec.
462.1  What is the scope of this part?
462.2  What regulations apply?
462.3  What definitions apply?
462.4  What are the transition rules for using tests to measure 
          educational gain for the National Reporting System for Adult 
          Education (NRS)?

Subpart B_What Process Does the Secretary Use To Review the Suitability 
                      of Tests for Use in the NRS?

462.10  How does the Secretary review tests?
462.11  What must an application contain?
462.12  What procedures does the Secretary use to review the suitability 
          of tests?
462.13  What criteria and requirements does the Secretary use for 
          determining the suitability of tests?
462.14  How often and under what circumstances must a test be reviewed 
          by the Secretary?

Subpart C [Reserved]

  Subpart D_What Requirements Must States and Local Eligible Providers 
                 Follow When Measuring Educational Gain?

462.40  Must a State have an assessment policy?
462.41  How must tests be administered in order to accurately measure 
          educational gain?
462.42  How are tests used to place students at an NRS educational 
          functioning level?
462.43-462.44  [Reserved]

    Authority: 29 U.S.C. 3292, et seq., unless otherwise noted.

    Source: 73 FR 2315, Jan. 14, 2008, unless otherwise noted.



                            Subpart A_General



Sec. 462.1  What is the scope of this part?

    The regulations in this part establish the--
    (a) Procedures the Secretary uses to determine the suitability of 
standardized tests for use in the National Reporting System for Adult 
Education (NRS) to measure educational gain of participants in an adult 
education program required to report under the NRS; and
    (b) Procedures States and local eligible providers must follow when 
measuring educational gain for use in the NRS.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55551, Aug. 19, 2016]



Sec. 462.2  What regulations apply?

    The following regulations apply to this part:

[[Page 127]]

    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) 34 CFR part 76 (State-Administered Programs).
    (2) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (3) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (4) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (5) 34 CFR part 82 (New Restrictions on Lobbying).
    (6) 34 CFR part 84 (Governmentwide Requirements for Drug-Free 
Workplace (Financial Assistance)).
    (7) 34 CFR part 86 (Drug and Alcohol Abuse Prevention).
    (8) 34 CFR part 97 (Protection of Human Subjects).
    (9) 34 CFR part 98 (Student Rights in Research, Experimental 
Programs, and Testing).
    (10) 34 CFR part 99 (Family Educational Rights and Privacy).
    (b) The regulations in this part 462.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 29 U.S.C. 3292)

[81 FR 55551, Aug. 19, 2016]



Sec. 462.3  What definitions apply?

    (a) Definitions in the Adult Education and Family Literacy Act 
(Act). The following terms used in these regulations are defined in 
section 203 of the Adult Education and Family Literacy Act, 20 U.S.C. 
3292 (Act):

Adult education,
Eligible provider,
Individual of limited English proficiency,
Individual with a disability,
Literacy.

    (b) Other definitions. The following definitions also apply to this 
part:
    Adult basic education (ABE) means instruction designed for an adult 
whose educational functioning level is equivalent to a particular ABE 
literacy level listed in the NRS educational functioning level table in 
the Guidelines.
    Adult education population means individuals--
    (1) Who have attained 16 years of age;
    (2) Who are not enrolled or required to be enrolled in secondary 
school under State law; and
    (3) Who--
    (i) Are basic skills deficient;
    (ii) Do not have a secondary school diploma or its recognized 
equivalent, and have not achieved an equivalent level of education; or
    (iii) Are English language learners.
    Adult secondary education (ASE) means instruction designed for an 
adult whose educational functioning level is equivalent to a particular 
ASE literacy level listed in the NRS educational functioning level table 
in the Guidelines.
    Content domains, content specifications, or NRS skill areas mean, 
for the purpose of the NRS, reading, writing, and speaking the English 
language, mathematics, problem solving, English language acquisition, 
and other literacy skills as defined by the Secretary.
    Educational functioning levels mean the ABE, ASE, and ESL literacy 
levels, as provided in the Guidelines, that describe a set of skills and 
competencies that students demonstrate in the NRS skill areas.
    English as a Second Language (ESL) means instruction designed for an 
adult whose educational functioning level is equivalent to a particular 
ESL English language proficiency level listed in the NRS educational 
functioning level table in the Guidelines.
    Guidelines means the Implementation Guidelines: Measures and Methods 
for the National Reporting System for Adult Education (OMB Control 
Number: 1830-0027) (also known as NRS Implementation Guidelines) posted 
on the Internet at: www.nrsweb.org.
    Local eligible provider means an ``eligible provider'' as defined in 
the Act that operates an adult education program that is required to 
report under the NRS.
    State means ``State'' and ``Outlying area'' as defined in the Act.

[[Page 128]]

    Test means a standardized test, assessment, or instrument that has a 
formal protocol on how it is to be administered. These protocols 
include, for example, the use of parallel, equated forms, testing 
conditions, time allowed for the test, standardized scoring, and the 
amount of instructional time a student needs before post-testing. 
Violation of these protocols often invalidates the test scores. Tests 
are not limited to traditional paper and pencil (or computer-
administered) instruments for which forms are constructed prior to 
administration to examinees. Tests may also include adaptive tests that 
use computerized algorithms for selecting and administering items in 
real time; however, for such instruments, the size of the item pool and 
the method of item selection must ensure negligible overlap in items 
across pre- and post-testing.
    Test administrator means an individual who is trained to administer 
tests the Secretary determines to be suitable under this part.
    Test publisher means an entity, individual, organization, or agency 
that owns a registered copyright of a test or is licensed by the 
copyright holder to sell or distribute a test.

(Authority: 29 U.S.C. 3292, et seq., unless otherwise noted)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55551, Aug. 19, 2016]



Sec. 462.4  What are the transition rules for using tests to measure
educational gain for the National Reporting System for Adult Education
(NRS)?

    A State or an eligible provider may continue to measure educational 
gain for the NRS using tests that the Secretary has identified in the 
most recent notice published in the Federal Register until the Secretary 
announces through a notice published in the Federal Register a date by 
which such tests may no longer be used.

(Authority: 29 U.S.C. 3292)

[81 FR 55551, Aug. 19, 2016]



Subpart B_What Process Does the Secretary Use To Review the Suitability 
                      of Tests for Use in the NRS?



Sec. 462.10  How does the Secretary review tests?

    (a) The Secretary only reviews tests under this part that are 
submitted by a test publisher.
    (b) A test publisher that wishes to have the suitability of its test 
determined by the Secretary under this part must submit an application 
to the Secretary, in the manner the Secretary may prescribe, by October 
1, 2016, April 1, 2017, October 1, 2017, April 1, 2018, October 1, 2018, 
and by October 1 of each year thereafter.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]



Sec. 462.11  What must an application contain?

    (a) Application content and format. In order for the Secretary to 
determine whether a standardized test is suitable for measuring the 
gains of participants in an adult education program required to report 
under the NRS, a test publisher must--
    (1) Include with its application information listed in paragraphs 
(b) through (i) of this section, and, if applicable, the information 
listed in paragraph (j) of this section;
    (2) Provide evidence that it holds a registered copyright of a test 
or is licensed by the copyright holder to sell or distribute a test.
    (3)(i) Arrange the information in its application in the order it is 
presented in paragraphs (b) through (j) of this section; or
    (ii) Include a table of contents in its application that identifies 
the location of the information required in paragraphs (b) through (j) 
of this section.
    (4) Submit to the Secretary four copies of its application.
    (b) General information. (1) A statement, in the technical manual 
for the test, of the intended purpose of the test and how the test will 
allow examinees to demonstrate the skills that are associated with the 
NRS educational functioning levels in the Guidelines.

[[Page 129]]

    (2) The name, address, e-mail address, and telephone and fax numbers 
of a contact person to whom the Secretary may address inquiries.
    (3) A summary of the precise editions, forms, levels, and, if 
applicable, sub-tests and abbreviated tests that the test publisher is 
requesting that the Secretary review and determine to be suitable for 
use in the NRS.
    (c) Development. Documentation of how the test was developed, 
including a description of--
    (1) The nature of samples of examinees administered the test during 
pilot or field testing, such as--
    (i) The number of examinees administered each item;
    (ii) How similar the sample or samples of examinees used to develop 
and evaluate the test were to the adult education population of interest 
to the NRS; and
    (iii) The steps, if any, taken to ensure that the examinees were 
motivated while responding to the test; and
    (2) The steps taken to ensure the quality of test items or tasks, 
such as--
    (i) The extent to which items or tasks on the test were reviewed for 
fairness and sensitivity; and
    (ii) The extent to which items or tasks on the test were screened 
for the adequacy of their psychometric properties.
    (3) The procedures used to assign items to--
    (i) Forms, for tests that are constructed prior to being 
administered to examinees; or
    (ii) Examinees, for adaptive tests in which items are selected in 
real time.
    (d) Maintenance. Documentation of how the test is maintained, 
including a description of--
    (1) How frequently, if ever, new forms of the test are developed;
    (2) The steps taken to ensure the comparability of scores across 
forms of the test;
    (3) The steps taken to maintain the security of the test;
    (4) A history of the test's use, including the number of times the 
test has been administered; and
    (5) For a computerized adaptive test, the procedures used to--
    (i) Select subsets of items for administration;
    (ii) Determine the starting point and termination conditions;
    (iii) Score the test; and
    (iv) Control for item exposure.
    (e) Match of content to the NRS educational functioning levels 
(content validity). Documentation of the extent to which the items or 
tasks on the test cover the skills in the NRS educational functioning 
levels in the Guidelines, including--
    (1) Whether the items or tasks on the test require the types and 
levels of skills used to describe the NRS educational functioning 
levels;
    (2) Whether the items or tasks measure skills that are not 
associated with the NRS educational functioning levels;
    (3) Whether aspects of a particular NRS educational functioning 
level are not covered by any of the items or tasks;
    (4) The procedures used to establish the content validity of the 
test;
    (5) The number of subject-matter experts who provided judgments 
linking the items or tasks to the NRS educational functioning levels and 
their qualifications for doing so, particularly their familiarity with 
adult education and the NRS educational functioning levels; and
    (6) The extent to which the judgments of the subject matter experts 
agree.
    (f) Match of scores to NRS educational functioning levels. 
Documentation of the adequacy of the procedure used to translate the 
performance of an examinee on a particular test to an estimate of the 
examinee's standing with respect to the NRS educational functioning 
levels in the Guidelines, including--
    (1) The standard-setting procedures used to establish cut scores for 
transforming raw or scale scores on the test into estimates of an 
examinee's NRS educational functioning level;
    (2) If judgment-based procedures were used--
    (i) The number of subject-matter experts who provided judgments, and 
their qualifications; and
    (ii) Evidence of the extent to which the judgments of subject-matter 
experts agree;

[[Page 130]]

    (3) The standard error of each cut score, and how it was 
established; and
    (4) The extent to which the cut scores might be expected to differ 
if they had been established by a different (though similar) panel of 
experts.
    (g) Reliability. Documentation of the degree of consistency in 
performance across different forms of the test in the absence of any 
external interventions, including--
    (1) The correlation between raw (or scale) scores across alternate 
forms of the test or, in the case of computerized adaptive tests, across 
alternate administrations of the test;
    (2) The consistency with which examinees are classified into the 
same NRS educational functioning levels across forms of the test. 
Information regarding classification consistency should be reported for 
each NRS educational functioning level that the test is being considered 
for use in measuring;
    (3) The adequacy of the research design leading to the estimates of 
the reliability of the test, including--
    (i) The size of the sample(s);
    (ii) The similarity between the sample(s) used in the data 
collection and the adult education population; and
    (iii) The steps taken to ensure the motivation of the examinees; and
    (4) Any other information explaining the methodology and procedures 
used to measure the reliability of the test.
    (h) Construct validity. Documentation of the appropriateness of a 
given test for measuring educational gain for the NRS, i.e., 
documentation that the test measures what it is intended to measure, 
including--
    (1) The extent to which the raw or scale scores and the educational 
functioning classifications associated with the test correlate (or 
agree) with scores or classifications associated with other tests 
designed or intended to assess educational gain in the same adult 
education population as the NRS;
    (2) The extent to which the raw or scale scores are related to other 
relevant variables, such as teacher evaluation, hours of instruction, or 
other measures that may be related to test performance;
    (3) The adequacy of the research designs associated with these 
sources of evidence (see paragraph (g)(3) of this section); and
    (4) Other evidence demonstrating that the test measures gains in 
educational functioning resulting from adult education and not from 
other construct-irrelevant variables, such as practice effects.
    (i) Other information. (1) A description of the manner in which test 
administration time was determined, and an analysis of the speededness 
of the test.
    (2) Additional guidance on the interpretation of scores resulting 
from any modifications of the tests for an individual with a disability.
    (3) The manual provided to test administrators containing procedures 
and instructions for test security and administration.
    (4) A description of the training or certification required of test 
administrators and scorers by the test publisher.
    (5) A description of retesting (e.g., re-administration of a test 
because of problems in the original administration such as the test 
taker becomes ill during the test and cannot finish, there are external 
interruptions during testing, or there are administration errors) 
procedures and the analysis upon which the criteria for retesting are 
based.
    (6) Such other evidence as the Secretary may determine is necessary 
to establish the test's compliance with the criteria and requirements 
the Secretary uses to determine the suitability of tests as provided in 
Sec. 462.13.
    (j) Previous tests. (1) For a test used to measure educational gain 
in the NRS before the effective date of these regulations that is 
submitted to the Secretary for review under this part, the test 
publisher must provide documentation of periodic review of the content 
and specifications of the test to ensure that the test continues to 
reflect NRS educational functioning levels.
    (2) For a test first published five years or more before the date it 
is submitted to the Secretary for review under this part, the test 
publisher must provide documentation of periodic review of the content 
and specifications

[[Page 131]]

of the test to ensure that the test continues to reflect NRS educational 
functioning levels.
    (3) For a test that has not changed in the seven years since the 
Secretary determined, under Sec. 462.13, that it was suitable for use in 
the NRS that is again being submitted to the Secretary for review under 
this part, the test publisher must provide updated data supporting the 
validity of the test for use in classifying adult learners with respect 
to the NRS educational functioning levels and the measurement of 
educational gain as defined in Sec. 462.43 of this part.
    (4) If a test has been substantially revised--for example by 
changing its mode of administration, administration procedures, 
structure, number of items, content specifications, item types, forms, 
sub-tests, or number of hours between pre- and post-testing from the 
most recent edition reviewed by the Secretary under this part--the test 
publisher must provide an analysis of the revisions, including the 
reasons for the revisions, the implications of the revisions for the 
comparability of scores on the current test to scores on the previous 
test, and results from validity, reliability, and equating or standard-
setting studies undertaken subsequent to the revisions.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]



Sec. 462.12  What procedures does the Secretary use to review the
suitability of tests?

    (a) Review. (1) When the Secretary receives a complete application 
from a test publisher, the Secretary selects experts in the field of 
educational testing and assessment who possess appropriate advanced 
degrees and experience in test development or psychometric research, or 
both, to advise the Secretary on the extent to which a test meets the 
criteria and requirements in Sec. 462.13.
    (2) The Secretary reviews and determines the suitability of a test 
only if an application--
    (i) Is submitted by a test publisher;
    (ii) Meets the deadline established by the Secretary;
    (iii) Includes a test that--
    (A) Has two or more secure, parallel, equated forms of the same 
test--either traditional paper and pencil or computer-administered 
instruments--for which forms are constructed prior to administration to 
examinees; or
    (B) Is an adaptive test that uses computerized algorithms for 
selecting and administering items in real time; however, for such an 
instrument, the size of the item pool and the method of item selection 
must ensure negligible overlap in items across pre- and post-testing;
    (iv) Includes a test that samples one or more of the major content 
domains of the NRS educational functioning levels of ABE, ASE or ESL 
with sufficient numbers of questions to represent adequately the domain 
or domains; and
    (v) Includes the information prescribed by the Secretary, including 
the information in Sec. 462.11 of this part.
    (b) Secretary's determination. (1) The Secretary determines whether 
a test meets the criteria and requirements in Sec. 462.13 after taking 
into account the advice of the experts described in paragraph (a)(1) of 
this section.
    (2) For tests that contain multiple sub-tests measuring content 
domains other than those of the NRS educational functioning levels, the 
Secretary determines the suitability of only those sub-tests covering 
the domains of the NRS educational functioning levels.
    (c) Suitable tests. If the Secretary determines that a test 
satisfies the criteria and requirements in Sec. 462.13 and, therefore, 
is suitable for use in the NRS, the Secretary--
    (1) Notifies the test publisher of the Secretary's decision; and
    (2) Annually publishes in the Federal Register and posts on the 
Internet at www.nrsweb.org a list of the names of tests and test forms 
and the educational functioning levels the tests are suitable to measure 
in the NRS. A copy of the list is also available from the U.S. 
Department of Education, Office of Career, Technical, and Adult 
Education, Division of Adult Education and Literacy, 400 Maryland Avenue 
SW., Room 11152, Potomac Center Plaza, Washington, DC 20202-7240.
    (d) Unsuitable tests. (1) If the Secretary determines that a test 
does not

[[Page 132]]

satisfy the criteria and requirements in Sec. 462.13 and, therefore, is 
not suitable for use in the NRS, the Secretary notifies the test 
publisher of the Secretary's decision and of the reasons why the test 
does not meet those criteria and requirements.
    (2) The test publisher may resubmit an application to have the 
suitability of its test determined by the Secretary under this part on 
October 1 in the year immediately following the year in which the 
Secretary notifies the publisher.
    (i) An analysis of why the information and documentation submitted 
meet the criteria and requirements in Sec. 462.13, notwithstanding the 
Secretary's earlier decision to the contrary; and
    (ii) Any additional documentation and information that address the 
Secretary's reasons for determining that the test was unsuitable.
    (3) The Secretary reviews the additional information submitted by 
the test publisher and makes a final determination regarding the 
suitability of the test for use in the NRS.
    (i) If the Secretary's decision is unchanged and the test remains 
unsuitable for use in the NRS, the Secretary notifies the test 
publisher, and this action concludes the review process.
    (ii) If the Secretary's decision changes and the test is determined 
to be suitable for use in the NRS, the Secretary follows the procedures 
in paragraph (c) of this section.
    (e) Revocation. (1) The Secretary's determination regarding the 
suitability of a test may be revoked if the Secretary determines that--
    (i) The information the publisher submitted as a basis for the 
Secretary's review of the test was inaccurate; or
    (ii) A test has been substantially revised--for example, by changing 
its mode of administration, administration procedures, structure, number 
of items, content specifications, item types, forms or sub-tests, or 
number of hours between pre- and post-testing.
    (2) The Secretary notifies the test publisher of the--
    (i) Secretary's decision to revoke the determination that the test 
is suitable for use in the NRS; and
    (ii) Reasons for the Secretary's revocation.
    (3) Within 30 days after the Secretary notifies a test publisher of 
the decision to revoke a determination that a test is suitable for use 
in the NRS, the test publisher may request that the Secretary reconsider 
the decision. This request must be accompanied by documentation and 
information that address the Secretary's reasons for revoking the 
determination that the test is suitable for use in the NRS.
    (4) The Secretary reviews the information submitted by the test 
publisher and makes a final determination regarding the suitability of 
the test for use in the NRS.
    (5) If the Secretary revokes the determination regarding the 
suitability of a test, the Secretary publishes in the Federal Register 
and posts on the Internet at www.nrsweb.org a notice of that revocation 
along with the date by which States and eligible providers must stop 
using the revoked test. A copy of the notice of revocation is also 
available from the U.S. Department of Education, Office of Career, 
Technical, and Adult Education, Division of Adult Education and 
Literacy, 400 Maryland Avenue SW., Room 11152, Potomac Center Plaza, 
Washington, DC 20202-7240.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]



Sec. 462.13  What criteria and requirements does the Secretary use
for determining the suitability of tests?

    In order for the Secretary to consider a test suitable for use in 
the NRS, the test or the test publisher, if applicable, must meet the 
following criteria and requirements:
    (a) The test must measure the NRS educational functioning levels of 
members of the adult education population.
    (b) The test must sample one or more of the major content domains of 
the NRS educational functioning levels of ABE, ASE or ESL with 
sufficient numbers of questions to adequately represent the domain or 
domains.
    (c)(1) The test must meet all applicable and feasible standards for 
test construction and validity provided in the

[[Page 133]]

1999 edition of the Standards for Educational and Psychological Testing, 
prepared by the Joint Committee on Standards for Educational and 
Psychological Testing of the American Educational Research Association, 
the American Psychological Association, and the National Council on 
Measurement in Education incorporated by reference in this section. The 
Director of the Federal Register approves this incorporation by 
reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. You may 
obtain a copy from the American Psychological Association, Inc., 750 
First Street, NE., Washington, DC 20002. You may inspect a copy at the 
Department of Education, room 11159, 550 12th Street, SW., Washington, 
DC 20202 or at the National Archives and Records Administration (NARA). 
For information on the availability of this material at NARA, call (202) 
741-6030, or go to: http://www.archives.gov/federal_register/
code_of_federal_regulations/ibr_locations.html.
    (2) If requested by the Secretary, a test publisher must explain why 
it believes that certain standards in the 1999 edition of the Standards 
for Educational and Psychological Testing were not applicable or were 
not feasible to meet.
    (d) The test must contain the publisher's guidelines for retesting, 
including time between test-taking, which are accompanied by appropriate 
justification.
    (e) The test must--
    (1) Have two or more secure, parallel, equated forms of the same 
test--either traditional paper and pencil or computer administered 
instruments--for which forms are constructed prior to administration to 
examinees; or
    (2) Be an adaptive test that uses computerized algorithms for 
selecting and administering items in real time; however, for such an 
instrument, the size of the item pool and the method of item selection 
must ensure negligible overlap in items across pre- and post-testing. 
Scores associated with these alternate administrations must be 
equivalent in meaning.
    (f) For a test that has been modified for individuals with 
disabilities, the test publisher must--
    (1) Provide documentation that it followed the guidelines provided 
in the Testing Individuals With Disabilities section of the 1999 edition 
of the Standards for Educational and Psychological Testing;
    (2) Provide documentation of the appropriateness and feasibility of 
the modifications relevant to test performance; and
    (3)(i) Recommend educational functioning levels based on the 
information obtained from adult education students who participated in 
the pilot or field test and who have the disability for which the test 
has been modified; and
    (ii) Provide documentation of the adequacy of the procedures used to 
translate the performance of adult education students with the 
disability for whom the test has been modified to an estimate of the 
examinees' standing with respect to the NRS educational functioning 
levels.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]



Sec. 462.14  How often and under what circumstances must a test be 
reviewed by the Secretary?

    (a) The Secretary's determination that a test is suitable for use in 
the NRS is in effect for a period of seven years from the date of the 
Secretary's written notification to the test publisher, unless otherwise 
indicated by the Secretary. After that time, if the test publisher wants 
the test to be used in the NRS, the test must be reviewed again by the 
Secretary so that the Secretary can determine whether the test continues 
to be suitable for use in the NRS.
    (b) If a test that the Secretary has determined is suitable for use 
in the NRS is substantially revised--for example, by changing its mode 
of administration, administration procedures, structure, number of 
items, content specifications, item types, forms, sub-tests, or number 
of hours between pre- and post-testing--and the test publisher wants the 
test to continue to be used in the NRS, the test publisher must submit, 
as provided in Sec. 462.11(j)(4), the substantially revised test or 
version of the test to the Secretary for review so that the Secretary

[[Page 134]]

can determine whether the test continues to be suitable for use in the 
NRS.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]

Subpart C [Reserved]



  Subpart D_What Requirements Must States and Local Eligible Providers 
                 Follow When Measuring Educational Gain?



Sec. 462.40  Must a State have an assessment policy?

    (a) A State must have a written assessment policy that its local 
eligible providers must follow in measuring educational gain and 
reporting data in the NRS.
    (b) A State must submit its assessment policy to the Secretary for 
review and approval at the time it submits its annual statistical report 
for the NRS.
    (c) The State's assessment policy must--
    (1) Include a statement requiring that local eligible providers 
measure the educational gain of all students who receive 12 hours or 
more of instruction in the State's adult education program with a test 
that the Secretary has determined is suitable for use in the NRS;
    (2) Identify the pre- and post-tests that the State requires 
eligible providers to use to measure the educational functioning level 
gain of ABE, ASE, and ESL students;
    (3)(i) Indicate when, in calendar days or instructional hours, 
eligible providers must administer pre- and post-tests to students;
    (ii) Ensure that the time for administering the post-test is long 
enough after the pre-test to allow the test to measure educational 
functioning level gains according to the test publisher's guidelines; 
and
    (iii) Specify a standard for the percentage of students to be pre- 
and post-tested.
    (4) Specify the score ranges tied to educational functioning levels 
for placement and for reporting gains for accountability;
    (5) Identify the skill areas the State intends to require local 
eligible providers to assess in order to measure educational gain;
    (6) Include the guidance the State provides to local eligible 
providers on testing and placement of an individual with a disability or 
an individual who is unable to be tested because of a disability;
    (7) Describe the training requirements that staff must meet in order 
to be qualified to administer and score each test selected by the State 
to measure the educational gains of students;
    (8) Identify the alternate form or forms of each test that local 
eligible providers must use for post-testing;
    (9) Indicate whether local eligible providers must use a locator 
test for guidance on identifying the appropriate pre-test;
    (10) Describe the State's policy for the initial placement of a 
student at each NRS educational functioning level using test scores;
    (11) Describe the State's policy for using the post-test for 
measuring educational gain and for advancing students across educational 
functioning levels;
    (12) Describe the pre-service and in-service staff training that the 
State or local eligible providers will provide, including training--
    (i) For staff who either administer or score each of the tests used 
to measure educational gain;
    (ii) For teachers and other local staff involved in gathering, 
analyzing, compiling, and reporting data for the NRS; and
    (iii) That includes the following topics:
    (A) NRS policy, accountability policies, and the data collection 
process.
    (B) Definitions of measures.
    (C) Conducting assessments; and
    (13) Identify the State or local agency responsible for providing 
pre- and in-service training.

(Approved by the Office of Management and Budget under control number 
1830-0027)

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]

[[Page 135]]



Sec. 462.41  How must tests be administered in order to accurately
measure educational gain?

    (a) General. A local eligible provider must measure the educational 
gains of students using only tests that the Secretary has determined are 
suitable for use in the NRS and that the State has identified in its 
assessment policy.
    (b) Pre-test. A local eligible provider must--
    (1) Administer a pre-test to measure a student's educational 
functioning level at intake, or as soon as possible thereafter;
    (2) Administer the pre-test to students at a uniform time, according 
to the State's assessment policy; and
    (3) Administer pre-tests to students in the skill areas identified 
in the State's assessment policy.
    (c) Post-test. A local eligible provider must--
    (1) Administer a post-test to measure a student's educational 
functioning level after a set time period or number of instructional 
hours;
    (2) Administer the post-test to students at a uniform time, 
according to the State's assessment policy;
    (3)(i) Administer post-tests with a secure, parallel, equated form 
of the same test--either traditional paper and pencil or computer-
administered instruments--for which forms are constructed prior to 
administration to examinees to pre-test and determine the initial 
placement of students; or
    (ii) Administer post-tests with an adaptive test that uses 
computerized algorithms for selecting and administering items in real 
time; however, for such an instrument, the size of the item pool and the 
method of item selection must ensure negligible overlap in items across 
pre- and post-testing; and
    (4) Administer post-tests to students in the same skill areas as the 
pre-test.
    (d) Other requirements. (1) A local eligible provider must 
administer a test using only staff who have been trained to administer 
the test.
    (2) A local eligible provider may use the results of a test in the 
NRS only if the test was administered in a manner that is consistent 
with the State's assessment policy and the test publisher's guidelines.

(Approved by the Office of Management and Budget under control number 
1830-0027)

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55553, Aug. 19, 2016]



Sec. 462.42  How are tests used to place students at an NRS educational
functioning level?

    (a) A local eligible provider must use the results of the pre-test 
described in Sec. 462.41(b) to initially place students at the 
appropriate NRS educational functioning level.
    (b) A local eligible provider must use the results of the post-test 
described in Sec. 462.41(c)--
    (1) To determine whether students have completed one or more 
educational functioning levels or are progressing within the same level; 
and
    (2) To place students at the appropriate NRS educational functioning 
level.
    (c)(1) States and local eligible providers are not required to use 
all of the skill areas described in the NRS educational functioning 
levels to place students.
    (2) States and local eligible providers must test and report on the 
skill areas most relevant to the students' needs and to the programs' 
curriculum.
    (d)(1) If a State's assessment policy requires a local eligible 
provider to test a student in multiple skill areas and the student will 
receive instruction in all of the skill areas, the local eligible 
provider must place the student in an educational functioning level that 
is equivalent to the student's lowest test score for any of the skill 
areas tested under Sec. 462.41(b) and (c).
    (2) If a State's assessment policy requires a local eligible 
provider to test a student in multiple skill areas, but the student will 
receive instruction in fewer than all of the skill areas, the local 
eligible provider must place the student in an educational functioning 
level that is equivalent to the student's lowest test score for any of 
the skill areas--
    (i) Tested under Sec. 462.41(b) and (c); and

[[Page 136]]

    (ii) In which the student will receive instruction.

(Approved by the Office of Management and Budget under control number 
1830-0027)

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55553, Aug. 19, 2016]



Secs. 462.43-462.44  [Reserved]



PART 463_ADULT EDUCATION AND FAMILY LITERACY ACT--Table of Contents



              Subpart A_Adult Education General Provisions

Sec.
463.1  What is the purpose of the Adult Education and Family Literacy 
          Act?
463.2  What regulations apply to the Adult Education and Family Literacy 
          Act programs?
463.3  What definitions apply to the Adult Education and Family Literacy 
          Act programs?

Subpart B [Reserved]

     Subpart C_How Does a State Make an Award to Eligible Providers?

463.20  What is the process that the eligible agency must follow in 
          awarding grants or contracts to eligible providers?
463.21  What processes must be in place to determine the extent to which 
          a local application for grants or contracts to provide adult 
          education and literacy services is aligned with a local plan 
          under section 108 of WIOA?
463.22  What must be included in the eligible provider's application for 
          a grant or contract?
463.23  Who is eligible to apply for a grant or contract for adult 
          education and literacy activities?
463.24  How can an eligible provider establish that it has demonstrated 
          effectiveness?
463.25  What are the requirements related to local administrative cost 
          limits?
463.26  What activities are considered local administrative costs?

       Subpart D_What Are Adult Education and Literacy Activities?

463.30  What are adult education and literacy programs, activities, and 
          services?
463.31  What is an English language acquisition program?
463.32  How does a program that is intended to be an English language 
          acquisition program meet the requirement that the program lead 
          to attainment of a secondary school diploma or its recognized 
          equivalent and transition to postsecondary education and 
          training or leads to employment?
463.33  What are integrated English literacy and civics education 
          services?
463.34  What are workforce preparation activities?
463.35  What is integrated education and training?
463.36  What are the required components of an integrated education and 
          training program funded under title II?
463.37  How does a program providing integrated education and training 
          under title II meet the requirement that the three required 
          components be ``integrated''?
463.38  How does a program providing integrated education and training 
          under title II meet the requirement that an integrated 
          education and training program be ``for the purpose of 
          educational and career advancement''?

Subpart E [Reserved]

Subpart F_Programs for Corrections Education and the Education of Other 
                     Institutionalized Individuals?

463.60  What are programs for Corrections Education and the Education of 
          other Institutionalized Individuals?
463.61  How does the eligible agency award funds to eligible providers 
          under the program for Corrections Education and Education of 
          other Institutionalized Individuals?
463.62  What is the priority for programs that receive funding through 
          programs for Corrections Education and Education of other 
          Institutionalized Individuals?
463.63  How may funds under programs for Corrections Education and 
          Education of other Institutionalized Individuals be used to 
          support transition to re-entry initiatives and other post-
          release services with the goal of reducing recidivism?

 Subpart G_What Is the Integrated English Literacy and Civics Education 
                                Program?

463.70  What is the Integrated English Literacy and Civics Education 
          program?
463.71  How does the Secretary make an award under the Integrated 
          English Literacy and Civics Education program?
463.72  How does the eligible agency award funds to eligible providers 
          for the Integrated English Literacy and Civics Education 
          program?
463.73  What are the requirements for eligible providers that receive 
          funding through the Integrated English Literacy and Civics 
          Education program?
463.74  How does an eligible provider that receives funds through the 
          Integrated

[[Page 137]]

          English Literacy and Civics Education program meet the 
          requirement to use funds for Integrated English Literacy and 
          Civics Education in combination with integrated education and 
          training activities?
463.75  Who is eligible to receive education services through the 
          Integrated English Literacy and Civics Education program?

    Subpart H_Unified and Combined State Plans Under Title I of the 
                Workforce Innovation and Opportunity Act

463.100  What are the purposes of the Unified and Combined State Plans?
463.105  What are the general requirements for the Unified State Plan?
463.110  What are the program-specific requirements in the Unified State 
          Plan for the adult, dislocated worker, and youth programs 
          authorized under Workforce Innovation and Opportunity Act 
          title I?
463.115  What are the program-specific requirements in the Unified State 
          Plan for the Adult Education and Family Literacy Act program 
          authorized under Workforce Innovation and Opportunity Act 
          title II?
463.120  What are the program-specific requirements in the Unified State 
          Plan for the Employment Service program authorized under the 
          Wagner-Peyser Act, as amended by Workforce Innovation and 
          Opportunity Act title III?
463.125  What are the program-specific requirements in the Unified State 
          Plan for the State Vocational Rehabilitation program 
          authorized under title I of the Rehabilitation Act of 1973, as 
          amended by Workforce Innovation and Opportunity Act title IV?
463.130  What is the development, submission, and approval process of 
          the Unified State Plan?
463.135  What are the requirements for modification of the Unified State 
          Plan?
463.140  What are the general requirements for submitting a Combined 
          State Plan?
463.143  What is the development, submission, and approval process of 
          the Combined State Plan?
463.145  What are the requirements for modifications of the Combined 
          State Plan?

  Subpart I_Performance Accountability Under Title I of the Workforce 
                     Innovation and Opportunity Act

463.150  What definitions apply to Workforce Innovation and Opportunity 
          Act performance accountability provisions?
463.155  What are the primary indicators of performance under the 
          Workforce Innovation and Opportunity Act?
463.160  What information is required for State performance reports?
463.165  May a State establish additional indicators of performance?
463.170  How are State levels of performance for primary indicators 
          established?
463.175  What responsibility do States have to use quarterly wage record 
          information for performance accountability?
463.180  When is a State subject to a financial sanction under the 
          Workforce Innovation and Opportunity Act?
463.185  When are sanctions applied for a State's failure to submit an 
          annual performance report?
463.190  When are sanctions applied for failure to achieve adjusted 
          levels of performance?
463.195  What should States expect when a sanction is applied to the 
          Governor's Reserve Allotment?
463.200  What other administrative actions will be applied to States' 
          performance requirements?
463.205  What performance indicators apply to local areas and what 
          information must be included in local area performance 
          reports?
463.210  How are local performance levels established?
463.215  Under what circumstances are local areas eligible for State 
          Incentive Grants?
463.220  Under what circumstances may a corrective action or sanction be 
          applied to local areas for poor performance?
463.225  Under what circumstances may local areas appeal a 
          reorganization plan?
463.230  What information is required for the eligible training provider 
          performance reports?
463.235  What are the reporting requirements for individual records for 
          core Workforce Innovation and Opportunity Act (WIOA) title I 
          programs; the Wagner-Peyser Act Employment Service program, as 
          amended by WIOA title III; and the Vocational Rehabilitation 
          program authorized under title I of the Rehabilitation Act of 
          1973, as amended by WIOA title IV?
463.240  What are the requirements for data validation of State annual 
          performance reports?

 Subpart J_Description of the One-Stop Delivery System Under Title I of 
              the Workforce Innovation and Opportunity Act

463.300  What is the one-stop delivery system?
463.305  What is a comprehensive one-stop center and what must be 
          provided there?
463.310  What is an affiliated site and what must be provided there?
463.315  Can a stand-alone Wagner-Peyser Act Employment Service office 
          be designated as an affiliated one-stop site?
463.320  Are there any requirements for networks of eligible one-stop 
          partners or specialized centers?

[[Page 138]]

463.400  Who are the required one-stop partners?
463.405  Is Temporary Assistance for Needy Families a required one-stop 
          partner?
463.410  What other entities may serve as one-stop partners?
463.415  What entity serves as the one-stop partner for a particular 
          program in the local area?
463.420  What are the roles and responsibilities of the required one-
          stop partners?
463.425  What are the applicable career services that must be provided 
          through the one-stop delivery system by required one-stop 
          partners?
463.430  What are career services?
463.435  What are the business services provided through the one-stop 
          delivery system, and how are they provided?
463.440  When may a fee be charged for the business services in this 
          subpart?
463.500  What is the Memorandum of Understanding for the one-stop 
          delivery system and what must be included in the Memorandum of 
          Understanding?
463.505  Is there a single Memorandum of Understanding for the local 
          area, or must there be different Memoranda of Understanding 
          between the Local Workforce Development Board and each 
          partner?
463.510  How must the Memorandum of Understanding be negotiated?
463.600  Who may operate one-stop centers?
463.605  How is the one-stop operator selected?
463.610  When is the sole-source selection of one-stop operators 
          appropriate, and how is it conducted?
463.615  May an entity currently serving as one-stop operator compete to 
          be a one-stop operator under the procurement requirements of 
          this subpart?
463.620  What is the one-stop operator's role?
463.625  Can a one-stop operator also be a service provider?
463.630  Can State merit staff still work in a one-stop center where the 
          operator is not a governmental entity?
463.635  What is the compliance date of the provisions of this subpart?
463.700  What are the one-stop infrastructure costs?
463.705  What guidance must the Governor issue regarding one-stop 
          infrastructure funding?
463.710  How are infrastructure costs funded?
463.715  How are one-stop infrastructure costs funded in the local 
          funding mechanism?
463.720  What funds are used to pay for infrastructure costs in the 
          local one-stop infrastructure funding mechanism?
463.725  What happens if consensus on infrastructure funding is not 
          reached at the local level between the Local Workforce 
          Development Board, chief elected officials, and one-stop 
          partners?
463.730  What is the State one-stop infrastructure funding mechanism?
463.731  What are the steps to determine the amount to be paid under the 
          State one-stop infrastructure funding mechanism?
463.735  How are infrastructure cost budgets for the one-stop centers in 
          a local area determined in the State one-stop infrastructure 
          funding mechanism?
463.736  How does the Governor establish a cost allocation methodology 
          used to determine the one-stop partner programs' proportionate 
          shares of infrastructure costs under the State one-stop 
          infrastructure funding mechanism?
463.737  How are one-stop partner programs' proportionate shares of 
          infrastructure costs determined under the State one-stop 
          infrastructure funding mechanism?
463.738  How are statewide caps on the contributions for one-stop 
          infrastructure funding determined in the State one-stop 
          infrastructure funding mechanism?
463.740  What funds are used to pay for infrastructure costs in the 
          State one-stop infrastructure funding mechanism?
463.745  What factors does the State Workforce Development Board use to 
          develop the formula described in Workforce Innovation and 
          Opportunity Act, which is used by the Governor to determine 
          the appropriate one-stop infrastructure budget for each local 
          area operating under the State infrastructure funding 
          mechanism, if no reasonably implementable locally negotiated 
          budget exists?
463.750  When and how can a one-stop partner appeal a one-stop 
          infrastructure amount designated by the State under the State 
          infrastructure funding mechanism?
463.755  What are the required elements regarding infrastructure funding 
          that must be included in the one-stop Memorandum of 
          Understanding?
463.760  How do one-stop partners jointly fund other shared costs under 
          the Memorandum of Understanding?
463.800  How are one-stop centers and one-stop delivery systems 
          certified for effectiveness, physical and programmatic 
          accessibility, and continuous improvement?
463.900  What is the common identifier to be used by each one-stop 
          delivery system?

Subpart K [Reserved]

    Authority: 29 U.S.C. 102 and 103, unless otherwise noted.

    Source: 81 FR 55553, Aug. 19, 2016, unless otherwise noted.

[[Page 139]]



              Subpart A_Adult Education General Provisions



Sec. 463.1  What is the purpose of the Adult Education and Family
Literacy Act?

    The purpose of the Adult Education and Family Literacy Act (AEFLA) 
is to create a partnership among the Federal Government, States, and 
localities to provide, on a voluntary basis, adult education and 
literacy activities, in order to--
    (a) Assist adults to become literate and obtain the knowledge and 
skills necessary for employment and economic self-sufficiency;
    (b) Assist adults who are parents or family members to obtain the 
education and skills that--
    (1) Are necessary to becoming full partners in the educational 
development of their children; and
    (2) Lead to sustainable improvements in the economic opportunities 
for their family;
    (c) Assist adults in attaining a secondary school diploma or its 
recognized equivalent and in the transition to postsecondary education 
and training, through career pathways; and
    (d) Assist immigrants and other individuals who are English language 
learners in--
    (1) Improving their--
    (i) Reading, writing, speaking, and comprehension skills in English; 
and
    (ii) Mathematics skills; and
    (2) Acquiring an understanding of the American system of Government, 
individual freedom, and the responsibilities of citizenship.

(Authority: 29 U.S.C. 3271)



Sec. 463.2  What regulations apply to the Adult Education and Family
Literacy Act programs?

    The following regulations apply to the Adult Education and Family 
Literacy Act programs:
    (a) The following Education Department General Administrative 
Regulations (EDGAR):
    (1) 34 CFR part 75 (Direct Grant Programs), except that 34 CFR 
75.720(b), regarding the frequency of certain reports, does not apply.
    (2) 34 CFR part 76 (State-Administered Programs), except that 34 CFR 
76.101 (The general State application) does not apply.
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (6) 34 CFR part 82 (New Restrictions on Lobbying).
    (7) 34 CFR part 86 (Drug and Alcohol Prevention).
    (8) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.
    (b) The regulations in 34 CFR part 462.
    (c) The regulations in 34 CFR part 463.



Sec. 463.3  What definitions apply to the Adult Education and Family
Literacy Act programs?

    Definitions in the Workforce Innovation and Opportunity Act. The 
following terms are defined in Sections 3, 134, 203, and 225 of the 
Workforce Innovation and Opportunity Act (29 U.S.C. 3102, 3174, 3272, 
and 3305):

Adult Education
Adult Education and Literacy Activities
Basic Skills Deficient
Career Pathway
Core Program
Core Program Provision
Correctional Institution
Criminal Offender
Customized Training
Eligible Agency
Eligible Individual
Eligible Provider
English Language Acquisition Program
English Language Learner
Essential Components of Reading
Family Literacy Activities
Governor
Individual with a Barrier to Employment
Individual with a Disability
Institution of Higher Education
Integrated Education and Training
Integrated English Literacy and Civics Education
Literacy
Local Educational Agency
On-the-Job Training
Outlying Area
Postsecondary Educational Institution
State
Training Services
Workplace Adult Education and Literacy Activities

[[Page 140]]

Workforce Preparation Activities

    Definitions in EDGAR. The following terms are defined in 34 CFR 
77.1:

Applicant
Application
Award
Budget
Budget Period
Contract
Department
ED
EDGAR
Fiscal Year
Grant
Grantee
Nonprofit
Private
Project
Project Period
Public
Secretary
Subgrant
Subgrantee

    Other Definitions. The following definitions also apply:
    Act means the Workforce Innovation and Opportunity Act, Public Law 
113-128.
    Concurrent enrollment or co-enrollment refers to enrollment by an 
eligible individual in two or more of the six core programs administered 
under the Act.
    Digital literacy means the skills associated with using technology 
to enable users to find, evaluate, organize, create, and communicate 
information.
    Peer tutoring means an instructional model that utilizes one 
institutionalized individual to assist in providing or enhancing 
learning opportunities for other institutionalized individuals. A peer 
tutoring program must be structured and overseen by educators who assist 
with training and supervising tutors, setting educational goals, 
establishing an individualized plan of instruction, and monitoring 
progress.
    Re-entry and post-release services means services provided to a 
formerly incarcerated individual upon or shortly after release from a 
correctional institution that are designed to promote successful 
adjustment to the community and prevent recidivism. Examples include 
education, employment services, substance abuse treatment, housing 
support, mental and physical health care, and family reunification 
services.
    Title means title II of the Workforce Innovation and Opportunity 
Act, the Adult Education and Family Literacy Act, Public Law 113-128.

Subpart B [Reserved]



     Subpart C_How Does a State Make an Award to Eligible Providers?



Sec. 463.20  What is the process that the eligible agency must
follow in awarding grants or contracts to eligible providers?

    (a) From grant funds made available under section 222(a)(1) of the 
Act, each eligible agency must award competitive multiyear grants or 
contracts to eligible providers within the State or outlying area to 
enable the eligible providers to develop, implement, and improve adult 
education and literacy activities within the State or outlying area.
    (b) The eligible agency must require that each eligible provider 
receiving a grant or contract use the funding to establish or operate 
programs that provide adult education and literacy activities, including 
programs that provide such activities concurrently.
    (c) In conducting the competitive grant process, the eligible agency 
must ensure that--
    (1) All eligible providers have direct and equitable access to apply 
and compete for grants or contracts;
    (2) The same grant or contract announcement and application 
processes are used for all eligible providers in the State or outlying 
area; and
    (3) In awarding grants or contracts to eligible providers for adult 
education and literacy activities, funds shall not be used for the 
purpose of supporting or providing programs, services, or activities for 
individuals who are not eligible individuals as defined in the Act, 
except that such agency may use such funds for such purpose if such 
programs, services, or activities are related to family literacy 
activities. Prior to providing family literacy activities for 
individuals who are not eligible individuals, an eligible provider shall 
attempt to coordinate with programs and services that do not receive 
funding under this title.

[[Page 141]]

    (d) In awarding grants or contracts for adult education and literacy 
activities to eligible providers, the eligible agency must consider the 
following:
    (1) The degree to which the eligible provider would be responsive 
to--
    (i) Regional needs as identified in the local workforce development 
plan; and
    (ii) Serving individuals in the community who were identified in 
such plan as most in need of adult education and literacy activities, 
including individuals who--
    (A) Have low levels of literacy skills; or
    (B) Are English language learners;
    (2) The ability of the eligible provider to serve eligible 
individuals with disabilities, including eligible individuals with 
learning disabilities;
    (3) The past effectiveness of the eligible provider in improving the 
literacy of eligible individuals, especially those individuals who have 
low levels of literacy, and the degree to which those improvements 
contribute to the eligible agency meeting its State-adjusted levels of 
performance for the primary indicators of performance described in 
Sec. 677.155;
    (4) The extent to which the eligible provider demonstrates alignment 
between proposed activities and services and the strategy and goals of 
the local plan under section 108 of the Act, as well as the activities 
and services of the one-stop partners;
    (5) Whether the eligible provider's program--
    (i) Is of sufficient intensity and quality, and based on the most 
rigorous research available so that participants achieve substantial 
learning gains; and
    (ii) Uses instructional practices that include the essential 
components of reading instruction;
    (6) Whether the eligible provider's activities, including whether 
reading, writing, speaking, mathematics, and English language 
acquisition instruction delivered by the eligible provider, are based on 
the best practices derived from the most rigorous research available, 
including scientifically valid research and effective educational 
practice;
    (7) Whether the eligible provider's activities effectively use 
technology, services and delivery systems, including distance education, 
in a manner sufficient to increase the amount and quality of learning, 
and how such technology, services, and systems lead to improved 
performance;
    (8) Whether the eligible provider's activities provide learning in 
context, including through integrated education and training, so that an 
individual acquires the skills needed to transition to and complete 
postsecondary education and training programs, obtain and advance in 
employment leading to economic self-sufficiency, and to exercise the 
rights and responsibilities of citizenship;
    (9) Whether the eligible provider's activities are delivered by 
instructors, counselors, and administrators who meet any minimum 
qualifications established by the State, where applicable, and who have 
access to high-quality professional development, including through 
electronic means;
    (10) Whether the eligible provider coordinates with other available 
education, training, and social service resources in the community, such 
as by establishing strong links with elementary schools and secondary 
schools, postsecondary educational institutions, institutions of higher 
education, Local WDBs, one-stop centers, job training programs, and 
social service agencies, business, industry, labor organizations, 
community-based organizations, nonprofit organizations, and 
intermediaries, in the development of career pathways;
    (11) Whether the eligible provider's activities offer the flexible 
schedules and coordination with Federal, State, and local support 
services (such as child care, transportation, mental health services, 
and career planning) that are necessary to enable individuals, including 
individuals with disabilities or other special needs, to attend and 
complete programs;
    (12) Whether the eligible provider maintains a high-quality 
information management system that has the capacity to report measurable 
participant outcomes (consistent with section Sec. 666.100) and to 
monitor program performance; and
    (13) Whether the local area in which the eligible provider is 
located has a demonstrated need for additional

[[Page 142]]

English language acquisition programs and civics education programs.

(Authority: 29 U.S.C. 3321)



Sec. 463.21  What processes must be in place to determine the extent
to which a local application for grants or contracts to provide adult
education and literacy services is aligned with a local plan under
section 108 of WIOA?

    (a) An eligible agency must establish, within its grant or contract 
competition, a process that provides for the submission of all 
applications for funds under AEFLA to the appropriate Local Boards.
    (b) The process must include--
    (1) Submission of the applications to the appropriate Local Board 
for its review for consistency with the local plan within the 
appropriate timeframe; and
    (2) An opportunity for the local board to make recommendations to 
the eligible agency to promote alignment with the local plan.
    (c) The eligible agency must consider the results of the review by 
the Local Board in determining the extent to which the application 
addresses the required considerations in Sec. 463.20.

(Authority: 29 U.S.C. 3122(d)(11), 3321(e), 3322)



Sec. 463.22  What must be included in the eligible provider's 
application for a grant or contract?

    (a) Each eligible provider seeking a grant or contract must submit 
an application to the eligible agency containing the information and 
assurances listed below, as well as any additional information required 
by the eligible agency, including:
    (1) A description of how funds awarded under this title will be 
spent consistent with the requirements of title II of AEFLA;
    (2) A description of any cooperative arrangements the eligible 
provider has with other agencies, institutions, or organizations for the 
delivery of adult education and literacy activities;
    (3) A description of how the eligible provider will provide services 
in alignment with the local workforce development plan, including how 
such provider will promote concurrent enrollment in programs and 
activities under title I, as appropriate;
    (4) A description of how the eligible provider will meet the State-
adjusted levels of performance for the primary indicators of performance 
identified in the State's Unified or Combined State Plan, including how 
such provider will collect data to report on such performance 
indicators;
    (5) A description of how the eligible provider will fulfill, as 
appropriate, required one-stop partner responsibilities to--
    (i) Provide access through the one-stop delivery system to adult 
education and literacy activities;
    (ii) Use a portion of the funds made available under the Act to 
maintain the one-stop delivery system, including payment of the 
infrastructure costs for the one-stop centers, in accordance with the 
methods agreed upon by the Local Board and described in the memorandum 
of understanding or the determination of the Governor regarding State 
one-stop infrastructure funding;
    (iii) Enter into a local memorandum of understanding with the Local 
Board, relating to the operations of the one-stop system;
    (iv) Participate in the operation of the one-stop system consistent 
with the terms of the memorandum of understanding, and the requirements 
of the Act; and
    (v) Provide representation to the State board;
    (6) A description of how the eligible provider will provide services 
in a manner that meets the needs of eligible individuals;
    (7) Information that addresses the 13 considerations listed in 
Sec. 463.20; and
    (8) Documentation of the activities required by Sec. 463.21(b).
    (b) [Reserved]

(Authority: 29 U.S.C. 3322)



Sec. 463.23  Who is eligible to apply for a grant or contract for
adult education and literacy activities?

    An organization that has demonstrated effectiveness in providing 
adult education and literacy activities is eligible to apply for a grant 
or contract. These organizations may include, but are not limited to:

[[Page 143]]

    (a) A local educational agency;
    (b) A community-based organization or faith-based organization;
    (c) A volunteer literacy organization;
    (d) An institution of higher education;
    (e) A public or private nonprofit agency;
    (f) A library;
    (g) A public housing authority;
    (h) A nonprofit institution that is not described in any of 
paragraphs (a) through (g) of this section and has the ability to 
provide adult education and literacy activities to eligible individuals;
    (i) A consortium or coalition of the agencies, organizations, 
institutions, libraries, or authorities described in any of paragraphs 
(a) through (h) of this section; and
    (j) A partnership between an employer and an entity described in any 
of paragraphs (a) through (i) of this section.

(Authority: 29 U.S.C. 3272(5))



Sec. 463.24  How must an eligible provider establish that it has
demonstrated effectiveness?

    (a) For the purposes of this section, an eligible provider must 
demonstrate past effectiveness by providing performance data on its 
record of improving the skills of eligible individuals, particularly 
eligible individuals who have low levels of literacy, in the content 
domains of reading, writing, mathematics, English language acquisition, 
and other subject areas relevant to the services contained in the 
State's application for funds. An eligible provider must also provide 
information regarding its outcomes for participants related to 
employment, attainment of secondary school diploma or its recognized 
equivalent, and transition to postsecondary education and training.
    (b) There are two ways in which an eligible provider may meet the 
requirements in paragraph (a) of this section:
    (1) An eligible provider that has been funded under title II of the 
Act must provide performance data required under section 116 to 
demonstrate past effectiveness.
    (2) An eligible provider that has not been previously funded under 
title II of the Act must provide performance data to demonstrate its 
past effectiveness in serving basic skills deficient eligible 
individuals, including evidence of its success in achieving outcomes 
listed in paragraph (a) of this section.

(Authority: 29 U.S.C. 3272(5))



Sec. 463.25  What are the requirements related to local administrative
cost limits?

    Not more than five percent of a local grant to an eligible provider 
can be expended to administer a grant or contract under title II. In 
cases where five percent is too restrictive to allow for administrative 
activities, the eligible agency may increase the amount that can be 
spent on local administration. In such cases, the eligible provider must 
negotiate with the eligible agency to determine an adequate level of 
funds to be used for non-instructional purposes.

(Authority: 29 U.S.C. 3323)



Sec. 463.26  What activities are considered local administrative costs?

    An eligible provider receiving a grant or contract under this part 
may consider costs incurred in connection with the following activities 
to be administrative costs:
    (a) Planning;
    (b) Administration, including carrying out performance 
accountability requirements;
    (c) Professional development;
    (d) Providing adult education and literacy services in alignment 
with local workforce plans, including promoting co-enrollment in 
programs and activities under title I, as appropriate; and
    (e) Carrying out the one-stop partner responsibilities described in 
Sec. 678.420, including contributing to the infrastructure costs of the 
one-stop delivery system.

(Authority: 29 U.S.C. 3323, 3322, 3151)



       Subpart D_What Are Adult Education and Literacy Activities?



Sec. 463.30  What are adult education and literacy programs, activities,
and services?

    The term ``adult education and literacy activities'' means programs, 
activities, and services that include:

[[Page 144]]

    (a) Adult education,
    (b) Literacy,
    (c) Workplace adult education and literacy activities,
    (d) Family literacy activities,
    (e) English language acquisition activities,
    (f) Integrated English literacy and civics education,
    (g) Workforce preparation activities, or
    (h) Integrated education and training.

(Authority: 29 U.S.C. 3272(2))



Sec. 463.31  What is an English language acquisition program?

    The term ``English language acquisition program'' means a program of 
instruction--
    (a) That is designed to help eligible individuals who are English 
language learners achieve competence in reading, writing, speaking, and 
comprehension of the English language; and
    (b) That leads to--
    (1) Attainment of a secondary school diploma or its recognized 
equivalent; and
    (2) Transition to postsecondary education and training; or
    (3) Employment.

(Authority: 29 U.S.C. 3272(6))



Sec. 463.32  How does a program that is intended to be an English
language acquisition program meet the requirement that the program 
leads to attainment of a secondary school diploma or its recognized
equivalent and transition to postsecondary education and training or 
leads to employment?

    To meet the requirement in Sec. 463.31(b) a program of instruction 
must:
    (a) Have implemented State adult education content standards that 
are aligned with State-adopted challenging academic content standards, 
as adopted under the Elementary and Secondary Education Act of 1965, as 
amended (ESEA) as described in the State's Unified or Combined State 
Plan and as evidenced by the use of a State or local curriculum, lesson 
plans, or instructional materials that are aligned with the State adult 
education content standards; or
    (b) Offer educational and career counseling services that assist an 
eligible individual to transition to postsecondary education or 
employment; or
    (c) Be part of a career pathway.

(Authority: 29 U.S.C. 3112(b)(2)(D)(ii), 3272)



Sec. 463.33  What are integrated English literacy and civics education
services?

    (a) Integrated English literacy and civics education services are 
education services provided to English language learners who are adults, 
including professionals with degrees or credentials in their native 
countries, that enable such adults to achieve competency in the English 
language and acquire the basic and more advanced skills needed to 
function effectively as parents, workers, and citizens in the United 
States.
    (b) Integrated English literacy and civics education services must 
include instruction in literacy and English language acquisition and 
instruction on the rights and responsibilities of citizenship and civic 
participation and may include workforce training.

(Authority: 29 U.S.C. 3272(12))



Sec. 463.34  What are workforce preparation activities?

    Workforce preparation activities include activities, programs, or 
services designed to help an individual acquire a combination of basic 
academic skills, critical thinking skills, digital literacy skills, and 
self-management skills, including competencies in:
    (a) Utilizing resources;
    (b) Using information;
    (c) Working with others;
    (d) Understanding systems;
    (e) Skills necessary for successful transition into and completion 
of postsecondary education or training, or employment; and
    (f) Other employability skills that increase an individual's 
preparation for the workforce.

(Authority: 29 U.S.C. 3272(17); P.L. 111-340)



Sec. 463.35  What is integrated education and training?

    The term ``integrated education and training'' refers to a service 
approach

[[Page 145]]

that provides adult education and literacy activities concurrently and 
contextually with workforce preparation activities and workforce 
training for a specific occupation or occupational cluster for the 
purpose of educational and career advancement.

(Authority: 29 U.S.C. 3272(11))



Sec. 463.36  What are the required components of an integrated
education and training program funded under title II?

    An integrated education and training program must include three 
components:
    (a) Adult education and literacy activities as described in 
Sec. 463.30.
    (b) Workforce preparation activities as described in Sec. 463.34.
    (c) Workforce training for a specific occupation or occupational 
cluster which can be any one of the training services defined in section 
134(c)(3)(D) of the Act.

(Authority: 29 U.S.C. 3272, 3174)



Sec. 463.37  How does a program providing integrated education and
training under title II meet the requirement that the three required 
components be `integrated''?

    In order to meet the requirement that the adult education and 
literacy activities, workforce preparation activities, and workforce 
training be integrated, services must be provided concurrently and 
contextually such that--
    (a) Within the overall scope of a particular integrated education 
and training program, the adult education and literacy activities, 
workforce preparation activities, and workforce training:
    (1) Are each of sufficient intensity and quality, and based on the 
most rigorous research available, particularly with respect to improving 
reading, writing, mathematics, and English proficiency of eligible 
individuals;
    (2) Occur simultaneously; and
    (3) Use occupationally relevant instructional materials.
    (b) The integrated education and training program has a single set 
of learning objectives that identifies specific adult education content, 
workforce preparation activities, and workforce training competencies, 
and the program activities are organized to function cooperatively.

(Authority: 29 U.S.C. 3272)



Sec. 463.38  How does a program providing integrated education and
training under title II meet the requirement that the integrated 
education and training program be ``for the purpose of educational 
and career advancement''?

    A provider meets the requirement that the integrated education and 
training program provided is for the purpose of educational and career 
advancement if:
    (a) The adult education component of the program is aligned with the 
State's content standards for adult education as described in the 
State's Unified or Combined State Plan; and
    (b) The integrated education and training program is part of a 
career pathway.

(Authority: 29 U.S.C. 3272, 3112)

Subpart E [Reserved]



Subpart F_What are Programs for Corrections Education and the Education 
                 of Other Institutionalized Individuals?



Sec. 463.60  What are programs for Corrections Education and the
Education of other Institutionalized Individuals?

    (a) Authorized under section 225 of the Act, programs for 
corrections education and the education of other institutionalized 
individuals require each eligible agency to carry out corrections 
education and education for other institutionalized individuals using 
funds provided under section 222 of the Act.
    (b) The funds described in paragraph (a) of this section must be 
used for the cost of educational programs for criminal offenders in 
correctional institutions and other institutionalized individuals, 
including academic programs for--
    (1) Adult education and literacy activities;
    (2) Special education, as determined by the eligible agency;
    (3) Secondary school credit;
    (4) Integrated education and training;

[[Page 146]]

    (5) Career pathways;
    (6) Concurrent enrollment;
    (7) Peer tutoring; and
    (8) Transition to re-entry initiatives and other post-release-
services with the goal of reducing recidivism.

(Authority: 29 U.S.C. 3302, 3305)



Sec. 463.61  How does the eligible agency award funds to eligible
providers under the program for Corrections Education and Education of
other Institutionalized Individuals?

    (a) States may award up to 20 percent of the 82.5 percent of the 
funds made available by the Secretary for local grants and contracts 
under section 231 of the Act for programs for corrections education and 
the education of other institutionalized individuals.
    (b) The State must make awards to eligible providers in accordance 
with subpart C.

(Authority: 29 U.S.C. 3302, 3321)



Sec. 463.62  What is the priority for programs that receive funding
through programs for Corrections Education and Education of other 
Institutionalized Individuals?

    Each eligible agency using funds provided under Programs for 
Corrections Education and Education of Other Institutionalized 
Individuals to carry out a program for criminal offenders within a 
correctional institution must give priority to programs serving 
individuals who are likely to leave the correctional institution within 
five years of participation in the program.

(Authority: 29 U.S.C. 3305)



Sec. 463.63  How may funds under programs for Corrections Education 
and Education of other Institutionalized Individuals be used to support
transition to re- entry initiatives and other post-release services with
the goal of reducing recidivism?

    Funds under Programs for Corrections Education and the Education of 
Other Institutionalized Individuals may be used to support educational 
programs for transition to re-entry initiatives and other post-release 
services with the goal of reducing recidivism. Such use of funds may 
include educational counseling or case work to support incarcerated 
individuals' transition to re-entry and other post-release services. 
Examples include assisting incarcerated individuals to develop plans for 
post-release education program participation, assisting students in 
identifying and applying for participation in post-release programs, and 
performing direct outreach to community-based program providers on 
behalf of re-entering students. Such funds may not be used for costs for 
participation in post-release programs or services.

(Authority: 29 U.S.C. 3305)



 Subpart G_What Is the Integrated English Literacy and Civics Education 
                                Program?



Sec. 463.70  What is the Integrated English Literacy and Civics
Education program?

    (a) The Integrated English Literacy and Civics Education program 
refers to the use of funds provided under section 243 of the Act for 
education services for English language learners who are adults, 
including professionals with degrees and credentials in their native 
countries.
    (b) The Integrated English Literacy and Civics Education program 
delivers educational services as described in Sec. 463.33.
    (c) Such educational services must be delivered in combination with 
integrated education and training activities as described in 
Sec. 463.36.

(Authority: 29 U.S.C. 3272, 3333)



Sec. 463.71  How does the Secretary make an award under the Integrated
English Literacy and Civics Education program?

    (a) The Secretary awards grants under the Integrated English 
Literacy and Civics Education program to States that have an approved 
Unified State Plan in accordance with Sec. 463.90 through Sec. 463.145, 
or an approved Combined State Plan in accordance with Sec. 463.90 
through Sec. 463.145.
    (b) The Secretary allocates funds to States following the formula 
described in section 243(b) of the Act.

[[Page 147]]

    (1) Sixty-five percent is allocated on the basis of a State's need 
for integrated English literacy and civics education, as determined by 
calculating each State's share of a 10-year average of the data of the 
Office of Immigration Statistics of the Department of Homeland Security 
for immigrants admitted for legal permanent residence for the 10 most 
recent years; and
    (2) Thirty-five percent is allocated on the basis of whether the 
State experienced growth, as measured by the average of the three most 
recent years for which the data of the Office of Immigration Statistics 
of the Department of Homeland Security for immigrants admitted for legal 
permanent residence are available.
    (3) No State receives an allotment less than $60,000.

(Authority: 29 U.S.C. 3333)



Sec. 463.72  How does the eligible agency award funds to eligible
providers for the Integrated English Literacy and Civics Education
program?

    States must award funds for the Integrated English Literacy and 
Civics Education program to eligible providers in accordance with 
subpart C.

(Authority: 29 U.S.C. 3321)



Sec. 463.73  What are the requirements for eligible providers that
receive funding through the Integrated English Literacy and Civics
Education program?

    Eligible providers receiving funds through the Integrated English 
Literacy and Civics Education program must provide services that--
    (a) Include instruction in literacy and English language acquisition 
and instruction on the rights and responsibilities of citizenship and 
civic participation; and
    (b) Are designed to:
    (1) Prepare adults who are English language learners for, and place 
such adults in, unsubsidized employment in in-demand industries and 
occupations that lead to economic self-sufficiency; and
    (2) Integrate with the local workforce development system and its 
functions to carry out the activities of the program.

(Authority: 29 U.S.C. 3272, 3333)



Sec. 463.74  How does an eligible provider that receives funds through 
the Integrated English Literacy and Civics Education program meet the
requirement to use funds for Integrated English Literacy and Civics
Education in combination with integrated education and training
activities?

    An eligible provider that receives funds through the Integrated 
English Literacy and Civics Education program may meet the requirement 
to use funds for integrated English literacy and civics education in 
combination with integrated education and training activities by:
    (a) Co-enrolling participants in integrated education and training 
as described in subpart D of this part that is provided within the local 
or regional workforce development area from sources other than section 
243 of the Act; or
    (b) Using funds provided under section 243 of the Act to support 
integrated education and training activities as described in subpart D 
of this part.

(Authority: 29 U.S.C. 3333, 3121, 3122, 3123)



Sec. 463.75  Who is eligible to receive education services through
the Integrated English Literacy and Civics Education program?

    Individuals who otherwise meet the definition of ``eligible 
individual'' and are English language learners, including professionals 
with degrees and credentials obtained in their native countries, may 
receive Integrated English Literacy and Civics Education services.

(Authority: 29 U.S.C. 3272)



    Subpart H_Unified and Combined State Plans Under Title I of the 
                Workforce Innovation and Opportunity Act

    Authority: Secs. 102, 103, and 503, Pub. L. 113-128, 128 Stat. 1425 
(Jul. 22, 2014).

    Source: 81 FR 56046, Aug. 19, 2016, unless otherwise noted.

[[Page 148]]



Sec. 463.100  What are the purposes of the Unified and Combined
State Plans?

    (a) The Unified and Combined State Plans provide the framework for 
States to outline a strategic vision of, and goals for, how their 
workforce development systems will achieve the purposes of the Workforce 
Innovation and Opportunity Act (WIOA).
    (b) The Unified and Combined State Plans serve as 4-year action 
plans to develop, align, and integrate the State's systems and provide a 
platform to achieve the State's vision and strategic and operational 
goals. A Unified or Combined State Plan is intended to:
    (1) Align, in strategic coordination, the six core programs required 
in the Unified State Plan pursuant to Sec. 463.105(b), and additional 
Combined State Plan partner programs that may be part of the Combined 
State Plan pursuant to Sec. 463.140;
    (2) Direct investments in economic, education, and workforce 
training programs to focus on providing relevant education and training 
to ensure that individuals, including youth and individuals with 
barriers to employment, have the skills to compete in the job market and 
that employers have a ready supply of skilled workers;
    (3) Apply strategies for job-driven training consistently across 
Federal programs; and
    (4) Enable economic, education, and workforce partners to build a 
skilled workforce through innovation in, and alignment of, employment, 
training, and education programs.



Sec. 463.105  What are the general requirements for the Unified
State Plan?

    (a) The Unified State Plan must be submitted in accordance with 
Sec. 463.130 and WIOA sec. 102(c), as explained in joint planning 
guidelines issued by the Secretaries of Labor and Education.
    (b) The Governor of each State must submit, at a minimum, in 
accordance with Sec. 463.130, a Unified State Plan to the Secretary of 
Labor to be eligible to receive funding for the workforce development 
system's six core programs:
    (1) The adult, dislocated worker, and youth programs authorized 
under subtitle B of title I of WIOA and administered by the U.S. 
Department of Labor (DOL);
    (2) The Adult Education and Family Literacy Act (AEFLA) program 
authorized under title II of WIOA and administered by the U.S. 
Department of Education (ED);
    (3) The Employment Service program authorized under the Wagner-
Peyser Act of 1933, as amended by WIOA title III and administered by 
DOL; and
    (4) The Vocational Rehabilitation program authorized under title I 
of the Rehabilitation Act of 1973, as amended by title IV of WIOA and 
administered by ED.
    (c) The Unified State Plan must outline the State's 4-year strategy 
for the core programs described in paragraph (b) of this section and 
meet the requirements of sec. 102(b) of WIOA, as explained in the joint 
planning guidelines issued by the Secretaries of Labor and Education.
    (d) The Unified State Plan must include strategic and operational 
planning elements to facilitate the development of an aligned, 
coordinated, and comprehensive workforce development system. The Unified 
State Plan must include:
    (1) Strategic planning elements that describe the State's strategic 
vision and goals for preparing an educated and skilled workforce under 
sec. 102(b)(1) of WIOA. The strategic planning elements must be informed 
by and include an analysis of the State's economic conditions and 
employer and workforce needs, including education and skill needs.
    (2) Strategies for aligning the core programs and Combined State 
Plan partner programs as described in Sec. 463.140(d), as well as other 
resources available to the State, to achieve the strategic vision and 
goals in accordance with sec. 102(b)(1)(E) of WIOA.
    (3) Operational planning elements in accordance with sec. 102(b)(2) 
of WIOA that support the strategies for aligning the core programs and 
other resources available to the State to achieve the State's vision and 
goals and a description of how the State Workforce Development Board 
(WDB) will implement its functions, in accordance with sec. 101(d) of 
WIOA. Operational planning elements must include:

[[Page 149]]

    (i) A description of how the State strategy will be implemented by 
each core program's lead State agency;
    (ii) State operating systems, including data systems, and policies 
that will support the implementation of the State's strategy identified 
in paragraph (d)(1) of this section;
    (iii) Program-specific requirements for the core programs required 
by WIOA sec. 102(b)(2)(D);
    (iv) Assurances required by sec. 102(b)(2)(E) of WIOA, including an 
assurance that the lead State agencies responsible for the 
administration of the core programs reviewed and commented on the 
appropriate operational planning of the Unified State Plan and approved 
the elements as serving the needs of the population served by such 
programs, and other assurances deemed necessary by the Secretaries of 
Labor and Education under sec. 102(b)(2)(E)(x) of WIOA;
    (v) A description of joint planning and coordination across core 
programs, required one-stop partner programs, and other programs and 
activities in the Unified State Plan; and
    (vi) Any additional operational planning requirements imposed by the 
Secretary of Labor or the Secretary of Education under sec. 
102(b)(2)(C)(viii) of WIOA.
    (e) All of the requirements in this subpart that apply to States 
also apply to outlying areas.



Sec. 463.110  What are the program-specific requirements in the
Unified State Plan for the adult, dislocated worker, and youth programs
authorized under Workforce Innovation and Opportunity Act title I?

    The program-specific requirements for the adult, dislocated worker, 
and youth programs that must be included in the Unified State Plan are 
described in sec. 102(b)(2)(D) of WIOA. Additional planning requirements 
may be explained in joint planning guidelines issued by the Secretaries 
of Labor and Education.



Sec. 463.115  What are the program-specific requirements in the
Unified State Plan for the Adult Education and Family Literacy Act
program authorized under Workforce Innovation and Opportunity Act
title II?

    The program-specific requirements for the AEFLA program in title II 
that must be included in the Unified State Plan are described in secs. 
102(b)(2)(C) and 102(b)(2)(D)(ii) of WIOA.
    (a) With regard to the description required in sec. 
102(b)(2)(D)(ii)(I) of WIOA pertaining to content standards, the Unified 
State Plan must describe how the eligible agency will, by July 1, 2016, 
align its content standards for adult education with State-adopted 
challenging academic content standards under the Elementary and 
Secondary Education Act of 1965, as amended.
    (b) With regard to the description required in sec. 102(b)(2)(C)(iv) 
of WIOA pertaining to the methods and factors the State will use to 
distribute funds under the core programs, for title II of WIOA, the 
Unified State Plan must include--
    (1) How the eligible agency will award multi-year grants on a 
competitive basis to eligible providers in the State; and
    (2) How the eligible agency will provide direct and equitable access 
to funds using the same grant or contract announcement and application 
procedure.



Sec. 463.120  What are the program-specific requirements in the Unified
State Plan for the Employment Service program authorized under the 
Wagner-Peyser Act, as amended by Workforce Innovation and Opportunity
Act title III?

    The Employment Service program authorized under the Wagner-Peyser 
Act of 1933, as amended by WIOA title III, is subject to requirements in 
sec. 102(b) of WIOA, including any additional requirements imposed by 
the Secretary of Labor under secs. 102(b)(2)(C)(viii) and 
102(b)(2)(D)(iv) of WIOA, as explained in joint planning guidelines 
issued by the Secretaries of Labor and Education.

[[Page 150]]



Sec. 463.125  What are the program-specific requirements in the Unified 
State Plan for the State Vocational Rehabilitation program authorized
under title I of the Rehabilitation Act of 1973, as amended by Workforce 
Innovation and Opportunity Act title IV?

    The program specific-requirements for the vocational rehabilitation 
services portion of the Unified or Combined State Plan are set forth in 
sec. 101(a) of the Rehabilitation Act of 1973, as amended. All 
submission requirements for the vocational rehabilitation services 
portion of the Unified or Combined State Plan are in addition to the 
jointly developed strategic and operational content requirements 
prescribed by sec. 102(b) of WIOA.



Sec. 463.130  What is the development, submission, and approval process
of the Unified State Plan?

    (a) The Unified State Plan described in Sec. 463.105 must be 
submitted in accordance with WIOA sec. 102(c), as explained in joint 
planning guidelines issued jointly by the Secretaries of Labor and 
Education.
    (b) A State must submit its Unified State Plan to the Secretary of 
Labor pursuant to a process identified by the Secretary.
    (1) The initial Unified State Plan must be submitted no later than 
120 days prior to the commencement of the second full program year of 
WIOA.
    (2) Subsequent Unified State Plans must be submitted no later than 
120 days prior to the end of the 4-year period covered by a preceding 
Unified State Plan.
    (3) For purposes of paragraph (b) of this section, ``program year'' 
means July 1 through June 30 of any year.
    (c) The Unified State Plan must be developed with the assistance of 
the State WDB, as required by 20 CFR 679.130(a) and WIOA sec. 101(d), 
and must be developed in coordination with administrators with optimum 
policy-making authority for the core programs and required one-stop 
partners.
    (d) The State must provide an opportunity for public comment on and 
input into the development of the Unified State Plan prior to its 
submission.
    (1) The opportunity for public comment must include an opportunity 
for comment by representatives of Local WDBs and chief elected 
officials, businesses, representatives of labor organizations, 
community-based organizations, adult education providers, institutions 
of higher education, other stakeholders with an interest in the services 
provided by the six core programs, and the general public, including 
individuals with disabilities.
    (2) Consistent with the ``Sunshine Provision'' of WIOA in sec. 
101(g), the State WDB must make information regarding the Unified State 
Plan available to the public through electronic means and regularly 
occurring open meetings in accordance with State law. The Unified State 
Plan must describe the State's process and timeline for ensuring a 
meaningful opportunity for public comment.
    (e) Upon receipt of the Unified State Plan from the State, the 
Secretary of Labor will ensure that the entire Unified State Plan is 
submitted to the Secretary of Education pursuant to a process developed 
by the Secretaries.
    (f) The Unified State Plan is subject to the approval of both the 
Secretary of Labor and the Secretary of Education.
    (g) Before the Secretaries of Labor and Education approve the 
Unified State Plan, the vocational rehabilitation services portion of 
the Unified State Plan described in WIOA sec. 102(b)(2)(D)(iii) must be 
approved by the Commissioner of the Rehabilitation Services 
Administration.
    (h) The Secretaries of Labor and Education will review and approve 
the Unified State Plan within 90 days of receipt by the Secretary of 
Labor, unless the Secretary of Labor or the Secretary of Education 
determines in writing within that period that:
    (1) The plan is inconsistent with a core program's requirements;
    (2) The Unified State Plan is inconsistent with any requirement of 
sec. 102 of WIOA; or
    (3) The plan is incomplete or otherwise insufficient to determine 
whether it is consistent with a core program's requirements or other 
requirements of WIOA.
    (i) If neither the Secretary of Labor nor the Secretary of Education 
makes the written determination described in

[[Page 151]]

paragraph (h) of this section within 90 days of the receipt by the 
Secretaries, the Unified State Plan will be considered approved.



Sec. 463.135  What are the requirements for modification of the
Unified State Plan?

    (a) In addition to the required modification review set forth in 
paragraph (b) of this section, a Governor may submit a modification of 
its Unified State Plan at any time during the 4-year period of the plan.
    (b) Modifications are required, at a minimum:
    (1) At the end of the first 2-year period of any 4-year State Plan, 
wherein the State WDB must review the Unified State Plan, and the 
Governor must submit modifications to the plan to reflect changes in 
labor market and economic conditions or other factors affecting the 
implementation of the Unified State Plan;
    (2) When changes in Federal or State law or policy substantially 
affect the strategies, goals, and priorities upon which the Unified 
State Plan is based;
    (3) When there are changes in the statewide vision, strategies, 
policies, State negotiated levels of performance as described in 
Sec. 463.170(b), the methodology used to determine local allocation of 
funds, reorganizations that change the working relationship with system 
employees, changes in organizational responsibilities, changes to the 
membership structure of the State WDB or alternative entity, and similar 
substantial changes to the State's workforce development system.
    (c) Modifications to the Unified State Plan are subject to the same 
public review and comment requirements in Sec. 463.130(d) that apply to 
the development of the original Unified State Plan.
    (d) Unified State Plan modifications must be approved by the 
Secretaries of Labor and Education, based on the approval standards 
applicable to the original Unified State Plan under Sec. 463.130. This 
approval must come after the approval of the Commissioner of the 
Rehabilitation Services Administration for modification of any portion 
of the plan described in sec. 102(b)(2)(D)(iii) of WIOA.



Sec. 463.140  What are the general requirements for submitting a
Combined State Plan?

    (a) A State may choose to develop and submit a 4-year Combined State 
Plan in lieu of the Unified State Plan described in Secs. 463.105 
through 463.125.
    (b) A State that submits a Combined State Plan covering an activity 
or program described in paragraph (d) of this section that is, in 
accordance with WIOA sec. 103(c), approved or deemed complete under the 
law relating to the program will not be required to submit any other 
plan or application in order to receive Federal funds to carry out the 
core programs or the program or activities described under paragraph (d) 
of this section that are covered by the Combined State Plan.
    (c) If a State develops a Combined State Plan, it must be submitted 
in accordance with the process described in Sec. 463.143.
    (d) If a State chooses to submit a Combined State Plan, the plan 
must include the six core programs and one or more of the Combined State 
Plan partner programs and activities described in sec. 103(a)(2) of 
WIOA. The Combined State Plan partner programs and activities that may 
be included in the Combined State Plan are:
    (1) Career and technical education programs authorized under the 
Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 
2301 et seq.);
    (2) Temporary Assistance for Needy Families or TANF, authorized 
under part A of title IV of the Social Security Act (42 U.S.C. 601 et 
seq.);
    (3) Employment and training programs authorized under sec. 6(d)(4) 
of the Food and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));
    (4) Work programs authorized under sec. 6(o) of the Food and 
Nutrition Act of 2008 (7 U.S.C. 2015(o));
    (5) Trade adjustment assistance activities under chapter 2 of title 
II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);
    (6) Services for veterans authorized under chapter 41 of title 38 
United States Code;
    (7) Programs authorized under State unemployment compensation laws 
(in

[[Page 152]]

accordance with applicable Federal law);
    (8) Senior Community Service Employment Programs under title V of 
the Older Americans Act of 1965 (42 U.S.C. 3056 et seq.);
    (9) Employment and training activities carried out by the Department 
of Housing and Urban Development (HUD);
    (10) Employment and training activities carried out under the 
Community Services Block Grant Act (42 U.S.C. 9901 et seq.); and
    (11) Reintegration of offenders programs authorized under sec. 212 
of the Second Chance Act of 2007 (42 U.S.C. 17532).
    (e) A Combined State Plan must contain:
    (1) For the core programs, the information required by sec. 102(b) 
of WIOA and Secs. 463.105 through 463.125, as explained in the joint 
planning guidelines issued by the Secretaries;
    (2) For the Combined State Plan partner programs and activities, 
except as described in paragraph (h) of this section, the information 
required by the law authorizing and governing that program to be 
submitted to the appropriate Secretary, any other applicable legal 
requirements, and any common planning requirements described in sec. 
102(b) of WIOA, as explained in the joint planning guidelines issued by 
the Secretaries;
    (3) A description of the methods used for joint planning and 
coordination among the core programs, and with the required one-stop 
partner programs and other programs and activities included in the State 
Plan; and
    (4) An assurance that all of the entities responsible for planning 
or administering the programs described in the Combined State Plan have 
had a meaningful opportunity to review and comment on all portions of 
the plan.
    (f) Each Combined State Plan partner program included in the 
Combined State Plan remains subject to the applicable program-specific 
requirements of the Federal law and regulations, and any other 
applicable legal or program requirements, governing the implementation 
and operation of that program.
    (g) For purposes of Secs. 463.140 through 463.145 the term 
``appropriate Secretary'' means the head of the Federal agency who 
exercises either plan or application approval authority for the program 
or activity under the Federal law authorizing the program or activity 
or, if there are no planning or application requirements, who exercises 
administrative authority over the program or activity under that Federal 
law.
    (h) States that include employment and training activities carried 
out under the Community Services Block Grant (CSBG) Act (42 U.S.C. 9901 
et seq.) under a Combined State Plan would submit all other required 
elements of a complete CSBG State Plan directly to the Federal agency 
that administers the program, according to the requirements of Federal 
law and regulations.
    (i) States that submit employment and training activities carried 
out by HUD under a Combined State Plan would submit any other required 
planning documents for HUD programs directly to HUD, according to the 
requirements of Federal law and regulations.



Sec. 463.143  What is the development, submission, and approval process
of the Combined State Plan?

    (a) For purposes of Sec. 463.140(a), if a State chooses to develop a 
Combined State Plan it must submit the Combined State Plan in accordance 
with the requirements described below and sec. 103 of WIOA, as explained 
in the joint planning guidelines issued by the Secretaries of Labor and 
Education.
    (b) The Combined State Plan must be developed with the assistance of 
the State WDB, as required by 20 CFR 679.130(a) and WIOA sec. 101(d), 
and must be developed in coordination with administrators with optimum 
policy-making authority for the core programs and required one-stop 
partners.
    (c) The State must provide an opportunity for public comment on and 
input into the development of the Combined State Plan prior to its 
submission.
    (1) The opportunity for public comment for the portions of the 
Combined State Plan that cover the core programs must include an 
opportunity for comment by representatives of Local

[[Page 153]]

WDBs and chief elected officials, businesses, representatives of labor 
organizations, community-based organizations, adult education providers, 
institutions of higher education, other stakeholders with an interest in 
the services provided by the six core programs, and the general public, 
including individuals with disabilities.
    (2) Consistent with the ``Sunshine Provision'' of WIOA in sec. 
101(g), the State WDB must make information regarding the Combined State 
Plan available to the public through electronic means and regularly 
occurring open meetings in accordance with State law. The Combined State 
Plan must describe the State's process and timeline for ensuring a 
meaningful opportunity for public comment on the portions of the plan 
covering core programs.
    (3) The portions of the plan that cover the Combined State Plan 
partner programs are subject to any public comment requirements 
applicable to those programs.
    (d) The State must submit to the Secretaries of Labor and Education 
and to the Secretary of the agency with responsibility for approving the 
program's plan or deeming it complete under the law governing the 
program, as part of its Combined State Plan, any plan, application, 
form, or any other similar document that is required as a condition for 
the approval of Federal funding under the applicable program or 
activity. Such submission must occur in accordance with a process 
identified by the relevant Secretaries in paragraph (a) of this section.
    (e) The Combined State Plan will be approved or disapproved in 
accordance with the requirements of sec. 103(c) of WIOA.
    (1) The portion of the Combined State Plan covering programs 
administered by the Departments of Labor and Education must be reviewed, 
and approved or disapproved, by the appropriate Secretary within 90 days 
beginning on the day the Combined State Plan is received by the 
appropriate Secretary from the State, consistent with paragraph (f) of 
this section. Before the Secretaries of Labor and Education approve the 
Combined State Plan, the vocational rehabilitation services portion of 
the Combined State Plan described in WIOA sec. 102(b)(2)(D)(iii) must be 
approved by the Commissioner of the Rehabilitation Services 
Administration.
    (2) If an appropriate Secretary other than the Secretary of Labor or 
the Secretary of Education has authority to approve or deem complete a 
portion of the Combined State Plan for a program or activity described 
in Sec. 463.140(d), that portion of the Combined State Plan must be 
reviewed, and approved, disapproved, or deemed complete, by the 
appropriate Secretary within 120 days beginning on the day the Combined 
State Plan is received by the appropriate Secretary from the State 
consistent with paragraph (f) of this section.
    (f) The appropriate Secretaries will review and approve or deem 
complete the Combined State Plan within 90 or 120 days, as appropriate, 
as described in paragraph (e) of this section, unless the Secretaries of 
Labor and Education or appropriate Secretary have determined in writing 
within that period that:
    (1) The Combined State Plan is inconsistent with the requirements of 
the six core programs or the Federal laws authorizing or applicable to 
the program or activity involved, including the criteria for approval of 
a plan or application, or deeming the plan complete, if any, under such 
law;
    (2) The portion of the Combined State Plan describing the six core 
programs or the program or activity described in paragraph (a) of this 
section involved does not satisfy the criteria as provided in sec. 102 
or 103 of WIOA, as applicable; or
    (3) The Combined State Plan is incomplete, or otherwise insufficient 
to determine whether it is consistent with a core program's 
requirements, other requirements of WIOA, or the Federal laws 
authorizing, or applicable to, the program or activity described in 
Sec. 463.140(d), including the criteria for approval of a plan or 
application, if any, under such law.
    (g) If the Secretary of Labor, the Secretary of Education, or the 
appropriate Secretary does not make the written determination described 
in paragraph (f) of this section within the relevant period of time 
after submission of the

[[Page 154]]

Combined State Plan, that portion of the Combined State Plan over which 
the Secretary has jurisdiction will be considered approved.
    (h) The Secretaries of Labor and Education's written determination 
of approval or disapproval regarding the portion of the plan for the six 
core programs may be separate from the written determination of 
approval, disapproval, or completeness of the program-specific 
requirements of Combined State Plan partner programs and activities 
described in Sec. 463.140(d) and included in the Combined State Plan.
    (i) Special rule. In paragraphs (f)(1) and (3) of this section, the 
term ``criteria for approval of a plan or application,'' with respect to 
a State or a core program or a program under the Carl D. Perkins Career 
and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.), includes a 
requirement for agreement between the State and the appropriate 
Secretaries regarding State performance measures or State performance 
accountability measures, as the case may be, including levels of 
performance.



Sec. 463.145  What are the requirements for modifications of the
Combined State Plan?

    (a) For the core program portions of the Combined State Plan, 
modifications are required, at a minimum:
    (1) By the end of the first 2-year period of any 4-year State Plan. 
The State WDB must review the Combined State Plan, and the Governor must 
submit modifications to the Combined State Plan to reflect changes in 
labor market and economic conditions or other factors affecting the 
implementation of the Combined State Plan;
    (2) When changes in Federal or State law or policy substantially 
affect the strategies, goals, and priorities upon which the Combined 
State Plan is based;
    (3) When there are changes in the statewide vision, strategies, 
policies, State negotiated levels of performance as described in 
Sec. 463.170(b), the methodology used to determine local allocation of 
funds, reorganizations that change the working relationship with system 
employees, changes in organizational responsibilities, changes to the 
membership structure of the State WDB or alternative entity, and similar 
substantial changes to the State's workforce development system.
    (b) In addition to the required modification review described in 
paragraph (a)(1) of this section, a State may submit a modification of 
its Combined State Plan at any time during the 4-year period of the 
plan.
    (c) For any Combined State Plan partner programs and activities 
described in Sec. 463.140(d) that are included in a State's Combined 
State Plan, the State--
    (1) May decide if the modification requirements under WIOA sec. 
102(c)(3) that apply to the core programs will apply to the Combined 
State Plan partner programs, as long as consistent with any other 
modification requirements for the programs, or may comply with the 
requirements applicable to only the particular program or activity; and
    (2) Must submit, in accordance with the procedure described in 
Sec. 463.143, any modification, amendment, or revision required by the 
Federal law authorizing, or applicable to, the Combined State Plan 
partner program or activity.
    (i) If the underlying programmatic requirements change (e.g., the 
authorizing statute is reauthorized) for Federal laws authorizing such 
programs, a State must either modify its Combined State Plan or submit a 
separate plan to the appropriate Federal agency in accordance with the 
new Federal law authorizing the Combined State Plan partner program or 
activity and other legal requirements applicable to such program or 
activity.
    (ii) If the modification, amendment, or revision affects the 
administration of only that particular Combined State Plan partner 
program and has no impact on the Combined State Plan as a whole or the 
integration and administration of the core and other Combined State Plan 
partner programs at the State level, modifications must be submitted for 
approval to only the appropriate Secretary, based on the approval 
standards applicable to the original Combined State Plan under 
Sec. 463.143, if the State elects, or in accordance with

[[Page 155]]

the procedures and requirements applicable to the particular Combined 
State Plan partner program.
    (3) A State also may amend its Combined State Plan to add a Combined 
State Plan partner program or activity described in Sec. 463.140(d).
    (d) Modifications of the Combined State Plan are subject to the same 
public review and comment requirements that apply to the development of 
the original Combined State Plan as described in Sec. 463.143(c) except 
that, if the modification, amendment, or revision affects the 
administration of a particular Combined State Plan partner program and 
has no impact on the Combined State Plan as a whole or the integration 
and administration of the core and other Combined State Plan partner 
programs at the State level, a State may comply instead with the 
procedures and requirements applicable to the particular Combined State 
Plan partner program.
    (e) Modifications for the core program portions of the Combined 
State Plan must be approved by the Secretaries of Labor and Education, 
based on the approval standards applicable to the original Combined 
State Plan under Sec. 463.143. This approval must come after the 
approval of the Commissioner of the Rehabilitation Services 
Administration for modification of any portion of the Combined State 
Plan described in sec. 102(b)(2)(D)(iii) of WIOA.



  Subpart I_Performance Accountability Under Title I of the Workforce 
                     Innovation and Opportunity Act

    Authority: Secs. 116, 189, and 503 of Pub. L. 113-128, 128 Stat. 
1425 (Jul. 22, 2014).

    Source: 81 FR 56051, Aug. 19, 2016, unless otherwise noted.



Sec. 463.150  What definitions apply to Workforce Innovation and
Opportunity Act performance accountability provisions?

    (a) Participant. A reportable individual who has received services 
other than the services described in paragraph (a)(3) of this section, 
after satisfying all applicable programmatic requirements for the 
provision of services, such as eligibility determination.
    (1) For the Vocational Rehabilitation (VR) program, a participant is 
a reportable individual who has an approved and signed Individualized 
Plan for Employment (IPE) and has begun to receive services.
    (2) For the Workforce Innovation and Opportunity Act (WIOA) title I 
youth program, a participant is a reportable individual who has 
satisfied all applicable program requirements for the provision of 
services, including eligibility determination, an objective assessment, 
and development of an individual service strategy, and received 1 of the 
14 WIOA youth program elements identified in sec. 129(c)(2) of WIOA.
    (3) The following individuals are not participants:
    (i) Individuals in an Adult Education and Family Literacy Act 
(AEFLA) program who have not completed at least 12 contact hours;
    (ii) Individuals who only use the self-service system.
    (A) Subject to paragraph (a)(3)(ii)(B) of this section, self-service 
occurs when individuals independently access any workforce development 
system program's information and activities in either a physical 
location, such as a one-stop center resource room or partner agency, or 
remotely via the use of electronic technologies.
    (B) Self-service does not uniformly apply to all virtually accessed 
services. For example, virtually accessed services that provide a level 
of support beyond independent job or information seeking on the part of 
an individual would not qualify as self-service.
    (iii) Individuals who receive information-only services or 
activities, which provide readily available information that does not 
require an assessment by a staff member of the individual's skills, 
education, or career objectives.
    (4) Programs must include participants in their performance 
calculations.
    (b) Reportable individual. An individual who has taken action that 
demonstrates an intent to use program services and who meets specific 
reporting criteria of the program, including:

[[Page 156]]

    (1) Individuals who provide identifying information;
    (2) Individuals who only use the self-service system; or
    (3) Individuals who only receive information-only services or 
activities.
    (c) Exit. As defined for the purpose of performance calculations, 
exit is the point after which a participant who has received services 
through any program meets the following criteria:
    (1) For the adult, dislocated worker, and youth programs authorized 
under WIOA title I, the AEFLA program authorized under WIOA title II, 
and the Employment Service program authorized under the Wagner-Peyser 
Act, as amended by WIOA title III, exit date is the last date of 
service.
    (i) The last day of service cannot be determined until at least 90 
days have elapsed since the participant last received services; services 
do not include self-service, information-only services or activities, or 
follow-up services. This also requires that there are no plans to 
provide the participant with future services.
    (ii) [Reserved].
    (2)(i) For the VR program authorized under title I of the 
Rehabilitation Act of 1973, as amended by WIOA title IV (VR program):
    (A) The participant's record of service is closed in accordance with 
Sec. 463.56 because the participant has achieved an employment outcome; 
or
    (B) The participant's service record is closed because the 
individual has not achieved an employment outcome or the individual has 
been determined ineligible after receiving services in accordance with 
Sec. 463.43.
    (ii) Notwithstanding any other provision of this section, a 
participant will not be considered as meeting the definition of exit 
from the VR program if the participant's service record is closed 
because the participant has achieved a supported employment outcome in 
an integrated setting but not in competitive integrated employment.
    (3)(i) A State may implement a common exit policy for all or some of 
the core programs in WIOA title I and the Employment Service program 
authorized under the Wagner-Peyser Act, as amended by WIOA title III, 
and any additional required partner program(s) listed in sec. 
121(b)(1)(B) of WIOA that is under the authority of the U.S. Department 
of Labor (DOL).
    (ii) If a State chooses to implement a common exit policy, the 
policy must require that a participant is exited only when all of the 
criteria in paragraph (c)(1) of this section are met for the WIOA title 
I core programs and the Employment Service program authorized under the 
Wagner-Peyser Act, as amended by WIOA title III, as well as any 
additional required partner programs listed in sec. 121(b)(1)(B) of WIOA 
under the authority of DOL to which the common exit policy applies in 
which the participant is enrolled.
    (d) State. For purposes of this part, other than in regard to 
sanctions or the statistical adjustment model, all references to 
``State'' include the outlying areas of American Samoa, Guam, 
Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, 
and, as applicable, the Republic of Palau.



Sec. 463.155  What are the primary indicators of performance under
the Workforce Innovation and Opportunity Act?

    (a) All States submitting either a Unified or Combined State Plan 
under Secs. 463.130 and 463.143, must propose expected levels of 
performance for each of the primary indicators of performance for the 
adult, dislocated worker, and youth programs authorized under WIOA title 
I; the AEFLA program authorized under WIOA title II; the Employment 
Service program authorized under the Wagner-Peyser Act, as amended by 
WIOA title III; and the VR program authorized under title I of the 
Rehabilitation Act of 1973, as amended by WIOA title IV.
    (1) Primary indicators of performance. The six primary indicators of 
performance for the adult and dislocated worker programs, the AEFLA 
program, and the VR program are:
    (i) The percentage of participants who are in unsubsidized 
employment during the second quarter after exit from the program;
    (ii) The percentage of participants who are in unsubsidized 
employment during the fourth quarter after exit from the program;

[[Page 157]]

    (iii) Median earnings of participants who are in unsubsidized 
employment during the second quarter after exit from the program;
    (iv)(A) The percentage of those participants enrolled in an 
education or training program (excluding those in on-the-job training 
[OJT] and customized training) who attained a recognized postsecondary 
credential or a secondary school diploma, or its recognized equivalent, 
during participation in or within 1 year after exit from the program.
    (B) A participant who has attained a secondary school diploma or its 
recognized equivalent is included in the percentage of participants who 
have attained a secondary school diploma or recognized equivalent only 
if the participant also is employed or is enrolled in an education or 
training program leading to a recognized postsecondary credential within 
1 year after exit from the program;
    (v) The percentage of participants who, during a program year, are 
in an education or training program that leads to a recognized 
postsecondary credential or employment and who are achieving measurable 
skill gains, defined as documented academic, technical, occupational, or 
other forms of progress, towards such a credential or employment. 
Depending upon the type of education or training program, documented 
progress is defined as one of the following:
    (A) Documented achievement of at least one educational functioning 
level of a participant who is receiving instruction below the 
postsecondary education level;
    (B) Documented attainment of a secondary school diploma or its 
recognized equivalent;
    (C) Secondary or postsecondary transcript or report card for a 
sufficient number of credit hours that shows a participant is meeting 
the State unit's academic standards;
    (D) Satisfactory or better progress report, towards established 
milestones, such as completion of OJT or completion of 1 year of an 
apprenticeship program or similar milestones, from an employer or 
training provider who is providing training; or
    (E) Successful passage of an exam that is required for a particular 
occupation or progress in attaining technical or occupational skills as 
evidenced by trade-related benchmarks such as knowledge-based exams.
    (vi) Effectiveness in serving employers.
    (2) Participants. For purposes of the primary indicators of 
performance in paragraph (a)(1) of this section, ``participant'' will 
have the meaning given to it in Sec. 463.150(a), except that--
    (i) For purposes of determining program performance levels under 
indicators set forth in paragraphs (a)(1)(i) through (iv) and (vi) of 
this section, a ``participant'' does not include a participant who 
received services under sec. 225 of WIOA and exits such program while 
still in a correctional institution as defined in sec. 225(e)(1) of 
WIOA; and
    (ii) The Secretaries of Labor and Education may, as needed and 
consistent with the Paperwork Reduction Act (PRA), make further 
determinations as to the participants to be included in calculating 
program performance levels for purposes of any of the performance 
indicators set forth in paragraph (a)(1) of this section.
    (b) The primary indicators in paragraphs (a)(1)(i) through (iii) and 
(vi) of this section apply to the Employment Service program authorized 
under the Wagner-Peyser Act, as amended by WIOA title III.
    (c) For the youth program authorized under WIOA title I, the primary 
indicators are:
    (1) Percentage of participants who are in education or training 
activities, or in unsubsidized employment, during the second quarter 
after exit from the program;
    (2) Percentage of participants in education or training activities, 
or in unsubsidized employment, during the fourth quarter after exit from 
the program;
    (3) Median earnings of participants who are in unsubsidized 
employment during the second quarter after exit from the program;
    (4) The percentage of those participants enrolled in an education or 
training program (excluding those in OJT and customized training) who 
obtained

[[Page 158]]

a recognized postsecondary credential or a secondary school diploma, or 
its recognized equivalent, during participation in or within 1 year 
after exit from the program, except that a participant who has attained 
a secondary school diploma or its recognized equivalent is included as 
having attained a secondary school diploma or recognized equivalent only 
if the participant is also employed or is enrolled in an education or 
training program leading to a recognized postsecondary credential within 
1 year from program exit;
    (5) The percentage of participants who during a program year, are in 
an education or training program that leads to a recognized 
postsecondary credential or employment and who are achieving measurable 
skill gains, defined as documented academic, technical, occupational or 
other forms of progress towards such a credential or employment. 
Depending upon the type of education or training program, documented 
progress is defined as one of the following:
    (i) Documented achievement of at least one educational functioning 
level of a participant who is receiving instruction below the 
postsecondary education level;
    (ii) Documented attainment of a secondary school diploma or its 
recognized equivalent;
    (iii) Secondary or postsecondary transcript or report card for a 
sufficient number of credit hours that shows a participant is achieving 
the State unit's academic standards;
    (iv) Satisfactory or better progress report, towards established 
milestones, such as completion of OJT or completion of 1 year of an 
apprenticeship program or similar milestones, from an employer or 
training provider who is providing training; or
    (v) Successful passage of an exam that is required for a particular 
occupation or progress in attaining technical or occupational skills as 
evidenced by trade-related benchmarks such as knowledge-based exams.
    (6) Effectiveness in serving employers.



Sec. 463.160  What information is required for State performance reports?

    (a) The State performance report required by sec. 116(d)(2) of WIOA 
must be submitted annually using a template the Departments of Labor and 
Education will disseminate, and must provide, at a minimum, information 
on the actual performance levels achieved consistent with Sec. 463.175 
with respect to:
    (1) The total number of participants served, and the total number of 
participants who exited each of the core programs identified in sec. 
116(b)(3)(A)(ii) of WIOA, including disaggregated counts of those who 
participated in and exited a core program, by:
    (i) Individuals with barriers to employment as defined in WIOA sec. 
3(24); and
    (ii) Co-enrollment in any of the programs in WIOA sec. 
116(b)(3)(A)(ii).
    (2) Information on the performance levels achieved for the primary 
indicators of performance for all of the core programs identified in 
Sec. 463.155 including disaggregated levels for:
    (i) Individuals with barriers to employment as defined in WIOA sec. 
3(24);
    (ii) Age;
    (iii) Sex; and
    (iv) Race and ethnicity.
    (3) The total number of participants who received career services 
and the total number of participants who exited from career services for 
the most recent program year and the 3 preceding program years, and the 
total number of participants who received training services and the 
total number of participants who exited from training services for the 
most recent program year and the 3 preceding program years, as 
applicable to the program;
    (4) Information on the performance levels achieved for the primary 
indicators of performance consistent with Sec. 463.155 for career 
services and training services for the most recent program year and the 
3 preceding program years, as applicable to the program;
    (5) The percentage of participants in a program who attained 
unsubsidized employment related to the training received (often referred 
to as training-related employment) through WIOA title I, subtitle B 
programs;

[[Page 159]]

    (6) The amount of funds spent on career services and the amount of 
funds spent on training services for the most recent program year and 
the 3 preceding program years, as applicable to the program;
    (7) The average cost per participant for those participants who 
received career services and training services, respectively, during the 
most recent program year and the 3 preceding program years, as 
applicable to the program;
    (8) The percentage of a State's annual allotment under WIOA sec. 
132(b) that the State spent on administrative costs; and
    (9) Information that facilitates comparisons of programs with 
programs in other States.
    (10) For WIOA title I programs, a State performance narrative, 
which, for States in which a local area is implementing a pay-for-
performance contracting strategy, at a minimum provides:
    (i) A description of pay-for-performance contract strategies being 
used for programs;
    (ii) The performance of service providers entering into contracts 
for such strategies, measured against the levels of performance 
specified in the contracts for such strategies; and
    (iii) An evaluation of the design of the programs and performance 
strategies and, when available, the satisfaction of employers and 
participants who received services under such strategies.
    (b) The disaggregation of data for the State performance report must 
be done in compliance with WIOA sec. 116(d)(6)(C).
    (c) The State performance reports must include a mechanism of 
electronic access to the State's local area and eligible training 
provider (ETP) performance reports.
    (d) States must comply with these requirements from sec. 116 of WIOA 
as explained in joint guidance issued by the Departments of Labor and 
Education, which may include information on reportable individuals as 
determined by the Secretaries of Labor and Education.



Sec. 463.165  May a State establish additional indicators of performance?

    States may identify additional indicators of performance for the six 
core programs. If a State does so, these indicators must be included in 
the Unified or Combined State Plan.



Sec. 463.170  How are State levels of performance for primary indicators
established?

    (a) A State must submit in the State Plan expected levels of 
performance on the primary indicators of performance for each core 
program as required by sec. 116(b)(3)(A)(iii) of WIOA as explained in 
joint guidance issued by the Secretaries of Labor and Education.
    (1) The initial State Plan submitted under WIOA must contain 
expected levels of performance for the first 2 years of the State Plan.
    (2) States must submit expected levels of performance for the third 
and fourth year of the State Plan before the third program year 
consistent with Secs. 463.135 and 463.145.
    (b) States must reach agreement on levels of performance with the 
Secretaries of Labor and Education for each indicator for each core 
program. These are the negotiated levels of performance. The negotiated 
levels must be based on the following factors:
    (1) How the negotiated levels of performance compare with State 
levels of performance established for other States;
    (2) The application of an objective statistical model established by 
the Secretaries of Labor and Education, subject to paragraph (d) of this 
section;
    (3) How the negotiated levels promote continuous improvement in 
performance based on the primary indicators and ensure optimal return on 
investment of Federal funds; and
    (4) The extent to which the negotiated levels assist the State in 
meeting the performance goals established by the Secretaries of Labor 
and Education for the core programs in accordance with the Government 
Performance and Results Act of 1993, as amended.
    (c) An objective statistical adjustment model will be developed and 
disseminated by the Secretaries of Labor

[[Page 160]]

and Education. The model will be based on:
    (1) Differences among States in actual economic conditions, 
including but not limited to unemployment rates and job losses or gains 
in particular industries; and
    (2) The characteristics of participants, including but not limited 
to:
    (i) Indicators of poor work history;
    (ii) Lack of work experience;
    (iii) Lack of educational or occupational skills attainment;
    (iv) Dislocation from high-wage and high-benefit employment;
    (v) Low levels of literacy;
    (vi) Low levels of English proficiency;
    (vii) Disability status;
    (viii) Homelessness;
    (ix) Ex-offender status; and
    (x) Welfare dependency.
    (d) The objective statistical adjustment model developed under 
paragraph (c) of this section will be:
    (1) Applied to the core programs' primary indicators upon 
availability of data which are necessary to populate the model and apply 
the model to the local core programs;
    (2) Subject to paragraph (d)(1) of this section, used before the 
beginning of a program year in order to reach agreement on State 
negotiated levels for the upcoming program year; and
    (3) Subject to paragraph (d)(1) of this section, used to revise 
negotiated levels at the end of a program year based on actual economic 
conditions and characteristics of participants served, consistent with 
sec. 116(b)(3)(A)(vii) of WIOA.
    (e) The negotiated levels revised at the end of the program year, 
based on the statistical adjustment model, are the adjusted levels of 
performance.
    (f) States must comply with these requirements from sec. 116 of WIOA 
as explained in joint guidance issued by the Departments of Labor and 
Education.



Sec. 463.175  What responsibility do States have to use quarterly wage
record information for performance accountability?

    (a)(1) States must, consistent with State laws, use quarterly wage 
record information in measuring a State's performance on the primary 
indicators of performance outlined in Sec. 463.155 and a local area's 
performance on the primary indicators of performance identified in 
Sec. 463.205.
    (2) The use of social security numbers from participants and such 
other information as is necessary to measure the progress of those 
participants through quarterly wage record information is authorized.
    (3) To the extent that quarterly wage records are not available for 
a participant, States may use other information as is necessary to 
measure the progress of those participants through methods other than 
quarterly wage record information.
    (b) ``Quarterly wage record information'' means intrastate and 
interstate wages paid to an individual, the social security number (or 
numbers, if more than one) of the individual, and the name, address, 
State, and the Federal employer identification number of the employer 
paying the wages to the individual.
    (c) The Governor may designate a State agency (or appropriate State 
entity) to assist in carrying out the performance reporting requirements 
for WIOA core programs and ETPs. The Governor or such agency (or 
appropriate State entity) is responsible for:
    (1) Facilitating data matches;
    (2) Data quality reliability; and
    (3) Protection against disaggregation that would violate applicable 
privacy standards.



Sec. 463.180  When is a State subject to a financial sanction under
the Workforce Innovation and Opportunity Act?

    A State will be subject to financial sanction under WIOA sec. 116(f) 
if it fails to:
    (a) Submit the State annual performance report required under WIOA 
sec. 116(d)(2); or
    (b) Meet adjusted levels of performance for the primary indicators 
of performance in accordance with sec. 116(f) of WIOA.



Sec. 463.185  When are sanctions applied for a State's failure to submit
an annual performance report?

    (a) Sanctions will be applied when a State fails to submit the State 
annual performance report required under sec.

[[Page 161]]

116(d)(2) of WIOA. A State fails to report if the State either:
    (1) Does not submit a State annual performance report by the date 
for timely submission set in performance reporting guidance; or
    (2) Submits a State annual performance report by the date for timely 
submission, but the report is incomplete.
    (b) Sanctions will not be applied if the reporting failure is due to 
exceptional circumstances outside of the State's control. Exceptional 
circumstances may include, but are not limited to:
    (1) Natural disasters;
    (2) Unexpected personnel transitions; and
    (3) Unexpected technology related issues.
    (c) In the event that a State may not be able to submit a complete 
and accurate performance report by the deadline for timely reporting:
    (1) The State must notify the Secretary of Labor or Secretary of 
Education as soon as possible, but no later than 30 days prior to the 
established deadline for submission, of a potential impact on the 
State's ability to submit its State annual performance report in order 
to not be considered failing to report.
    (2) In circumstances where unexpected events occur less than 30 days 
before the established deadline for submission of the State annual 
performance reports, the Secretaries of Labor and Education will review 
requests for extending the reporting deadline in accordance with the 
Departments of Labor and Education's procedures that will be established 
in guidance.



Sec. 463.190  When are sanctions applied for failure to achieve adjusted
levels of performance?

    (a) States' negotiated levels of performance will be adjusted 
through the application of the statistical adjustment model established 
under Sec. 463.170 to account for actual economic conditions experienced 
during a program year and characteristics of participants, annually at 
the close of each program year.
    (b) Any State that fails to meet adjusted levels of performance for 
the primary indicators of performance outlined in Sec. 463.155 for any 
year will receive technical assistance, including assistance in the 
development of a performance improvement plan provided by the Secretary 
of Labor or Secretary of Education.
    (c) Whether a State has failed to meet adjusted levels of 
performance will be determined using the following three criteria:
    (1) The overall State program score, which is expressed as the 
percent achieved, compares the actual results achieved by a core program 
on the primary indicators of performance to the adjusted levels of 
performance for that core program. The average of the percentages 
achieved of the adjusted level of performance for each of the primary 
indicators by a core program will constitute the overall State program 
score.
    (2) However, until all indicators for the core program have at least 
2 years of complete data, the overall State program score will be based 
on a comparison of the actual results achieved to the adjusted level of 
performance for each of the primary indicators that have at least 2 
years of complete data for that program;
    (3) The overall State indicator score, which is expressed as the 
percent achieved, compares the actual results achieved on a primary 
indicator of performance by all core programs in a State to the adjusted 
levels of performance for that primary indicator. The average of the 
percentages achieved of the adjusted level of performance by all of the 
core programs on that indicator will constitute the overall State 
indicator score.
    (4) However, until all indicators for the State have at least 2 
years of complete data, the overall State indicator score will be based 
on a comparison of the actual results achieved to the adjusted level of 
performance for each of the primary indicators that have at least 2 
years of complete data in a State.
    (5) The individual indicator score, which is expressed as the 
percent achieved, compares the actual results achieved by each core 
program on each of the individual primary indicators to the adjusted 
levels of performance for

[[Page 162]]

each of the program's primary indicators of performance.
    (d) A performance failure occurs when:
    (1) Any overall State program score or overall State indicator score 
falls below 90 percent for the program year; or
    (2) Any of the States' individual indicator scores fall below 50 
percent for the program year.
    (e) Sanctions based on performance failure will be applied to States 
if, for 2 consecutive years, the State fails to meet:
    (1) 90 percent of the overall State program score for the same core 
program;
    (2) 90 percent of the overall State indicator score for the same 
primary indicator; or
    (3) 50 percent of the same indicator score for the same program.



Sec. 463.195  What should States expect when a sanction is applied to
the Governor's Reserve Allotment?

    (a) The Secretaries of Labor and Education will reduce the 
Governor's Reserve Allotment by five percent of the maximum available 
amount for the immediately succeeding program year if:
    (1) The State fails to submit the State annual performance reports 
as required under WIOA sec. 116(d)(2), as defined in Sec. 463.185;
    (2) The State fails to meet State adjusted levels of performance for 
the same primary performance indicator(s) under either 
Sec. 463.190(d)(1) for the second consecutive year as defined in 
Sec. 463.190; or
    (3) The State's score on the same indicator for the same program 
falls below 50 percent under Sec. 463.190(d)(2) for the second 
consecutive year as defined in Sec. 463.190.
    (b) If the State fails under paragraphs (a)(1) and either (a)(2) or 
(3) of this section in the same program year, the Secretaries of Labor 
and Education will reduce the Governor's Reserve Allotment by 10 percent 
of the maximum available amount for the immediately succeeding program 
year.
    (c) If a State's Governor's Reserve Allotment is reduced:
    (1) The reduced amount will not be returned to the State in the 
event that the State later improves performance or submits its annual 
performance report; and
    (2) The Governor's Reserve will continue to be set at the reduced 
level in each subsequent year until the Secretary of Labor or the 
Secretary of Education, depending on which program is impacted, 
determines that the State met the State adjusted levels of performance 
for the applicable primary performance indicators and has submitted all 
of the required performance reports.
    (d) A State may request review of a sanction the Secretary of Labor 
imposes in accordance with the provisions of 20 CFR 683.800.



Sec. 463.200  What other administrative actions will be applied to
States' performance requirements?

    (a) In addition to sanctions for failure to report or failure to 
meet adjusted levels of performance, States will be subject to 
administrative actions in the case of poor performance.
    (b) States' performance achievement on the individual primary 
indicators will be assessed in addition to the overall State program 
score and overall State indicator score. Based on this assessment, as 
clarified and explained in guidance, for performance on any individual 
primary indicator, the Secretary of Labor or the Secretary of Education 
will require the State to establish a performance risk plan to address 
continuous improvement on the individual primary indicator.
      



Sec. 463.205  What performance indicators apply to local areas and
what information must be included in local area performance reports?

    (a) Each local area in a State under WIOA title I is subject to the 
same primary indicators of performance for the core programs for WIOA 
title I under Sec. 463.155(a)(1) and (c) that apply to the State.
    (b) In addition to the indicators described in paragraph (a) of this 
section, under Sec. 463.165, the Governor may apply additional 
indicators of performance to local areas in the State.
    (c) States must annually make local area performance reports 
available to the public using a template that the

[[Page 163]]

Departments of Labor and Education will disseminate in guidance, 
including by electronic means. The State must provide electronic access 
to the public local area performance report in its annual State 
performance report.
    (d) The local area performance report must include:
    (1) The actual results achieved under Sec. 463.155 and the 
information required under Sec. 463.160(a);
    (2) The percentage of a local area's allotment under WIOA secs. 
128(b) and 133(b) that the local area spent on administrative costs; and
    (3) Other information that facilitates comparisons of programs with 
programs in other local areas (or planning regions if the local area is 
part of a planning region).
    (e) The disaggregation of data for the local area performance report 
must be done in compliance with WIOA sec. 116(d)(6)(C).
    (f) States must comply with any requirements from sec. 116(d)(3) of 
WIOA as explained in guidance, including the use of the performance 
reporting template, issued by DOL.



Sec. 463.210  How are local performance levels established?

    (a) The objective statistical adjustment model required under sec. 
116(b)(3)(A)(viii) of WIOA and described in Sec. 463.170(c) must be:
    (1) Applied to the core programs' primary indicators upon 
availability of data which are necessary to populate the model and apply 
the model to the local core programs;
    (2) Used in order to reach agreement on local negotiated levels of 
performance for the upcoming program year; and
    (3) Used to establish adjusted levels of performance at the end of a 
program year based on actual conditions, consistent with WIOA sec. 
116(c)(3).
    (b) Until all indicators for the core program in a local area have 
at least 2 years of complete data, the comparison of the actual results 
achieved to the adjusted levels of performance for each of the primary 
indicators only will be applied where there are at least 2 years of 
complete data for that program.
    (c) The Governor, Local Workforce Development Board (WDB), and chief 
elected official must reach agreement on local negotiated levels of 
performance based on a negotiations process before the start of a 
program year with the use of the objective statistical model described 
in paragraph (a) of this section. The negotiations will include a 
discussion of circumstances not accounted for in the model and will take 
into account the extent to which the levels promote continuous 
improvement. The objective statistical model will be applied at the end 
of the program year based on actual economic conditions and 
characteristics of the participants served.
    (d) The negotiations process described in paragraph (c) of this 
section must be developed by the Governor and disseminated to all Local 
WDBs and chief elected officials.
    (e) The Local WDBs may apply performance measures to service 
providers that differ from the performance indicators that apply to the 
local area. These performance measures must be established after 
considering:
    (1) The established local negotiated levels;
    (2) The services provided by each provider; and
    (3) The populations the service providers are intended to serve.



Sec. 463.215  Under what circumstances are local areas eligible for
State Incentive Grants?

    (a) The Governor is not required to award local incentive funds, but 
is authorized to provide incentive grants to local areas for performance 
on the primary indicators of performance consistent with WIOA sec. 
134(a)(3)(A)(xi).
    (b) The Governor may use non-Federal funds to create incentives for 
the Local WDBs to implement pay-for-performance contract strategies for 
the delivery of training services described in WIOA sec. 134(c)(3) or 
activities described in WIOA sec. 129(c)(2) in the local areas served by 
the Local WDBs. Pay-for-performance contract strategies must be 
implemented in accordance with 20 CFR part 683, subpart E and 
Sec. 463.160.

[[Page 164]]



Sec. 463.220  Under what circumstances may a corrective action or
sanction be applied to local areas for poor performance?

    (a) If a local area fails to meet the adjusted levels of performance 
agreed to under Sec. 463.210 for the primary indicators of performance 
in the adult, dislocated worker, and youth programs authorized under 
WIOA title I in any program year, technical assistance must be provided 
by the Governor or, upon the Governor's request, by the Secretary of 
Labor.
    (1) A State must establish the threshold for failure to meet 
adjusted levels of performance for a local area before coming to 
agreement on the negotiated levels of performance for the local area.
    (i) A State must establish the adjusted level of performance for a 
local area, using the statistical adjustment model described in 
Sec. 463.170(c).
    (ii) At least 2 years of complete data on any indicator for any 
local core program are required in order to establish adjusted levels of 
performance for a local area.
    (2) The technical assistance may include:
    (i) Assistance in the development of a performance improvement plan;
    (ii) The development of a modified local or regional plan; or
    (iii) Other actions designed to assist the local area in improving 
performance.
    (b) If a local area fails to meet the adjusted levels of performance 
agreed to under Sec. 463.210 for the same primary indicators of 
performance for the same core program authorized under WIOA title I for 
a third consecutive program year, the Governor must take corrective 
actions. The corrective actions must include the development of a 
reorganization plan under which the Governor:
    (1) Requires the appointment and certification of a new Local WDB, 
consistent with the criteria established under 20 CFR 679.350;
    (2) Prohibits the use of eligible providers and one-stop partners 
that have been identified as achieving poor levels of performance; or
    (3) Takes such other significant actions as the Governor determines 
are appropriate.



Sec. 463.225  Under what circumstances may local areas appeal a
reorganization plan?

    (a) The Local WDB and chief elected official for a local area that 
is subject to a reorganization plan under WIOA sec. 116(g)(2)(A) may 
appeal to the Governor to rescind or revise the reorganization plan not 
later than 30 days after receiving notice of the reorganization plan. 
The Governor must make a final decision within 30 days after receipt of 
the appeal.
    (b) The Local WDB and chief elected official may appeal the final 
decision of the Governor to the Secretary of Labor not later than 30 
days after receiving the decision from the Governor. Any appeal of the 
Governor's final decision must be:
    (1) Appealed jointly by the Local WDB and chief elected official to 
the Secretary of Labor under 20 CFR 683.650; and
    (2) Must be submitted by certified mail, return receipt requested, 
to the Secretary of Labor, U.S. Department of Labor, 200 Constitution 
Ave. NW., Washington DC 20210, Attention: ASET. A copy of the appeal 
must be simultaneously provided to the Governor.
    (c) Upon receipt of the joint appeal from the Local WDB and chief 
elected official, the Secretary of Labor must make a final decision 
within 30 days. In making this determination the Secretary of Labor may 
consider any comments submitted by the Governor in response to the 
appeals.
    (d) The decision by the Governor on the appeal becomes effective at 
the time it is issued and remains effective unless the Secretary of 
Labor rescinds or revises the reorganization plan under WIOA sec. 
116(g)(2)(C).



Sec. 463.230  What information is required for the eligible training
provider performance reports?

    (a) States are required to make available and publish annually using 
a template the Departments of Labor and Education will disseminate 
including through electronic means, the ETP

[[Page 165]]

performance reports for ETPs who provide services under sec. 122 of WIOA 
that are described in 20 CFR 680.400 through 680.530. These reports at a 
minimum must include, consistent with Sec. 463.175 and with respect to 
each program of study that is eligible to receive funds under WIOA:
    (1) The total number of participants as defined by Sec. 463.150(a) 
who received training services under the adult and dislocated worker 
programs authorized under WIOA title I for the most recent year and the 
3 preceding program years, including:
    (i) The number of participants under the adult and dislocated worker 
programs disaggregated by barriers to employment;
    (ii) The number of participants under the adult and dislocated 
worker programs disaggregated by race, ethnicity, sex, and age;
    (iii) The number of participants under the adult and dislocated 
worker programs disaggregated by the type of training entity for the 
most recent program year and the 3 preceding program years;
    (2) The total number of participants who exit a program of study or 
its equivalent, including disaggregate counts by the type of training 
entity during the most recent program year and the 3 preceding program 
years;
    (3) The average cost-per-participant for participants who received 
training services for the most recent program year and the 3 preceding 
program years disaggregated by type of training entity;
    (4) The total number of individuals exiting from the program of 
study (or the equivalent) with respect to all individuals engaging in 
the program of study (or the equivalent); and
    (5) The levels of performance achieved for the primary indicators of 
performance identified in Sec. 463.155(a)(1)(i) through (iv) with 
respect to all individuals engaging in a program of study (or the 
equivalent).
    (b) Apprenticeship programs registered under the National 
Apprenticeship Act are not required to submit ETP performance 
information. If a registered apprenticeship program voluntarily submits 
performance information to a State, the State must include this 
information in the report.
    (c) The State must provide a mechanism of electronic access to the 
public ETP performance report in its annual State performance report.
    (d) States must comply with any requirements from sec. 116(d)(4) of 
WIOA as explained in guidance issued by DOL.
    (e) The Governor may designate one or more State agencies such as a 
State Education Agency or other State Educational Authority to assist in 
overseeing ETP performance and facilitating the production and 
dissemination of ETP performance reports. These agencies may be the same 
agencies that are designated as responsible for administering the ETP 
list as provided under 20 CFR 680.500. The Governor or such agencies, or 
authorities, is responsible for:
    (1) Facilitating data matches between ETP records and unemployment 
insurance (UI) wage data in order to produce the report;
    (2) The creation and dissemination of the reports as described in 
paragraphs (a) through (d) of this section;
    (3) Coordinating the dissemination of the performance reports with 
the ETP list and the information required to accompany the list, as 
provided in 20 CFR 680.500.



Sec. 463.235  What are the reporting requirements for individual 
records for core Workforce Innovation and Opportunity Act (WIOA)
title I programs; the Wagner-Peyser Act Employment Service program,
as amended by WIOA title III; and the Vocational Rehabilitation
program authorized under title I of the Rehabilitation Act of 1973,
as amended by WIOA title IV?

    (a) On a quarterly basis, each State must submit to the Secretary of 
Labor or the Secretary of Education, as appropriate, individual records 
that include demographic information, information on services received, 
and information on resulting outcomes, as appropriate, for each 
reportable individual in either of the following programs administered 
by the Secretary of Labor or Secretary of Education: A WIOA title I core 
program; the Employment Service program authorized

[[Page 166]]

under the Wagner-Peyser Act, as amended by WIOA title III; or the VR 
program authorized under title I of the Rehabilitation Act of 1973, as 
amended by WIOA title IV.
    (b) For individual records submitted to the Secretary of Labor, 
those records may be required to be integrated across all programs 
administered by the Secretary of Labor in one single file.
    (c) States must comply with the requirements of sec. 116(d)(2) of 
WIOA as explained in guidance issued by the Departments of Labor and 
Education.



Sec. 463.240  What are the requirements for data validation of State
annual performance reports?

    (a) States must establish procedures, consistent with guidelines 
issued by the Secretary of Labor or the Secretary of Education, to 
ensure that they submit complete annual performance reports that contain 
information that is valid and reliable, as required by WIOA sec. 
116(d)(5).
    (b) If a State fails to meet standards in paragraph (a) of this 
section as determined by the Secretary of Labor or the Secretary of 
Education, the appropriate Secretary will provide technical assistance 
and may require the State to develop and implement corrective actions, 
which may require the State to provide training for its subrecipients.
    (c) The Secretaries of Labor and Education will provide training and 
technical assistance to States in order to implement this section. 
States must comply with the requirements of sec. 116(d)(5) of WIOA as 
explained in guidance.



 Subpart J_Description of the One-Stop Delivery System Under Title I of 
              the Workforce Innovation and Opportunity Act

    Authority: Secs. 503, 107, 121, 134, 189, Pub. L. 113-128, 128 Stat. 
1425 (Jul. 22, 2014).

    Source: 81 FR 56057, Aug. 19, 2016, unless otherwise noted.



Sec. 463.300  What is the one-stop delivery system?

    (a) The one-stop delivery system brings together workforce 
development, educational, and other human resource services in a 
seamless customer-focused service delivery network that enhances access 
to the programs' services and improves long-term employment outcomes for 
individuals receiving assistance. One-stop partners administer 
separately funded programs as a set of integrated streamlined services 
to customers.
    (b) Title I of the Workforce Innovation and Opportunity Act (WIOA) 
assigns responsibilities at the local, State, and Federal level to 
ensure the creation and maintenance of a one-stop delivery system that 
enhances the range and quality of education and workforce development 
services that employers and individual customers can access.
    (c) The system must include at least one comprehensive physical 
center in each local area as described in Sec. 463.305.
    (d) The system may also have additional arrangements to supplement 
the comprehensive center. These arrangements include:
    (1) An affiliated site or a network of affiliated sites, where one 
or more partners make programs, services, and activities available, as 
described in Sec. 463.310;
    (2) A network of eligible one-stop partners, as described in 
Secs. 463.400 through 463.410, through which each partner provides one 
or more of the programs, services, and activities that are linked, 
physically or technologically, to an affiliated site or access point 
that assures customers are provided information on the availability of 
career services, as well as other program services and activities, 
regardless of where they initially enter the public workforce system in 
the local area; and
    (3) Specialized centers that address specific needs, including those 
of dislocated workers, youth, or key industry sectors, or clusters.
    (e) Required one-stop partner programs must provide access to 
programs, services, and activities through electronic means if 
applicable and practicable. This is in addition to providing access to 
services through the

[[Page 167]]

mandatory comprehensive physical one-stop center and any affiliated 
sites or specialized centers. The provision of programs and services by 
electronic methods such as Web sites, telephones, or other means must 
improve the efficiency, coordination, and quality of one-stop partner 
services. Electronic delivery must not replace access to such services 
at a comprehensive one-stop center or be a substitute to making services 
available at an affiliated site if the partner is participating in an 
affiliated site. Electronic delivery systems must be in compliance with 
the nondiscrimination and equal opportunity provisions of WIOA sec. 188 
and its implementing regulations at 29 CFR part 38.
    (f) The design of the local area's one-stop delivery system must be 
described in the Memorandum of Understanding (MOU) executed with the 
one-stop partners, described in Sec. 463.500.



Sec. 463.305  What is a comprehensive one-stop center and what must
be provided there?

    (a) A comprehensive one-stop center is a physical location where job 
seeker and employer customers can access the programs, services, and 
activities of all required one-stop partners. A comprehensive one-stop 
center must have at least one title I staff person physically present.
    (b) The comprehensive one-stop center must provide:
    (1) Career services, described in Sec. 463.430;
    (2) Access to training services described in 20 CFR 680.200;
    (3) Access to any employment and training activities carried out 
under sec. 134(d) of WIOA;
    (4) Access to programs and activities carried out by one-stop 
partners listed in Secs. 463.400 through 463.410, including the 
Employment Service program authorized under the Wagner-Peyser Act, as 
amended by WIOA title III (Wagner-Peyser Act Employment Service 
program); and
    (5) Workforce and labor market information.
    (c) Customers must have access to these programs, services, and 
activities during regular business days at a comprehensive one-stop 
center. The Local Workforce Development Board (WDB) may establish other 
service hours at other times to accommodate the schedules of individuals 
who work on regular business days. The State WDB will evaluate the hours 
of access to service as part of the evaluation of effectiveness in the 
one-stop certification process described in Sec. 463.800(b).
    (d) ``Access'' to each partner program and its services means:
    (1) Having a program staff member physically present at the one-stop 
center;
    (2) Having a staff member from a different partner program 
physically present at the one-stop center appropriately trained to 
provide information to customers about the programs, services, and 
activities available through partner programs; or
    (3) Making available a direct linkage through technology to program 
staff who can provide meaningful information or services.
    (i) A ``direct linkage'' means providing direct connection at the 
one-stop center, within a reasonable time, by phone or through a real-
time Web-based communication to a program staff member who can provide 
program information or services to the customer.
    (ii) A ``direct linkage'' cannot exclusively be providing a phone 
number or computer Web site or providing information, pamphlets, or 
materials.
    (e) All comprehensive one-stop centers must be physically and 
programmatically accessible to individuals with disabilities, as 
described in 29 CFR part 38, the implementing regulations of WIOA sec. 
188.



Sec. 463.310  What is an affiliated site and what must be provided
there?

    (a) An affiliated site, or affiliate one-stop center, is a site that 
makes available to job seeker and employer customers one or more of the 
one-stop partners' programs, services, and activities. An affiliated 
site does not need to provide access to every required one-stop partner 
program. The frequency of program staff's physical presence in the 
affiliated site will be determined at the local level. Affiliated sites 
are access points in addition

[[Page 168]]

to the comprehensive one-stop center(s) in each local area. If used by 
local areas as a part of the service delivery strategy, affiliate sites 
must be implemented in a manner that supplements and enhances customer 
access to services.
    (b) As described in Sec. 463.315, Wagner-Peyser Act employment 
services cannot be a stand-alone affiliated site.
    (c) States, in conjunction with the Local WDBs, must examine lease 
agreements and property holdings throughout the one-stop delivery system 
in order to use property in an efficient and effective way. Where 
necessary and appropriate, States and Local WDBs must take expeditious 
steps to align lease expiration dates with efforts to consolidate one-
stop operations into service points where Wagner-Peyser Act employment 
services are colocated as soon as reasonably possible. These steps must 
be included in the State Plan.
    (d) All affiliated sites must be physically and programmatically 
accessible to individuals with disabilities, as described in 29 CFR part 
38, the implementing regulations of WIOA sec. 188.



Sec. 463.315  Can a stand-alone Wagner-Peyser Act Employment Service
office be designated as an affiliated one-stop site?

    (a) Separate stand-alone Wagner-Peyser Act Employment Service 
offices are not permitted under WIOA, as also described in 20 CFR 
652.202.
    (b) If Wagner-Peyser Act employment services are provided at an 
affiliated site, there must be at least one or more other partners in 
the affiliated site with a physical presence of combined staff more than 
50 percent of the time the center is open. Additionally, the other 
partner must not be the partner administering local veterans' employment 
representatives, disabled veterans' outreach program specialists, or 
unemployment compensation programs. If Wagner-Peyser Act employment 
services and any of these 3 programs are provided at an affiliated site, 
an additional partner or partners must have a presence of combined staff 
in the center more than 50 percent of the time the center is open.



Sec. 463.320  Are there any requirements for networks of eligible
one-stop partners or specialized centers?

    Any network of one-stop partners or specialized centers, as 
described in Sec. 463.300(d)(3), must be connected to the comprehensive 
one-stop center and any appropriate affiliate one-stop centers, for 
example, by having processes in place to make referrals to these centers 
and the partner programs located in them. Wagner-Peyser Act employment 
services cannot stand alone in a specialized center. Just as described 
in Sec. 463.315 for an affiliated site, a specialized center must 
include other programs besides Wagner-Peyser Act employment services, 
local veterans' employment representatives, disabled veterans' outreach 
program specialists, and unemployment compensation.



Sec. 463.400  Who are the required one-stop partners?

    (a) Section 121(b)(1)(B) of WIOA identifies the entities that are 
required partners in the local one-stop delivery systems.
    (b) The required partners are the entities responsible for 
administering the following programs and activities in the local area:
    (1) Programs authorized under title I of WIOA, including:
    (i) Adults;
    (ii) Dislocated workers;
    (iii) Youth;
    (iv) Job Corps;
    (v) YouthBuild;
    (vi) Native American programs; and
    (vii) Migrant and seasonal farmworker programs;
    (2) The Wagner-Peyser Act Employment Service program authorized 
under the Wagner-Peyser Act (29 U.S.C. 49 et seq.), as amended by WIOA 
title III;
    (3) The Adult Education and Family Literacy Act (AEFLA) program 
authorized under title II of WIOA;
    (4) The Vocational Rehabilitation (VR) program authorized under 
title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.), as 
amended by WIOA title IV;
    (5) The Senior Community Service Employment Program authorized under 
title V of the Older Americans Act of 1965 (42 U.S.C. 3056 et seq.);

[[Page 169]]

    (6) Career and technical education programs at the postsecondary 
level authorized under the Carl D. Perkins Career and Technical 
Education Act of 2006 (20 U.S.C. 2301 et seq.);
    (7) Trade Adjustment Assistance activities authorized under chapter 
2 of title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);
    (8) Jobs for Veterans State Grants programs authorized under chapter 
41 of title 38, U.S.C.;
    (9) Employment and training activities carried out under the 
Community Services Block Grant (42 U.S.C. 9901 et seq.);
    (10) Employment and training activities carried out by the 
Department of Housing and Urban Development;
    (11) Programs authorized under State unemployment compensation laws 
(in accordance with applicable Federal law);
    (12) Programs authorized under sec. 212 of the Second Chance Act of 
2007 (42 U.S.C. 17532); and
    (13) Temporary Assistance for Needy Families (TANF) authorized under 
part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), 
unless exempted by the Governor under Sec. 463.405(b).



Sec. 463.405  Is Temporary Assistance for Needy Families a required
one-stop partner?

    (a) Yes, TANF, authorized under part A of title IV of the Social 
Security Act (42 U.S.C. 601 et seq.), is a required partner.
    (b) The Governor may determine that TANF will not be a required 
partner in the State, or within some specific local areas in the State. 
In this instance, the Governor must notify the Secretaries of the U.S. 
Departments of Labor and Health and Human Services in writing of this 
determination.
    (c) In States, or local areas within a State, where the Governor has 
determined that TANF is not required to be a partner, local TANF 
programs may still work in collaboration or partnership with the local 
one-stop centers to deliver employment and training services to the TANF 
population unless inconsistent with the Governor's direction.



Sec. 463.410  What other entities may serve as one-stop partners?

    (a) Other entities that carry out a workforce development program, 
including Federal, State, or local programs and programs in the private 
sector, may serve as additional partners in the one-stop delivery system 
if the Local WDB and chief elected official(s) approve the entity's 
participation.
    (b) Additional partners may include, but are not limited to:
    (1) Employment and training programs administered by the Social 
Security Administration, including the Ticket to Work and Self-
Sufficiency Program established under sec. 1148 of the Social Security 
Act (42 U.S.C. 1320b-19);
    (2) Employment and training programs carried out by the Small 
Business Administration;
    (3) Supplemental Nutrition Assistance Program (SNAP) employment and 
training programs, authorized under secs. 6(d)(4) and 6(o) of the Food 
and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));
    (4) Client Assistance Program authorized under sec. 112 of the 
Rehabilitation Act of 1973 (29 U.S.C. 732);
    (5) Programs authorized under the National and Community Service Act 
of 1990 (42 U.S.C. 12501 et seq.); and
    (6) Other appropriate Federal, State or local programs, including, 
but not limited to, employment, education, and training programs 
provided by public libraries or in the private sector.



Sec. 463.415  What entity serves as the one-stop partner for a 
particular program in the local area?

    (a) The entity that carries out the program and activities listed in 
Sec. 463.400 or Sec. 463.410, and therefore serves as the one-stop 
partner, is the grant recipient, administrative entity, or organization 
responsible for administering the funds of the specified program in the 
local area. The term ``entity'' does not include the service providers 
that contract with, or are subrecipients of, the local administrative 
entity. For programs that do not include local administrative entities, 
the responsible State agency must be the partner. Specific entities for 
particular programs are identified in paragraphs (b) through

[[Page 170]]

(e) of this section. If a program or activity listed in Sec. 463.400 is 
not carried out in a local area, the requirements relating to a required 
one-stop partner are not applicable to such program or activity in that 
local one-stop delivery system.
    (b) For title II of WIOA, the entity or agency that carries out the 
program for the purposes of paragraph (a) of this section is the sole 
entity or agency in the State or outlying area responsible for 
administering or supervising policy for adult education and literacy 
activities in the State or outlying area. The State eligible entity or 
agency may delegate its responsibilities under paragraph (a) of this 
section to one or more eligible providers or consortium of eligible 
providers.
    (c) For the VR program, authorized under title I of the 
Rehabilitation Act of 1973, as amended by WIOA title IV, the entity that 
carries out the program for the purposes of paragraph (a) of this 
section is the designated State agencies or designated State units 
specified under sec. 101(a)(2) of the Rehabilitation Act that is 
primarily concerned with vocational rehabilitation, or vocational and 
other rehabilitation, of individuals with disabilities.
    (d) Under WIOA title I, the national programs, including Job Corps, 
the Native American program, YouthBuild, and Migrant and Seasonal 
Farmworker programs are required one-stop partners. The entity for the 
Native American program, YouthBuild, and Migrant and Seasonal Farmworker 
programs is the grantee of those respective programs. The entity for Job 
Corps is the Job Corps center.
    (e) For the Carl D. Perkins Career and Technical Education Act of 
2006, the entity that carries out the program for the purposes of 
paragraph (a) of this section is the eligible recipient or recipients at 
the postsecondary level, or a consortium of eligible recipients at the 
postsecondary level in the local area. The eligible recipient at the 
postsecondary level may also request assistance from the State eligible 
agency in completing its responsibilities under paragraph (a) of this 
section.



Sec. 463.420  What are the roles and responsibilities of the required
one-stop partners?

    Each required partner must:
    (a) Provide access to its programs or activities through the one-
stop delivery system, in addition to any other appropriate locations;
    (b) Use a portion of funds made available to the partner's program, 
to the extent consistent with the Federal law authorizing the partner's 
program and with Federal cost principles in 2 CFR parts 200 and 3474 
(requiring, among other things, that costs are allowable, reasonable, 
necessary, and allocable), to:
    (1) Provide applicable career services; and
    (2) Work collaboratively with the State and Local WDBs to establish 
and maintain the one-stop delivery system. This includes jointly funding 
the one-stop infrastructure through partner contributions that are based 
upon:
    (i) A reasonable cost allocation methodology by which infrastructure 
costs are charged to each partner based on proportionate use and 
relative benefit received;
    (ii) Federal cost principles; and
    (iii) Any local administrative cost requirements in the Federal law 
authorizing the partner's program. (This is further described in 
Sec. 463.700.)
    (c) Enter into an MOU with the Local WDB relating to the operation 
of the one-stop delivery system that meets the requirements of 
Sec. 463.500(b);
    (d) Participate in the operation of the one-stop delivery system 
consistent with the terms of the MOU, requirements of authorizing laws, 
the Federal cost principles, and all other applicable legal 
requirements; and
    (e) Provide representation on the State and Local WDBs as required 
and participate in Board committees as needed.



Sec. 463.425  What are the applicable career services that must be
provided through the one-stop delivery system by required one-stop
partners?

    (a) The applicable career services to be delivered by required one-
stop partners are those services listed in Sec. 463.430 that are 
authorized to be provided under each partner's program.

[[Page 171]]

    (b) One-stop centers provide services to individual customers based 
on individual needs, including the seamless delivery of multiple 
services to individual customers. There is no required sequence of 
services.



Sec. 463.430  What are career services?

    Career services, as identified in sec. 134(c)(2) of WIOA, consist of 
three types:
    (a) Basic career services must be made available and, at a minimum, 
must include the following services, as consistent with allowable 
program activities and Federal cost principles:
    (1) Determinations of whether the individual is eligible to receive 
assistance from the adult, dislocated worker, or youth programs;
    (2) Outreach, intake (including worker profiling), and orientation 
to information and other services available through the one-stop 
delivery system. For the TANF program, States must provide individuals 
with the opportunity to initiate an application for TANF assistance and 
non-assistance benefits and services, which could be implemented through 
the provision of paper application forms or links to the application Web 
site;
    (3) Initial assessment of skill levels including literacy, numeracy, 
and English language proficiency, as well as aptitudes, abilities 
(including skills gaps), and supportive services needs;
    (4) Labor exchange services, including--
    (i) Job search and placement assistance, and, when needed by an 
individual, career counseling, including--
    (A) Provision of information on in-demand industry sectors and 
occupations (as defined in sec. 3(23) of WIOA); and
    (B) Provision of information on nontraditional employment; and
    (ii) Appropriate recruitment and other business services on behalf 
of employers, including information and referrals to specialized 
business services other than those traditionally offered through the 
one-stop delivery system;
    (5) Provision of referrals to and coordination of activities with 
other programs and services, including programs and services within the 
one-stop delivery system and, when appropriate, other workforce 
development programs;
    (6) Provision of workforce and labor market employment statistics 
information, including the provision of accurate information relating to 
local, regional, and national labor market areas, including--
    (i) Job vacancy listings in labor market areas;
    (ii) Information on job skills necessary to obtain the vacant jobs 
listed; and
    (iii) Information relating to local occupations in demand and the 
earnings, skill requirements, and opportunities for advancement for 
those jobs;
    (7) Provision of performance information and program cost 
information on eligible providers of education, training, and workforce 
services by program and type of providers;
    (8) Provision of information, in usable and understandable formats 
and languages, about how the local area is performing on local 
performance accountability measures, as well as any additional 
performance information relating to the area's one-stop delivery system;
    (9) Provision of information, in usable and understandable formats 
and languages, relating to the availability of supportive services or 
assistance, and appropriate referrals to those services and assistance, 
including: Child care; child support; medical or child health assistance 
available through the State's Medicaid program and Children's Health 
Insurance Program; benefits under SNAP; assistance through the earned 
income tax credit; and assistance under a State program for TANF, and 
other supportive services and transportation provided through that 
program;
    (10) Provision of information and meaningful assistance to 
individuals seeking assistance in filing a claim for unemployment 
compensation.
    (i) ``Meaningful assistance'' means:
    (A) Providing assistance on-site using staff who are well-trained in 
unemployment compensation claims filing and the rights and 
responsibilities of claimants; or
    (B) Providing assistance by phone or via other technology, as long 
as the assistance is provided by trained and

[[Page 172]]

available staff and within a reasonable time.
    (ii) The costs associated in providing this assistance may be paid 
for by the State's unemployment insurance program, or the WIOA adult or 
dislocated worker programs, or some combination thereof.
    (11) Assistance in establishing eligibility for programs of 
financial aid assistance for training and education programs not 
provided under WIOA.
    (b) Individualized career services must be made available if 
determined to be appropriate in order for an individual to obtain or 
retain employment. These services include the following services, as 
consistent with program requirements and Federal cost principles:
    (1) Comprehensive and specialized assessments of the skill levels 
and service needs of adults and dislocated workers, which may include--
    (i) Diagnostic testing and use of other assessment tools; and
    (ii) In-depth interviewing and evaluation to identify employment 
barriers and appropriate employment goals;
    (2) Development of an individual employment plan, to identify the 
employment goals, appropriate achievement objectives, and appropriate 
combination of services for the participant to achieve his or her 
employment goals, including the list of, and information about, the 
eligible training providers (as described in 20 CFR 680.180);
    (3) Group counseling;
    (4) Individual counseling;
    (5) Career planning;
    (6) Short-term pre-vocational services including development of 
learning skills, communication skills, interviewing skills, punctuality, 
personal maintenance skills, and professional conduct services to 
prepare individuals for unsubsidized employment or training;
    (7) Internships and work experiences that are linked to careers (as 
described in 20 CFR 680.170);
    (8) Workforce preparation activities;
    (9) Financial literacy services as described in sec. 129(b)(2)(D) of 
WIOA and 20 CFR 681.500;
    (10) Out-of-area job search assistance and relocation assistance; 
and
    (11) English language acquisition and integrated education and 
training programs.
    (c) Follow-up services must be provided, as appropriate, including: 
Counseling regarding the workplace, for participants in adult or 
dislocated worker workforce investment activities who are placed in 
unsubsidized employment, for up to 12 months after the first day of 
employment.
    (d) In addition to the requirements in paragraph (a)(2) of this 
section, TANF agencies must identify employment services and related 
support being provided by the TANF program (within the local area) that 
qualify as career services and ensure access to them via the local one-
stop delivery system.



Sec. 463.435  What are the business services provided through the
one-stop delivery system, and how are they provided?

    (a) Certain career services must be made available to local 
employers, specifically labor exchange activities and labor market 
information described in Sec. 463.430(a)(4)(ii) and (a)(6). Local areas 
must establish and develop relationships and networks with large and 
small employers and their intermediaries. Local areas also must develop, 
convene, or implement industry or sector partnerships.
    (b) Customized business services may be provided to employers, 
employer associations, or other such organizations. These services are 
tailored for specific employers and may include:
    (1) Customized screening and referral of qualified participants in 
training services to employers;
    (2) Customized services to employers, employer associations, or 
other such organizations, on employment-related issues;
    (3) Customized recruitment events and related services for employers 
including targeted job fairs;
    (4) Human resource consultation services, including but not limited 
to assistance with:
    (i) Writing/reviewing job descriptions and employee handbooks;
    (ii) Developing performance evaluation and personnel policies;
    (iii) Creating orientation sessions for new workers;

[[Page 173]]

    (iv) Honing job interview techniques for efficiency and compliance;
    (v) Analyzing employee turnover;
    (vi) Creating job accommodations and using assistive technologies; 
or
    (vii) Explaining labor and employment laws to help employers comply 
with discrimination, wage/hour, and safety/health regulations;
    (5) Customized labor market information for specific employers, 
sectors, industries or clusters; and
    (6) Other similar customized services.
    (c) Local areas may also provide other business services and 
strategies that meet the workforce investment needs of area employers, 
in accordance with partner programs' statutory requirements and 
consistent with Federal cost principles. These business services may be 
provided through effective business intermediaries working in 
conjunction with the Local WDB, or through the use of economic 
development, philanthropic, and other public and private resources in a 
manner determined appropriate by the Local WDB and in cooperation with 
the State. Allowable activities, consistent with each partner's 
authorized activities, include, but are not limited to:
    (1) Developing and implementing industry sector strategies 
(including strategies involving industry partnerships, regional skills 
alliances, industry skill panels, and sectoral skills partnerships);
    (2) Customized assistance or referral for assistance in the 
development of a registered apprenticeship program;
    (3) Developing and delivering innovative workforce investment 
services and strategies for area employers, which may include career 
pathways, skills upgrading, skill standard development and certification 
for recognized postsecondary credential or other employer use, and other 
effective initiatives for meeting the workforce investment needs of area 
employers and workers;
    (4) Assistance to area employers in managing reductions in force in 
coordination with rapid response activities and with strategies for the 
aversion of layoffs, which may include strategies such as early 
identification of firms at risk of layoffs, use of feasibility studies 
to assess the needs of and options for at-risk firms, and the delivery 
of employment and training activities to address risk factors;
    (5) The marketing of business services to appropriate area 
employers, including small and mid-sized employers; and
    (6) Assisting employers with accessing local, State, and Federal tax 
credits.
    (d) All business services and strategies must be reflected in the 
local plan, described in 20 CFR 679.560(b)(3).



Sec. 463.440  When may a fee be charged for the business services
in this subpart?

    (a) There is no requirement that a fee-for-service be charged to 
employers.
    (b) No fee may be charged for services provided in Sec. 463.435(a).
    (c) A fee may be charged for services provided under Sec. 463.435(b) 
and (c). Services provided under Sec. 463.435(c) may be provided through 
effective business intermediaries working in conjunction with the Local 
WDB and may also be provided on a fee-for-service basis or through the 
leveraging of economic development, philanthropic, and other public and 
private resources in a manner determined appropriate by the Local WDB. 
The Local WDB may examine the services provided compared with the assets 
and resources available within the local one-stop delivery system and 
through its partners to determine an appropriate cost structure for 
services, if any.
    (d) Any fees earned are recognized as program income and must be 
expended by the partner in accordance with the partner program's 
authorizing statute, implementing regulations, and Federal cost 
principles identified in Uniform Guidance.



Sec. 463.500  What is the Memorandum of Understanding for the
one-stop delivery system and what must be included in the Memorandum
of Understanding?

    (a) The MOU is the product of local discussion and negotiation, and 
is an agreement developed and executed between the Local WDB and the 
one-stop partners, with the agreement of the chief elected official and 
the one-stop partners, relating to the operation of the one-stop 
delivery system in the

[[Page 174]]

local area. Two or more local areas in a region may develop a single 
joint MOU, if they are in a region that has submitted a regional plan 
under sec. 106 of WIOA.
    (b) The MOU must include:
    (1) A description of services to be provided through the one-stop 
delivery system, including the manner in which the services will be 
coordinated and delivered through the system;
    (2) Agreement on funding the costs of the services and the operating 
costs of the system, including:
    (i) Funding of infrastructure costs of one-stop centers in 
accordance with Secs. 463.700 through 463.755; and
    (ii) Funding of the shared services and operating costs of the one-
stop delivery system described in Sec. 463.760;
    (3) Methods for referring individuals between the one-stop operators 
and partners for appropriate services and activities;
    (4) Methods to ensure that the needs of workers, youth, and 
individuals with barriers to employment, including individuals with 
disabilities, are addressed in providing access to services, including 
access to technology and materials that are available through the one-
stop delivery system;
    (5) The duration of the MOU and procedures for amending it; and
    (6) Assurances that each MOU will be reviewed, and if substantial 
changes have occurred, renewed, not less than once every 3-year period 
to ensure appropriate funding and delivery of services.
    (c) The MOU may contain any other provisions agreed to by the 
parties that are consistent with WIOA title I, the authorizing statutes 
and regulations of one-stop partner programs, and the WIOA regulations.
    (d) When fully executed, the MOU must contain the signatures of the 
Local WDB, one-stop partners, the chief elected official(s), and the 
time period in which the agreement is effective. The MOU must be updated 
not less than every 3 years to reflect any changes in the signatory 
official of the Board, one-stop partners, and chief elected officials, 
or one-stop infrastructure funding.
    (e) If a one-stop partner appeal to the State regarding 
infrastructure costs, using the process described in Sec. 463.750, 
results in a change to the one-stop partner's infrastructure cost 
contributions, the MOU must be updated to reflect the final one-stop 
partner infrastructure cost contributions.



Sec. 463.505  Is there a single Memorandum of Understanding for the
local area, or must there be different Memoranda of Understanding
between the Local Workforce Development Board and each partner?

    (a) A single ``umbrella'' MOU may be developed that addresses the 
issues relating to the local one-stop delivery system for the Local WDB, 
chief elected official and all partners. Alternatively, the Local WDB 
(with agreement of chief elected official) may enter into separate 
agreements between each partner or groups of partners.
    (b) Under either approach, the requirements described in 
Sec. 463.500 apply. Since funds are generally appropriated annually, the 
Local WDB may negotiate financial agreements with each partner annually 
to update funding of services and operating costs of the system under 
the MOU.



Sec. 463.510  How must the Memorandum of Understanding be negotiated?

    (a) WIOA emphasizes full and effective partnerships between Local 
WDBs, chief elected officials, and one-stop partners. Local WDBs and 
partners must enter into good-faith negotiations. Local WDBs, chief 
elected officials, and one-stop partners may also request assistance 
from a State agency responsible for administering the partner program, 
the Governor, State WDB, or other appropriate parties on other aspects 
of the MOU.
    (b) Local WDBs and one-stop partners must establish, in the MOU, how 
they will fund the infrastructure costs and other shared costs of the 
one-stop centers. If agreement regarding infrastructure costs is not 
reached when other sections of the MOU are ready, an interim 
infrastructure funding agreement may be included instead, as described 
in Sec. 463.715(c). Once agreement on infrastructure funding is reached, 
the Local WDB and one-stop partners

[[Page 175]]

must amend the MOU to include the infrastructure funding of the one-stop 
centers. Infrastructure funding is described in detail in Secs. 463.700 
through 463.760.
    (c) The Local WDB must report to the State WDB, Governor, and 
relevant State agency when MOU negotiations with one-stop partners have 
reached an impasse.
    (1) The Local WDB and partners must document the negotiations and 
efforts that have taken place in the MOU. The State WDB, one-stop 
partner programs, and the Governor may consult with the appropriate 
Federal agencies to address impasse situations related to issues other 
than infrastructure funding after attempting to address the impasse. 
Impasses related to infrastructure cost funding must be resolved using 
the State infrastructure cost funding mechanism described in 
Sec. 463.730.
    (2) The Local WDB must report failure to execute an MOU with a 
required partner to the Governor, State WDB, and the State agency 
responsible for administering the partner's program. Additionally, if 
the State cannot assist the Local WDB in resolving the impasse, the 
Governor or the State WDB must report the failure to the Secretary of 
Labor and to the head of any other Federal agency with responsibility 
for oversight of a partner's program.



Sec. 463.600  Who may operate one-stop centers?

    (a) One-stop operators may be a single entity (public, private, or 
nonprofit) or a consortium of entities. If the consortium of entities is 
one of one-stop partners, it must include a minimum of three of the one-
stop partners described in Sec. 463.400.
    (b) The one-stop operator may operate one or more one-stop centers. 
There may be more than one one-stop operator in a local area.
    (c) The types of entities that may be a one-stop operator include:
    (1) An institution of higher education;
    (2) An Employment Service State agency established under the Wagner-
Peyser Act;
    (3) A community-based organization, nonprofit organization, or 
workforce intermediary;
    (4) A private for-profit entity;
    (5) A government agency;
    (6) A Local WDB, with the approval of the chief elected official and 
the Governor; or
    (7) Another interested organization or entity, which is capable of 
carrying out the duties of the one-stop operator. Examples may include a 
local chamber of commerce or other business organization, or a labor 
organization.
    (d) Elementary schools and secondary schools are not eligible as 
one-stop operators, except that a nontraditional public secondary school 
such as a night school, adult school, or an area career and technical 
education school may be selected.
    (e) The State and Local WDBs must ensure that, in carrying out WIOA 
programs and activities, one-stop operators:
    (1) Disclose any potential conflicts of interest arising from the 
relationships of the operators with particular training service 
providers or other service providers (further discussed in 20 CFR 
679.430);
    (2) Do not establish practices that create disincentives to 
providing services to individuals with barriers to employment who may 
require longer-term career and training services; and
    (3) Comply with Federal regulations and procurement policies 
relating to the calculation and use of profits, including those at 20 
CFR 683.295, the Uniform Guidance at 2 CFR part 200, and other 
applicable regulations and policies.



Sec. 463.605  How is the one-stop operator selected?

    (a) Consistent with paragraphs (b) and (c) of this section, the 
Local WDB must select the one-stop operator through a competitive 
process, as required by sec. 121(d)(2)(A) of WIOA, at least once every 4 
years. A State may require, or a Local WDB may choose to implement, a 
competitive selection process more than once every 4 years.
    (b) In instances in which a State is conducting the competitive 
process described in paragraph (a) of this section, the State must 
follow the same policies

[[Page 176]]

and procedures it uses for procurement with non-Federal funds.
    (c) All other non-Federal entities, including subrecipients of a 
State (such as local areas), must use a competitive process based on 
local procurement policies and procedures and the principles of 
competitive procurement in the Uniform Guidance set out at 2 CFR 200.318 
through 200.326. All references to ``noncompetitive proposals'' in the 
Uniform Guidance at 2 CFR 200.320(f) will be read as ``sole source 
procurement'' for the purposes of implementing this section.
    (d) Entities must prepare written documentation explaining the 
determination concerning the nature of the competitive process to be 
followed in selecting a one-stop operator.



Sec. 463.610  When is the sole-source selection of one-stop operators
appropriate, and how is it conducted?

    (a) States may select a one-stop operator through sole source 
selection when allowed under the same policies and procedures used for 
competitive procurement with non-Federal funds, while other non-Federal 
entities including subrecipients of a State (such as local areas) may 
select a one-stop operator through sole selection when consistent with 
local procurement policies and procedures and the Uniform Guidance set 
out at 2 CFR 200.320.
    (b) In the event that sole source procurement is determined 
necessary and reasonable, in accordance with Sec. 463.605(c), written 
documentation must be prepared and maintained concerning the entire 
process of making such a selection.
    (c) Such sole source procurement must include appropriate conflict 
of interest policies and procedures. These policies and procedures must 
conform to the specifications in 20 CFR 679.430 for demonstrating 
internal controls and preventing conflict of interest.
    (d) A Local WDB may be selected as a one-stop operator through sole 
source procurement only with agreement of the chief elected official in 
the local area and the Governor. The Local WDB must establish sufficient 
conflict of interest policies and procedures and these policies and 
procedures must be approved by the Governor.



Sec. 463.615  May an entity currently serving as one-stop operator
compete to be a one-stop operator under the procurement requirements
of this subpart?

    (a) Local WDBs may compete for and be selected as one-stop 
operators, as long as appropriate firewalls and conflict of interest 
policies and procedures are in place. These policies and procedures must 
conform to the specifications in 20 CFR 679.430 for demonstrating 
internal controls and preventing conflict of interest.
    (b) State and local agencies may compete for and be selected as one-
stop operators by the Local WDB, as long as appropriate firewalls and 
conflict of interest policies and procedures are in place. These 
policies and procedures must conform to the specifications in 20 CFR 
679.430 for demonstrating internal controls and preventing conflict of 
interest.
    (c) In the case of single-area States where the State WDB serves as 
the Local WDB, the State agency is eligible to compete for and be 
selected as operator as long as appropriate firewalls and conflict of 
interest policies are in place and followed for the competition. These 
policies and procedures must conform to the specifications in 20 CFR 
679.430 for demonstrating internal controls and preventing conflicts of 
interest.



Sec. 463.620  What is the one-stop operator's role?

    (a) At a minimum, the one-stop operator must coordinate the service 
delivery of required one-stop partners and service providers. Local WDBs 
may establish additional roles of one-stop operator, including, but not 
limited to: Coordinating service providers across the one-stop delivery 
system, being the primary provider of services within the center, 
providing some of the services within the center, or coordinating 
service delivery in a multi-center area, which may include affiliated 
sites. The competition for a one-stop operator must clearly articulate 
the role of the one-stop operator.
    (b)(1) Subject to paragraph (b)(2) of this section, a one-stop 
operator may not perform the following functions: Convene system 
stakeholders to assist

[[Page 177]]

in the development of the local plan; prepare and submit local plans (as 
required under sec. 107 of WIOA); be responsible for oversight of 
itself; manage or significantly participate in the competitive selection 
process for one-stop operators; select or terminate one-stop operators, 
career services, and youth providers; negotiate local performance 
accountability measures; or develop and submit budget for activities of 
the Local WDB in the local area.
    (2) An entity serving as a one-stop operator, that also serves a 
different role within the one-stop delivery system, may perform some or 
all of these functions when it is acting in its other role, if it has 
established sufficient firewalls and conflict of interest policies and 
procedures. The policies and procedures must conform to the 
specifications in 20 CFR 679.430 for demonstrating internal controls and 
preventing conflict of interest.



Sec. 463.625  Can a one-stop operator also be a service provider?

    Yes, but there must be appropriate firewalls in place in regards to 
the competition, and subsequent oversight, monitoring, and evaluation of 
performance of the service provider. The operator cannot develop, 
manage, or conduct the competition of a service provider in which it 
intends to compete. In cases where an operator is also a service 
provider, there must be firewalls and internal controls within the 
operator-service provider entity, as well as specific policies and 
procedures at the Local WDB level regarding oversight, monitoring, and 
evaluation of performance of the service provider. The firewalls must 
conform to the specifications in 20 CFR 679.430 for demonstrating 
internal controls and preventing conflicts of interest.



Sec. 463.630  Can State merit staff still work in a one-stop center
where the operator is not a governmental entity?

    Yes. State merit staff can continue to perform functions and 
activities in the one-stop center. The Local WDB and one-stop operator 
must establish a system for management of merit staff in accordance with 
State policies and procedures. Continued use of State merit staff for 
the provision of Wagner-Peyser Act services or services from other 
programs with merit staffing requirements must be included in the 
competition for and final contract with the one-stop operator when 
Wagner-Peyser Act services or services from other programs with merit 
staffing requirements are being provided.



Sec. 463.635  What is the compliance date of the provisions of this
subpart?

    (a) No later than July 1, 2017, one-stop operators selected under 
the competitive process described in this subpart must be in place and 
operating the one-stop center.
    (b) By November 17, 2016, every Local WDB must demonstrate it is 
taking steps to prepare for competition of its one-stop operator. This 
demonstration may include, but is not limited to, market research, 
requests for information, and conducting a cost and price analysis.



Sec. 463.700  What are the one-stop infrastructure costs?

    (a) Infrastructure costs of one-stop centers are nonpersonnel costs 
that are necessary for the general operation of the one-stop center, 
including:
    (1) Rental of the facilities;
    (2) Utilities and maintenance;
    (3) Equipment (including assessment-related products and assistive 
technology for individuals with disabilities); and
    (4) Technology to facilitate access to the one-stop center, 
including technology used for the center's planning and outreach 
activities.
    (b) Local WDBs may consider common identifier costs as costs of one-
stop infrastructure.
    (c) Each entity that carries out a program or activities in a local 
one-stop center, described in Secs. 463.400 through 463.410, must use a 
portion of the funds available for the program and activities to 
maintain the one-stop delivery system, including payment of the 
infrastructure costs of one-stop centers. These payments must be in 
accordance with this subpart; Federal cost principles, which require 
that all costs must be allowable, reasonable,

[[Page 178]]

necessary, and allocable to the program; and all other applicable legal 
requirements.



Sec. 463.705  What guidance must the Governor issue regarding one-stop
infrastructure funding?

    (a) The Governor, after consultation with chief elected officials, 
the State WDB, and Local WDBs, and consistent with guidance and policies 
provided by the State WDB, must develop and issue guidance for use by 
local areas, specifically:
    (1) Guidelines for State-administered one-stop partner programs for 
determining such programs' contributions to a one-stop delivery system, 
based on such programs' proportionate use of such system, and relative 
benefit received, consistent with Office of Management and Budget (OMB) 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards in 2 CFR part 200, including determining 
funding for the costs of infrastructure; and
    (2) Guidance to assist Local WDBs, chief elected officials, and one-
stop partners in local areas in determining equitable and stable methods 
of funding the costs of infrastructure at one-stop centers based on 
proportionate use and relative benefit received, and consistent with 
Federal cost principles contained in the Uniform Guidance at 2 CFR part 
200.
    (b) The guidance must include:
    (1) The appropriate roles of the one-stop partner programs in 
identifying one-stop infrastructure costs;
    (2) Approaches to facilitate equitable and efficient cost allocation 
that results in a reasonable cost allocation methodology where 
infrastructure costs are charged to each partner based on its 
proportionate use of the one-stop centers and relative benefit received, 
consistent with Federal cost principles at 2 CFR part 200; and
    (3) The timelines regarding notification to the Governor for not 
reaching local agreement and triggering the State funding mechanism 
described in Sec. 463.730, and timelines for a one-stop partner to 
submit an appeal in the State funding mechanism.



Sec. 463.710  How are infrastructure costs funded?

    Infrastructure costs are funded either through the local funding 
mechanism described in Sec. 463.715 or through the State funding 
mechanism described in Sec. 463.730.



Sec. 463.715  How are one-stop infrastructure costs funded in the
local funding mechanism?

    (a) In the local funding mechanism, the Local WDB, chief elected 
officials, and one-stop partners agree to amounts and methods of 
calculating amounts each partner will contribute for one-stop 
infrastructure funding, include the infrastructure funding terms in the 
MOU, and sign the MOU. The local funding mechanism must meet all of the 
following requirements:
    (1) The infrastructure costs are funded through cash and fairly 
evaluated non-cash and third-party in-kind partner contributions and 
include any funding from philanthropic organizations or other private 
entities, or through other alternative financing options, to provide a 
stable and equitable funding stream for ongoing one-stop delivery system 
operations;
    (2) Contributions must be negotiated between one-stop partners, 
chief elected officials, and the Local WDB and the amount to be 
contributed must be included in the MOU;
    (3) The one-stop partner program's proportionate share of funding 
must be calculated in accordance with the Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal Awards 
in 2 CFR part 200 based upon a reasonable cost allocation methodology 
whereby infrastructure costs are charged to each partner in proportion 
to its use of the one-stop center, relative to benefits received. Such 
costs must also be allowable, reasonable, necessary, and allocable;
    (4) Partner shares must be periodically reviewed and reconciled 
against actual costs incurred, and adjusted to ensure that actual costs 
charged to any one-stop partners are proportionate to the use of the 
one-stop center and relative to the benefit received by the one-stop 
partners and their respective programs or activities.

[[Page 179]]

    (b) In developing the section of the MOU on one-stop infrastructure 
funding described in Sec. 463.755, the Local WDB and chief elected 
officials will:
    (1) Ensure that the one-stop partners adhere to the guidance 
identified in Sec. 463.705 on one-stop delivery system infrastructure 
costs.
    (2) Work with one-stop partners to achieve consensus and informally 
mediate any possible conflicts or disagreements among one-stop partners.
    (3) Provide technical assistance to new one-stop partners and local 
grant recipients to ensure that those entities are informed and 
knowledgeable of the elements contained in the MOU and the one-stop 
infrastructure costs arrangement.
    (c) The MOU may include an interim infrastructure funding agreement, 
including as much detail as the Local WDB has negotiated with one-stop 
partners, if all other parts of the MOU have been negotiated, in order 
to allow the partner programs to operate in the one-stop centers. The 
interim infrastructure funding agreement must be finalized within 6 
months of when the MOU is signed. If the interim infrastructure funding 
agreement is not finalized within that timeframe, the Local WDB must 
notify the Governor, as described in Sec. 463.725.



Sec. 463.720  What funds are used to pay for infrastructure costs in
the local one-stop infrastructure funding mechanism?

    (a) In the local funding mechanism, one-stop partner programs may 
determine what funds they will use to pay for infrastructure costs. The 
use of these funds must be in accordance with the requirements in this 
subpart, and with the relevant partner's authorizing statutes and 
regulations, including, for example, prohibitions against supplanting 
non-Federal resources, statutory limitations on administrative costs, 
and all other applicable legal requirements. In the case of partners 
administering programs authorized by title I of WIOA, these 
infrastructure costs may be considered program costs. In the case of 
partners administering adult education and literacy programs authorized 
by title II of WIOA, these funds must include Federal funds made 
available for the local administration of adult education and literacy 
programs authorized by title II of WIOA. These funds may also include 
non-Federal resources that are cash, in-kind or third-party 
contributions. In the case of partners administering the Carl D. Perkins 
Career and Technical Education Act of 2006, funds used to pay for 
infrastructure costs may include funds available for local 
administrative expenses, non-Federal resources that are cash, in-kind or 
third-party contributions, and may include other funds made available by 
the State.
    (b) There are no specific caps on the amount or percent of overall 
funding a one-stop partner may contribute to fund infrastructure costs 
under the local funding mechanism, except that contributions for 
administrative costs may not exceed the amount available for 
administrative costs under the authorizing statute of the partner 
program. However, amounts contributed for infrastructure costs must be 
allowable and based on proportionate use of the one-stop centers and 
relative benefit received by the partner program, taking into account 
the total cost of the one-stop infrastructure as well as alternate 
financing options, and must be consistent with 2 CFR part 200, including 
the Federal cost principles.
    (c) Cash, non-cash, and third-party in-kind contributions may be 
provided by one-stop partners to cover their proportionate share of 
infrastructure costs.
    (1) Cash contributions are cash funds provided to the Local WDB or 
its designee by one-stop partners, either directly or by an interagency 
transfer.
    (2) Non-cash contributions are comprised of--
    (i) Expenditures incurred by one-stop partners on behalf of the one-
stop center; and
    (ii) Non-cash contributions or goods or services contributed by a 
partner program and used by the one-stop center.
    (3) Non-cash contributions, especially those set forth in paragraph 
(c)(2)(ii) of this section, must be valued consistent with 2 CFR 200.306 
to ensure they are fairly evaluated and meet the partners' proportionate 
share.

[[Page 180]]

    (4) Third-party in-kind contributions are:
    (i) Contributions of space, equipment, technology, non-personnel 
services, or other like items to support the infrastructure costs 
associated with one-stop operations, by a non-one-stop partner to 
support the one-stop center in general, not a specific partner; or
    (ii) Contributions by a non-one-stop partner of space, equipment, 
technology, non-personnel services, or other like items to support the 
infrastructure costs associated with one-stop operations, to a one-stop 
partner to support its proportionate share of one-stop infrastructure 
costs.
    (iii) In-kind contributions described in paragraphs (c)(4)(i) and 
(ii) of this section must be valued consistent with 2 CFR 200.306 and 
reconciled on a regular basis to ensure they are fairly evaluated and 
meet the proportionate share of the partner.
    (5) All partner contributions, regardless of the type, must be 
reconciled on a regular basis (i.e., monthly or quarterly), comparing 
actual expenses incurred to relative benefits received, to ensure each 
partner program is contributing its proportionate share in accordance 
with the terms of the MOU.



Sec. 463.725  What happens if consensus on infrastructure funding is
not reached at the local level between the Local Workforce Development
Board, chief elected officials, and one-stop partners?

    With regard to negotiations for infrastructure funding for Program 
Year (PY) 2017 and for each subsequent program year thereafter, if the 
Local WDB, chief elected officials, and one-stop partners do not reach 
consensus on methods of sufficiently funding local infrastructure 
through the local funding mechanism in accordance with the Governor's 
guidance issued under Sec. 463.705 and consistent with the regulations 
in Secs. 463.715 and 463.720, and include that consensus agreement in 
the signed MOU, then the Local WDB must notify the Governor by the 
deadline established by the Governor under Sec. 463.705(b)(3). Once 
notified, the Governor must administer funding through the State funding 
mechanism, as described in Secs. 463.730 through 463.738, for the 
program year impacted by the local area's failure to reach consensus.



Sec. 463.730  What is the State one-stop infrastructure funding mechanism?

    (a) Consistent with sec. 121(h)(1)(A)(i)(II) of WIOA, if the Local 
WDB, chief elected official, and one-stop partners in a local area do 
not reach consensus agreement on methods of sufficiently funding the 
costs of infrastructure of one-stop centers for a program year, the 
State funding mechanism is applicable to the local area for that program 
year.
    (b) In the State funding mechanism, the Governor, subject to the 
limitations in paragraph (c) of this section, determines one-stop 
partner contributions after consultation with the chief elected 
officials, Local WDBs, and the State WDB. This determination involves:
    (1) The application of a budget for one-stop infrastructure costs as 
described in Sec. 463.735, based on either agreement reached in the 
local area negotiations or the State WDB formula outlined in 
Sec. 463.745;
    (2) The determination of each local one-stop partner program's 
proportionate use of the one-stop delivery system and relative benefit 
received, consistent with the Uniform Guidance at 2 CFR part 200, 
including the Federal cost principles, the partner programs' authorizing 
laws and regulations, and other applicable legal requirements described 
in Sec. 463.736; and
    (3) The calculation of required statewide program caps on 
contributions to infrastructure costs from one-stop partner programs in 
areas operating under the State funding mechanism as described in 
Sec. 463.738.
    (c) In certain situations, the Governor does not determine the 
infrastructure cost contributions for some one-stop partner programs 
under the State funding mechanism.
    (1) The Governor will not determine the contribution amounts for 
infrastructure funds for Native American program grantees described in 
20 CFR part 684. The appropriate portion of funds to be provided by 
Native American program grantees to pay for one-stop infrastructure must 
be determined as part of the development of the MOU

[[Page 181]]

described in Sec. 463.500 and specified in that MOU.
    (2) In States in which the policy-making authority is placed in an 
entity or official that is independent of the authority of the Governor 
with respect to the funds provided for adult education and literacy 
activities authorized under title II of WIOA, postsecondary career and 
technical education activities authorized under the Carl D. Perkins 
Career and Technical Education Act of 2006, or VR services authorized 
under title I of the Rehabilitation Act of 1973 (other than sec. 112 or 
part C), as amended by WIOA title IV, the determination of the amount 
each of the applicable partners must contribute to assist in paying the 
infrastructure costs of one-stop centers must be made by the official or 
chief officer of the entity with such authority, in consultation with 
the Governor.
    (d) Any duty, ability, choice, responsibility, or other action 
otherwise related to the determination of infrastructure costs 
contributions that is assigned to the Governor in Secs. 463.730 through 
463.745 also applies to this decision-making process performed by the 
official or chief officer described in paragraph (c)(2) of this section.



Sec. 463.731  What are the steps to determine the amount to be paid
under the State one-stop infrastructure funding mechanism?

    (a) To initiate the State funding mechanism, a Local WDB that has 
not reached consensus on methods of sufficiently funding local 
infrastructure through the local funding mechanism as provided in 
Sec. 463.725 must notify the Governor by the deadline established by the 
Governor under Sec. 463.705(b)(3).
    (b) Once a Local WDB has informed the Governor that no consensus has 
been reached:
    (1) The Local WDB must provide the Governor with local negotiation 
materials in accordance with Sec. 463.735(a).
    (2) The Governor must determine the one-stop center budget by 
either:
    (i) Accepting a budget previously agreed upon by partner programs in 
the local negotiations, in accordance with Sec. 463.735(b)(1); or
    (ii) Creating a budget for the one-stop center using the State WDB 
formula (described in Sec. 463.745) in accordance with 
Sec. 463.735(b)(3).
    (3) The Governor then must establish a cost allocation methodology 
to determine the one-stop partner programs' proportionate shares of 
infrastructure costs, in accordance with Sec. 463.736.
    (4)(i) Using the methodology established under paragraph (b)(2)(ii) 
of this section, and taking into consideration the factors concerning 
individual partner programs listed in Sec. 463.737(b)(2), the Governor 
must determine each partner's proportionate share of the infrastructure 
costs, in accordance with Sec. 463.737(b)(1), and
    (ii) In accordance with Sec. 463.730(c), in some instances, the 
Governor does not determine a partner program's proportionate share of 
infrastructure funding costs, in which case it must be determined by the 
entities named in Sec. 463.730(c)(1) and (2).
    (5) The Governor must then calculate the statewide caps on the 
amounts that partner programs may be required to contribute toward 
infrastructure funding, according to the steps found at 
Sec. 463.738(a)(1) through (4).
    (6) The Governor must ensure that the aggregate total of the 
infrastructure contributions according to proportionate share required 
of all local partner programs in local areas under the State funding 
mechanism do not exceed the cap for that particular program, in 
accordance with Sec. 463.738(b)(1). If the total does not exceed the 
cap, the Governor must direct each one-stop partner program to pay the 
amount determined under Sec. 463.737(a) toward the infrastructure 
funding costs of the one-stop center. If the total does exceed the cap, 
then to determine the amount to direct each one-stop program to pay, the 
Governor may:
    (i) Ascertain, in accordance with Sec. 463.738(b)(2)(i), whether the 
local partner or partners whose proportionate shares are calculated 
above the individual program caps are willing to voluntarily contribute 
above the capped amount to equal that program's proportionate share; or
    (ii) Choose from the options provided in Sec. 463.738(b)(2)(ii), 
including having the local area re-enter negotiations to

[[Page 182]]

reassess each one-stop partner's proportionate share and make 
adjustments or identify alternate sources of funding to make up the 
difference between the capped amount and the proportionate share of 
infrastructure funding of the one-stop partner.
    (7) If none of the solutions given in paragraphs (b)(6)(i) and (ii) 
of this section prove to be viable, the Governor must reassess the 
proportionate shares of each one-stop partner so that the aggregate 
amount attributable to the local partners for each program is less than 
that program's cap amount. Upon such reassessment, the Governor must 
direct each one-stop partner program to pay the reassessed amount toward 
the infrastructure funding costs of the one-stop center.



Sec. 463.735  How are infrastructure cost budgets for the one-stop
centers in a local area determined in the State one-stop infrastructure
funding mechanism?

    (a) Local WDBs must provide to the Governor appropriate and relevant 
materials and documents used in the negotiations under the local funding 
mechanism, including but not limited to: The local WIOA plan, the cost 
allocation method or methods proposed by the partners to be used in 
determining proportionate share, the proposed amounts or budget to fund 
infrastructure, the amount of total partner funds included, the type of 
funds or non-cash contributions, proposed one-stop center budgets, and 
any agreed upon or proposed MOUs.
    (b)(1) If a local area has reached agreement as to the 
infrastructure budget for the one-stop centers in the local area, it 
must provide this budget to the Governor as required by paragraph (a) of 
this section. If, as a result of the agreed upon infrastructure budget, 
only the individual programmatic contributions to infrastructure funding 
based upon proportionate use of the one-stop centers and relative 
benefit received are at issue, the Governor may accept the budget, from 
which the Governor must calculate each partner's contribution consistent 
with the cost allocation methodologies contained in the Uniform Guidance 
found in 2 CFR part 200, as described in Sec. 463.736.
    (2) The Governor may also take into consideration the extent to 
which the partners in the local area have agreed in determining the 
proportionate shares, including any agreements reached at the local 
level by one or more partners, as well as any other element or product 
of the negotiating process provided to the Governor as required by 
paragraph (a) of this section.
    (3) If a local area has not reached agreement as to the 
infrastructure budget for the one-stop centers in the local area, or if 
the Governor determines that the agreed upon budget does not adequately 
meet the needs of the local area or does not reasonably work within the 
confines of the local area's resources in accordance with the Governor's 
one-stop budget guidance (which is required to be issued by WIOA sec. 
121(h)(1)(B) and under Sec. 463.705), then, in accordance with 
Sec. 463.745, the Governor must use the formula developed by the State 
WDB based on at least the factors required under Sec. 463.745, and any 
associated weights to determine the local area budget.



Sec. 463.736  How does the Governor establish a cost allocation
methodology used to determine the one-stop partner programs' 
proportionate shares of infrastructure costs under the State one-stop
infrastructure funding mechanism?

    Once the appropriate budget is determined for a local area through 
either method described in Sec. 463.735 (by acceptance of a budget 
agreed upon in local negotiation or by the Governor applying the formula 
detailed in Sec. 463.745), the Governor must determine the appropriate 
cost allocation methodology to be applied to the one-stop partners in 
such local area, consistent with the Federal cost principles permitted 
under 2 CFR part 200, to fund the infrastructure budget.



Sec. 463.737  How are one-stop partner programs' proportionate shares
of infrastructure costs determined under the State one-stop
infrastructure funding mechanism?

    (a) The Governor must direct the one-stop partners in each local 
area that have not reached agreement under the local funding mechanism 
to pay

[[Page 183]]

what the Governor determines is each partner program's proportionate 
share of infrastructure funds for that area, subject to the application 
of the caps described in Sec. 463.738.
    (b)(1) The Governor must use the cost allocation methodology--as 
determined under Sec. 463.736--to determine each partner's proportionate 
share of the infrastructure costs under the State funding mechanism, 
subject to considering the factors described in paragraph (b)(2) of this 
section.
    (2) In determining each partner program's proportionate share of 
infrastructure costs, the Governor must take into account the costs of 
administration of the one-stop delivery system for purposes not related 
to one-stop centers for each partner (such as costs associated with 
maintaining the Local WDB or information technology systems), as well as 
the statutory requirements for each partner program, the partner 
program's ability to fulfill such requirements, and all other applicable 
legal requirements. The Governor may also take into consideration the 
extent to which the partners in the local area have agreed in 
determining the proportionate shares, including any agreements reached 
at the local level by one or more partners, as well as any other 
materials or documents of the negotiating process, which must be 
provided to the Governor by the Local WDB and described in 
Sec. 463.735(a).



Sec. 463.738  How are statewide caps on the contributions for
one-stop infrastructure funding determined in the State one-stop
infrastructure funding mechanism?

    (a) The Governor must calculate the statewide cap on the 
contributions for one-stop infrastructure funding required to be 
provided by each one-stop partner program for those local areas that 
have not reached agreement. The cap is the amount determined under 
paragraph (a)(4) of this section, which the Governor derives by:
    (1) First, determining the amount resulting from applying the 
percentage for the corresponding one-stop partner program provided in 
paragraph (d) of this section to the amount of Federal funds provided to 
carry out the one-stop partner program in the State for the applicable 
fiscal year;
    (2) Second, selecting a factor (or factors) that reasonably 
indicates the use of one-stop centers in the State, applying such 
factor(s) to all local areas in the State, and determining the 
percentage of such factor(s) applicable to the local areas that reached 
agreement under the local funding mechanism in the State;
    (3) Third, determining the amount resulting from applying the 
percentage determined in paragraph (a)(2) of this section to the amount 
determined under paragraph (a)(1) of this section for the one-stop 
partner program; and
    (4) Fourth, determining the amount that results from subtracting the 
amount determined under paragraph (a)(3) of this section from the amount 
determined under paragraph (a)(1) of this section. The outcome of this 
final calculation results in the partner program's cap.
    (b)(1) The Governor must ensure that the funds required to be 
contributed by each partner program in the local areas in the State 
under the State funding mechanism, in aggregate, do not exceed the 
statewide cap for each program as determined under paragraph (a) of this 
section.
    (2) If the contributions initially determined under Sec. 463.737 
would exceed the applicable cap determined under paragraph (a) of this 
section, the Governor may:
    (i) Ascertain if the one-stop partner whose contribution would 
otherwise exceed the cap determined under paragraph (a) of this section 
will voluntarily contribute above the capped amount, so that the total 
contributions equal that partner's proportionate share. The one-stop 
partner's contribution must still be consistent with the program's 
authorizing laws and regulations, the Federal cost principles in 2 CFR 
part 200, and other applicable legal requirements; or
    (ii) Direct or allow the Local WDB, chief elected officials, and 
one-stop partners to: Re-enter negotiations, as necessary; reduce the 
infrastructure costs to reflect the amount of funds that are available 
for such costs without exceeding the cap levels; reassess the 
proportionate share of each one-stop partner; or identify alternative

[[Page 184]]

sources of financing for one-stop infrastructure funding, consistent 
with the requirement that each one-stop partner pay an amount that is 
consistent with the proportionate use of the one-stop center and 
relative benefit received by the partner, the program's authorizing laws 
and regulations, the Federal cost principles in 2 CFR part 200, and 
other applicable legal requirements.
    (3) If applicable under paragraph (b)(2)(ii) of this section, the 
Local WDB, chief elected officials, and one-stop partners, after 
renegotiation, may come to agreement, sign an MOU, and proceed under the 
local funding mechanism. Such actions do not require the redetermination 
of the applicable caps under paragraph (a) of this section.
    (4) If, after renegotiation, agreement among partners still cannot 
be reached or alternate financing cannot be identified, the Governor may 
adjust the specified allocation, in accordance with the amounts 
available and the limitations described in paragraph (d) of this 
section. In determining these adjustments, the Governor may take into 
account information relating to the renegotiation as well as the 
information described in Sec. 463.735(a).
    (c) Limitations. Subject to paragraph (a) of this section and in 
accordance with WIOA sec. 121(h)(2)(D), the following limitations apply 
to the Governor's calculations of the amount that one-stop partners in 
local areas that have not reached agreement under the local funding 
mechanism may be required under Sec. 463.736 to contribute to one-stop 
infrastructure funding:
    (1) WIOA formula programs and Wagner-Peyser Act Employment Service. 
The portion of funds required to be contributed under the WIOA youth, 
adult, or dislocated worker programs, or under the Wagner-Peyser Act (29 
U.S.C. 49 et seq.) must not exceed three percent of the amount of the 
program in the State for a program year.
    (2) Other one-stop partners. For required one-stop partners other 
than those specified in paragraphs (c)(1), (3), (5), and (6) of this 
section, the portion of funds required to be contributed must not exceed 
1.5 percent of the amount of Federal funds provided to carry out that 
program in the State for a fiscal year. For purposes of the Carl D. 
Perkins Career and Technical Education Act of 2006, the cap on 
contributions is determined based on the funds made available by the 
State for postsecondary level programs and activities under sec. 132 of 
the Carl D. Perkins Career and Technical Education Act and the amount of 
funds used by the State under sec. 112(a)(3) of the Perkins Act during 
the prior year to administer postsecondary level programs and 
activities, as applicable.
    (3) Vocational Rehabilitation
    (i) Within a State, for the entity or entities administering the 
programs described in WIOA sec. 121(b)(1)(B)(iv) and Sec. 463.400, the 
allotment is based on the one State Federal fiscal year allotment, even 
in instances where that allotment is shared between two State agencies, 
and the cumulative portion of funds required to be contributed must not 
exceed--
    (A) 0.75 percent of the amount of Federal funds provided to carry 
out such program in the State for Fiscal Year 2016 for purposes of 
applicability of the State funding mechanism for PY 2017;
    (B) 1.0 percent of the amount provided to carry out such program in 
the State for Fiscal Year 2017 for purposes of applicability of the 
State funding mechanism for PY 2018;
    (C) 1.25 percent of the amount provided to carry out such program in 
the State for Fiscal Year 2018 for purposes of applicability of the 
State funding mechanism for PY 2019;
    (D) 1.5 percent of the amount provided to carry out such program in 
the State for Fiscal Year 2019 and following years for purposes of 
applicability of the State funding mechanism for PY 2020 and subsequent 
years.
    (ii) The limitations set forth in paragraph (d)(3)(i) of this 
section for any given fiscal year must be based on the final VR 
allotment to the State in the applicable Federal fiscal year.
    (4) Federal direct spending programs. For local areas that have not 
reached a one-stop infrastructure funding agreement by consensus, an 
entity administering a program funded with direct Federal spending, as 
defined in sec. 250(c)(8) of the Balanced Budget and Emergency Deficit 
Control Act of 1985, as in effect on February 15, 2014 (2 U.S.C. 
900(c)(8)), must not be required

[[Page 185]]

to provide more for infrastructure costs than the amount that the 
Governor determined (as described in Sec. 463.737).
    (5) TANF programs. For purposes of TANF, the cap on contributions is 
determined based on the total Federal TANF funds expended by the State 
for work, education, and training activities during the prior Federal 
fiscal year (as reported to the Department of Health and Human Services 
(HHS) on the quarterly TANF Financial Report form), plus any additional 
amount of Federal TANF funds that the State TANF agency reasonably 
determines was expended for administrative costs in connection with 
these activities but that was separately reported to HHS as an 
administrative cost. The State's contribution to the one-stop 
infrastructure must not exceed 1.5 percent of these combined 
expenditures.
    (6) Community Services Block Grant (CSBG) programs. For purposes of 
CSBG, the cap on contributions will be based on the total amount of CSBG 
funds determined by the State to have been expended by local CSBG-
eligible entities for the provision of employment and training 
activities during the prior Federal fiscal year for which information is 
available (as reported to HHS on the CSBG Annual Report) and any 
additional amount that the State CSBG agency reasonably determines was 
expended for administrative purposes in connection with these activities 
and was separately reported to HHS as an administrative cost. The 
State's contribution must not exceed 1.5 percent of these combined 
expenditures.
    (d) For programs for which it is not otherwise feasible to determine 
the amount of Federal funding used by the program until the end of that 
program's operational year--because, for example, the funding available 
for education, employment, and training activities is included within 
funding for the program that may also be used for other unrelated 
activities--the determination of the Federal funds provided to carry out 
the program for a fiscal year under paragraph (a)(1) of this section may 
be determined by:
    (1) The percentage of Federal funds available to the one-stop 
partner program that were used by the one-stop partner program for 
education, employment, and training activities in the previous fiscal 
year for which data are available; and
    (2) Applying the percentage determined under paragraph (d)(1) of 
this section to the total amount of Federal funds available to the one-
stop partner program for the fiscal year for which the determination 
under paragraph (a)(1) of this section applies.



Sec. 463.740  What funds are used to pay for infrastructure costs in
the State one-stop infrastructure funding mechanism?

    (a) In the State funding mechanism, infrastructure costs for WIOA 
title I programs, including Native American Programs described in 20 CFR 
part 684, may be paid using program funds, administrative funds, or 
both. Infrastructure costs for the Senior Community Service Employment 
Program under title V of the Older Americans Act (42 U.S.C. 3056 et 
seq.) may also be paid using program funds, administrative funds, or 
both.
    (b) In the State funding mechanism, infrastructure costs for other 
required one-stop partner programs (listed in Secs. 463.400 through 
463.410) are limited to the program's administrative funds, as 
appropriate.
    (c) In the State funding mechanism, infrastructure costs for the 
adult education program authorized by title II of WIOA must be paid from 
the funds that are available for local administration and may be paid 
from funds made available by the State or non-Federal resources that are 
cash, in-kind, or third-party contributions.
    (d) In the State funding mechanism, infrastructure costs for the 
Carl D. Perkins Career and Technical Education Act of 2006 must be paid 
from funds available for local administration of postsecondary level 
programs and activities to eligible recipients or consortia of eligible 
recipients and may be paid from funds made available by the State or 
non-Federal resources that are cash, in-kind, or third-party 
contributions.

[[Page 186]]



Sec. 463.745  What factors does the State Workforce Development Board
use to develop the formula described in Workforce Innovation and 
Opportunity Act, which is used by the Governor to determine the 
appropriate one-stop infrastructure budget for each local area operating
under the State infrastructure funding mechanism, if no reasonably 
implementable locally negotiated budget exists?

    The State WDB must develop a formula, as described in WIOA sec. 
121(h)(3)(B), to be used by the Governor under Sec. 463.735(b)(3) in 
determining the appropriate budget for the infrastructure costs of one-
stop centers in the local areas that do not reach agreement under the 
local funding mechanism and are, therefore, subject to the State funding 
mechanism. The formula identifies the factors and corresponding weights 
for each factor that the Governor must use, which must include: the 
number of one-stop centers in a local area; the population served by 
such centers; the services provided by such centers; and any factors 
relating to the operations of such centers in the local area that the 
State WDB determines are appropriate. As indicated in 
Sec. 463.735(b)(1), if the local area has agreed on such a budget, the 
Governor may accept that budget in lieu of applying the formula factors.



Sec. 463.750  When and how can a one-stop partner appeal a one-stop
infrastructure amount designated by the State under the State 
infrastructure funding mechanism?

    (a) The Governor must establish a process, described under sec. 
121(h)(2)(E) of WIOA, for a one-stop partner administering a program 
described in Secs. 463.400 through 463.410 to appeal the Governor's 
determination regarding the one-stop partner's portion of funds to be 
provided for one-stop infrastructure costs. This appeal process must be 
described in the Unified State Plan.
    (b) The appeal may be made on the ground that the Governor's 
determination is inconsistent with proportionate share requirements in 
Sec. 463.735(a), the cost contribution limitations in Sec. 463.735(b), 
the cost contribution caps in Sec. 463.738, consistent with the process 
described in the State Plan.
    (c) The process must ensure prompt resolution of the appeal in order 
to ensure the funds are distributed in a timely manner, consistent with 
the requirements of 20 CFR 683.630.
    (d) The one-stop partner must submit an appeal in accordance with 
State's deadlines for appeals specified in the guidance issued under 
Sec. 463.705(b)(3), or if the State has not set a deadline, within 21 
days from the Governor's determination.



Sec. 463.755  What are the required elements regarding infrastructure
funding that must be included in the one-stop Memorandum of 
Understanding?

    The MOU, fully described in Sec. 463.500, must contain the following 
information whether the local areas use either the local one-stop or the 
State funding method:
    (a) The period of time in which this infrastructure funding 
agreement is effective. This may be a different time period than the 
duration of the MOU.
    (b) Identification of an infrastructure and shared services budget 
that will be periodically reconciled against actual costs incurred and 
adjusted accordingly to ensure that it reflects a cost allocation 
methodology that demonstrates how infrastructure costs are charged to 
each partner in proportion to its use of the one-stop center and 
relative benefit received, and that complies with 2 CFR part 200 (or any 
corresponding similar regulation or ruling).
    (c) Identification of all one-stop partners, chief elected 
officials, and Local WDB participating in the infrastructure funding 
arrangement.
    (d) Steps the Local WDB, chief elected officials, and one-stop 
partners used to reach consensus or an assurance that the local area 
followed the guidance for the State funding process.
    (e) Description of the process to be used among partners to resolve 
issues during the MOU duration period when consensus cannot be reached.
    (f) Description of the periodic modification and review process to 
ensure equitable benefit among one-stop partners.

[[Page 187]]



Sec. 463.760  How do one-stop partners jointly fund other shared
costs under the Memorandum of Understanding?

    (a) In addition to jointly funding infrastructure costs, one-stop 
partners listed in Secs. 463.400 through 463.410 must use a portion of 
funds made available under their programs' authorizing Federal law (or 
fairly evaluated in-kind contributions) to pay the additional costs 
relating to the operation of the one-stop delivery system. These other 
costs must include applicable career services and may include other 
costs, including shared services.
    (b) For the purposes of paragraph (a) of this section, shared 
services' costs may include the costs of shared services that are 
authorized for and may be commonly provided through the one-stop partner 
programs to any individual, such as initial intake, assessment of needs, 
appraisal of basic skills, identification of appropriate services to 
meet such needs, referrals to other one-stop partners, and business 
services. Shared operating costs may also include shared costs of the 
Local WDB's functions.
    (c) Contributions to the additional costs related to operation of 
the one-stop delivery system may be cash, non-cash, or third-party in-
kind contributions, consistent with how these are described in 
Sec. 463.720(c).
    (d) The shared costs described in paragraph (a) of this section must 
be allocated according to the proportion of benefit received by each of 
the partners, consistent with the Federal law authorizing the partner's 
program, and consistent with all other applicable legal requirements, 
including Federal cost principles in 2 CFR part 200 (or any 
corresponding similar regulation or ruling) requiring that costs are 
allowable, reasonable, necessary, and allocable.
    (e) Any shared costs agreed upon by the one-stop partners must be 
included in the MOU.



Sec. 463.800  How are one-stop centers and one-stop delivery systems
certified for effectiveness, physical and programmatic accessibility,
and continuous improvement?

    (a) The State WDB, in consultation with chief elected officials and 
Local WDBs, must establish objective criteria and procedures for Local 
WDBs to use when certifying one-stop centers.
    (1) The State WDB, in consultation with chief elected officials and 
Local WDBs, must review and update the criteria every 2 years as part of 
the review and modification of State Plans pursuant to Sec. 463.135.
    (2) The criteria must be consistent with the Governor's and State 
WDB's guidelines, guidance, and policies on infrastructure funding 
decisions, described in Sec. 463.705. The criteria must evaluate the 
one-stop centers and one-stop delivery system for effectiveness, 
including customer satisfaction, physical and programmatic 
accessibility, and continuous improvement.
    (3) When the Local WDB is the one-stop operator as described in 20 
CFR 679.410, the State WDB must certify the one-stop center.
    (b) Evaluations of effectiveness must include how well the one-stop 
center integrates available services for participants and businesses, 
meets the workforce development needs of participants and the employment 
needs of local employers, operates in a cost-efficient manner, 
coordinates services among the one-stop partner programs, and provides 
access to partner program services to the maximum extent practicable, 
including providing services outside of regular business hours where 
there is a workforce need, as identified by the Local WDB. These 
evaluations must take into account feedback from one-stop customers. 
They must also include evaluations of how well the one-stop center 
ensures equal opportunity for individuals with disabilities to 
participate in or benefit from one-stop center services. These 
evaluations must include criteria evaluating how well the centers and 
delivery systems take actions to comply with the disability-related 
regulations implementing WIOA sec. 188, set forth at 29 CFR part 38. 
Such actions include, but are not limited to:

[[Page 188]]

    (1) Providing reasonable accommodations for individuals with 
disabilities;
    (2) Making reasonable modifications to policies, practices, and 
procedures where necessary to avoid discrimination against persons with 
disabilities;
    (3) Administering programs in the most integrated setting 
appropriate;
    (4) Communicating with persons with disabilities as effectively as 
with others;
    (5) Providing appropriate auxiliary aids and services, including 
assistive technology devices and services, where necessary to afford 
individuals with disabilities an equal opportunity to participate in, 
and enjoy the benefits of, the program or activity; and
    (6) Providing for the physical accessibility of the one-stop center 
to individuals with disabilities.
    (c) Evaluations of continuous improvement must include how well the 
one-stop center supports the achievement of the negotiated local levels 
of performance for the indicators of performance for the local area 
described in sec. 116(b)(2) of WIOA and part 463. Other continuous 
improvement factors may include a regular process for identifying and 
responding to technical assistance needs, a regular system of continuing 
professional staff development, and having systems in place to capture 
and respond to specific customer feedback.
    (d) Local WDBs must assess at least once every 3 years the 
effectiveness, physical and programmatic accessibility, and continuous 
improvement of one-stop centers and the one-stop delivery systems using 
the criteria and procedures developed by the State WDB. The Local WDB 
may establish additional criteria, or set higher standards for service 
coordination, than those set by the State criteria. Local WDBs must 
review and update the criteria every 2 years as part of the Local Plan 
update process described in Sec. 463.580. Local WDBs must certify one-
stop centers in order to be eligible to use infrastructure funds in the 
State funding mechanism described in Sec. 463.730.
    (e) All one-stop centers must comply with applicable physical and 
programmatic accessibility requirements, as set forth in 29 CFR part 38, 
the implementing regulations of WIOA sec. 188.



Sec. 463.900  What is the common identifier to be used by each
one-stop delivery system?

    (a) The common one-stop delivery system identifier is ``American Job 
Center.''
    (b) As of November 17, 2016, each one-stop delivery system must 
include the ``American Job Center'' identifier or ``a proud partner of 
the American Job Center network'' on all primary electronic resources 
used by the one-stop delivery system, and on any newly printed, 
purchased, or created materials.
    (c) As of July 1, 2017, each one-stop delivery system must include 
the ``American Job Center'' identifier or ``a proud partner of the 
American Job Center network'' on all products, programs, activities, 
services, electronic resources, facilities, and related property and new 
materials used in the one-stop delivery system.
    (d) One-stop partners, States, or local areas may use additional 
identifiers on their products, programs, activities, services, 
facilities, and related property and materials.

Subpart K [Reserved]

                           PART 464 [RESERVED]

                           PART 472 [RESERVED]

                           PART 477 [RESERVED]

                        PARTS 489	499 [RESERVED]

[[Page 189]]



CHAPTER V--OFFICE OF BILINGUAL EDUCATION AND MINORITY LANGUAGES AFFAIRS, 
                         DEPARTMENT OF EDUCATION




  --------------------------------------------------------------------
Part                                                                Page
500-599

[Reserved]

[[Page 191]]

                        PARTS 500	599 [RESERVED]

[[Page 193]]



 CHAPTER VI--OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION




  --------------------------------------------------------------------
Part                                                                Page
600             Institutional eligibility under the Higher 
                    Education Act of 1965, as amended.......         195
601             Institution and lender requirements relating 
                    to education loans......................         230
602             The Secretary's recognition of accrediting 
                    agencies................................         238
603             Secretary's recognition procedures for State 
                    agencies................................         262
604             Federal-State relationship agreements.......         265
606             Developing Hispanic-serving institutions 
                    program.................................         267
607             Strengthening institutions program..........         278
608             Strengthening historically Black colleges 
                    and universities program................         292
609             Strengthening historically Black graduate 
                    institutions program....................         299
611             Teacher quality enhancement grants program..         304
614             Preparing tomorrow's teachers to use 
                    technology..............................         319
628             Endowment challenge grant program...........         320
636

[Reserved]

637             Minority science and engineering improvement 
                    program.................................         329
642             Training program for Federal TRIO programs..         334
643             Talent search...............................         342
644             Educational opportunity centers.............         354
645             Upward bound program........................         364
646             Student support services program............         380
647             Ronald E. McNair Postbaccalaureate 
                    Achievement Program.....................         392
648             Graduate assistance in areas of national 
                    need....................................         401
649

[Reserved]

650             Jacob K. Javits fellowship program..........         412
654             Robert C. Byrd honors scholarship program...         418
655             International education programs--general 
                    provisions..............................         423

[[Page 194]]

656             National resource centers program for 
                    foreign language and area studies or 
                    foreign language and international 
                    studies.................................         425
657             Foreign language and area studies 
                    fellowships program.....................         433
658             Undergraduate international studies and 
                    foreign language program................         439
660             The international research and studies 
                    program.................................         443
661             Business and international education program         448
662             Fulbright-Hays doctoral dissertation 
                    research abroad fellowship program......         450
663             Fulbright-Hays faculty research abroad 
                    fellowship program......................         454
664             Fulbright-Hays group projects abroad program         458
668             Student assistance general provisions.......         463
669             Language resource centers program...........         726
673             General provisions for the Federal Perkins 
                    loan program, Federal work-study 
                    program, and Federal supplemental 
                    educational opportunity grant program...         728
674             Federal Perkins loan program................         734
675             Federal work-study programs.................         797
676             Federal supplemental educational opportunity 
                    grant program...........................         811
677-679

[Reserved]

[[Page 195]]



PART 600_INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT OF 1965,
AS AMENDED--Table of Contents



                            Subpart A_General

Sec.
600.1  Scope.
600.2  Definitions.
600.3  [Reserved]
600.4  Institution of higher education.
600.5  Proprietary institution of higher education.
600.6  Postsecondary vocational institution.
600.7  Conditions of institutional ineligibility.
600.8  Treatment of a branch campus.
600.9  State authorization.
600.10  Date, extent, duration, and consequence of eligibility.
600.11  Special rules regarding institutional accreditation or 
          preaccreditation.

            Subpart B_Procedures for Establishing Eligibility

600.20  Notice and application procedures for establishing, 
          reestablishing, maintaining, or expanding institutional 
          eligibility and certification.
600.21  Updating application information.

                    Subpart C_Maintaining Eligibility

600.30  [Reserved]
600.31  Change in ownership resulting in a change in control for private 
          nonprofit, private for-profit and public institutions.
600.32  Eligibility of additional locations.

                      Subpart D_Loss of Eligibility

600.40  Loss of eligibility.
600.41  Termination and emergency action proceedings.

Subpart E_Eligibility of Foreign Institutions To Apply To Participate in 
            the Federal Family Education Loan (FFEL) Programs

600.51  Purpose and scope.
600.52  Definitions.
600.53  Requesting an eligibility determination.
600.54  Criteria for determining whether a foreign institution is 
          eligible to apply to participate in the Direct Loan Program.
600.55  Additional criteria for determining whether a foreign graduate 
          medical school is eligible to apply to participate in the 
          Direct Loan Program.
600.56  Additional criteria for determining whether a foreign veterinary 
          school is eligible to apply to participate in the FFEL 
          programs.
600.57  Additional criteria for determining whether a foreign nursing 
          school is eligible to apply to participate in the Direct Loan 
          Program.
600.58  Duration of eligibility determination.

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

    Source: 53 FR 11210, Apr. 5, 1988, unless otherwise noted.



                            Subpart A_General

    Source: 59 FR 22336, Apr. 29, 1994, unless otherwise noted.



Sec. 600.1  Scope.

    This part establishes the rules and procedures that the Secretary 
uses to determine whether an educational institution qualifies in whole 
or in part as an eligible institution of higher education under the 
Higher Education Act of 1965, as amended (HEA). An eligible institution 
of higher education may apply to participate in programs authorized by 
the HEA (HEA programs).

(Authority: 20 U.S.C. 1088, 1094, 1099b, 1099c, and 1141)



Sec. 600.2  Definitions.

    The following definitions apply to terms used in this part:
    Accredited: The status of public recognition that a nationally 
recognized accrediting agency grants to an institution or educational 
program that meets the agency's established requirements.
    Award year: The period of time from July 1 of one year through June 
30 of the following year.
    Branch Campus: A location of an institution that is geographically 
apart and independent of the main campus of the institution. The 
Secretary considers a location of an institution to be independent of 
the main campus if the location--
    (1) Is permanent in nature;
    (2) Offers courses in educational programs leading to a degree, 
certificate, or other recognized educational credential;
    (3) Has its own faculty and administrative or supervisory 
organization; and
    (4) Has its own budgetary and hiring authority.

[[Page 196]]

    Clock hour: A period of time consisting of--
    (1) A 50- to 60-minute class, lecture, or recitation in a 60-minute 
period;
    (2) A 50- to 60-minute faculty-supervised laboratory, shop training, 
or internship in a 60-minute period; or
    (3) Sixty minutes of preparation in a correspondence course.
    Correspondence course: (1) A course provided by an institution under 
which the institution provides instructional materials, by mail or 
electronic transmission, including examinations on the materials, to 
students who are separated from the instructor. Interaction between the 
instructor and student is limited, is not regular and substantive, and 
is primarily initiated by the student. Correspondence courses are 
typically self-paced.
    (2) If a course is part correspondence and part residential 
training, the Secretary considers the course to be a correspondence 
course.
    (3) A correspondence course is not distance education.
    Credit hour: Except as provided in 34 CFR 668.8(k) and (l), a credit 
hour is an amount of work represented in intended learning outcomes and 
verified by evidence of student achievement that is an institutionally 
established equivalency that reasonably approximates not less than--
    (1) One hour of classroom or direct faculty instruction and a 
minimum of two hours of out of class student work each week for 
approximately fifteen weeks for one semester or trimester hour of 
credit, or ten to twelve weeks for one quarter hour of credit, or the 
equivalent amount of work over a different amount of time; or
    (2) At least an equivalent amount of work as required in paragraph 
(1) of this definition for other academic activities as established by 
the institution including laboratory work, internships, practica, studio 
work, and other academic work leading to the award of credit hours.
    Direct assessment program: A program as described in 34 CFR 668.10.
    Distance education means education that uses one or more of the 
technologies listed in paragraphs (1) through (4) of this definition to 
deliver instruction to students who are separated from the instructor 
and to support regular and substantive interaction between the students 
and the instructor, either synchronously or asynchronously. The 
technologies may include--
    (1) The internet;
    (2) One-way and two-way transmissions through open broadcast, closed 
circuit, cable, microwave, broadband lines, fiber optics, satellite, or 
wireless communications devices;
    (3) Audio conferencing; or
    (4) Video cassettes, DVDs, and CD-ROMs, if the cassettes, DVDs, or 
CD-ROMs are used in a course in conjunction with any of the technologies 
listed in paragraphs (1) through (3) of this definition.
    Educational program: (1) A legally authorized postsecondary program 
of organized instruction or study that:
    (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
    (ii) May, in lieu of credit hours or clock hours as a measure of 
student learning, utilize direct assessment of student learning, or 
recognize the direct assessment of student learning by others, if such 
assessment is consistent with the accreditation of the institution or 
program utilizing the results of the assessment and with the provisions 
of Sec. 668.10.
    (2) The Secretary does not consider that an institution provides an 
educational program if the institution does not provide instruction 
itself (including a course of independent study) but merely gives credit 
for one or more of the following: Instruction provided by other 
institutions or schools; examinations or direct assessments provided by 
agencies or organizations; or other accomplishments such as ``life 
experience.''
    Eligible institution: An institution that--
    (1) Qualifies as--
    (i) An institution of higher education, as defined in Sec. 600.4;
    (ii) A proprietary institution of higher education, as defined in 
Sec. 600.5; or

[[Page 197]]

    (iii) A postsecondary vocational institution, as defined in 
Sec. 600.6; and
    (2) Meets all the other applicable provisions of this part.
    Federal Family Education Loan (FFEL) Programs: The loan programs 
(formerly called the Guaranteed Student Loan (GSL) programs) authorized 
by title IV-B of the HEA, including the Federal Stafford Loan, Federal 
PLUS, Federal Supplemental Loans for Students (Federal SLS), and Federal 
Consolidation Loan programs, in which lenders use their own funds to 
make loans to enable students or their parents to pay the costs of the 
students' attendance at eligible institutions. The Federal Stafford 
Loan, Federal PLUS, Federal SLS, and Federal Consolidation Loan programs 
are defined in 34 CFR part 668.
    Incarcerated student: A student who is serving a criminal sentence 
in a Federal, State, or local penitentiary, prison, jail, reformatory, 
work farm, or other similar correctional institution. A student is not 
considered incarcerated if that student is in a half-way house or home 
detention or is sentenced to serve only weekends.
    Legally authorized: The legal status granted to an institution 
through a charter, license, or other written document issued by the 
appropriate agency or official of the State in which the institution is 
physically located.
    Nationally recognized accrediting agency: An agency or association 
that the Secretary recognizes as a reliable authority to determine the 
quality of education or training offered by an institution or a program 
offered by an institution. The Secretary recognizes these agencies and 
associations under the provisions of 34 CFR part 602 and publishes a 
list of the recognized agencies in the Federal Register.
    Nonprofit institution: An institution that--
    (1)(i) Is owned and operated by one or more nonprofit corporations 
or associations, no part of the net earnings of which benefits any 
private shareholder or individual;
    (ii) Is legally authorized to operate as a nonprofit organization by 
each State in which it is physically located; and
    (iii) Is determined by the U.S. Internal Revenue Service to be an 
organization to which contributions are tax-deductible in accordance 
with section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 
501(c)(3)); or
    (2) For a foreign institution--
    (i) An institution that is owned and operated only by one or more 
nonprofit corporations or associations; and
    (ii)(A) If a recognized tax authority of the institution's home 
country is recognized by the Secretary for purposes of making 
determinations of an institution's nonprofit status for title IV 
purposes, is determined by that tax authority to be a nonprofit 
educational institution; or
    (B) If no recognized tax authority of the institution's home country 
is recognized by the Secretary for purposes of making determinations of 
an institution's nonprofit status for title IV purposes, the foreign 
institution demonstrates to the satisfaction of the Secretary that it is 
a nonprofit educational institution.
    (3) Is determined by the U.S. Internal Revenue Service to be an 
organization to which contributions are tax-deductible in accordance 
with section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 
501(c)(3)).
    One-academic-year training program: An educational program that is 
at least one academic year as defined under 34 CFR 668.2.
    Preaccredited: A status that a nationally recognized accrediting 
agency, recognized by the Secretary to grant that status, has accorded 
an unaccredited public or private nonprofit institution that is 
progressing toward accreditation within a reasonable period of time.
    Recognized equivalent of a high school diploma: The following are 
the equivalent of a high school diploma--
    (1) A General Education Development Certificate (GED);
    (2) A State certificate received by a student after the student has 
passed a State-authorized examination that the State recognizes as the 
equivalent of a high school diploma;
    (3) An academic transcript of a student who has successfully 
completed at least a two-year program that is acceptable for full credit 
toward a bachelor's degree; or
    (4) For a person who is seeking enrollment in an educational program

[[Page 198]]

that leads to at least an associate degree or its equivalent and who has 
not completed high school but who excelled academically in high school, 
documentation that the student excelled academically in high school and 
has met the formalized, written policies of the institution for 
admitting such students.
    Recognized occupation: An occupation that is--
    (1) Identified by a Standard Occupational Classification (SOC) code 
established by the Office of Management and Budget (OMB) or an 
Occupational Information Network O*Net-SOC code established by the 
Department of Labor, which is available at www.onetonline.org or its 
successor site; or
    (2) Determined by the Secretary in consultation with the Secretary 
of Labor to be a recognized occupation.
    Regular student: A person who is enrolled or accepted for enrollment 
at an institution for the purpose of obtaining a degree, certificate, or 
other recognized educational credential offered by that institution.
    Secretary: The Secretary of the Department of Education or an 
official or employee of the Department of Education acting for the 
Secretary under a delegation of authority.
    State: A State of the Union, American Samoa, the Commonwealth of 
Puerto Rico, the District of Columbia, Guam, the Virgin Islands, the 
Commonwealth of the Northern Mariana Islands, the Republic of the 
Marshall Islands, the Federated States of Micronesia, and the Republic 
of Palau. The latter three are also known as the Freely Associated 
States.
    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.
    Title IV, HEA program: Any of the student financial assistance 
programs listed in 34 CFR 668.1(c).

(Authority: 20 U.S.C. 1001, 1002, 1071, et seq., 1078-2, 1088, 1091, 
1094, 1099b, 1099c, 1141; 26 U.S.C. 501(c))

[59 FR 22336, Apr. 29, 1994, as amended at 63 FR 40622, July 29, 1998; 
64 FR 58615, Oct. 29, 1999; 71 FR 45692, Aug. 9, 2006; 74 FR 55425, Oct. 
27, 2009; 74 FR 55932, Oct. 29, 2009; 75 FR 66946, Oct. 29, 2010, 75 FR 
67192, Nov. 1, 2010; 79 FR 65006, Oct. 31, 2014]

    Effective Date Note: At 81 FR 92262, Dec. 19, 2016, Sec. 600.2 was 
amended by adding, in alphabetical order, a definition of ``State 
authorization reciprocity agreement'', effective July 1, 2020. For the 
convenience of the user, the revised text is set forth as follows:



Sec. 600.2  Definitions.

                                * * * * *

    State authorization reciprocity agreement: An agreement between two 
or more States that authorizes an institution located and legally 
authorized in a State covered by the agreement to provide postsecondary 
education through distance education or correspondence courses to 
students residing in other States covered by the agreement and does not 
prohibit any State in the agreement from enforcing its own statutes and 
regulations, whether general or specifically directed at all or a 
subgroup of educational institutions.



Sec. 600.3  [Reserved]



Sec. 600.4  Institution of higher education.

    (a) An institution of higher education is a public or private 
nonprofit educational institution that--
    (1) Is in a State, or for purposes of the Federal Pell Grant, 
Federal Supplemental Educational Opportunity Grant, Federal Work-Study, 
and Federal TRIO programs may also be located in the Federated States of 
Micronesia or the Marshall Islands;
    (2) Admits as regular students only persons who--
    (i) Have a high school diploma;
    (ii) Have the recognized equivalent of a high school diploma; or
    (iii) Are beyond the age of compulsory school attendance in the 
State in which the institution is physically located;
    (3) Is legally authorized to provide an educational program beyond 
secondary

[[Page 199]]

education in the State in which the institution is physically located in 
accordance with Sec. 600.9;
    (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, or other nondegree recognized 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
    (5) Is--
    (i) Accredited or preaccredited; or
    (ii) Approved by a State agency listed in the Federal Register in 
accordance with 34 CFR part 603, if the institution is a public 
postsecondary vocational educational institution that seeks to 
participate only in Federal student assistance programs.
    (b) An institution is physically located in a State if it has a 
campus or other instructional site in that State.
    (c) The Secretary does not recognize the accreditation or 
preaccreditation of an institution unless the institution agrees to 
submit any dispute involving the final denial, withdrawal, or 
termination of accreditation to initial arbitration before initiating 
any other legal action.

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

[59 FR 22336, Apr. 29, 1994, as amended at 64 FR 58615, Oct. 29, 1999; 
74 FR 55932, Oct. 29, 2009; 75 FR 66946, Oct. 29, 2010]



Sec. 600.5  Proprietary institution of higher education.

    (a) A proprietary institution of higher education is an educational 
institution that--
    (1) Is not a public or private nonprofit educational institution;
    (2) Is in a State;
    (3) Admits as regular students only persons who--
    (i) Have a high school diploma;
    (ii) Have the recognized equivalent of a high school diploma; or
    (iii) Are beyond the age of compulsory school attendance in the 
State in which the institution is physically located;
    (4) Is legally authorized to provide an educational program beyond 
secondary education in the State in which the institution is physically 
located in accordance with Sec. 600.9;
    (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) Has provided a program leading to a baccalaureate degree in 
liberal arts, as defined in paragraph (e) of this section, continuously 
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;
    (6) Is accredited; and
    (7) Has been in existence for at least two years.
    (b)(1) The Secretary considers an institution to have been in 
existence for two years only if--
    (i) The institution has been legally authorized to provide, and has 
provided, a continuous educational program to prepare students for 
gainful employment in a recognized occupation during the 24 months 
preceding the date of its eligibility application; and
    (ii) The educational program that the institution provides on the 
date of its eligibility application is substantially the same in length 
and subject matter as the program that the institution provided during 
the 24 months preceding the date of its eligibility application.
    (2)(i) The Secretary considers an institution to have provided a 
continuous educational program during the 24 months preceding the date 
of its eligibility application even if the institution did not provide 
that program during normal vacation periods, or periods when the 
institution temporarily

[[Page 200]]

closed due to a natural disaster that directly affected the institution 
or the institution's students.
    (ii) The Secretary considers an institution to have satisfied the 
provisions of paragraph (b)(1)(ii) of this section if the institution 
substantially changed the subject matter of the educational program it 
provided during that 24-month period because of new technology or the 
requirements of other Federal agencies.
    (3) In determining whether an applicant institution satisfies the 
requirement contained in paragraph (b)(1) of this section, the 
Secretary--
    (i) Counts any period during which the applicant institution has 
been certified as a branch campus; and
    (ii) Except as provided in paragraph (b)(3)(i) of this section, does 
not count any period during which the applicant institution was a part 
of another eligible proprietary institution of higher education, 
postsecondary vocational institution, or vocational school.
    (c) An institution is physically located in a State if it has a 
campus or other instructional site in that State.
    (d) The Secretary does not recognize the accreditation of an 
institution unless the institution agrees to submit any dispute 
involving the final denial, withdrawal, or termination of accreditation 
to initial arbitration before initiating any other legal action.
    (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:
    (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)

[59 FR 22336, Apr. 29, 1994; 59 FR 32082, June 22, 1994, as amended at 
59 FR 47801, Sept. 19, 1994; 59 FR 61177, Nov. 29, 1994; 61 FR 29901, 
June 12, 1996; 61 FR 60569, Nov. 29, 1996; 64 FR 58615, Oct. 29, 1999; 
74 FR 55932, Oct. 29, 2009; 76 FR 66946, Oct. 29, 2010]



Sec. 600.6  Postsecondary vocational institution.

    (a) A postsecondary vocational institution is a public or private 
nonprofit educational institution that--
    (1) Is in a State;
    (2) Admits as regular students only persons who--
    (i) Have a high school diploma;
    (ii) Have the recognized equivalent of a high school diploma; or
    (iii) Are beyond the age of compulsory school attendance in the 
State in which the institution is physically located;
    (3) Is legally authorized to provide an educational program beyond 
secondary education in the State in which the institution is physically 
located in accordance with Sec. 600.9;
    (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;
    (5) Is--
    (i) Accredited or preaccredited; or

[[Page 201]]

    (ii) Approved by a State agency listed in the Federal Register in 
accordance with 34 CFR part 603, if the institution is a public 
postsecondary vocational educational institution that seeks to 
participate only in Federal assistance programs; and
    (6) Has been in existence for at least two years.
    (b)(1) The Secretary considers an institution to have been in 
existence for two years only if--
    (i) The institution has been legally authorized to provide, and has 
provided, a continuous education or training program to prepare students 
for gainful employment in a recognized occupation during the 24 months 
preceding the date of its eligibility application; and
    (ii) The education or training program it provides on the date of 
its eligibility application is substantially the same in length and 
subject matter as the program it provided during the 24 months preceding 
the date of its eligibility application.
    (2)(i) The Secretary considers an institution to have provided a 
continuous education or training program during the 24 months preceding 
the date of its eligibility application even if the institution did not 
provide that program during normal vacation periods, or periods when the 
institution temporarily closed due to a natural disaster that affected 
the institution or the institution's students.
    (ii) The Secretary considers an institution to have satisfied the 
provisions of paragraph (b)(1)(ii) of this section if the institution 
substantially changed the subject matter of the educational program it 
provided during that 24-month period because of new technology or the 
requirements of other Federal agencies.
    (3) In determining whether an applicant institution satisfies the 
requirement contained in paragraph (b)(1) of this section, the 
Secretary--
    (i) Counts any period during which the applicant institution 
qualified as an eligible institution of higher education;
    (ii) Counts any period during which the applicant institution was 
part of another eligible institution of higher education, provided that 
the applicant institution continues to be part of an eligible 
institution of higher education;
    (iii) Counts any period during which the applicant institution has 
been certified as a branch campus; and
    (iv) Except as provided in paragraph (b)(3)(iii) of this section, 
does not count any period during which the applicant institution was a 
part of another eligible proprietary institution of higher education or 
postsecondary vocational institution.
    (c) An institution is physically located in a State or other 
instructional site if it has a campus or instructional site in that 
State.
    (d) The Secretary does not recognize the accreditation or 
preaccreditation of an institution unless the institution agrees to 
submit any dispute involving the final denial, withdrawal, or 
termination of accreditation to initial arbitration before initiating 
any other legal action.

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

[59 FR 22336, Apr. 29, 1994, as amended at 64 FR 58616, Oct. 29, 1999; 
74 FR 55933, Oct. 29, 2009; 75 FR 66946, Oct. 29, 2010]



Sec. 600.7  Conditions of institutional ineligibility.

    (a) General rule. For purposes of title IV of the HEA, an 
educational institution that otherwise satisfies the requirements 
contained in Secs. 600.4, 600.5, or 600.6 nevertheless does not qualify 
as an eligible institution under this part if--
    (1) For its latest complete award year--
    (i) More than 50 percent of the institution's courses were 
correspondence courses as calculated under paragraph (b) of this 
section;
    (ii) Fifty percent or more of the institution's regular enrolled 
students were enrolled in correspondence courses;
    (iii) More than twenty-five percent of the institution's regular 
enrolled students were incarcerated;
    (iv) More than fifty percent of its regular enrolled students had 
neither a high school diploma nor the recognized equivalent of a high 
school diploma, and the institution does not provide a four-year or two-
year educational program for which it awards a bachelor's

[[Page 202]]

degree or an associate degree, respectively;
    (2) The institution, or an affiliate of the institution that has the 
power, by contract or ownership interest, to direct or cause the 
direction of the management of policies of the institution--
    (A) Files for relief in bankruptcy, or
    (B) Has entered against it an order for relief in bankruptcy; or
    (3) The institution, its owner, or its chief executive officer--
    (i) Has pled guilty to, has pled nolo contendere to, or is found 
guilty of, a crime involving the acquisition, use, or expenditure of 
title IV, HEA program funds; or
    (ii) Has been judicially determined to have committed fraud 
involving title IV, HEA program funds.
    (b) Special provisions regarding correspondence courses and 
students--(1) Calculating the number of correspondence courses. For 
purposes of paragraphs (a)(1) (i) and (ii) of this section--
    (i) A correspondence course may be a complete educational program 
offered by correspondence, or one course provided by correspondence in 
an on-campus (residential) educational program;
    (ii) A course must be considered as being offered once during an 
award year regardless of the number of times it is offered during that 
year; and
    (iii) A course that is offered both on campus and by correspondence 
must be considered two courses for the purpose of determining the total 
number of courses the institution provided during an award year.
    (2) Exceptions. (i) The provisions contained in paragraphs (a)(1) 
(i) and (ii) of this section do not apply to an institution that 
qualifies as a ``technical institute or vocational school used 
exclusively or principally for the provision of vocational education to 
individuals who have completed or left high school and who are available 
for study in preparation for entering the labor market'' under section 
3(3)(C) of the Carl D. Perkins Vocational and Applied Technology 
Education Act of 1995.
    (ii) The Secretary waives the limitation contained in paragraph 
(a)(1)(ii) of this section for an institution that offers a 2-year 
associate-degree or a 4-year bachelor's-degree program if the students 
enrolled in the institution's correspondence courses receive no more 
than 5 percent of the title IV, HEA program funds received by students 
at that institution.
    (c) Special provisions regarding incarcerated students--(1) 
Exception. The Secretary may waive the prohibition contained in 
paragraph (a)(1)(iii) of this section, upon the application of an 
institution, if the institution is a nonprofit institution that provides 
four-year or two-year educational programs for which it awards a 
bachelor's degree, an associate degree, or a postsecondary diploma.
    (2) Waiver for entire institution. If the nonprofit institution that 
applies for a waiver consists solely of four-year or two-year 
educational programs for which it awards a bachelor's degree, an 
associate degree, or a postsecondary diploma, the Secretary waives the 
prohibition contained in paragraph (a)(1)(iii) of this section for the 
entire institution.
    (3) Other waivers. If the nonprofit institution that applies for a 
waiver does not consist solely of four-year or two-year educational 
programs for which it awards a bachelor's degree, an associate degree, 
or a postsecondary diploma, the Secretary waives the prohibition 
contained in paragraph (a)(1)(iii) of this section--
    (i) For the four-year and two-year programs for which it awards a 
bachelor's degree, an associate degree or a postsecondary diploma; and
    (ii) For the other programs the institution provides, if the 
incarcerated regular students enrolled in those other programs have a 
completion rate of 50 percent or greater.
    (d) Special provision for a nonprofit institution if more than 50 
percent of its enrollment consists of students who do not have a high 
school diploma or its equivalent. (1) Subject to the provisions 
contained in paragraphs (d)(2) and (d)(3) of this section, the Secretary 
waives the limitation contained in paragraph (a)(1)(iv) of this section 
for a nonprofit institution if that institution demonstrates to the 
Secretary's satisfaction that it exceeds that limitation because it 
serves, through contracts with Federal, State, or local government

[[Page 203]]

agencies, significant numbers of students who do not have a high school 
diploma or its recognized equivalent.
    (2) Number of critical students. The Secretary grants a waiver under 
paragraph (d)(1) of this section only if no more than 40 percent of the 
institution's enrollment of regular students consists of students who--
    (i) Do not have a high school diploma or its equivalent; and
    (ii) Are not served through contracts described in paragraph (d)(3) 
of this section.
    (3) Contracts with Federal, State, or local government agencies. For 
purposes of granting a waiver under paragraph (d)(1) of this section, 
the contracts referred to must be with Federal, State, or local 
government agencies for the purpose of providing job training to low-
income individuals who are in need of that training. An example of such 
a contract is a job training contract under the Job Training Partnership 
Act (JPTA).
    (e) Special provisions. (1) For purposes of paragraph (a)(1)of this 
section, when counting regular students, the institution shall--
    (i) Count each regular student without regard to the full-time or 
part-time nature of the student's attendance (i.e., ``head count'' 
rather than ``full-time equivalent'');
    (ii) Count a regular student once regardless of the number of times 
the student enrolls during an award year; and
    (iii) Determine the number of regular students who enrolled in the 
institution during the relevant award year by--
    (A) Calculating the number of regular students who enrolled during 
that award year; and
    (B) Excluding from the number of students in paragraph 
(e)(1)(iii)(A) of this section, the number of regular students who 
enrolled but subsequently withdrew or were expelled from the institution 
and were entitled to receive a 100 percent refund of their tuition and 
fees less any administrative fee that the institution is permitted to 
keep under its fair and equitable refund policy.
    (2) For the purpose of calculating a completion rate under paragraph 
(c)(3)(ii) of this section, the institution shall--
    (i) Determine the number of regular incarcerated students who 
enrolled in the other programs during the last completed award year;
    (ii) Exclude from the number of regular incarcerated students 
determined in paragraph (e)(2)(i) of this section, the number of those 
students who enrolled but subsequently withdrew or were expelled from 
the institution and were entitled to receive a 100 percent refund of 
their tuition and fees, less any administrative fee the institution is 
permitted to keep under the institution's fair and equitable refund 
policy;
    (iii) Exclude from the total obtained in paragraph (e)(2)(ii) of 
this section, the number of those regular incarcerated students who 
remained enrolled in the programs at the end of the applicable award 
year;
    (iv) From the total obtained in paragraph (e)(2)(iii) of this 
section, determine the number of regular incarcerated students who 
received a degree, certificate, or other recognized educational 
credential awarded for successfully completing the program during the 
applicable award year; and
    (v) Divide the total obtained in paragraph (e)(2)(iv) of this 
section by the total obtained in paragraph (e)(2)(iii) of this section 
and multiply by 100.
    (f)(1) If the Secretary grants a waiver to an institution under this 
section, the waiver extends indefinitely provided that the institution 
satisfies the waiver requirements in each award year.
    (2) If an institution fails to satisfy the waiver requirements for 
an award year, the institution becomes ineligible on June 30 of that 
award year.
    (g)(1) For purposes of paragraph (a)(1) of this section, and any 
applicable waiver or exception under this section, the institution shall 
substantiate the required calculations by having the certified public 
accountant who prepares its audited financial statement under 34 CFR 
668.15 or its title IV, HEA program compliance audit under 34 CFR 668.23 
report on the accuracy of those determinations.
    (2) The certified public accountant's report must be based on 
performing an

[[Page 204]]

``attestation engagement'' in accordance with the American Institute of 
Certified Public Accountants (AICPA's) Statement on Standards for 
Attestation Engagements. The certified public accountant shall include 
that attestation report with or as part of the audit report referenced 
in paragraph (g)(1) of this section.
    (3) The certified public accountant's attestation report must 
indicate whether the institution's determinations regarding paragraph 
(a)(1) of this section and any relevant waiver or exception under 
paragraphs (b), (c), and (d) of this section are accurate; i.e., fairly 
presented in all material respects.
    (h) Notice to the Secretary. An institution shall notify the 
Secretary--
    (1) By July 31 following the end of an award year if it falls within 
one of the prohibitions contained in paragraph (a)(1)of this section, or 
fails to continue to satisfy a waiver or exception granted under this 
section; or
    (2) Within 10 days if it falls within one of the prohibitions 
contained in paragraphs (a)(2) or (a)(3) of this section.
    (i) Regaining eligibility. (1) If an institution loses its 
eligibility because of one of the prohibitions contained in paragraph 
(a)(1) of this section, to regain its eligibility, it must demonstrate--
    (i) Compliance with all eligibility requirements;
    (ii) That it did not fall within any of the prohibitions contained 
in paragraph (a)(1) of this section for at least one award year; and
    (iii) That it changed its administrative policies and practices to 
ensure that it will not fall within any of the prohibitions contained in 
paragraph (a)(1) of this section.
    (2) If an institution loses its eligibility because of one of the 
prohibitions contained in paragraphs (a)(2) and (a)(3) of this section, 
this loss is permanent. The institution's eligibility cannot be 
reinstated.

(Approved by the Office of Management and Budget under control number 
1840-0098)

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

[59 FR 22336, Apr. 29, 1994; 59 FR 32082, June 22, 1994, as amended at 
59 FR 47801, Sept. 19, 1994; 60 FR 34430, June 30, 1995; 64 FR 58616, 
Oct. 29, 1999; 71 FR 45692, Aug. 9, 2006]



Sec. 600.8  Treatment of a branch campus.

    A branch campus of an eligible proprietary institution of higher 
education or a postsecondary vocational institution must be in existence 
for at least two years as a branch campus after the branch is certified 
as a branch campus before seeking to be designated as a main campus or a 
free-standing institution.

(Authority: 20 U.S.C. 1099c)

[64 FR 58616, Oct. 29, 1999, as amended at 67 FR 67070, Nov. 1, 2002]



Sec. 600.9  State authorization.

    (a)(1) An institution described under Secs. 600.4, 600.5, and 600.6 
is legally authorized by a State if the State has a process to review 
and appropriately act on complaints concerning the institution including 
enforcing applicable State laws, and the institution meets the 
provisions of paragraphs (a)(1)(i), (a)(1)(ii), or (b) of this section.
    (i)(A) The institution is established by name as an educational 
institution by a State through a charter, statute, constitutional 
provision, or other action issued by an appropriate State agency or 
State entity and is authorized to operate educational programs beyond 
secondary education, including programs leading to a degree or 
certificate.
    (B) The institution complies with any applicable State approval or 
licensure requirements, except that the State may exempt the institution 
from any State approval or licensure requirements based on the 
institution's accreditation by one or more accrediting agencies 
recognized by the Secretary or based upon the institution being in 
operation for at least 20 years.
    (ii) If an institution is established by a State on the basis of an 
authorization to conduct business in the State or to operate as a 
nonprofit charitable

[[Page 205]]

organization, but not established by name as an educational institution 
under paragraph (a)(1)(i) of this section, the institution--
    (A) By name, must be approved or licensed by the State to offer 
programs beyond secondary education, including programs leading to a 
degree or certificate; and
    (B) May not be exempt from the State's approval or licensure 
requirements based on accreditation, years in operation, or other 
comparable exemption.
    (2) The Secretary considers an institution to meet the provisions of 
paragraph (a)(1) of this section if the institution is authorized by 
name to offer educational programs beyond secondary education by--
    (i) The Federal Government; or
    (ii) As defined in 25 U.S.C. 1802(2), an Indian tribe, provided that 
the institution is located on tribal lands and the tribal government has 
a process to review and appropriately act on complaints concerning an 
institution and enforces applicable tribal requirements or laws.
    (b)(1) Notwithstanding paragraph (a)(1)(i) and (ii) of this section, 
an institution is considered to be legally authorized to operate 
educational programs beyond secondary education if it is exempt from 
State authorization as a religious institution under the State 
constitution or by State law.
    (2) For purposes of paragraph (b)(1) of this section, a religious 
institution is an institution that--
    (i) Is owned, controlled, operated, and maintained by a religious 
organization lawfully operating as a nonprofit religious corporation; 
and
    (ii) Awards only religious degrees or certificates including, but 
not limited to, a certificate of Talmudic studies, an associate of 
Biblical studies, a bachelor of religious studies, a master of divinity, 
or a doctor of divinity.
    (c) If an institution is offering postsecondary education through 
distance or correspondence education to students in a State in which it 
is not physically located or in which it is otherwise subject to State 
jurisdiction as determined by the State, the institution must meet any 
State requirements for it to be legally offering postsecondary distance 
or correspondence education in that State. An institution must be able 
to document to the Secretary the State's approval upon request.

(Authority: 20 U.S.C. 1001 and 1002)

[75 FR 66946, Oct. 29, 2010]

    Effective Date Note: At 81 FR 92262, Dec. 19, 2016, Sec. 600.9 was 
amended by revising paragraph (c) and adding paragraph (d), effective 
July 1, 2020. For the convenience of the user, the added and revised 
text is set forth as follows:



Sec. 600.9  State authorization.

                                * * * * *

    (c)(1)(i) If an institution that meets the requirements under 
paragraph (a)(1) of this section offers postsecondary education through 
distance education or correspondence courses to students residing in a 
State in which the institution is not physically located or in which the 
institution is otherwise subject to that State's jurisdiction as 
determined by that State, except as provided in paragraph (c)(1)(ii) of 
this section, the institution must meet any of that State's requirements 
for it to be legally offering postsecondary distance education or 
correspondence courses in that State. The institution must, upon 
request, document the State's approval to the Secretary; or
    (ii) If an institution that meets the requirements under paragraph 
(a)(1) of this section offers postsecondary education through distance 
education or correspondence courses in a State that participates in a 
State authorization reciprocity agreement, and the institution is 
covered by such agreement, the institution is considered to meet State 
requirements for it to be legally offering postsecondary distance 
education or correspondence courses in that State, subject to any 
limitations in that agreement and to any additional requirements of that 
State. The institution must, upon request, document its coverage under 
such an agreement to the Secretary.
    (2) If an institution that meets the requirements under paragraph 
(a)(1) of this section offers postsecondary education through distance 
education or correspondence courses to students residing in a State in 
which the institution is not physically located, for the institution to 
be considered legally authorized in that State, the institution must 
document that there is a State process for review and appropriate action 
on complaints from any of those enrolled students concerning the 
institution--
    (i) In each State in which the institution's enrolled students 
reside; or
    (ii) Through a State authorization reciprocity agreement which 
designates for this

[[Page 206]]

purpose either the State in which the institution's enrolled students 
reside or the State in which the institution's main campus is located.
    (d) An additional location or branch campus of an institution that 
meets the requirements under paragraph (a)(1) of this section and that 
is located in a foreign country, i.e., not in a State, must comply with 
Secs. 600.8, 600.10, 600.20, and 600.32, and the following requirements:
    (1) For any additional location at which 50 percent or more of an 
educational program (as defined in Sec. 600.2) is offered, or will be 
offered, or at a branch campus--
    (i) The additional location or branch campus must be legally 
authorized by an appropriate government authority to operate in the 
country where the additional location or branch campus is physically 
located, unless the additional location or branch campus is physically 
located on a U.S. military base, facility, or area that the foreign 
country has granted the U.S. military to use and the institution can 
demonstrate that it is exempt from obtaining such authorization from the 
foreign country;
    (ii) The institution must provide to the Secretary, upon request, 
documentation of such legal authorization to operate in the foreign 
country, demonstrating that the foreign governmental authority is aware 
that the additional location or branch campus provides postsecondary 
education and that the government authority does not object to those 
activities;
    (iii) The additional location or branch campus must be approved by 
the institution's recognized accrediting agency in accordance with 
Secs. 602.24(a) and 602.22(a)(2)(viii), as applicable;
    (iv) The additional location or branch campus must meet any 
additional requirements for legal authorization in that foreign country 
as the foreign country may establish;
    (v) The institution must report to the State in which the main 
campus of the institution is located at least annually, or more 
frequently if required by the State, the establishment or operation of 
each foreign additional location or branch campus; and
    (vi) The institution must comply with any limitations the State 
places on the establishment or operation of the foreign additional 
location or branch campus.
    (2) An additional location at which less than 50 percent of an 
educational program (as defined in Sec. 600.2) is offered or will be 
offered must meet the requirements for legal authorization in that 
foreign country as the foreign country may establish.
    (3) In accordance with the requirements of 34 CFR 668.41, the 
institution must disclose to enrolled and prospective students at 
foreign additional locations and foreign branch campuses the information 
regarding the student complaint process described in 34 CFR 668.43(b), 
of the State in which the main campus of the institution is located.
    (4) If the State in which the main campus of the institution is 
located limits the authorization of the institution to exclude the 
foreign additional location or branch campus, the foreign additional 
location or branch campus is not considered to be legally authorized by 
the State.



Sec. 600.10  Date, extent, duration, and consequence of eligibility.

    (a) Date of eligibility. (1) If the Secretary determines that an 
applicant institution satisfies all the statutory and regulatory 
eligibility requirements, the Secretary considers the institution to be 
an eligible institution as of the date--
    (i) The Secretary signs the institution's program participation 
agreement described in 34 CFR part 668, subpart B, for purposes of 
participating in any title IV, HEA program; and
    (ii) The Secretary receives all the information necessary to make 
that determination for purposes other than participating in any title 
IV, HEA program.
    (2) [Reserved]
    (b) Extent of eligibility. (1) If the Secretary determines that the 
entire applicant institution, including all its locations and all its 
educational programs, satisfies the applicable requirements of this 
part, the Secretary extends eligibility to all educational programs and 
locations identified on the institution's application for eligibility.
    (2) If the Secretary determines that only certain educational 
programs or certain locations of an applicant institution satisfy the 
applicable requirements of this part, the Secretary extends eligibility 
only to those educational programs and locations that meet those 
requirements and identifies the eligible educational programs and 
locations in the eligibility notice sent to the institution under 
Sec. 600.21.
    (3) Eligibility does not extend to any location that an institution 
establishes after it receives its eligibility designation if the 
institution provides at least 50 percent of an educational program at 
that location, unless--
    (i) The Secretary approves that location under Sec. 600.20(e)(4); or
    (ii) The location is licensed and accredited, the institution does 
not have

[[Page 207]]

to apply to the Secretary for approval of that location under 
Sec. 600.20(c), and the institution has reported to the Secretary that 
location under Sec. 600.21.
    (c) Educational programs. (1) An eligible institution that seeks to 
establish the eligibility of an educational program must--
    (i) For a gainful employment program under 34 CFR part 668, subpart 
Q of this chapter, update its application under Sec. 600.21, and meet 
any time restrictions that prohibit the institution from establishing or 
reestablishing the eligibility of the program as may be required under 
34 CFR 668.414;
    (ii) Pursuant to a requirement regarding additional programs 
included in the institution's program participation agreement under 34 
CFR 668.14, obtain the Secretary's approval; and
    (iii) For a direct assessment program under 34 CFR 668.10, and for a 
comprehensive transition and postsecondary program under 34 CFR 668.232, 
obtain the Secretary's approval.
    (2) Except as provided under Sec. 600.20(c), an eligible institution 
does not have to obtain the Secretary's approval to establish the 
eligibility of any program that is not described in paragraph (c)(1)(i), 
(ii), or (iii) of this section.
    (3) An institution must repay to the Secretary all HEA program funds 
received by the institution for an educational program, and all the 
title IV, HEA program funds received by or on behalf of students who 
enrolled in that program if the institution--
    (i) Fails to comply with the requirements in paragraph (c)(1) of 
this section; or
    (ii) Incorrectly determines that an educational program that is not 
subject to approval under paragraph (c)(1) of this section is an 
eligible program for title IV, HEA program purposes.
    (d) Duration of eligibility. (1) If an institution participates in 
the title IV, HEA programs, the Secretary's designation of the 
institution as an eligible institution under the title IV, HEA programs 
expires when the institution's program participation agreement, as 
described in 34 CFR part 668, subpart B, expires.
    (2) If an institution participates in an HEA program other than a 
title IV, HEA program, the Secretary's designation of the institution as 
an eligible institution, for purposes of that non-title IV, HEA program, 
does not expire as long as the institution continues to satisfy the 
statutory and regulatory requirements governing its eligibility.
    (e) Consequence of eligibility. (1) If, as a part of its 
institutional eligibility application, an institution indicates that it 
wishes to participate in a title IV, HEA program and the Secretary 
determines that the institution satisfies the applicable statutory and 
regulatory requirements governing institutional eligibility, the 
Secretary will determine whether the institution satisfies the standards 
of administrative capability and financial responsibility contained in 
34 CFR part 668, subpart B.
    (2) If, as part of its institutional eligibility application, an 
institution indicates that it does not wish to participate in any title 
IV, HEA program and the Secretary determines that the institution 
satisfies the applicable statutory and regulatory requirements governing 
institutional eligibility, the institution is eligible to apply to 
participate in any HEA program listed by the Secretary in the 
eligibility notice it receives under Sec. 600.21. However, the 
institution is not eligible to participate in those programs, or receive 
funds under those programs, merely by virtue of its designation as an 
eligible institution under this part.

(Approved by the Office of Management and Budget under control number 
1845-0098)

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094, and 1141)

[59 FR 22336, Apr. 29, 1994, as amended at 59 FR 47801, Sept. 19, 1994; 
65 FR 65671, Nov. 1, 2000; 71 FR 45692, Aug. 9, 2006; 75 FR 66676, Oct. 
29, 2010; 79 FR 65006, Oct. 31, 2014]



Sec. 600.11  Special rules regarding institutional accreditation or
preaccreditation.

    (a) Change of accrediting agencies. For purposes of 
Secs. 600.4(a)(5)(i), 600.5(a)(6), and 600.6(a)(5)(i), the Secretary 
does not recognize the accreditation or preaccreditation of an otherwise 
eligible institution if that institution is in the process of changing 
its accrediting agency, unless the institution provides to the 
Secretary--

[[Page 208]]

    (1) All materials related to its prior accreditation or 
preaccreditation; and
    (2) Materials demonstrating reasonable cause for changing its 
accrediting agency.
    (b) Multiple accreditation. The Secretary does not recognize the 
accreditation or preaccreditation of an otherwise eligible institution 
if that institution is accredited or preaccredited as an institution by 
more than one accrediting agency, unless the institution--
    (1) Provides to each such accrediting agency and the Secretary the 
reasons for that multiple accreditation or preaccreditation;
    (2) Demonstrates to the Secretary reasonable cause for that multiple 
accreditation or preaccreditation; and
    (3) Designates to the Secretary which agency's accreditation or 
preaccreditation the institution uses to establish its eligibility under 
this part.
    (c) Loss of accreditation or preaccreditation. (1) An institution 
may not be considered eligible for 24 months after it has had its 
accreditation or preaccreditation withdrawn, revoked, or otherwise 
terminated for cause, unless the accrediting agency that took that 
action rescinds that action.
    (2) An institution may not be considered eligible for 24 months 
after it has withdrawn voluntarily from its accreditation or 
preaccreditation status under a show-cause or suspension order issued by 
an accrediting agency, unless that agency rescinds its order.
    (d) Religious exception. (1) If an otherwise eligible institution 
loses its accreditation or preaccreditation, the Secretary considers the 
institution to be accredited or preaccredited for purposes of complying 
with the provisions of Secs. 600.4, 600.5, and 600.6 if the Secretary 
determines that its loss of accreditation or preaccreditation--
    (i) Is related to the religious mission or affiliation of the 
institution; and
    (ii) Is not related to its failure to satisfy the accrediting 
agency's standards.
    (2) If the Secretary considers an unaccredited institution to be 
accredited or preaccredited under the provisions of paragraph (d)(1) of 
this section, the Secretary will consider that unaccredited institution 
to be accredited or preaccredited for a period sufficient to allow the 
institution to obtain alternative accreditation or preaccreditation, 
except that period may not exceed 18 months.

(Authority: 20 U.S.C. 1099b)



            Subpart B_Procedures for Establishing Eligibility

    Source: 59 FR 22336, Apr. 29, 1994, unless otherwise noted.



Sec. 600.20  Notice and application procedures for establishing,
reestablishing, maintaining, or expanding institutional eligibility
and certification.

    (a) Initial eligibility application. (1) An institution that wishes 
to establish its eligibility to participate in any HEA program must 
submit an application to the Secretary for a determination that it 
qualifies as an eligible institution under this part.
    (2) If the institution also wishes to be certified to participate in 
the title IV, HEA programs, it must indicate that intent on the 
application, and submit all the documentation indicated on the 
application to enable the Secretary to determine that it satisfies the 
relevant certification requirements contained in 34 CFR part 668, 
subparts B and L.
    (3) A freestanding foreign graduate medical school, or a foreign 
institution that includes a foreign graduate medical school, must 
include in its application to participate--
    (i)(A) A list of all medical school educational sites and where they 
are located, including all sites at which its students receive clinical 
training, except those clinical training sites that are not used 
regularly, but instead are chosen by individual students who take no 
more than two electives at the location for no more than a total of 
eight weeks; and
    (B) The type of clinical training (core, required clinical rotation, 
not required clinical rotation) offered at each site listed on the 
application in accordance with paragraph (a)(3)(i)(A) of this section; 
and
    (ii) Whether the school offers--
    (A) Only post-baccalaureate/equivalent medical programs, as defined 
in Sec. 600.52;

[[Page 209]]

    (B) Other types of programs that lead to employment as a doctor of 
osteopathic medicine or doctor of medicine; or
    (C) Both; and
    (iii) Copies of the formal affiliation agreements with hospitals or 
clinics providing all or a portion of a clinical training program 
required under Sec. 600.55(e)(1).
    (b) Reapplication. (1) A currently designated eligible institution 
that is not participating in the title IV, HEA programs must apply to 
the Secretary for a determination that the institution continues to meet 
the requirements in this part if the Secretary requests the institution 
to reapply. If the institution wishes to be certified to participate in 
the title IV, HEA programs, it must submit an application to the 
Secretary and must submit all the supporting documentation indicated on 
the application to enable the Secretary to determine that it satisfies 
the relevant certification requirements contained in subparts B and L of 
34 CFR part 668.
    (2) A currently designated eligible institution that participates in 
the title IV, HEA programs must apply to the Secretary for a 
determination that the institution continues to meet the requirements in 
this part and in 34 CFR part 668 if the institution wishes to--
    (i) Continue to participate in the title IV, HEA programs beyond the 
scheduled expiration of the institution's current eligibility and 
certification designation;
    (ii) Reestablish eligibility and certification as a private 
nonprofit, private for-profit, or public institution following a change 
in ownership that results in a change in control as described in 
Sec. 600.31; or
    (iii) Reestablish eligibility and certification after the 
institution changes its status as a proprietary, nonprofit, or public 
institution.
    (3) A freestanding foreign graduate medical school, or a foreign 
institution that includes a foreign graduate medical school, must 
include in its reapplication to participate--
    (i)(A) A list of all of the foreign graduate medical school's 
educational sites and where they are located, including all sites at 
which its students receive clinical training, except those clinical 
training sites that are not used regularly, but instead are chosen by 
individual students who take no more than two electives at the location 
for no more than a total of eight weeks; and
    (B) The type of clinical training (core, required clinical rotation, 
not required clinical rotation) offered at each site listed on the 
application in accordance with paragraph (b)(3)(i)(A) of this section; 
and
    (ii) Whether the school offers--
    (A) Only post-baccalaureate/equivalent medical programs, as defined 
in Sec. 600.52;
    (B) Other types of programs that lead to employment as a doctor of 
osteopathic medicine or doctor of medicine; or
    (C) Both; and
    (iii) Copies of the formal affiliation agreements with hospitals or 
clinics providing all or a portion of a clinical training program 
required under Sec. 600.55(e)(1).
    (c) Application to expand eligibility. A currently designated 
eligible institution that wishes to expand the scope of its eligibility 
and certification and disburse title IV, HEA Program funds to students 
enrolled in that expanded scope must apply to the Secretary and wait for 
approval to--
    (1) Add an educational program or a location at which the 
institution offers or will offer 50 percent or more of an educational 
program if one of the following conditions applies, otherwise it must 
report to the Secretary under Sec. 600.21:
    (i) The institution participates in the title IV, HEA programs under 
a provisional certification, as provided in 34 CFR 668.13.
    (ii) The institution receives title IV, HEA program funds under the 
reimbursement or cash monitoring payment method, as provided in 34 CFR 
part 668, subpart K.
    (iii) The institution acquires the assets of another institution 
that provided educational programs at that location during the preceding 
year and participated in the title IV, HEA programs during that year.
    (iv) The institution would be subject to a loss of eligibility under 
34 CFR 668.188 if it adds that location.

[[Page 210]]

    (v) The Secretary notifies, or has notified, the institution that it 
must apply for approval of an additional educational program or a 
location under Sec. 600.10(c).
    (2) Increase its level of program offering (e.g., adding graduate 
degree programs when it previously offered only baccalaureate degree 
programs);
    (3) Add an educational program if the institution is required to 
apply to the Secretary for approval under Sec. 600.10(c);
    (4) Add a branch campus at a location that is not currently included 
in the institution's eligibility and certification designation;
    (5) For a freestanding foreign graduate medical school, or a foreign 
institution that includes a foreign graduate medical school, add a 
location that offers all or a portion of the foreign graduate medical 
school's core clinical training or required clinical rotations, except 
for those locations that are included in the accreditation of a medical 
program accredited by the Liaison Committee on Medical Education (LCME) 
or the American Osteopathic Association (AOA); or
    (6) Convert an eligible location to a branch campus.
    (d) Notice and application. (1) Notice and application procedures. 
(i) To satisfy the requirements of paragraphs (a), (b), and (c) of this 
section, an institution must notify the Secretary of its intent to offer 
an additional educational program, or provide an application to expand 
its eligibility, in a format prescribed by the Secretary and provide all 
the information and documentation requested by the Secretary to make a 
determination of its eligibility and certification.
    (ii)(A) An institution that notifies the Secretary of its intent to 
offer an educational program under paragraph (c)(3) of this section must 
ensure that the Secretary receives the notice described in paragraph 
(d)(2) of this section at least 90 days before the first day of class of 
the educational program.
    (B) An institution that submits a notice in accordance with 
paragraph (d)(1)(ii)(A) of this section is not required to obtain 
approval to offer the additional educational program unless the 
Secretary alerts the institution at least 30 days before the first day 
of class that the program must be approved for title IV, HEA program 
purposes. If the Secretary alerts the institution that the additional 
educational program must be approved, the Secretary will treat the 
notice provided about the additional educational program as an 
application for that program.
    (C) If an institution does not provide timely notice in accordance 
with paragraph (d)(1)(ii)(A) of this section, the institution must 
obtain approval of the additional educational program from the Secretary 
for title IV, HEA program purposes.
    (D) If an additional educational program is required to be approved 
by the Secretary for title IV, HEA program purposes under paragraph 
(d)(1)(ii)(B) or (C) of this section, the Secretary may grant approval, 
or request further information prior to making a determination of 
whether to approve or deny the additional educational program.
    (E) When reviewing an application under paragraph (d)(1)(ii)(B) of 
this section, the Secretary will take into consideration the following:
    (1) The institution's demonstrated financial responsibility and 
administrative capability in operating its existing programs.
    (2) Whether the additional educational program is one of several new 
programs that will replace similar programs currently provided by the 
institution, as opposed to supplementing or expanding the current 
programs provided by the institution.
    (3) Whether the number of additional educational programs being 
added is inconsistent with the institution's historic program offerings, 
growth, and operations.
    (4) Whether the process and determination by the institution to 
offer an additional educational program that leads to gainful employment 
in a recognized occupation is sufficient.
    (F)(1) If the Secretary denies an application from an institution to 
offer an additional educational program, the denial will be based on the 
factors described in paragraphs (d)(1)(ii)(E)(2), (3), and (4) of this 
section, and the Secretary will explain in the denial how

[[Page 211]]

the institution failed to demonstrate that the program is likely to lead 
to gainful employment in a recognized occupation.
    (2) If the Secretary denies the institution's application to add an 
additional educational program, the Secretary will permit the 
institution to respond to the reasons for the denial and request 
reconsideration of the denial.
    (2) Notice format. An institution that notifies the Secretary of its 
intent to offer an additional educational program under paragraph (c)(3) 
of this section must at a minimum--
    (i) Describe in the notice how the institution determined the need 
for the program and how the program was designed to meet local market 
needs, or for an online program, regional or national market needs. This 
description must contain any wage analysis the institution may have 
performed, including any consideration of Bureau of Labor Statistics 
data related to the program;
    (ii) Describe in the notice how the program was reviewed or approved 
by, or developed in conjunction with, business advisory committees, 
program integrity boards, public or private oversight or regulatory 
agencies, and businesses that would likely employ graduates of the 
program;
    (iii) Submit documentation that the program has been approved by its 
accrediting agency or is otherwise included in the institution's 
accreditation by its accrediting agency, or comparable documentation if 
the institution is a public postsecondary vocational institution 
approved by a recognized State agency for the approval of public 
postsecondary vocational education in lieu of accreditation; and
    (iv) Provide the date of the first day of class of the new program.
    (e) Secretary's response to applications. (1) If the Secretary 
receives an application under paragraph (a) or (b)(1) of this section, 
the Secretary notifies the institution--
    (i) Whether the applicant institution qualifies in whole or in part 
as an eligible institution under the appropriate provisions in 
Secs. 600.4 through 600.7; and
    (ii) Of the locations and educational programs that qualify as the 
eligible institution if only a portion of the applicant qualifies as an 
eligible institution;
    (2) If the Secretary receives an application under paragraphs (a) or 
(b) of this section and that institution applies to participate in the 
title IV, HEA programs, the Secretary notifies the institution--
    (i) Whether the institution is certified to participate in those 
programs;
    (ii) Of the title IV, HEA programs in which it is eligible to 
participate;
    (iii) Of the title IV, HEA programs in which it is eligible to apply 
for funds;
    (iv) Of the effective date of its eligibility to participate in 
those programs; and
    (v) Of the conditions under which it may participate in those 
programs;
    (3) If the Secretary receives an application under paragraph (b)(2) 
of this section, the Secretary notifies the institution whether it 
continues to be certified, or whether it reestablished its eligibility 
and certification to participate in the title IV, HEA programs and the 
scope of such approval.
    (4) If the Secretary receives an application under paragraph (c)(1) 
of this section for an additional location, the Secretary notifies the 
institution whether the location is eligible or ineligible to 
participate in the title IV, HEA programs, and the date of eligibility 
if the location is determined eligible;
    (5) If the Secretary receives an application under paragraph (c)(2) 
of this section for an increase in the level of program offering, or for 
an additional educational program under paragraph (c)(3) of this 
section, the Secretary notifies the institution whether the program 
qualifies as an eligible program, and if the program qualifies, the date 
of eligibility; and
    (6) If the Secretary receives an application under paragraphs (c)(4) 
or (c)(5) of this section to have a branch campus certified to 
participate in the title IV, HEA programs as a branch campus, the 
Secretary notifies the institution whether that branch campus is 
certified to participate and the date that the branch campus is eligible 
to begin participation.
    (f) Disbursement rules related to applications. (1)(i) Except as 
provided under

[[Page 212]]

paragraph (f)(1)(ii) of this section and 34 CFR 668.26, if an 
institution submits an application under paragraph (b)(2)(i) of this 
section because its participation period is scheduled to expire, after 
that expiration date the institution may not disburse title IV, HEA 
program funds to students attending that institution until the 
institution receives the Secretary's notification that the institution 
is again eligible to participate in those programs.
    (ii) An institution described in paragraph (f)(1)(i) of this section 
may disburse title IV, HEA program funds to its students if the 
institution submits to the Secretary a materially complete renewal 
application in accordance with the provisions of 34 CFR 668.13(b)(2), 
and has not received a final decision from the Department on that 
application.
    (2)(i) Except as provided under paragraph (f)(2)(ii) of this section 
and 34 CFR 668.26, if a private nonprofit, private for-profit, or public 
institution submits an application under paragraph (b)(2)(ii) or 
(b)(2)(iii) of this section because it has undergone or will undergo a 
change in ownership that results in a change of control or a change in 
status, the institution may not disburse title IV, HEA program funds to 
students attending that institution after the change of ownership or 
status until the institution receives the Secretary's notification that 
the institution is eligible to participate in those programs.
    (ii) An institution described in paragraph (f)(2)(i) of this section 
may disburse title IV, HEA program funds to its students if the 
Secretary issues a provisional extension of certification under 
paragraph (g) of this section.
    (3) If an institution must apply to the Secretary under paragraphs 
(c)(1) through (c)(4) of this section, the institution may not disburse 
title IV, HEA program funds to students attending the subject location, 
program, or branch until the institution receives the Secretary's 
notification that the location, program, or branch is eligible to 
participate in the title IV, HEA programs.
    (4) If an institution applies to the Secretary under paragraph 
(c)(5) of this section to convert an eligible location to a branch 
campus, the institution may continue to disburse title IV, HEA program 
funds to students attending that eligible location.
    (5) If an institution does not apply to the Secretary to obtain the 
Secretary's approval of a new location, program, increased level of 
program offering, or branch, and the location, program, or branch does 
not qualify as an eligible location, program, or branch of that 
institution under this part and 34 CFR part 668, the institution is 
liable for all title IV, HEA program funds it disburses to students 
enrolled at that location or branch or in that program.
    (g) Application for provisional extension of certification. (1) If a 
private nonprofit institution, a private for-profit institution, or a 
public institution participating in the title IV, HEA programs undergoes 
a change in ownership that results in a change of control as described 
in 34 CFR 600.31, the Secretary may continue the institution's 
participation in those programs on a provisional basis, if the 
institution under the new ownership submits a ``materially complete 
application'' that is received by the Secretary no later than 10 
business days after the day the change occurs.
    (2) For purposes of this section, a private nonprofit institution, a 
private for-profit institution, or a public institution submits a 
materially complete application if it submits a fully completed 
application form designated by the Secretary supported by--
    (i) A copy of the institution's State license or equivalent document 
that--as of the day before the change in ownership--authorized or will 
authorize the institution to provide a program of postsecondary 
education in the State in which it is physically located;
    (ii) A copy of the document from the institution's accrediting 
association that--as of the day before the change in ownership--granted 
or will grant the institution accreditation status, including approval 
of any non-degree programs it offers;
    (iii) Audited financial statements of the institution's two most 
recently completed fiscal years that are prepared and audited in 
accordance with the requirements of 34 CFR 668.23; and

[[Page 213]]

    (iv) Audited financial statements of the institution's new owner's 
two most recently completed fiscal years that are prepared and audited 
in accordance with the requirements of 34 CFR 668.23, or equivalent 
information for that owner that is acceptable to the Secretary.
    (h) Terms of the extension. (1) If the Secretary approves the 
institution's materially complete application, the Secretary provides 
the institution with a provisional Program Participation Agreement 
(PPA). The provisional PPA extends the terms and conditions of the 
program participation agreement that were in effect for the institution 
before its change of ownership.
    (2) The provisional PPA expires on the earlier of--
    (i) The date on which the Secretary signs a new program 
participation agreement;
    (ii) The date on which the Secretary notifies the institution that 
its application is denied; or
    (iii) The last day of the month following the month in which the 
change of ownership occurred, unless the provisions of paragraph (h)(3) 
of this section apply.
    (3) If the provisional PPA will expire under the provisions of 
paragraph (h)(2)(iii) of this section, the Secretary extends the 
provisional PPA on a month-to-month basis after the expiration date 
described in paragraph (h)(2)(iii) of this section if, prior to that 
expiration date, the institution provides the Secretary with--
    (i) A ``same day'' balance sheet showing the financial position of 
the institution, as of the date of the ownership change, that is 
prepared in accordance with Generally Accepted Accounting Principles 
(GAAP) published by the Financial Accounting Standards Board and audited 
in accordance with Generally Accepted Government Auditing Standards 
(GAGAS) published by the U.S. General Accounting Office;
    (ii) If not already provided, approval of the change of ownership 
from the State in which the institution is located by the agency that 
authorizes the institution to legally provide postsecondary education in 
that State;
    (iii) If not already provided, approval of the change of ownership 
from the institution's accrediting agency; and
    (iv) A default management plan unless the institution is exempt from 
providing that plan under 34 CFR 668.14(b)(15).

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

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094, and 1099c)

[65 FR 65671, Nov. 1, 2000, as amended at 75 FR 66677, Oct. 29, 2010; 75 
FR 67192, Nov. 1, 2010; 79 FR 65006, Oct. 31, 2014]



Sec. 600.21  Updating application information.

    (a) Reporting requirements. Except as provided in paragraph (b) of 
this section, an eligible institution must report to the Secretary in a 
manner prescribed by the Secretary no later than 10 days after the 
change occurs, of any change in the following:
    (1) Its name, the name of a branch, or the name of a previously 
reported location.
    (2) Its address, the address of a branch, or the address of a 
previously reported location.
    (3) Its establishment of an accredited and licensed additional 
location at which it offers or will offer 50 percent or more of an 
educational program if the institution wants to disburse title IV, HEA 
program funds to students enrolled at that location, under the 
provisions in paragraph (d) of this section.
    (4) Except as provided in 34 CFR 668.10, the way it measures program 
length (e.g., from clock hours to credit hours, or from semester hours 
to quarter hours).
    (5) A decrease in the level of program offering (e.g. the 
institution drops its graduate programs).
    (6) A person's ability to affect substantially the actions of the 
institution if that person did not previously have this ability. The 
Secretary considers a person to have this ability if the person--
    (i) Holds alone or together with another member or members of his or 
her family, at least a 25 percent ``ownership interest'' in the 
institution as defined in Sec. 600.31(b);
    (ii) Represents or holds, either alone or together with other 
persons, under a

[[Page 214]]

voting trust, power of attorney, proxy, or similar agreement at least a 
25 percent ``ownership interest'' in the institution, as defined in 
Sec. 600.31(b); or
    (iii) Is a general partner, the chief executive officer, or chief 
financial officer of the institution.
    (7) The individual the institution designates under 34 CFR 
668.16(b)(1) as its title IV, HEA Program administrator.
    (8) The closure of a branch campus or additional location that the 
institution was required to report to the Secretary.
    (9) The governance of a public institution.
    (10) For a freestanding foreign graduate medical school, or a 
foreign institution that includes a foreign graduate medical school, the 
school adds a location that offers all or a portion of the school's 
clinical rotations that are not required, except for those that are 
included in the accreditation of a medical program accredited by the 
Liaison Committee on Medical Education (LCME) or the American 
Osteopathic Association (AOA), or that are not used regularly, but 
instead are chosen by individual students who take no more than two 
electives at the location for no more than a total of eight weeks.
    (11) For any gainful employment program under 34 CFR part 668, 
subpart Q--
    (i) Establishing the eligibility or reestablishing the eligibility 
of the program;
    (ii) Discontinuing the program's eligibility under 34 CFR 668.410;
    (iii) Ceasing to provide the program for at least 12 consecutive 
months;
    (iv) Losing program eligibility under Sec. 600.40;
    (v) Changing the program's name, CIP code, as defined in 34 CFR 
668.402, or credential level; or
    (vi) Updating the certification pursuant to Sec. 668.414(b).
    (b) Additional reporting from institutions owned by publicly-traded 
corporations. An institution that is owned by a publicly-traded 
corporation must report to the Secretary any change in the information 
described in paragraph (a)(6) of this section when it notifies its 
accrediting agency, but no later than 10 days after the institution 
learns of the change.
    (c) Secretary's response to reporting. The Secretary notifies an 
institution if any reported changes affects the institution's 
eligibility, and the effective date of that change.
    (d) Disbursement rules related to additional locations. When an 
institution must report to the Secretary about an additional location 
under paragraph (a)(3) of this section, the institution may not disburse 
title IV, HEA funds to students at that location before it reports to 
the Secretary about that location. Unless it is an institution that must 
apply to the Secretary under Sec. 600.20(c)(1), once it reports to the 
Secretary about that location, the institution may disburse those funds 
to those students if that location is licensed and accredited.
    (e) Consequence of failure to report. An institution's failure to 
inform the Secretary of a change described in paragraph (a) of this 
section within the time period stated in that paragraph may result in 
adverse action against the institution.
    (f) Definition. A family member includes a person's--
    (1) Parent or stepparent, sibling or step-sibling, spouse, child or 
stepchild, or grandchild or step-grandchild;
    (2) Spouse's parent or stepparent, sibling or step-sibling, child or 
stepchild, or grandchild or step-grandchild;
    (3) Child's spouse; and
    (4) Sibling's spouse.

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

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

[65 FR 65673, Nov. 1, 2000, as amended at 67 FR 67070, Nov. 1, 2002; 71 
FR 45692, Aug. 9, 2006; 75 FR 67193, Nov. 1, 2010; 79 FR 65006, Oct. 31, 
2014]



                    Subpart C_Maintaining Eligibility

    Source: 59 FR 22336, Apr. 29, 1994, unless otherwise noted.



Sec. 600.30  [Reserved]



Sec. 600.31  Change in ownership resulting in a change in control for
private nonprofit, private for-profit and public institutions.

    (a)(1) Except as provided in paragraph (a)(2) of this section, a 
private nonprofit, private for-profit, or public

[[Page 215]]

institution that undergoes a change in ownership that results in a 
change in control ceases to qualify as an eligible institution upon the 
change in ownership and control. A change in ownership that results in a 
change in control includes any change by which a person who has or 
thereby acquires an ownership interest in the entity that owns the 
institution or the parent corporation of that entity, acquires or loses 
the ability to control the institution.
    (2) If a private nonprofit, private for-profit, or public 
institution has undergone a change in ownership that results in a change 
in control, the Secretary may, under the provisions of Sec. 600.20(g) 
and (h), continue the institution's participation in the title IV, HEA 
programs on a provisional basis, provided that the institution submits, 
under the provisions of Sec. 600.20(g), a materially complete 
application--
    (i) No later than 10 business days after the change occurs; or
    (ii) For an institution owned by a publicly-traded corporation, no 
later than 10 business days after the institution knew, or should have 
known of the change based upon SEC filings, that the change occurred.
    (3) In order to reestablish eligibility and to resume participation 
in the title IV, HEA programs, the institution must demonstrate to the 
Secretary that after the change in ownership and control--
    (i) The institution satisfies all the applicable requirements 
contained in Secs. 600.4, 600.5, and 600.6, except that if the 
institution is a proprietary institution of higher education or 
postsecondary vocational institution, it need not have been in existence 
for two years before seeking eligibility; and
    (ii) The institution qualifies to be certified to participate under 
34 CFR part 668, subpart B.
    (b) Definitions. The following definitions apply to terms used in 
this section:
    Closely-held corporation. Closely-held corporation (including the 
term close corporation) means--
    (1) A corporation that qualifies under the law of the State of its 
incorporation as a closely-held corporation; or
    (2) If the State of incorporation has no definition of closely-held 
corporation, a corporation the stock of which--
    (i) Is held by no more than 30 persons; and
    (ii) Has not been and is not planned to be publicly offered.
    Control. Control (including the terms controlling, controlled by and 
under common control with) means the possession, direct or indirect, of 
the power to direct or cause the direction of the management and 
policies of a person, whether through the ownership of voting 
securities, by contract, or otherwise.
    Ownership or ownership interest. (1) Ownership or ownership interest 
means a legal or beneficial interest in an institution or its corporate 
parent, or a right to share in the profits derived from the operation of 
an institution or its corporate parent.
    (2) Ownership or ownership interest does not include an ownership 
interest held by--
    (i) A mutual fund that is regularly and publicly traded;
    (ii) A U.S. institutional investor, as defined in 17 CFR 240.15a-
6(b)(7);
    (iii) A profit-sharing plan of the institution or its corporate 
parent, provided that all full-time permanent employees of the 
institution or corporate parent are included in the plan; or
    (iv) An Employee Stock Ownership Plan (ESOP).
    Parent. The parent or parent corporation of a specified corporation 
is the corporation or partnership that controls the specified 
corporation directly or indirectly through one or more intermediaries.
    Person. Person includes a legal person (corporation or partnership) 
or an individual.
    Wholly-owned subsidiary. A wholly-owned subsidiary is one 
substantially all of whose outstanding voting securities are owned by 
its parent together with the parent's other wholly-owned subsidiaries.
    (c) Standards for identifying changes of ownership and control--(1) 
Closely-held corporation. A change in ownership and control occurs 
when--
    (i) A person acquires more than 50 percent of the total outstanding 
voting stock of the corporation;

[[Page 216]]

    (ii) A person who holds an ownership interest in the corporation 
acquires control of more than 50 percent of the outstanding voting stock 
of the corporation; or
    (iii) A person who holds or controls 50 percent or more of the total 
outstanding stock of the corporation ceases to hold or control that 
proportion of the stock of the corporation.
    (2) Publicly traded corporations required to be registered with the 
Securities and Exchange Commission (SEC). A change in ownership and 
control occurs when--
    (i) A person acquires such ownership and control of the corporation 
so that the corporation is required to file a Form 8K with the SEC 
notifying that agency of the change in control; or
    (ii) (A) A person who is a controlling shareholder of the 
corporation ceases to be a controlling shareholder. A controlling 
shareholder is a shareholder who holds or controls through agreement 
both 25 percent or more of the total outstanding voting stock of the 
corporation and more shares of voting stock than any other shareholder. 
A controlling shareholder for this purpose does not include a 
shareholder whose sole stock ownership is held as a U.S. institutional 
investor, as defined in 17 CFR 240.15a-6(b)(7), held in mutual funds, 
held through a profit-sharing plan, or held in an Employee Stock 
Ownership Plan (ESOP).
    (B) When a change of ownership occurs as a result of paragraph 
(c)(2)(ii)(A) of this section, the institution may submit its most 
recent quarterly financial statement as filed with the SEC, along with 
copies of all other SEC filings made after the close of the fiscal year 
for which a compliance audit has been submitted to the Department of 
Education, instead of the ``same day'' balance sheet.
    (C) If a publicly-traded institution is provisionally certified due 
to a change in ownership under paragraph (c)(2)(ii) of this section, and 
that institution experiences another change of ownership under paragraph 
(c)(2)(ii) of this section, an approval of the subsequent change in 
ownership does not extend the original expiration date for the 
provisional certification provided that any current controlling 
shareholder was listed on the change of ownership application for which 
the original provisional approval was granted.
    (3) Other corporations. A change in ownership and control of a 
corporation that is neither closely-held nor required to be registered 
with the SEC occurs when--
    (i) A person who has or acquires an ownership interest acquires both 
control of at least 25 percent of the total outstanding voting stock of 
the corporation and control of the corporation;
    (ii) A person who holds both ownership or control of at least 25 
percent of the total outstanding voting stock of the corporation and 
control of the corporation, ceases to own or control that proportion of 
the stock of the corporation, or to control the corporation; or
    (iii) For a membership corporation, a person who is or becomes a 
member acquires or loses control of 25 percent of the voting interests 
of the corporation and control of the corporation.
    (4) Partnership or sole proprietorship. A change in ownership and 
control occurs when a person who has or acquires an ownership interest 
acquires or loses control as described in this section.
    (5) Parent corporation. An institution that is a wholly-owned 
subsidiary changes ownership and control when the parent corporation 
changes ownership and control as described in this section.
    (6) Nonprofit institution. A nonprofit institution changes ownership 
and control when a change takes place that is described in paragraph (d) 
of this section.
    (7) Public institution. The Secretary does not consider that a 
public institution undergoes a change in ownership that results in a 
change of control if there is a change in governance and the institution 
after the change remains a public institution, provided--
    (i) The new governing authority is in the same State as included in 
the institution's program participation agreement; and
    (ii) The new governing authority has acknowledged the public 
institution's continued responsibilities under its program participation 
agreement.

[[Page 217]]

    (d) Covered transactions. For the purposes of this section, a change 
in ownership of an institution that results in a change of control may 
include, but is not limited to--
    (1) The sale of the institution;
    (2) The transfer of the controlling interest of stock of the 
institution or its parent corporation;
    (3) The merger of two or more eligible institutions;
    (4) The division of one institution into two or more institutions;
    (5) The transfer of the liabilities of an institution to its parent 
corporation;
    (6) A transfer of assets that comprise a substantial portion of the 
educational business of the institution, except where the transfer 
consists exclusively in the granting of a security interest in those 
assets; or
    (7) A change in status as a for-profit, nonprofit, or public 
institution.
    (e) Excluded transactions. A change in ownership and control 
reported under Sec. 600.21 and otherwise subject to this section does 
not include a transfer of ownership and control of all or part of an 
owner's equity or partnership interest in an institution, the 
institution's parent corporation, or other legal entity that has signed 
the institution's Program Participation Agreement--
    (1) From an owner to a ``family member'' of that owner as defined in 
Sec. 600.21(f); or
    (2) Upon the retirement or death of the owner, to a person with an 
ownership interest in the institution who has been involved in 
management of the institution for at least two years preceding the 
transfer and who has established and retained the ownership interest for 
at least two years prior to the transfer.

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

(Authority: 20 U.S.C. 1099c)

[59 FR 22336, Apr. 29, 1994, as amended at 59 FR 47801, Sept. 19, 1994; 
60 FR 33430, June 30, 1995; 64 FR 58616, Oct. 29, 1999; 65 FR 65673, 
Nov. 1, 2000; 67 FR 67070, Nov. 1, 2002]



Sec. 600.32  Eligibility of additional locations.

    (a) Except as provided in paragraphs (b), (c), and (d) of this 
section, to qualify as an eligible location, an additional location of 
an eligible institution must satisfy the applicable requirements of this 
section and Secs. 600.4, 600.5, 600.6, 600.8, and 600.10.
    (b) To qualify as an eligible location, an additional location is 
not required to satisfy the two-year requirement of Secs. 600.5(a)(7) or 
600.6(a)(6), 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--
    (i) Owes a liability for a violation of an HEA program requirement; 
and
    (ii) Is not making payments in accordance with an agreement to repay 
that liability.
    (c) Notwithstanding paragraph (b) of this section, an additional 
location is not required to satisfy the two-year requirement of 
Sec. 600.5(a)(7) or Sec. 600.6(a)(6) if the applicant institution 
agrees--
    (1) To be liable for all improperly expended or unspent title IV, 
HEA 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, HEA 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.
    (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 and the Secretary has 
taken an action to limit, suspend, or terminate the institution's 
participation under Sec. 600.41 or subpart G of this part,

[[Page 218]]

or has taken an emergency action 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 in existence 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 paragraph (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.
    (e) For purposes of this section, an ``additional location'' is a 
location of an institution that was not designated as an eligible 
location in the eligibility notification provided to an institution 
under Sec. 600.21.

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

[59 FR 22336, Apr. 29, 1994, as amended at 74 FR 55933, Oct. 29, 2009]



                      Subpart D_Loss of Eligibility

    Source: 59 FR 22336, Apr. 29, 1994, unless otherwise noted.



Sec. 600.40  Loss of eligibility.

    (a)(1) Except as provided in paragraphs (a) (2) and (3) of this 
section, an institution, or a location or educational program of an 
institution, loses its eligibility on the date that--
    (i) The institution, location, or educational program fails to meet 
any of the eligibility requirements of this part;
    (ii) The institution or location permanently closes;
    (iii) The institution or location ceases to provide educational 
programs for a reason other than a normal vacation period or a natural 
disaster that directly affects the institution, particular location, or 
the students of the institution or location; or
    (iv) For purposes of the title IV, HEA programs--
    (A) The institution's period of participation as specified under 34 
CFR 668.13 expires; or
    (B) The institution's provisional certification is revoked under 34 
CFR 668.13.
    (2) If an institution loses its eligibility because it violated the 
requirements of Sec. 600.5(a)(8), as evidenced by the determination 
under provisions contained in Sec. 600.5(d), it loses its eligibility on 
the last day of the fiscal year used in Sec. 600.5(d), except that if an 
institution's latest fiscal year was described in Sec. 600.7(h)(1), it 
loses its eligibility as of June 30, 1994.
    (3) If an institution loses its eligibility under the provisions of 
Sec. 600.7(a)(1), it loses its eligibility on the last day of the award 
year being evaluated under that provision.
    (b) If the Secretary undertakes to terminate the eligibility of an 
institution because it violated the provisions of Sec. 600.5(a)(8) or 
Sec. 600.7(a), and the institution requests a hearing, the presiding 
official must terminate the institution's eligibility if it violated 
those provisions, notwithstanding its status at the time of the hearing.
    (c)(1) If the Secretary designates an institution or any of its 
educational programs or locations as eligible on the basis of inaccurate 
information or documentation, the Secretary's designation is void from 
the date the Secretary made the designation, and the

[[Page 219]]

institution or program or location, as applicable, never qualified as 
eligible.
    (2) If an institution closes its main campus or stops providing any 
educational programs on its main campus, it loses its eligibility as an 
institution, and that loss of eligibility includes all its locations and 
all its programs. Its loss of eligibility is effective on the date it 
closes that campus or stops providing any educational program at that 
campus.
    (d) Except as otherwise provided in this part, if an institution 
ceases to satisfy any of the requirements for eligibility under this 
part--
    (1) It must notify the Secretary within 30 days of the date that it 
ceases to satisfy that requirement; and
    (2) It becomes ineligible to continue to participate in any HEA 
program as of the date it ceases to satisfy any of the requirements.

(Authority: 20 U.S.C. 1088, 1099a-3, and 1141)

[59 FR 22336, Apr. 29, 1994, as amended at 63 FR 40622, July 29, 1998]



Sec. 600.41  Termination and emergency action proceedings.

    (a) If the Secretary believes that a previously designated eligible 
institution as a whole, or at one or more of its locations, does not 
satisfy the statutory or regulatory requirements that define that 
institution as an eligible institution, the Secretary may--
    (1) Terminate the institution's eligibility designation in whole or 
as to a particular location--
    (i) Under the procedural provisions applicable to terminations 
contained in 34 CFR 668.81, 668.83, 668.86, 668.87, 668.88, 668.89, 
668.90 (a)(1), (a)(4), and (c) through (f), and 668.91; or
    (ii) Under a show-cause hearing, if the institution's loss of 
eligibility results from--
    (A) Its previously qualifying as an eligible vocational school;
    (B) Its previously qualifying as an eligible institution, 
notwithstanding its unaccredited status, under the transfer-of-credit 
alternative to accreditation (as that alternative existed in 20 U.S.C. 
1085, 1088, and 1141(a)(5)(B) and Sec. 600.8 until July 23, 1992);
    (C) Its loss of accreditation or preaccreditation;
    (D) Its loss of legal authority to provide postsecondary education 
in the State in which it is physically located;
    (E) Its violations of the provisions contained in Sec. 600.5(a)(8) 
or Sec. 600.7(a);
    (F) Its permanently closing; or
    (G) Its ceasing to provide educational programs for a reason other 
than a normal vacation period or a natural disaster that directly 
affects the institution, a particular location, or the students of the 
institution or location;
    (2) Limit, under the provisions of 34 CFR 668.86, the authority of 
the institution to disburse, deliver, or cause the disbursement or 
delivery of funds under one or more title IV, HEA programs as otherwise 
provided under 34 CFR 668.26 for the benefit of students enrolled at the 
ineligible institution or location prior to the loss of eligibility of 
that institution or location; and
    (3) Initiate an emergency action under the provisions contained in 
34 CFR 668.83 with regard to the institution's participation in one or 
more title IV, HEA programs.
    (b) If the Secretary believes that an educational program offered by 
an institution that was previously designated by the Secretary as an 
eligible institution under the HEA does not satisfy relevant statutory 
or regulatory requirements that define that educational program as part 
of an eligible institution, the Secretary may in accordance with the 
procedural provisions described in paragraph (a) of this section--
    (1) Undertake to terminate that educational program's eligibility 
under one or more of the title IV, HEA programs under the procedural 
provisions applicable to terminations described in paragraph (a) of this 
section;
    (2) Limit the institution's authority to deliver, disburse, or cause 
the delivery or disbursement of funds provided under that title IV, HEA 
program to students enrolled in that educational program, as otherwise 
provided in 34 CFR 668.26; and
    (3) Initiate an emergency action under the provisions contained in 
34 CFR 668.83 with regard to the institution's participation in one or 
more title IV, HEA programs with respect to students enrolled in that 
educational program.

[[Page 220]]

    (c)(1) An action to terminate and limit the eligibility of an 
institution as a whole or as to any of its locations or educational 
programs is initiated in accordance with 34 CFR 668.86(b) and becomes 
final 20 days after the Secretary notifies the institution of the 
proposed action, unless the designated department official receives by 
that date a request for a hearing or written material that demonstrates 
that the termination and limitation should not take place.
    (2) Once a termination under this section becomes final, the 
termination is effective with respect to any commitment, delivery, or 
disbursement of funds provided under an applicable title IV, HEA program 
by the institution--
    (i) Made to students enrolled in the ineligible institution, 
location, or educational program; and
    (ii) Made on or after the date of the act or omission that caused 
the loss of eligibility as to the institution, location, or educational 
program.
    (3) Once a limitation under this section becomes final, the 
limitation is effective with regard to any commitment, delivery, or 
disbursement of funds under the applicable title IV, HEA program by the 
institution--
    (i) Made after the date on which the limitation became final; and
    (ii) Made to students enrolled in the ineligible institution, 
location, or educational program.
    (d) After a termination under this section of the eligibility of an 
institution as a whole or as to a location or educational program 
becomes final, the institution may not certify applications for, make 
awards of or commitments for, deliver, or disburse funds under the 
applicable title IV, HEA program, except--
    (1) In accordance with the requirements of 34 CFR 668.26(c) with 
respect to students enrolled in the ineligible institution, location, or 
educational program; and
    (2) After satisfaction of any additional requirements, imposed 
pursuant to a limitation under paragraph (a)(2) of this section, which 
may include the following:
    (i) Completion of the actions required by 34 CFR 668.26(a) and (b).
    (ii) Demonstration that the institution has made satisfactory 
arrangements for the completion of actions required by 34 CFR 668.26(a) 
and (b).
    (iii) Securing the confirmation of a third party selected by the 
Secretary that the proposed disbursements or delivery of title IV, HEA 
program funds meet the requirements of the applicable program.
    (iv) Using institutional funds to make disbursements permitted under 
this paragraph and seeking reimbursement from the Secretary for those 
disbursements.
    (e) If the Secretary undertakes to terminate the eligibility of an 
institution, location, or program under paragraphs (a) and (b) of this 
section:
    (1) If the basis for the loss of eligibility is the loss of 
accreditation or preaccreditation, the sole issue is whether the 
institution, location, or program has the requisite accreditation or 
preaccreditation. The presiding official has no authority to consider 
challenges to the action of the accrediting agency.
    (2) If the basis for the loss of eligibility is the loss of legal 
authorization, the sole issue is whether the institution, location, or 
program has the requisite legal authorization. The presiding official 
has no authority to consider challenges to the action of a State agency 
in removing the legal authorization.
    (3) If the basis for the loss of eligibility of a foreign graduate 
medical school is one or more annual pass rates on the U.S. Medical 
Licensing Examination below the threshold required in 
Sec. 600.55(f)(1)(ii), the sole issue is whether one or more of the 
foreign medical school's pass rate or rates for the preceding calendar 
year fell below that threshold. For a foreign graduate medical school 
that opted to have the Educational Commission for Foreign Medical 
Graduates (ECFMG) calculate and provide the pass rates directly to the 
Secretary for the preceding calendar year as permitted under 
Sec. 600.55(d)(2) in lieu of the foreign graduate medical school 
providing pass rate data to the Secretary under Sec. 600.55(d)(1)(iii), 
the ECFMG's calculations of the school's rates are conclusive; and the 
presiding official has no authority to consider

[[Page 221]]

challenges to the computation of the rate or rates by the ECFMG.

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

[59 FR 22336, Apr. 29, 1994, as amended at 63 FR 40623, July 29, 1998; 
75 FR 67193, Nov. 1, 2010]



Subpart E_Eligibility of Foreign Institutions To Apply To Participate in 
            the Federal Family Education Loan (FFEL) Programs

    Source: 59 FR 22063, Apr. 28, 1994, unless otherwise noted.



Sec. 600.51  Purpose and scope.

    (a) A foreign institution is eligible to apply to participate in the 
Federal Family Education Loan (FFEL) programs if it is comparable to an 
eligible institution of higher education located in the United States 
and has been approved by the Secretary in accordance with the provisions 
of this subpart.
    (b) This subpart E contains the procedures and criteria under which 
a foreign institution may be deemed eligible to apply to participate in 
the FFEL programs.
    (c) Applicability of other title IV, HEA program regulations.
    (1) A foreign institution must comply with all requirements for 
eligible and participating institutions except when made inapplicable by 
the HEA or when the Secretary, through publication in the Federal 
Register, identifies specific provisions as inapplicable to foreign 
institutions.
    (2)(i) A public or nonprofit foreign institution that meets the 
requirements of this subpart, and that also meets the requirements of 
this part except as provided in Secs. 600.51(c)(1) and 600.54(a), is 
considered an ``institution of higher education'' for purposes of the 
title IV, HEA program regulations; and
    (ii) A for-profit foreign institution that meets the requirements of 
this subpart, and that also meets the requirements of this Part, except 
as provided in Secs. 600.51(c)(1) and 600.54(a), is considered a 
``proprietary institution'' for purposes of title IV, HEA program 
regulations.
    (d)(1) A program offered by a foreign school through any use of a 
telecommunications course, correspondence course, or direct assessment 
program is not an eligible program;
    (2) Correspondence course has the meaning given in Sec. 600.2;
    (3) Direct assessment program has the meaning given in 
Sec. 668.10(a)(1) of this chapter;
    (4) Telecommunications course is a course offered through any one or 
a combination of the technologies listed in the definition of 
telecommunications course in Sec. 600.2, except that telecommunications 
technologies may be used to supplement and support instruction that is 
offered in a classroom located in the foreign country where the students 
and instructor are physically present.

(Authority: 20 U.S.C. 1082, 1088)

[59 FR 22063, Apr. 28, 1994, as amended at 71 FR 45692, Aug. 9, 2006; 75 
FR 67193, Nov. 1, 2010]



Sec. 600.52  Definitions.

    The following definitions apply to this subpart E:
    Associate degree school of nursing: A school that provides primarily 
or exclusively a two-year program of postsecondary education in 
professional nursing leading to a degree equivalent to an associate 
degree in the United States.
    Clinical training: The portion of a graduate medical education 
program that counts as a clinical clerkship for purposes of medical 
licensure comprising core, required clinical rotation, and not required 
clinical rotation.
    Collegiate school of nursing: A school that provides primarily or 
exclusively a minimum of a two-year program of postsecondary education 
in professional nursing leading to a degree equivalent to a bachelor of 
arts, bachelor of science, or bachelor of nursing in the United States, 
or to a degree equivalent to a graduate degree in nursing in the United 
States, and including advanced training related to the program of 
education provided by the school.
    Diploma school of nursing: A school affiliated with a hospital or 
university, or an independent school, which provides primarily or 
exclusively a two-

[[Page 222]]

year program of postsecondary education in professional nursing leading 
to the equivalent of a diploma in the United States or to equivalent 
indicia that the program has been satisfactorily completed.
    Foreign graduate medical school: A foreign institution (or, for a 
foreign institution that is a university, a component of that foreign 
institution) having as its sole mission providing an educational program 
that leads to a degree of medical doctor, doctor of osteopathic 
medicine, or the equivalent. A reference in these regulations to a 
foreign graduate medical school as ``freestanding'' pertains solely to 
those schools that qualify by themselves as foreign institutions and not 
to schools that are components of universities that qualify as foreign 
institutions.
    Foreign institution:
    (1) For the purposes of students who receive title IV aid, an 
institution that--
    (i) Is not located in a State;
    (ii) Except as provided with respect to clinical training offered 
under Sec. 600.55(h)(1), Sec. 600.56(b), or Sec. 600.57(a)(2)--
    (A) Has no U.S. location;
    (B) Has no written arrangements, within the meaning of Sec. 668.5, 
with institutions or organizations located in the United States for 
students enrolling at the foreign institution to take courses from 
institutions located in the United States;
    (C) Does not permit students to enroll in any course offered by the 
foreign institution in the United States, including research, work, 
internship, externship, or special studies within the United States, 
except that independent research done by an individual student in the 
United States for not more than one academic year is permitted, if it is 
conducted during the dissertation phase of a doctoral program under the 
guidance of faculty, and the research can only be performed in a 
facility in the United States;
    (iii) Is legally authorized by the education ministry, council, or 
equivalent agency of the country in which the institution is located to 
provide an educational program beyond the secondary education level; and
    (iv) Awards degrees, certificates, or other recognized educational 
credentials in accordance with Sec. 600.54(e) that are officially 
recognized by the country in which the institution is located; or
    (2) If the educational enterprise enrolls students both within a 
State and outside a State, and the number of students who would be 
eligible to receive title IV, HEA program funds attending locations 
outside a State is at least twice the number of students enrolled within 
a State, the locations outside a State must apply to participate as one 
or more foreign institutions and must meet all requirements of paragraph 
(1) of this definition, and the other requirements of this part. For the 
purposes of this paragraph, an educational enterprise consists of two or 
more locations offering all or part of an educational program that are 
directly or indirectly under common ownership.
    Foreign nursing school: A foreign institution (or, for a foreign 
institution that is a university, a component of that foreign 
institution) that is an associate degree school of nursing, a collegiate 
school of nursing, or a diploma school of nursing. A reference in these 
regulations to a foreign nursing school as ``freestanding'' pertains 
solely to those schools that qualify by themselves as foreign 
institutions and not to schools that are components of universities that 
qualify as foreign institutions.
    Foreign veterinary school: A foreign institution (or, for a foreign 
institution that is a university, a component of that foreign 
institution) having as its sole mission providing an educational program 
that leads to the degree of doctor of veterinary medicine, or the 
equivalent. A reference in these regulations to a foreign veterinary 
school as ``freestanding'' pertains solely to those schools that qualify 
by themselves as foreign institutions and not to schools that are 
components of universities that qualify as foreign institutions.
    National Committee on Foreign Medical Education and Accreditation 
(NCFMEA): The operational committee of medical experts established by 
the Secretary to determine whether the medical school accrediting 
standards used in other countries are comparable to those applied to 
medical schools in the United States, for purposes of evaluating the

[[Page 223]]

eligibility of accredited foreign graduate medical schools to 
participate in the title IV, HEA programs.
    Passing score: The minimum passing score as defined by the 
Educational Commission for Foreign Medical Graduates (ECFMG), or on the 
National Council Licensure Examination for Registered Nurses (NCLEX-RN), 
as applicable.
    Post-baccalaureate/equivalent medical program: A program offered by 
a foreign graduate medical school that requires, as a condition of 
admission, that its students have already completed their non-medical 
undergraduate studies and that consists solely of courses and training 
leading to employment as a doctor of medicine or doctor of osteopathic 
medicine.
    Secondary school: A school that provides secondary education as 
determined under the laws of the country in which the school is located.

(Authority: 20 U.S.C. 1082, 1088)

[59 FR 22063, Apr. 28, 1994, as amended at 75 FR 67193, Nov. 1, 2010]



Sec. 600.53  Requesting an eligibility determination.

    (a) To be designated as eligible to apply to participate in the FFEL 
programs or to continue to be eligible beyond the scheduled expiration 
of the institution's current period of eligibility, a foreign 
institution must--
    (1) Apply on the form prescribed by the Secretary; and
    (2) Provide all the information and documentation requested by the 
Secretary to make a determination of that eligibility.
    (b) If a foreign institution fails to provide, release, or authorize 
release to the Secretary of information that is required in this subpart 
E, the institution is ineligible to apply to participate in the FFEL 
programs.

(Approved by the Office of Management and Budget under control number 
1840-0673)

(Authority: 20 U.S.C. 1082, 1088)



Sec. 600.54  Criteria for determining whether a foreign institution
is eligible to apply to participate in the Direct Loan Program.

    The Secretary considers a foreign institution to be comparable to an 
eligible institution of higher education in the United States and 
eligible to apply to participate in the Direct Loan Program if the 
foreign institution meets the following requirements:
    (a)(1) Except for a freestanding foreign graduate medical school, 
foreign veterinary school, or foreign nursing school, the foreign 
institution is a public or private nonprofit educational institution.
    (2) For a public or private nonprofit foreign institution, the 
institution meets the requirements of Sec. 600.4, except 
Sec. 600.4(a)(1), (a)(2), (a)(3), (a)(4)(ii), (a)(5), (b), (c), and any 
requirements the HEA or the Secretary has designated as inapplicable in 
accordance with Sec. 600.51(c)(1).
    (3) For a for-profit foreign medical, veterinary, or nursing school, 
the school meets the requirements of Sec. 600.5, except 
Sec. 600.5(a)(2), (a)(3), (a)(4), (a)(5)(i)(B), (a)(5)(ii), (a)(6), (c), 
(d), (e) and any requirements the HEA or the Secretary has designated as 
inapplicable in accordance with Sec. 600.51(c)(1).
    (b) The foreign institution admits as regular students only persons 
who--
    (1) Have a secondary school completion credential; or
    (2) Have the recognized equivalent of a secondary school completion 
credential.
    (c) Notwithstanding Sec. 668.5, an eligible foreign institution may 
not enter into a written arrangement under which an ineligible 
institution or organization provides any portion of one or more of the 
eligible foreign institution's programs. For the purposes of this 
paragraph, written arrangements do not include affiliation agreements 
for the provision of clinical training for foreign medical, veterinary, 
and nursing schools.
    (d) An additional location of a foreign institution must separately 
meet the definition of a foreign institution in Sec. 600.52 if the 
additional location is--
    (1) Located outside of the country in which the main campus is 
located, except as provided in Sec. 600.55(h)(1), Sec. 600.56(b), 
Sec. 600.57(a)(2), Sec. 600.55(h)(3), and the definition of foreign 
institution found in Sec. 600.52; or
    (2) Located within the same country as the main campus, but is not 
covered

[[Page 224]]

by the legal authorization of the main campus.
    (e) The foreign institution provides an eligible education program--
    (1) For which the institution is legally authorized to award a 
degree that is equivalent to an associate, baccalaureate, graduate, or 
professional degree awarded in the United States;
    (2) That is at least a two-academic-year program acceptable for full 
credit toward the equivalent of a baccalaureate degree awarded in the 
United States; or
    (3)(i) That is equivalent to at least a one-academic-year training 
program in the United States that leads to a certificate, degree, or 
other recognized educational credential and prepares students for 
gainful employment in a recognized occupation within the meaning of the 
gainful employment provisions.
    (ii) An institution must demonstrate to the satisfaction of the 
Secretary that the amount of academic work required by a program in 
paragraph (e)(3)(i) of this section is equivalent to at least the 
definition of an academic year in Sec. 668.3.
    (f) For a for-profit foreign medical, veterinary, or nursing 
school--
    (1) No portion of an eligible medical or veterinary program offered 
may be at what would be an undergraduate level in the United States; and
    (2) The title IV, HEA program eligibility does not extend to any 
joint degree program.
    (g) Proof that a foreign institution meets the requirements of 
paragraph (1)(iii) of the definition of a foreign institution in 
Sec. 600.52 may be provided to the Secretary by a legal authorization 
from the appropriate education ministry, council, or equivalent agency--
    (1) For all eligible foreign institutions in the country;
    (2) For all eligible foreign institutions in a jurisdiction within 
the country; or
    (3) For each separate eligible foreign institution in the country.

(Authority: 20 U.S.C. 1082, 1088)


[75 FR 67194, Nov. 1, 2010]



Sec. 600.55  Additional criteria for determining whether a foreign 
graduate medical school is eligible to apply to participate in the
Direct Loan Program.


    (a) General. (1) The Secretary considers a foreign graduate medical 
school to be eligible to apply to participate in the title IV, HEA 
programs if, in addition to satisfying the criteria of this part (except 
the criterion in Sec. 600.54 that the institution be public or private 
nonprofit), the school satisfies the criteria of this section.
    (2) A foreign graduate medical school must provide, and in the 
normal course require its students to complete, a program of clinical 
training and classroom medical instruction of not less than 32 months in 
length, that is supervised closely by members of the school's faculty 
and that--
    (i) Is provided in facilities adequately equipped and staffed to 
afford students comprehensive clinical training and classroom medical 
instruction;
    (ii) Is approved by all medical licensing boards and evaluating 
bodies whose views are considered relevant by the Secretary; and
    (iii) As part of its clinical training, does not offer more than two 
electives consisting of no more than eight weeks per student at a site 
located in a foreign country other than the country in which the main 
campus is located or in the United States, unless that location is 
included in the accreditation of a medical program accredited by the 
Liaison Committee on Medical Education (LCME) or the American 
Osteopathic Association (AOA).
    (3) A foreign graduate medical school must appoint for the program 
described in paragraph (a)(2) of this section only those faculty members 
whose academic credentials are the equivalent of credentials required of 
faculty members teaching the same or similar courses at medical schools 
in the United States.
    (4) A foreign graduate medical school must have graduated classes 
during each of the two twelve-month periods immediately preceding the 
date the Secretary receives the school's request for an eligibility 
determination.
    (b) Accreditation. A foreign graduate medical school must--

[[Page 225]]

    (1) Be approved by an accrediting body--
    (i) That is legally authorized to evaluate the quality of graduate 
medical school educational programs and facilities in the country where 
the school is located; and
    (ii) Whose standards of accreditation of graduate medical schools 
have been evaluated by the NCFMEA or its successor committee of medical 
experts and have been determined to be comparable to standards of 
accreditation applied to medical schools in the United States; or
    (2) Be a public or private nonprofit educational institution that 
satisfies the requirements in Sec. 600.4(a)(5)(i).
    (c) Admission criteria. (1) A foreign graduate medical school having 
a post-baccalaureate/equivalent medical program must require students 
accepted for admission who are U.S. citizens, nationals, or permanent 
residents to have taken the Medical College Admission Test (MCAT) and to 
have reported their scores to the foreign graduate medical school; and
    (2) A foreign graduate medical school must determine the consent 
requirements for, and require the necessary consents of, all students 
accepted for admission for whom the school must report to enable the 
school to comply with the collection and submission requirements of 
paragraph (d) of this section.
    (d) Collection and submission of data. (1) A foreign graduate 
medical school must obtain, at its own expense, and submit, by the date 
required by paragraph (d)(3) of this section--
    (i) To its accrediting authority and, on request, to the Secretary, 
the scores on the MCAT or successor examination, of all students 
admitted during the preceding calendar year who are U.S. citizens, 
nationals, or eligible permanent residents, together with a statement of 
the number of times each student took the examination;
    (ii) To its accrediting authority and, on request, to the Secretary, 
the percentage of students graduating during the preceding calendar year 
(including at least all graduates who are U.S. citizens, nationals, or 
eligible permanent residents) who obtain placement in an accredited U.S. 
medical residency program;
    (iii) To the Secretary, except as provided for in paragraph (d)(2) 
of this section, all scores, disaggregated by step/test--i.e., Step 1, 
Step 2--Clinical Skills (Step 2-CS), and Step 2--Clinical Knowledge 
(Step 2-CK), or the successor examinations--and attempt, earned during 
the preceding calendar year by each student and graduate, on Step 1, 
Step 2-CS, and Step 2-CK, or the successor examinations, of the U.S. 
Medical Licensing Examination (USMLE), together with the dates the 
student has taken each test, including any failed tests;
    (iv) To the Secretary, a statement of its citizenship rate for the 
preceding calendar year for a school that is subject to paragraph 
(f)(1)(i)(A) of this section, together with a description of the 
methodology used in deriving the rate that is acceptable to the 
Secretary.
    (2) In lieu of submitting the information required in paragraph 
(d)(1)(iii) of this section to the Secretary, a foreign graduate medical 
school that is not subject to paragraph (f)(4) of this section may agree 
to allow the Educational Commission for Foreign Medical Graduates 
(ECFMG) or other responsible third party to calculate the rate described 
in paragraph (f)(1)(ii) and (f)(3) of this section for the preceding 
calendar year and provide the rate directly to the Secretary on the 
school's behalf with a copy to the foreign graduate medical school, 
provided--
    (i) The foreign graduate medical school has provided by April 30 to 
the Secretary written consent acceptable to the Secretary to reliance by 
the Secretary on the pass rate as calculated by the ECFMG or other 
responsible third party for purposes of determining compliance with 
paragraph (f)(1)(ii) and (f)(3) of this section for the preceding 
calendar year; and
    (ii) The foreign graduate medical school agrees in its written 
consent that for the preceding calendar year the rate as calculated by 
the ECFMG or other designated third party will be conclusive for 
purposes of determining compliance with paragraph (f)(1)(ii) and (f)(3) 
of this section.

[[Page 226]]

    (3) A foreign graduate medical school must submit the data it 
collects in accordance with paragraph (d)(1) of this section no later 
than April 30 of each year, unless the Secretary specifies a different 
date through a notice in the Federal Register.
    (e) Requirements for clinical training. (1)(i) A foreign graduate 
medical school must have--
    (A) A formal affiliation agreement with any hospital or clinic at 
which all or a portion of the school's core clinical training or 
required clinical rotations are provided; and
    (B) Either a formal affiliation agreement or other written 
arrangements with any hospital or clinic at which all or a portion of 
its clinical rotations that are not required are provided, except for 
those locations that are not used regularly, but instead are chosen by 
individual students who take no more than two electives at the location 
for no more than a total of eight weeks.
    (ii) The agreements described in paragraph (e)(1)(i) of this section 
must state how the following will be addressed at each site--
    (A) Maintenance of the school's standards;
    (B) Appointment of faculty to the medical school staff;
    (C) Design of the curriculum;
    (D) Supervision of students;
    (E) Evaluation of student performance; and
    (F) Provision of liability insurance.
    (2) A foreign graduate medical school must notify its accrediting 
body within one year of any material changes in--
    (i) The educational programs, including changes in clinical training 
programs; and
    (ii) The overseeing bodies and in the formal affiliation agreements 
with hospitals and clinics described in paragraph (e)(1)(i) of this 
section.
    (f) Citizenship and USMLE pass rate percentages. (1)(i)(A) During 
the calendar year preceding the year for which any of the school's 
students seeks an title IV, HEA program loan, at least 60 percent of 
those enrolled as full-time regular students in the school and at least 
60 percent of the school's most recent graduating class must have been 
persons who did not meet the citizenship and residency criteria 
contained in section 484(a)(5) of the HEA, 20 U.S.C. 1091(a)(5); or
    (B) The school must have had a clinical training program approved by 
a State prior to January 1, 2008, and must continue to operate a 
clinical training program in at least one State that approves the 
program; and
    (ii) Except as provided in paragraph (f)(4) of this section, for a 
foreign graduate medical school outside of Canada, for Step 1, Step 2-
CS, and Step 2-CK, or the successor examinations, of the USMLE 
administered by the ECFMG, at least 75 percent of the school's students 
and graduates who took that step/test of the examination in the year 
preceding the year for which any of the school's students seeks a title 
IV, HEA program loan must have received a passing score on that step/
test and are taking the step/test for the first time; or
    (2)(i) The school must have had a clinical training program approved 
by a State as of January 1, 1992; and
    (ii) The school must continue to operate a clinical training program 
in at least one State that approves the program.
    (3) In performing the calculation required in paragraph (f)(1)(ii) 
of this section, a foreign graduate medical school shall--
    (i) Include as a graduate each student who graduated from the school 
during the three years preceding the year for which the calculation is 
performed and who took that step/test for the first time in that year; 
and
    (ii) Include students and graduates who take more than one step/test 
of the USMLE examination for the first time in the same year in the 
denominator for each of those steps/tests;
    (4)(i) If the calculation described in paragraph (f)(1)(ii) of this 
section would result in any step/test pass rate based on fewer than 
eight students, a single pass rate for the school is determined instead 
based on the performance of the school's students and graduates on Step 
1, Step 2-CS, and Step 2-CK combined;
    (ii) If combining the results on all three step/tests as permitted 
in paragraph (f)(4)(i) of this section would result in a pass rate based 
on fewer than

[[Page 227]]

eight step/test results, the school is deemed to have no pass rate for 
that year and the results for the year are combined with each subsequent 
year until a pass rate based on at least eight step/test results is 
derived.
    (g) Other criteria. (1) As part of establishing, publishing, and 
applying reasonable satisfactory academic progress standards, a foreign 
graduate medical school must include as a quantitative component a 
maximum timeframe in which a student must complete his or her 
educational program that must--
    (i) Be no longer than 150 percent of the published length of the 
educational program measured in academic years, terms, credit hours 
attempted, clock hours completed, etc., as appropriate; and
    (ii) Meet the requirements of Sec. 668.16(e)(2)(ii)(B), (C) and (D).
    (2) A foreign graduate medical school must document the educational 
remediation it provides to assist students in making satisfactory 
academic progress.
    (3) A foreign graduate medical school must publish all the languages 
in which instruction is offered.
    (h) Location of a program. (1) Except as provided in paragraph 
(h)(3)(ii) of this section, all portions of a graduate medical education 
program offered to U.S. students must be located in a country whose 
medical school accrediting standards are comparable to standards used in 
the United States, as determined by the NCFMEA, except for clinical 
training sites located in the United States.
    (2) No portion of the graduate medical educational program offered 
to U.S. students, other than the clinical training portion of the 
program, may be located outside of the country in which the main campus 
of the foreign graduate medical school is located.
    (3)(i) Except as provided in paragraph (h)(3)(ii) of this section, 
for any part of the clinical training portion of the educational program 
located in a foreign country other than the country in which the main 
campus is located or in the United States, in order for students 
attending the site to be eligible to borrow title IV, HEA program 
funds--
    (A) The site must be located in an NCFMEA approved comparable 
foreign country;
    (B) The institution's medical accrediting agency must have conducted 
an on-site evaluation and specifically approved the clinical training 
site; and
    (C) Clinical instruction must be offered in conjunction with medical 
educational programs offered to students enrolled in accredited medical 
schools located in that approved foreign country.
    (ii) A clinical training site located in a foreign country other 
than the country in which the main campus is located or in the United 
States is not required to meet the requirements of paragraph (h)(3)(i) 
of this section in order for students attending that site to be eligible 
to borrow title IV, HEA program funds if--
    (A) The location is included in the accreditation of a medical 
program accredited by the Liaison Committee on Medical Education (LCME) 
or the American Osteopathic Association (AOA); or
    (B) No individual student takes more than two electives at the 
location and the combined length of the electives does not exceed eight 
weeks.

[75 FR 67195, Nov. 1, 2010]



Sec. 600.56  Additional criteria for determining whether a foreign
veterinary school is eligible to apply to participate in the Direct
Loan Program.

    (a) The Secretary considers a foreign veterinary school to be 
eligible to apply to participate in the Direct Loan Program if, in 
addition to satisfying the criteria in this part (except the criterion 
in Sec. 600.54 that the institution be public or private nonprofit), the 
school satisfies all of the following criteria:
    (1) The school provides, and in the normal course requires its 
students to complete, a program of clinical and classroom veterinary 
instruction that is supervised closely by members of the school's 
faculty, and that is provided in facilities adequately equipped and 
staffed to afford students comprehensive clinical and classroom 
veterinary instruction through a training program for foreign veterinary 
students that

[[Page 228]]

has been approved by all veterinary licensing boards and evaluating 
bodies whose views are considered relevant by the Secretary.
    (2) The school has graduated classes during each of the two twelve-
month periods immediately preceding the date the Secretary receives the 
school's request for an eligibility determination.
    (3) The school employs for the program described in paragraph (a)(1) 
of this section only those faculty members whose academic credentials 
are the equivalent of credentials required of faculty members teaching 
the same or similar courses at veterinary schools in the United States.
    (4) Effective July 1, 2015, the school is accredited or 
provisionally accredited by an organization acceptable to the Secretary 
for the purpose of evaluating veterinary programs.
    (b)(1) No portion of the foreign veterinary educational program 
offered to U.S. students, other than the clinical training portion of 
the program as provided for in paragraph (b)(2) of this section, may be 
located outside of the country in which the main campus of the foreign 
veterinary school is located;
    (2)(i) For a veterinary school that is neither public nor private 
nonprofit, the school's students must complete their clinical training 
at an approved veterinary school located in the United States;
    (ii) For a veterinary school that is public or private nonprofit, 
the school's students may complete their clinical training at an 
approved veterinary school located--
    (A) In the United States;
    (B) In the home country; or
    (C) Outside of the United States or the home country, if--
    (1) The location is included in the accreditation of a veterinary 
program accredited by the American Veterinary Medical Association 
(AVMA); or
    (2) No individual student takes more than two electives at the 
location and the combined length of the elective does not exceed eight 
weeks.

(Authority: 20 U.S.C. 1002 and 1092.)

[75 FR 67197, Nov. 1, 2010]



Sec. 600.57  Additional criteria for determining whether a foreign
nursing school is eligible to apply to participate in the Direct 
Loan Program.

    (a) Effective July 1, 2012 for a foreign nursing school that was 
participating in any title IV, HEA program on August 13, 2008, and 
effective July 1, 2011 for all other foreign nursing schools, the 
Secretary considers the foreign nursing school to be eligible to apply 
to participate in the Direct Loan Program if, in addition to satisfying 
the criteria in this part (except the criterion in Sec. 600.54 that the 
institution be public or private nonprofit), the nursing school 
satisfies all of the following criteria:
    (1) The nursing school is an associate degree school of nursing, a 
collegiate school of nursing, or a diploma school of nursing.
    (2) The nursing school has an agreement with a hospital located in 
the United States or an accredited school of nursing located in the 
United States that requires students of the nursing school to complete 
the student's clinical training at the hospital or accredited school of 
nursing.
    (3) The nursing school has an agreement with an accredited school of 
nursing located in the United States providing that students graduating 
from the nursing school located outside of the United States also 
receive a degree from the accredited school of nursing located in the 
United States.
    (4) The nursing school certifies only Federal Stafford Loan program 
loans or Federal PLUS program loans, as those terms are defined in 
Sec. 668.2, for students attending the nursing school.
    (5) The nursing school reimburses the Secretary for the cost of any 
loan defaults for current and former students included in the 
calculation of the institution's cohort default rate during the previous 
fiscal year.
    (6)(i) The nursing school determines the consent requirements for 
and requires the necessary consents of all students accepted for 
admission who are U.S. citizens, nationals, or eligible permanent 
residents to enable the school to comply with the collection and 
submission requirements of paragraph (a)(6)(ii) of this section.

[[Page 229]]

    (ii) The nursing school annually either--
    (A) Obtains, at its own expense, all results achieved by students 
and graduates who are U.S. citizens, nationals, or eligible permanent 
residents on the National Council Licensure Examination for Registered 
Nurses (NCLEX-RN), together with the dates the student has taken the 
examination, including any failed examinations, and provides such 
results to the Secretary; or
    (B) Obtains a report or reports from the National Council of State 
Boards of Nursing (NCSB), or an NCSB affiliate or NCSB contractor, 
reflecting the percentage of the school's students and graduates taking 
the NCLEX-RN in the preceding year who passed the examination, or the 
data from which the percentage could be derived, and provides the report 
to the Secretary.
    (7) Not less than 75 percent of the school's students and graduates 
who are U.S. citizens, nationals, or eligible permanent residents who 
took the NCLEX-RN in the year preceding the year for which the 
institution is certifying a Federal Stafford Loan or a Federal Plus 
Loan, passed the examination.
    (8) The school provides, including under the agreements described in 
paragraphs (a)(2) and (a)(3) of this section, and in the normal course 
requires its students to complete, a program of clinical and classroom 
nursing instruction that is supervised closely by members of the 
school's faculty that is provided in facilities adequately equipped and 
staffed to afford students comprehensive clinical and classroom nursing 
instruction, through a training program for foreign nursing students 
that has been approved by all nurse licensing boards and evaluating 
bodies whose views are considered relevant by the Secretary.
    (9) The school has graduated classes during each of the two twelve-
month periods immediately preceding the date the Secretary receives the 
school's request for an eligibility determination.
    (10) The school employs only those faculty members whose academic 
credentials are the equivalent of credentials required of faculty 
members teaching the same or similar courses at nursing schools in the 
United States.
    (b) For purposes of paragraph (a)(5) of this section, the cost of a 
loan default is the estimated future cost of collections on the 
defaulted loan.
    (c) The Department continues to collect on the Direct Loan after a 
school reimburses the Secretary for the amount specified in paragraph 
(b) of this section until the loan is paid in full or otherwise 
satisfied, or the loan account is closed out.
    (d) No portion of the foreign nursing program offered to U.S. 
students may be located outside of the country in which the main campus 
of the foreign nursing school is located, except for clinical sites 
located in the United States.

[75 FR 67197, Nov. 1, 2010]



Sec. 600.58  Duration of eligibility determination.

    (a) The eligibility of a foreign institution under this subpart 
expires six years after the date of the Secretary's determination that 
the institution is eligible to apply for participation, except that the 
Secretary may specify a shorter period of eligibility. In the case of a 
foreign graduate medical school, continued eligibility is dependent upon 
annual submission of the data and information required under 
Sec. 600.55(a)(5)(i), subject to the terms described in Sec. 600.53(b).
    (b) A foreign institution that has been determined eligible loses 
its eligibility on the date that the institution no longer meets any of 
the criteria in this subpart E.
    (c) Notwithstanding the provisions of 34 CFR 668.26, if a foreign 
institution loses its eligibility under this subpart E, an otherwise 
eligible student, continuously enrolled at the institution before the 
loss of eligibility, may receive an FFEL program loan for attendance at 
that institution for the academic year succeeding the academic year in 
which that institution lost its eligibility, if the student actually 
received an FFEL program loan for attendance at the institution for a 
period

[[Page 230]]

during which the institution was eligible under this subpart E.

(Authority: 20 U.S.C. 1082, 1088, 1099c)

[59 FR 22063, Apr. 28, 1994. Redesignated at 64 FR 58616, Oct. 29, 1999, 
as amended at 69 FR 12275, Mar. 16, 2004. Redesignated at 75 FR 67197, 
Nov. 1, 2010]



PART 601_INSTITUTION AND LENDER REQUIREMENTS RELATING TO EDUCATION 
LOANS--Table of Contents



                            Subpart A_General

Sec.
601.1  Scope.
601.2  Definitions.

 Subpart B_Loan Information To Be Disclosed by Covered Institutions and 
                  Institution-Affiliated Organizations

601.10  Preferred lender arrangement disclosures.
601.11  Private education loan disclosures and self-certification form.
601.12  Use of institution and lender name.

   Subpart C_Responsibilities of Covered Institutions and Institution-
                        Affiliated Organizations

601.20  Annual report.
601.21  Code of conduct.

Subpart D_Loan Information To Be Disclosed by Institutions Participating 
               in the William D. Ford Direct Loan Program

601.30  Duties of institutions.

                    Subpart E_Lender Responsibilities

601.40  Disclosure and reporting requirements for lenders.

    Authority: 20 U.S.C. 1019-1019d, 1021, 1094(a) and (h).

    Source: 74 FR 55643, Oct. 28, 2009, unless otherwise noted.



                            Subpart A_General



Sec. 601.1  Scope.

    This part establishes disclosure and reporting requirements for 
covered institutions, institution-affiliated organizations, and lenders 
that provide, issue, recommend, promote, endorse, or provide information 
relating to education loans. Education loans include loans authorized by 
the Higher Education Act of 1965, as amended (HEA) and private education 
loans.

(Authority:20 U.S.C. 1019-1019d, 1021, 1094(a)(25) and (e)).



Sec. 601.2  Definitions.

    (a) The definitions of the following terms used in this part are set 
forth in the regulations for Institutional Eligibility under the Higher 
Education Act of 1965, as amended, 34 CFR part 600:
    Federal Family Education Loan (FFEL) Program
    Secretary
    Title IV, HEA program
    (b) The following definitions also apply to this part:
    Agent: An officer or employee of a covered institution or an 
institution-affiliated organization.
    Covered institution: Any institution of higher education, 
proprietary institution of higher education, postsecondary vocational 
institution, or institution outside the United States, as these terms 
are defined in 34 CFR part 600, that receives any Federal funding or 
assistance.
    Education loan: Except when used as part of the term ``private 
education loan'',
    (1) Any loan made, insured, or guaranteed under the Federal Family 
Education Loan (FFEL) Program;
    (2) Any loan made under the William D. Ford Federal Direct Loan 
Program; or
    (3) A private education loan.
    Institution-affiliated organization: (1) Any organization that--
    (i) Is directly or indirectly related to a covered institution; and
    (ii) Is engaged in the practice of recommending, promoting, or 
endorsing education loans for students attending such covered 
institution or the families of such students.
    (2) An institution-affiliated organization--
    (i) May include an alumni organization, athletic organization, 
foundation, or social, academic, or professional organization, of a 
covered institution; and
    (ii) Does not include any lender with respect to any education loan 
secured, made, or extended by such lender.
    Lender: (1) An eligible lender in the Federal Family Education Loan

[[Page 231]]

(FFEL) Program, as defined in 34 CFR 682.200(b);
    (2) The Department in the Direct Loan program;
    (3) In the case of a private educational loan, a private education 
lender as defined in section 140 of the Truth in Lending Act; and
    (4) Any other person engaged in the business of securing, making, or 
extending education loans on behalf of the lender.
    Officer: A director or trustee of a covered institution or 
institution-affiliated organization, if such individual is treated as an 
employee of such covered institution or institution-affiliated 
organization, respectively.
    Preferred lender arrangement: (1) An arrangement or agreement 
between a lender and a covered institution or an institution-affiliated 
organization of such covered institution--
    (i) Under which a lender provides or otherwise issues education 
loans to the students attending such covered institution or the families 
of such students; and
    (ii) That relates to such covered institution or such institution-
affiliated organization recommending, promoting, or endorsing the 
education loan products of the lender.
    (2) A preferred lender arrangement does not include--
    (i) Arrangements or agreements with respect to loans made under the 
William D. Ford Federal Direct Loan Program; or
    (ii) Arrangements or agreements with respect to loans that originate 
through the PLUS Loan auction pilot program under section 499(b) of the 
HEA.
    (3) For purpose of this definition, an arrangement or agreement does 
not exist if the private education loan provided or issued to a student 
attending a covered institution is made by the covered institution or by 
an institution-affiliated organization of the covered institution, and 
the private education loan is--
    (i) Funded by the covered institution's or institution-affiliated 
organization's own funds;
    (ii) Funded by donor-directed contributions;
    (iii) Made under title VII or title VIII of the Public Service 
Health Act; or
    (iv) Made under a State-funded financial aid program, if the terms 
and conditions of the loan include a loan forgiveness option for public 
service.
    Private education loan: As the term is defined in 12 CFR 
226.46(b)(5), a loan provided by a private educational lender that is 
not a title IV loan and that is issued expressly for postsecondary 
education expenses to a borrower, regardless of whether the loan is 
provided through the educational institution that the student attends or 
directly to the borrower from the private educational lender. A private 
education loan does not include--
    (1) An extension of credit under an open end consumer credit plan, a 
reverse mortgage transaction, a residential mortgage transaction, or any 
other loan that is secured by real property or a dwelling; or
    (2) An extension of credit in which the educational institution is 
the lender if--
    (i) The term of the extension of credit is 90 days or less; or
    (ii) An interest rate will not be applied to the credit balance and 
the term of the extension of credit is one year or less, even if the 
credit is payable in more than four installments.

(Authority:20 U.S.C. 1019)



 Subpart B_Loan Information To Be Disclosed by Covered Institutions and 
                  Institution-Affiliated Organizations



Sec. 601.10  Preferred lender arrangement disclosures.

    (a) A covered institution, or an institution-affiliated organization 
of such covered institution, that participates in a preferred lender 
arrangement must disclose--
    (1) On such covered institution's or institution-affiliated 
organization's Web site and in all informational materials described in 
paragraph (b) of this section that describe or discuss education loans--
    (i) The maximum amount of Federal grant and loan aid under title IV 
of the HEA available to students, in an easy to understand format;

[[Page 232]]

    (ii) The information identified on a model disclosure form developed 
by the Secretary pursuant to section 153(a)(2)(B) of the HEA, for each 
type of education loan that is offered pursuant to a preferred lender 
arrangement of the institution or institution-affiliated organization to 
students of the institution or the families of such students; and
    (iii) A statement that such institution is required to process the 
documents required to obtain a loan under the Federal Family Education 
Loan (FFEL) Program from any eligible lender the student selects; and
    (2) On such covered institution's or institution-affiliated 
organization's Web site and in all informational materials described in 
paragraph (b) of this section that describe or discuss private education 
loans--
    (i) In the case of a covered institution, the information that the 
Board of Governors of the Federal Reserve System requires to be 
disclosed under section 128(e)(11) of the Truth in Lending Act (15 
U.S.C. 1638(e)(11)), for each type of private education loan offered 
pursuant to a preferred lender arrangement of the institution to 
students of the institution or the families of such students; and
    (ii) In the case of an institution-affiliated organization of a 
covered institution, the information the Board of Governors of the 
Federal Reserve System requires to be disclosed under section 128(e)(1) 
of the Truth in Lending Act (15 U.S.C. 1638(e)(1)), for each type of 
private education loan offered pursuant to a preferred lender 
arrangement of the organization to students of such institution or the 
families of such students.
    (b) The informational materials described in paragraphs (a)(1) and 
(a)(2) of this section are publications, mailings, or electronic 
messages or materials that--
    (1) Are distributed to prospective or current students of a covered 
institution and families of such students; and
    (2) Describe or discuss the financial aid opportunities available to 
students at an institution of higher education.
    (c)(1) Each covered institution and each institution-affiliated 
organization that participates in a preferred lender arrangement must 
provide the information described in paragraph (a)(1)(ii) of this 
section, and the information described in paragraphs (a)(2)(i) and 
(a)(2)(ii) of this section, respectively, for each type of education 
loan offered pursuant to the preferred lender arrangement.
    (2) The information identified in paragraph (c)(1) of this section 
must be provided to students attending the covered institution, or the 
families of such students, as applicable, annually and must be provided 
in a manner that allows for the students or their families to take such 
information into account before selecting a lender or applying for an 
education loan.
    (d) If a covered institution compiles, maintains, and makes 
available a preferred lender list as required under Sec. 668.14(b)(28), 
the institution must--
    (1) Clearly and fully disclose on such preferred lender list--
    (i) Not less than the information required to be disclosed under 
section 153(a)(2)(A) of the HEA;
    (ii) Why the institution participates in a preferred lender 
arrangement with each lender on the preferred lender list, particularly 
with respect to terms and conditions or provisions favorable to the 
borrower; and
    (iii) That the students attending the institution, or the families 
of such students, do not have to borrow from a lender on the preferred 
lender list;
    (2) Ensure, through the use of the list of lender affiliates 
provided by the Secretary under section 487(h)(2) of the HEA, that--
    (i) There are not less than three FFEL lenders that are not 
affiliates of each other included on the preferred lender list and, if 
the institution recommends, promotes, or endorses private education 
loans, there are not less than two lenders of private education loans 
that are not affiliates of each other included on the preferred lender 
list; and
    (ii) The preferred lender list under paragraph (d) of this section--
    (A) Specifically indicates, for each listed lender, whether the 
lender is or is not an affiliate of each other lender on the preferred 
lender list; and
    (B) If a lender is an affiliate of another lender on the preferred 
lender

[[Page 233]]

list, describes the details of such affiliation;
    (3) Prominently disclose the method and criteria used by the 
institution in selecting lenders with which to participate in preferred 
lender arrangements to ensure that such lenders are selected on the 
basis of the best interests of the borrowers, including--
    (i) Payment of origination or other fees on behalf of the borrower;
    (ii) Highly competitive interest rates, or other terms and 
conditions or provisions of Title IV, HEA program loans or private 
education loans;
    (iii) High-quality servicing for such loans; or
    (iv) Additional benefits beyond the standard terms and conditions or 
provisions for such loans;
    (4) Exercise a duty of care and a duty of loyalty to compile the 
preferred lender list under paragraph (d) of this section without 
prejudice and for the sole benefit of the students attending the 
institution, or the families of such students; and
    (5) Not deny or otherwise impede the borrower's choice of a lender 
or cause unnecessary delay in loan certification under title IV of the 
HEA for those borrowers who choose a lender that is not included on the 
preferred lender list.

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

(Authority:20 U.S.C. 1019a(a)(1)(A) and 1019b(c))



Sec. 601.11  Private education loan disclosures and self-certification
form.

    (a) A covered institution, or an institution-affiliated organization 
of such covered institution, that provides information regarding a 
private education loan from a lender to a prospective borrower must 
provide private education loan disclosures to the prospective borrower, 
regardless of whether the covered institution or institution-affiliated 
organization participates in a preferred lender arrangement.
    (b) The private education loan disclosures must--
    (1) Provide the prospective borrower with the information the Board 
of Governors of the Federal Reserve System requires to be disclosed 
under section 128(e)(1) of the Truth in Lending Act (15 U.S.C. 
1638(e)(1)) for such loan;
    (2) Inform the prospective borrower that--
    (i) The prospective borrower may qualify for loans or other 
assistance under title IV of the HEA; and
    (ii) The terms and conditions of Title IV, HEA program loans may be 
more favorable than the provisions of private education loans.
    (c) The covered institution or institution-affiliated organization 
must ensure that information regarding private education loans is 
presented in such a manner as to be distinct from information regarding 
Title IV, HEA program loans.
    (d) Upon an enrolled or admitted student applicant's request for a 
private education loan self-certification form, an institution must 
provide to the applicant, in written or electronic form--
    (1) The self-certification form for private education loans 
developed by the Secretary in consultation with the Board of Governors 
of the Federal Reserve System, to satisfy the requirements of section 
128(e)(3) of the Truth in Lending Act (15 U.S.C. 1638(e)(3)); and
    (2) The information required to complete the form, to the extent the 
institution possesses such information as specified in 34 CFR 
668.14(b)(29).

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

(Authority:20 U.S.C. 1019a(a)(1)(B) and 1019d)



Sec. 601.12  Use of institution and lender name.

    A covered institution, or an institution-affiliated organization of 
such covered institution, that participates in a preferred lender 
arrangement with a lender regarding private education loans must--
    (a) Not agree to the lender's use of the name, emblem, mascot, or 
logo of such institution or organization, or other words, pictures, or 
symbols readily identified with such institution or organization, in the 
marketing of private education loans to students attending such 
institution in any way that implies that the loan is offered or made by 
such institution or organization instead of the lender; and

[[Page 234]]

    (b) Ensure that the name of the lender is displayed in all 
information and documentation related to the private education loans 
described in this section.

(Authority:20 U.S.C. 1019a(a)(2)-(a)(3))



   Subpart C_Responsibilities of Covered Institutions and Institution-
                        Affiliated Organizations



Sec. 601.20  Annual report.

    Each covered institution, and each institution-affiliated 
organization of such covered institution, that participates in a 
preferred lender arrangement, must--
    (a) Prepare and submit to the Secretary an annual report, by a date 
determined by the Secretary, that includes, for each lender that 
participates in a preferred lender arrangement with such covered 
institution or organization--
    (1) The information described in Sec. 601.10(c); and
    (2) A detailed explanation of why such covered institution or 
institution-affiliated organization participates in a preferred lender 
arrangement with the lender, including why the terms, conditions, and 
provisions of each type of education loan provided pursuant to the 
preferred lender arrangement are beneficial for students attending such 
institution, or the families of such students, as applicable; and
    (b) Ensure that the report required under this section is made 
available to the public and provided to students attending or planning 
to attend such covered institution and the families of such students.

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

(Authority:20 U.S.C. 1019b(c)(2))



Sec. 601.21  Code of conduct.

    (a)(1) A covered institution that participates in a preferred lender 
arrangement must comply with the code of conduct requirements described 
in this section.
    (2) The covered institution must--
    (i) Develop a code of conduct with respect to FFEL Program loans and 
private education loans with which the institution's agents must comply. 
The code of conduct must--
    (A) Prohibit a conflict of interest with the responsibilities of an 
agent of an institution with respect to FFEL Program loans and private 
education loans; and
    (B) At a minimum, include the provisions specified in paragraph (c) 
of this section;
    (ii) Publish such code of conduct prominently on the institution's 
Web site; and
    (iii) Administer and enforce such code by, at a minimum, requiring 
that all of the institution's agents with responsibilities with respect 
to FFEL Program loans or private education loans be annually informed of 
the provisions of the code of conduct.
    (b) Any institution-affiliated organization of a covered institution 
that participates in a preferred lender arrangement must--
    (1) Comply with the code of conduct developed and published by such 
covered institution under paragraph (a)(1) of this section;
    (2) If such institution-affiliated organization has a Web site, 
publish such code of conduct prominently on the Web site; and
    (3) Administer and enforce such code of conduct by, at a minimum, 
requiring that all of such institution-affiliated organization's agents 
with responsibilities with respect to FFEL Program loans or private 
education loans be annually informed of the provisions of such code of 
conduct.
    (c) A covered institution's code of conduct must prohibit--
    (1) Revenue-sharing arrangements with any lender.The institution 
must not enter into any revenue-sharing arrangement with any lender. For 
purposes of this paragraph, the term revenue-sharing arrangement means 
an arrangement between a covered institution and a lender under which--
    (i) A lender provides or issues a FFEL Program loan or private 
education loan to students attending the institution or to the families 
of such students; and
    (ii) The institution recommends the lender or the loan products of 
the lender and in exchange, the lender pays a fee or provides other 
material benefits,

[[Page 235]]

including revenue or profit sharing, to the institution, an agent;
    (2)(i) Employees of the financial aid office receiving gifts from a 
lender, a guarantor, or a loan servicer. Agents who are employed in the 
financial aid office of the institution or who otherwise have 
responsibilities with respect to FFEL Program loans or private education 
loans, must not solicit or accept any gift from a lender, guarantor, or 
servicer of FFEL Program loans or private education loans;
    (ii) For purposes of paragraph (c) of this section, the term gift 
means any gratuity, favor, discount, entertainment, hospitality, loan, 
or other item having a monetary value of more than a de minimus amount. 
The term includes a gift of services, transportation, lodging, or meals, 
whether provided in kind, by purchase of a ticket, payment in advance, 
or reimbursement after the expense has been incurred;
    (iii) The term gift does not include any of the following:
    (A) Standard material, activities, or programs on issues related to 
a loan, default aversion, default prevention, or financial literacy, 
such as a brochure, a workshop, or training.
    (B) Food, refreshments, training, or informational material 
furnished to an agent as an integral part of a training session that is 
designed to improve the service of a lender, guarantor, or servicer of 
FFEL Program loans or private education loans to the institution, if 
such training contributes to the professional development of the agent.
    (C) Favorable terms, conditions, and borrower benefits on a FFEL 
Program loan or private education loan provided to a student employed by 
the institution if such terms, conditions, or benefits are comparable to 
those provided to all students of the institution.
    (D) Entrance and exit counseling services provided to borrowers to 
meet the institution's responsibilities for entrance and exit counseling 
as required by Secs. 682.604(f) and 682.604(g), as long as the 
institution's staff are in control of the counseling (whether in person 
or via electronic capabilities) and such counseling does not promote the 
products or services of any specific lender.
    (E) Philanthropic contributions to an institution from a lender, 
servicer, or guarantor of FFEL Program loans or private education loans 
that are unrelated to FFEL Program loans or private education loans or 
any contribution from any lender, servicer, or guarantor, that is not 
made in exchange for any advantage related to FFEL Program loans or 
private education loans.
    (F) State education grants, scholarships, or financial aid funds 
administered by or on behalf of a State; and
    (iv) For purposes of paragraph (c) of this section, a gift to a 
family member of an agent, or to any other individual based on that 
individual's relationship with the agent, is considered a gift to the 
agent if--
    (A) The gift is given with the knowledge and acquiescence of the 
agent; and
    (B) The agent has reason to believe the gift was given because of 
the official position of the agent;
    (3) Consulting or other contracting arrangements. An agent who is 
employed in the financial aid office of the institution or who otherwise 
has responsibilities with respect to FFEL Program loans or private 
education loans must not accept from any lender or affiliate of any 
lender any fee, payment, or other financial benefit (including the 
opportunity to purchase stock) as compensation for any type of 
consulting arrangement or other contract to provide services to a lender 
or on behalf of a lender relating to FFEL Program loans or private 
education loans. Nothing in paragraph (c)(3) of this section will be 
construed as prohibiting--
    (i) An agent who is not employed in the institution's financial aid 
office and who does not otherwise have responsibilities with respect to 
FFEL Program loans or private education loans from performing paid or 
unpaid service on a board of directors of a lender, guarantor, or 
servicer of education loans;
    (ii) An agent who is not employed in the institution's financial aid 
office but who has responsibility with respect to FFEL Program loans or 
private education loans from performing paid or unpaid service on a 
board of directors of a lender, guarantor, or servicer of FFEL Program 
loans or private education loans, if the institution has a written 
conflict of interest policy that clearly sets forth that agents must

[[Page 236]]

recuse themselves from participating in any decision of the board 
regarding FFEL Program loans or private education loans at the 
institution; or
    (iii) An officer, employee, or contractor of a lender, guarantor, or 
servicer of FFEL Program loans or private education loans from serving 
on a board of directors, or serving as a trustee, of an institution, if 
the institution has a written conflict of interest policy that the board 
member or trustee must recuse themselves from any decision regarding 
FFEL Program loans or private education loans at the institution;
    (4) Directing borrowers to particular lenders or delaying loan 
certifications. The institution must not--
    (i) For any first-time borrower, assign, through award packaging or 
other methods, the borrower's loan to a particular lender; or
    (ii) Refuse to certify, or delay certification of, any loan based on 
the borrower's selection of a particular lender or guaranty agency;
    (5)(i) Offers of funds for private loans. The institution must not 
request or accept from any lender any offer of funds to be used for 
private education loans, including funds for an opportunity pool loan, 
to students in exchange for the institution providing concessions or 
promises regarding providing the lender with--
    (A) A specified number of FFEL Program loans or private education 
loans;
    (B) A specified loan volume of such loans; or
    (C) A preferred lender arrangement for such loans.
    (ii) For purposes of paragraph (c) of this section, the term 
opportunity pool loan means a private education loan made by a lender to 
a student attending the institution or the family member of such a 
student that involves a payment, directly or indirectly, by such 
institution of points, premiums, additional interest, or financial 
support to such lender for the purpose of such lender extending credit 
to the student or the family;
    (6) Staffing assistance. The institution must not request or accept 
from any lender any assistance with call center staffing or financial 
aid office staffing, except that nothing in this paragraph will be 
construed to prohibit the institution from requesting or accepting 
assistance from a lender related to--
    (i) Professional development training for financial aid 
administrators;
    (ii) Providing educational counseling materials, financial literacy 
materials, or debt management materials to borrowers, provided that such 
materials disclose to borrowers the identification of any lender that 
assisted in preparing or providing such materials; or
    (iii) Staffing services on a short-term, nonrecurring basis to 
assist the institution with financial aid-related functions during 
emergencies, including State-declared or Federally declared natural 
disasters, Federally declared national disasters, and other localized 
disasters and emergencies identified by the Secretary; and
    (7) Advisory board compensation. Any employee who is employed in the 
financial aid office of the institution, or who otherwise has 
responsibilities with respect to FFEL Program loans or private education 
loans or other student financial aid of the institution, and who serves 
on an advisory board, commission, or group established by a lender, 
guarantor, or group of lenders or guarantors, must not receive anything 
of value from the lender, guarantor, or group of lenders or guarantors, 
except that the employee may be reimbursed for reasonable expenses, as 
that term is defined in Sec. 668.16(d)(2)(ii), incurred in serving on 
such advisory board, commission, or group.

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

(Authority:20 U.S.C. 1019b(c)(2)), 1094(a)(25) and (e)



Subpart D_Loan Information To Be Disclosed by Institutions Participating 
               in the William D. Ford Direct Loan Program



Sec. 601.30  Duties of institutions.

    (a) Each covered institution participating in the William D. Ford 
Direct Loan Program under part D of title IV of the HEA must--
    (1) Make the information identified in a model disclosure form 
developed by the Secretary pursuant to section

[[Page 237]]

154(a) of the HEA available to students attending or planning to attend 
the institution, or the families of such students, as applicable; and
    (2) If the institution provides information regarding a private 
education loan to a prospective borrower, concurrently provide such 
borrower with the information identified on the model disclosure form 
that the Secretary provides to the institution under section 154(a) of 
the HEA.
    (b) In providing the information required under paragraph (a) of 
this section, a covered institution may use a comparable form designed 
by the institution instead of the model disclosure form.

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

(Authority:20 U.S.C. 1019c(b))



                    Subpart E_Lender Responsibilities



Sec. 601.40  Disclosure and reporting requirements for lenders.

    (a) Disclosures to borrowers. (1) A lender must, at or prior to 
disbursement of a FFEL loan, provide the borrower, in writing (including 
through electronic means), in clear and understandable terms, the 
disclosures required in Sec. 682.205(a) and (b).
    (2) A lender must, for each of its private education loans, comply 
with the disclosure requirements under section 128(e) of the Truth in 
Lending Act (15 U.S.C. 1638(e)).
    (b) Reports to the Secretary. Each FFEL lender must report annually 
to the Secretary--
    (1) Any reasonable expenses paid or provided to any agent of a 
covered institution who is employed in the financial aid office or has 
other responsibilities with respect to education loans or other student 
financial aid of the institution for service on a lender advisory board, 
commission or group established by a lender or group of lenders; or
    (2) Any similar expenses paid or provided to any agent of an 
institution-affiliated organization who is involved in recommending, 
promoting, or endorsing education loans.
    (3) The report required by this paragraph must include--
    (i) The amount of expenses paid or provided for each specific 
instance in which the lender provided expenses;
    (ii) The name of any agent described in paragraph (b)(1) of this 
section to whom the expenses were paid or provided;
    (iii) The dates of the activity for which the expenses were paid or 
provided; and
    (iv) A brief description of the activity for which the expenses were 
paid or provided.
    (c) Lender certification of compliance. (1) Any FFEL lender 
participating in one or more preferred lender arrangements must annually 
certify to the Secretary its compliance with the Higher Education Act of 
1965, as amended; and
    (2) If the lender is required to submit an audit under 34 CFR 
682.305(c), the lender's compliance with the requirements under this 
section must be reported on and attested to annually by the lender's 
auditor.
    (3) A lender may comply with the certification requirements of this 
section if the certifications are provided as part of the annual audit 
required by 34 CFR 682.305(c).
    (4) A lender who is not required to submit an audit must submit the 
required certification at such time and in such manner as directed by 
the Secretary.
    (d) Annual lender report to covered institutions. A FFEL lender with 
a preferred lender arrangement with a covered institution or an 
institution-affiliated organization relating to FFEL loans must 
annually, on a date prescribed by the Secretary, provide to the covered 
institution or the institution-affiliated organization and to the 
Secretary, such information required by the Secretary in relation to the 
FFEL loans the lender plans to offer pursuant to that preferred lender 
arrangement for the next award year.

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

(Authority:20 U.S.C. 1019a(b) and 1019b(b))

[[Page 238]]



PART 602_THE SECRETARY'S RECOGNITION OF ACCREDITING AGENCIES
--Table of Contents



                            Subpart A_General

Sec.
602.1  Why does the Secretary recognize accrediting agencies?
602.2  How do I know which agencies the Secretary recognizes?
602.3  What definitions apply to this part?

                 Subpart B_The Criteria for Recognition

                     Basic Eligibility Requirements

602.10  Link to Federal programs.
602.11  Geographic scope of accrediting activities.
602.12  Accrediting experience.
602.13  Acceptance of the agency by others.

             Organizational and Administrative Requirements

602.14  Purpose and organization.
602.15  Administrative and fiscal responsibilities.

                Required Standards and Their Application

602.16  Accreditation and preaccreditation standards.
602.17  Application of standards in reaching an accrediting decision.
602.18  Ensuring consistency in decision-making.
602.19  Monitoring and reevaluation of accredited institutions and 
          programs.
602.20  Enforcement of standards.
602.21  Review of standards.

               Required Operating Policies and Procedures

602.22  Substantive change.
602.23  Operating procedures all agencies must have.
602.24  Additional procedures certain institutional accreditors must 
          have.
602.25  Due process.
602.26  Notification of accrediting decisions.
602.27  Other information an agency must provide the Department.
602.28  Regard for decisions of States and other accrediting agencies.

                    Subpart C_The Recognition Process

               Application and Review by Department Staff

602.30  Activities covered by recognition procedures.
602.31  Agency submissions to the Department.
602.32  Procedures for Department review of applications for recognition 
          or for change in scope, compliance reports, and increases in 
          enrollment.
602.33  Procedures for review of agencies during the period of 
          recognition.

 Review by the National Advisory Committee on Institutional Quality and 
                                Integrity

602.34  Advisory Committee meetings.
602.35  Responding to the Advisory Committee's recommendation.

          Review and Decision by the Senior Department Official

602.36  Senior Department official's decision.

                      Appeal Rights and Procedures

602.37  Appealing the senior Department official's decision to the 
          Secretary.
602.38  Contesting the Secretary's final decision to deny, limit, 
          suspend, or terminate an agency's recognition.

                  Subpart D_Department Responsibilities

602.50  What information does the Department share with a recognized 
          agency about its accredited institutions and programs?

    Authority: 20 U.S.C. 1099b, unless otherwise noted.

    Source: 64 FR 56617, Oct. 20, 1999, unless otherwise noted.



                            Subpart A_General



Sec. 602.1  Why does the Secretary recognize accrediting agencies?

    (a) The Secretary recognizes accrediting agencies to ensure that 
these agencies are, for the purposes of the Higher Education Act of 
1965, as amended (HEA), or for other Federal purposes, reliable 
authorities regarding the quality of education or training offered by 
the institutions or programs they accredit.
    (b) The Secretary lists an agency as a nationally recognized 
accrediting agency if the agency meets the criteria for recognition 
listed in subpart B of this part.

(Authority: 20 U.S.C. 1099b)



Sec. 602.2  How do I know which agencies the Secretary recognizes?

    (a) Periodically, the Secretary publishes a list of recognized 
agencies in the Federal Register, together with each agency's scope of 
recognition. You may obtain a copy of the list from the

[[Page 239]]

Department at any time. The list is also available on the Department's 
web site.
    (b) If the Secretary denies continued recognition to a previously 
recognized agency, or if the Secretary limits, suspends, or terminates 
the agency's recognition before the end of its recognition period, the 
Secretary publishes a notice of that action in the Federal Register. The 
Secretary also makes the reasons for the action available to the public, 
on request.

(Authority: 20 U.S.C. 1099b)



Sec. 602.3  What definitions apply to this part?

    The following definitions apply to this part:
    Accreditation means the status of public recognition that an 
accrediting agency grants to an educational institution or program that 
meets the agency's standards and requirements.
    Accrediting agency or agency means a legal entity, or that part of a 
legal entity, that conducts accrediting activities through voluntary, 
non-Federal peer review and makes decisions concerning the accreditation 
or preaccreditation status of institutions, programs, or both.
    Act means the Higher Education Act of 1965, as amended.
    Adverse accrediting action or adverse action means the denial, 
withdrawal, suspension, revocation, or termination of accreditation or 
preaccreditation, or any comparable accrediting action an agency may 
take against an institution or program.
    Advisory Committee means the National Advisory Committee on 
Institutional Quality and Integrity.
    Branch campus means a location of an institution that meets the 
definition of branch campus in 34 CFR 600.2.
    Compliance report means a written report that the Department 
requires an agency to file to demonstrate that the agency has addressed 
deficiencies specified in a decision letter from the senior Department 
official or the Secretary.
    Correspondence education means:
    (1) Education provided through one or more courses by an institution 
under which the institution provides instructional materials, by mail or 
electronic transmission, including examinations on the materials, to 
students who are separated from the instructor.
    (2) Interaction between the instructor and the student is limited, 
is not regular and substantive, and is primarily initiated by the 
student.
    (3) Correspondence courses are typically self-paced.
    (4) Correspondence education is not distance education.
    Designated Federal Official means the Federal officer designated 
under section 10(f) of the Federal Advisory Committee Act, 5 U.S.C. 
Appdx. 1.
    Direct assessment program means an instructional program that, in 
lieu of credit hours or clock hours as a measure of student learning, 
utilizes direct assessment of student learning, or recognizes the direct 
assessment of student learning by others, and meets the conditions of 34 
CFR 668.10. For title IV, HEA purposes, the institution must obtain 
approval for the direct assessment program from the Secretary under 34 
CFR 668.10(g) or (h) as applicable. As part of that approval, the 
accrediting agency must--
    (1) Evaluate the program(s) and include them in the institution's 
grant of accreditation or preaccreditation; and
    (2) Review and approve the institution's claim of each direct 
assessment program's equivalence in terms of credit or clock hours.
    Distance education means education that uses one or more of the 
technologies listed in paragraphs (1) through (4) of this definition to 
deliver instruction to students who are separated from the instructor 
and to support regular and substantive interaction between the students 
and the instructor, either synchronously or asynchronously. The 
technologies may include--
    (1) The internet;
    (2) One-way and two-way transmissions through open broadcast, closed 
circuit, cable, microwave, broadband lines, fiber optics, satellite, or 
wireless communications devices;
    (3) Audio conferencing; or
    (4) Video cassettes, DVDs, and CD-ROMs, if the cassettes, DVDs, or 
CD-ROMs are used in a course in conjunction with any of the technologies 
listed

[[Page 240]]

in paragraphs (1) through (3) of this definition.
    Final accrediting action means a final determination by an 
accrediting agency regarding the accreditation or preaccreditation 
status of an institution or program. A final accrediting action is not 
appealable within the agency.
    Institution of higher education or institution means an educational 
institution that qualifies, or may qualify, as an eligible institution 
under 34 CFR part 600.
    Institutional accrediting agency means an agency that accredits 
institutions of higher education.
    Nationally recognized accrediting agency, nationally recognized 
agency, or recognized agency means an accrediting agency that the 
Secretary recognizes under this part.
    Preaccreditation means the status of public recognition that an 
accrediting agency grants to an institution or program for a limited 
period of time that signifies the agency has determined that the 
institution or program is progressing towards accreditation and is 
likely to attain accreditation before the expiration of that limited 
period of time.
    Program means a postsecondary educational program offered by an 
institution of higher education that leads to an academic or 
professional degree, certificate, or other recognized educational 
credential.
    Programmatic accrediting agency means an agency that accredits 
specific educational programs that prepare students for entry into a 
profession, occupation, or vocation.
    Recognition means an unappealed determination by the senior 
Department official under Sec. 602.36, or a determination by the 
Secretary on appeal under Sec. 602.37, that an accrediting agency 
complies with the criteria for recognition listed in subpart B of this 
part and that the agency is effective in its application of those 
criteria. A grant of recognition to an agency as a reliable authority 
regarding the quality of education or training offered by institutions 
or programs it accredits remains in effect for the term granted except 
upon a determination made in accordance with subpart C of this part that 
the agency no longer complies with the subpart B criteria or that it has 
become ineffective in its application of those criteria.
    Representative of the public means a person who is not--
    (1) An employee, member of the governing board, owner, or 
shareholder of, or consultant to, an institution or program that either 
is accredited or preaccredited by the agency or has applied for 
accreditation or preaccreditation;
    (2) A member of any trade association or membership organization 
related to, affiliated with, or associated with the agency; or
    (3) A spouse, parent, child, or sibling of an individual identified 
in paragraph (1) or (2) of this definition.
    Scope of recognition or scope means the range of accrediting 
activities for which the Secretary recognizes an agency. The Secretary 
may place a limitation on the scope of an agency's recognition for Title 
IV, HEA purposes. The Secretary's designation of scope defines the 
recognition granted according to--
    (1) Geographic area of accrediting activities;
    (2) Types of degrees and certificates covered;
    (3) Types of institutions and programs covered;
    (4) Types of preaccreditation status covered, if any; and
    (5) Coverage of accrediting activities related to distance education 
or correspondence education.
    Secretary means the Secretary of the U.S. Department of Education or 
any official or employee of the Department acting for the Secretary 
under a delegation of authority.
    Senior Department official means the senior official in the U.S. 
Department of Education who reports directly to the Secretary regarding 
accrediting agency recognition.
    State means a State of the Union, American Samoa, the Commonwealth 
of Puerto Rico, the District of Columbia, Guam, the United States Virgin 
Islands, the Commonwealth of the Northern Mariana Islands, the Republic 
of the Marshall Islands, the Federated States of Micronesia, and the 
Republic

[[Page 241]]

of Palau. The latter three are also known as the Freely Associated 
States.
    Teach-out agreement means a written agreement between institutions 
that provides for the equitable treatment of students and a reasonable 
opportunity for students to complete their program of study if an 
institution, or an institutional location that provides one hundred 
percent of at least one program offered, ceases to operate before all 
enrolled students have completed their program of study.
    Teach-out plan means a written plan developed by an institution that 
provides for the equitable treatment of students if an institution, or 
an institutional location that provides one hundred 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. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55426, Oct. 27, 2009]



                 Subpart B_The Criteria for Recognition

                     Basic Eligibility Requirements



Sec. 602.10  Link to Federal programs.

    The agency must demonstrate that--
    (a) If the agency accredits institutions of higher education, its 
accreditation is a required element in enabling at least one of those 
institutions to establish eligibility to participate in HEA programs; or
    (b) If the agency accredits institutions of higher education or 
higher education programs, or both, its accreditation is a required 
element in enabling at least one of those entities to establish 
eligibility to participate in non-HEA Federal programs.

(Authority: 20 U.S.C. 1099b)



Sec. 602.11  Geographic scope of accrediting activities.

    The agency must demonstrate that its accrediting activities cover--
    (a) A State, if the agency is part of a State government;
    (b) A region of the United States that includes at least three 
States that are reasonably close to one another; or
    (c) The United States.

(Authority: 20 U.S.C. 1099b)



Sec. 602.12  Accrediting experience.

    (a) An agency seeking initial recognition must demonstrate that it 
has--
    (1) Granted accreditation or preaccreditation--
    (i) To one or more institutions if it is requesting recognition as 
an institutional accrediting agency and to one or more programs if it is 
requesting recognition as a programmatic accrediting agency;
    (ii) That covers the range of the specific degrees, certificates, 
institutions, and programs for which it seeks recognition; and
    (iii) In the geographic area for which it seeks recognition; and
    (2) Conducted accrediting activities, including deciding whether to 
grant or deny accreditation or preaccreditation, for at least two years 
prior to seeking recognition.
    (b) A recognized agency seeking an expansion of its scope of 
recognition must demonstrate that it has granted accreditation or 
preaccreditation covering the range of the specific degrees, 
certificates, institutions, and programs for which it seeks the 
expansion of scope.

(Authority: 20 U.S.C. 1099b)



Sec. 602.13  Acceptance of the agency by others.

    The agency must demonstrate that its standards, policies, 
procedures, and decisions to grant or deny accreditation are widely 
accepted in the United States by--
    (a) Educators and educational institutions; and
    (b) Licensing bodies, practitioners, and employers in the 
professional or vocational fields for which the educational institutions 
or programs within the agency's jurisdiction prepare their students.

(Authority: 20 U.S.C. 1099b)

[[Page 242]]

             Organizational and Administrative Requirements



Sec. 602.14  Purpose and organization.

    (a) The Secretary recognizes only the following four categories of 
agencies:

------------------------------------------------------------------------
 The Secretary recognizes . .
              .                                that . . .
------------------------------------------------------------------------
(1) An accrediting agency....  (i) Has a voluntary membership of
                                institutions of higher education;
                               (ii) Has as a principal purpose the
                                accrediting of institutions of higher
                                education and that accreditation is a
                                required element in enabling those
                                institutions to participate in HEA
                                programs; and
                               (iii) Satisfies the ``separate and
                                independent'' requirements in paragraph
                                (b) of this section.
(2) An accrediting agency....  (i) Has a voluntary membership; and
                               (ii) Has as its principal purpose the
                                accrediting of higher education
                                programs, or higher education programs
                                and institutions of higher education,
                                and that accreditation is a required
                                element in enabling those entities to
                                participate in non-HEA Federal programs.
(3) An accrediting agency....  for purposes of determining eligibility
                                for Title IV, HEA programs--
                               (i) Either has a voluntary membership of
                                individuals participating in a
                                profession or has as its principal
                                purpose the accrediting of programs
                                within institutions that are accredited
                                by a nationally recognized accrediting
                                agency; and
                               (ii) Either satisfies the ``separate and
                                independent'' requirements in paragraph
                                (b) of this section or obtains a waiver
                                of those requirements under paragraphs
                                (d) and (e) of this section.
(4) A State agency...........  (i) Has as a principal purpose the
                                accrediting of institutions of higher
                                education, higher education programs, or
                                both; and
                               (ii) The Secretary listed as a nationally
                                recognized accrediting agency on or
                                before October 1, 1991 and has
                                recognized continuously since that date.
------------------------------------------------------------------------

    (b) For purposes of this section, the term separate and independent 
means that--
    (1) The members of the agency's decision-making body--who decide the 
accreditation or preaccreditation status of institutions or programs, 
establish the agency's accreditation policies, or both--are not elected 
or selected by the board or chief executive officer of any related, 
associated, or affiliated trade association or membership organization;
    (2) At least one member of the agency's decision-making body is a 
representative of the public, and at least one-seventh of that body 
consists of representatives of the public;
    (3) The agency has established and implemented guide lines for each 
member of the decision-making body to avoid conflicts of interest in 
making decisions;
    (4) The agency's dues are paid separately from any dues paid to any 
related, associated, or affiliated trade association or membership 
organization; and
    (5) The agency develops and determines its own budget, with no 
review by or consultation with any other entity or organization.
    (c) The Secretary considers that any joint use of personnel, 
services, equipment, or facilities by an agency and a related, 
associated, or affiliated trade association or membership organization 
does not violate the ``separate and independent'' requirements in 
paragraph (b) of this section if--
    (1) The agency pays the fair market value for its proportionate 
share of the joint use; and
    (2) The joint use does not compromise the independence and 
confidentiality of the accreditation process.
    (d) For purposes of paragraph (a)(3) of this section, the Secretary 
may waive the ``separate and independent'' requirements in paragraph (b) 
of this section if the agency demonstrates that--
    (1) The Secretary listed the agency as a nationally recognized 
agency on or before October 1, 1991 and has recognized it continuously 
since that date;
    (2) The related, associated, or affiliated trade association or 
membership organization plays no role in making or ratifying either the 
accrediting or policy decisions of the agency;

[[Page 243]]

    (3) The agency has sufficient budgetary and administrative autonomy 
to carry out its accrediting functions independently; and
    (4) The agency provides to the related, associated, or affiliated 
trade association or membership organization only information it makes 
available to the public.
    (e) An agency seeking a waiver of the ``separate and independent'' 
requirements under paragraph (d) of this section must apply for the 
waiver each time the agency seeks recognition or continued recognition.

(Authority: 20 U.S.C. 1099b)



Sec. 602.15  Administrative and fiscal responsibilities.

    The agency must have the administrative and fiscal capability to 
carry out its accreditation activities in light of its requested scope 
of recognition. The agency meets this requirement if the agency 
demonstrates that--
    (a) The agency has--
    (1) Adequate administrative staff and financial resources to carry 
out its accrediting responsibilities;
    (2) Competent and knowledgeable individuals, qualified by education 
and experience in their own right and trained by the agency on their 
responsibilities, as appropriate for their roles, regarding the agency's 
standards, policies, and procedures, to conduct its on-site evaluations, 
apply or establish its policies, and make its accrediting and 
preaccrediting decisions, including, if applicable to the agency's 
scope, their responsibilities regarding distance education and 
correspondence education;
    (3) Academic and administrative personnel on its evaluation, policy, 
and decision-making bodies, if the agency accredits institutions;
    (4) Educators and practitioners on its evaluation, policy, and 
decision-making bodies, if the agency accredits programs or single-
purpose institutions that prepare students for a specific profession;
    (5) Representatives of the public on all decision-making bodies; and
    (6) Clear and effective controls against conflicts of interest, or 
the appearance of conflicts of interest, by the agency's--
    (i) Board members;
    (ii) Commissioners;
    (iii) Evaluation team members;
    (iv) Consultants;
    (v) Administrative staff; and
    (vi) Other agency representatives; and
    (b) The agency maintains complete and accurate records of--
    (1) Its last full accreditation or preaccreditation review of each 
institution or program, including on-site evaluation team reports, the 
institution's or program's responses to on-site reports, periodic review 
reports, any reports of special reviews conducted by the agency between 
regular reviews, and a copy of the institution's or program's most 
recent self-study; and
    (2) All decisions made throughout an institution's or program's 
affiliation with the agency regarding the accreditation and 
preaccreditation of any institution or program and substantive changes, 
including all correspondence that is significantly related to those 
decisions.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55426, Oct. 27, 2009]

                Required Standards and Their Application



Sec. 602.16  Accreditation and preaccreditation standards.

    (a) The agency must demonstrate that it has standards for 
accreditation, and preaccreditation, if offered, that are sufficiently 
rigorous to ensure that the agency is a reliable authority regarding the 
quality of the education or training provided by the institutions or 
programs it accredits. The agency meets this requirement if--
    (1) The agency's accreditation standards effectively address the 
quality of the institution or program in the following areas:
    (i) Success with respect to student achievement in relation to the 
institution's mission, which may include different standards for 
different institutions or programs, as established by the institution, 
including, as appropriate, consideration of State licensing 
examinations, course completion, and job placement rates.

[[Page 244]]

    (ii) Curricula.
    (iii) Faculty.
    (iv) Facilities, equipment, and supplies.
    (v) Fiscal and administrative capacity as appropriate to the 
specified scale of operations.
    (vi) Student support services.
    (vii) Recruiting and admissions practices, academic calendars, 
catalogs, publications, grading, and advertising.
    (viii) Measures of program length and the objectives of the degrees 
or credentials offered.
    (ix) Record of student complaints received by, or available to, the 
agency.
    (x) Record of compliance with the institution's program 
responsibilities under Title IV of the Act, based on the most recent 
student loan default rate data provided by the Secretary, the results of 
financial or compliance audits, program reviews, and any other 
information that the Secretary may provide to the agency; and
    (2) The agency's preaccreditation standards, if offered, are 
appropriately related to the agency's accreditation standards and do not 
permit the institution or program to hold preaccreditation status for 
more than five years.
    (b) If the agency only accredits programs and does not serve as an 
institutional accrediting agency for any of those programs, its 
accreditation standards must address the areas in paragraph (a)(1) of 
this section in terms of the type and level of the program rather than 
in terms of the institution.
    (c) If the agency has or seeks to include within its scope of 
recognition the evaluation of the quality of institutions or programs 
offering distance education or correspondence education, the agency's 
standards must effectively address the quality of an institution's 
distance education or correspondence education in the areas identified 
in paragraph (a)(1) of this section. The agency is not required to have 
separate standards, procedures, or policies for the evaluation of 
distance education or correspondence education.
    (d) If none of the institutions an agency accredits participates in 
any Title IV, HEA program, or if the agency only accredits programs 
within institutions that are accredited by a nationally recognized 
institutional accrediting agency, the agency is not required to have the 
accreditation standards described in paragraphs (a)(1)(viii) and 
(a)(1)(x) of this section.
    (e) An agency that has established and applies the standards in 
paragraph (a) of this section may establish any additional accreditation 
standards it deems appropriate.
    (f) Nothing in paragraph (a) of this section restricts--
    (1) An accrediting agency from setting, with the involvement of its 
members, and applying accreditation standards for or to institutions or 
programs that seek review by the agency; or
    (2) An institution from developing and using institutional standards 
to show its success with respect to student achievement, which 
achievement may be considered as part of any accreditation review.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55427, Oct. 27, 2009]



Sec. 602.17  Application of standards in reaching an accrediting decision.

    The agency must have effective mechanisms for evaluating an 
institution's or program's compliance with the agency's standards before 
reaching a decision to accredit or preaccredit the institution or 
program. The agency meets this requirement if the agency demonstrates 
that it--
    (a) Evaluates whether an institution or program--
    (1) Maintains clearly specified educational objectives that are 
consistent with its mission and appropriate in light of the degrees or 
certificates awarded;
    (2) Is successful in achieving its stated objectives; and
    (3) Maintains degree and certificate requirements that at least 
conform to commonly accepted standards;
    (b) Requires the institution or program to prepare, following 
guidance provided by the agency, an in-depth self-study that includes 
the assessment

[[Page 245]]

of educational quality and the institution's or program's continuing 
efforts to improve educational quality;
    (c) Conducts at least one on-site review of the institution or 
program during which it obtains sufficient information to determine if 
the institution or program complies with the agency's standards;
    (d) Allows the institution or program the opportunity to respond in 
writing to the report of the on-site review;
    (e) Conducts its own analysis of the self-study and supporting 
documentation furnished by the institution or program, the report of the 
on-site review, the institution's or program's response to the report, 
and any other appropriate information from other sources to determine 
whether the institution or program complies with the agency's standards;
    (f) Provides the institution or program with a detailed written 
report that assesses--
    (1) The institution's or program's compliance with the agency's 
standards, including areas needing improvement; and
    (2) The institution's or program's performance with respect to 
student achievement; and
    (g) Requires institutions that offer distance education or 
correspondence education to have processes in place through which the 
institution establishes that the student who registers in a distance 
education or correspondence education course or program is the same 
student who participates in and completes the course or program and 
receives the academic credit. The agency meets this requirement if it--
    (1) Requires institutions to verify the identity of a student who 
participates in class or coursework by using, at the option of the 
institution, methods such as--
    (i) A secure login and pass code;
    (ii) Proctored examinations; and
    (iii) New or other technologies and practices that are effective in 
verifying student identity; and
    (2) Makes clear in writing that institutions must use processes that 
protect student privacy and notify students of any projected additional 
student charges associated with the verification of student identity at 
the time of registration or enrollment.

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55427, Oct. 27, 2009]



Sec. 602.18  Ensuring consistency in decision-making.

    The agency must consistently apply and enforce standards that 
respect the stated mission of the institution, including religious 
mission, and that ensure that the education or training offered by an 
institution or program, including any offered through distance education 
or correspondence education, is of sufficient quality to achieve its 
stated objective for the duration of any accreditation or 
preaccreditation period granted by the agency. The agency meets this 
requirement if the agency--
    (a) Has written specification of the requirements for accreditation 
and preaccreditation that include clear standards for an institution or 
program to be accredited;
    (b) Has effective controls against the inconsistent application of 
the agency's standards;
    (c) Bases decisions regarding accreditation and preaccreditation on 
the agency's published standards;
    (d) Has a reasonable basis for determining that the information the 
agency relies on for making accrediting decisions is accurate; and
    (e) Provides the institution or program with a detailed written 
report that clearly identifies any deficiencies in the institution's or 
program's compliance with the agency's standards.

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55427, Oct. 27, 2009]



Sec. 602.19  Monitoring and reevaluation of accredited institutions
and programs.

    (a) The agency must reevaluate, at regularly established intervals, 
the institutions or programs it has accredited or preaccredited.
    (b) The agency must demonstrate it has, and effectively applies, a 
set of monitoring and evaluation approaches that enables the agency to 
identify problems with an institution's or program's continued 
compliance with

[[Page 246]]

agency standards and that takes into account institutional or program 
strengths and stability. These approaches must include periodic reports, 
and collection and analysis of key data and indicators, identified by 
the agency, including, but not limited to, fiscal information and 
measures of student achievement, consistent with the provisions of 
Sec. 602.16(f). This provision does not require institutions or programs 
to provide annual reports on each specific accreditation criterion.
    (c) Each agency must monitor overall growth of the institutions or 
programs it accredits and, at least annually, collect headcount 
enrollment data from those institutions or programs.
    (d) Institutional accrediting agencies must monitor the growth of 
programs at institutions experiencing significant enrollment growth, as 
reasonably defined by the agency.
    (e) Any agency that has notified the Secretary of a change in its 
scope in accordance with Sec. 602.27(a)(5) must monitor the headcount 
enrollment of each institution it has accredited that offers distance 
education or correspondence education. If any such institution has 
experienced an increase in headcount enrollment of 50 percent or more 
within one institutional fiscal year, the agency must report that 
information to the Secretary within 30 days of acquiring such data.

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55427, Oct. 27, 2009]



Sec. 602.20  Enforcement of standards.

    (a) If the agency's review of an institution or program under any 
standard indicates that the institution or program is not in compliance 
with that standard, the agency must--
    (1) Immediately initiate adverse action against the institution or 
program; or
    (2) Require the institution or program to take appropriate action to 
bring itself into compliance with the agency's standards within a time 
period that must not exceed--
    (i) Twelve months, if the program, or the longest program offered by 
the institution, is less than one year in length;
    (ii) Eighteen months, if the program, or the longest program offered 
by the institution, is at least one year, but less than two years, in 
length; or
    (iii) Two years, if the program, or the longest program offered by 
the institution, is at least two years in length.
    (b) If the institution or program does not bring itself into 
compliance within the specified period, the agency must take immediate 
adverse action unless the agency, for good cause, extends the period for 
achieving compliance.

(Authority: 20 U.S.C. 1099b)



Sec. 602.21  Review of standards.

    (a) The agency must maintain a systematic program of review that 
demonstrates that its standards are adequate to evaluate the quality of 
the education or training provided by the institutions and programs it 
accredits and relevant to the educational or training needs of students.
    (b) The agency determines the specific procedures it follows in 
evaluating its standards, but the agency must ensure that its program of 
review--
    (1) Is comprehensive;
    (2) Occurs at regular, yet reasonable, intervals or on an ongoing 
basis;
    (3) Examines each of the agency's standards and the standards as a 
whole; and
    (4) Involves all of the agency's relevant constituencies in the 
review and affords them a meaningful opportunity to provide input into 
the review.
    (c) If the agency determines, at any point during its systematic 
program of review, that it needs to make changes to its standards, the 
agency must initiate action within 12 months to make the changes and 
must complete that action within a reasonable period of time. Before 
finalizing any changes to its standards, the agency must--
    (1) Provide notice to all of the agency's relevant constituencies, 
and other parties who have made their interest known to the agency, of 
the changes the agency proposes to make;
    (2) Give the constituencies and other interested parties adequate 
opportunity to comment on the proposed changes; and
    (3) Take into account any comments on the proposed changes submitted

[[Page 247]]

timely by the relevant constituencies and by other interested parties.

(Authority: 20 U.S.C. 1099b)

               Required Operating Policies and Procedures



Sec. 602.22  Substantive change.

    (a) If the agency accredits institutions, it must maintain adequate 
substantive change policies that ensure that any substantive change to 
the educational mission, program, or programs of an institution after 
the agency has accredited or preaccredited the institution does not 
adversely affect the capacity of the institution to continue to meet the 
agency's standards. The agency meets this requirement if--
    (1) The agency requires the institution to obtain the agency's 
approval of the substantive change before the agency includes the change 
in the scope of accreditation or preaccreditation it previously granted 
to the institution; and
    (2) The agency's definition of substantive change includes at least 
the following types of change:
    (i) Any change in the established mission or objectives of the 
institution.
    (ii) Any change in the legal status, form of control, or ownership 
of the institution.
    (iii) The addition of courses or programs that represent a 
significant departure from the existing offerings of educational 
programs, or method of delivery, from those that were offered when the 
agency last evaluated the institution.
    (iv) The addition of programs of study at a degree or credential 
level different from that which is included in the institution's current 
accreditation or preaccreditation.
    (v) A change from clock hours to credit hours.
    (vi) A substantial increase in the number of clock or credit hours 
awarded for successful completion of a program.
    (vii) If the agency's accreditation of an institution enables the 
institution to seek eligibility to participate in title IV, HEA 
programs, the entering into a contract under which an institution or 
organization not certified to participate in the title IV, HEA programs 
offers more than 25 percent of one or more of the accredited 
institution's educational programs.
    (viii)(A) If the agency's accreditation of an institution enables it 
to seek eligibility to participate in title IV, HEA programs, the 
establishment of an additional location at which the institution offers 
at least 50 percent of an educational program. The addition of such a 
location must be approved by the agency in accordance with paragraph (c) 
of this section unless the accrediting agency determines, and issues a 
written determination stating that the institution has--
    (1) Successfully completed at least one cycle of accreditation of 
maximum length offered by the agency and one renewal, or has been 
accredited for at least ten years;
    (2) At least three additional locations that the agency has 
approved; and
    (3) Met criteria established by the agency indicating sufficient 
capacity to add additional locations without individual prior approvals, 
including at a minimum satisfactory evidence of a system to ensure 
quality across a distributed enterprise that includes--
    (i) Clearly identified academic control;
    (ii) Regular evaluation of the locations;
    (iii) Adequate faculty, facilities, resources, and academic and 
student support systems;
    (iv) Financial stability; and
    (v) Long-range planning for expansion.
    (B) The agency's procedures for approval of an additional location, 
pursuant to paragraph (a)(2)(viii)(A) of this section, must require 
timely reporting to the agency of every additional location established 
under this approval.
    (C) Each agency determination or redetermination to preapprove an 
institution's addition of locations under paragraph (a)(2)(viii)(A) of 
this section may not exceed five years.
    (D) The agency may not preapprove an institution's addition of 
locations under paragraph (a)(2)(viii)(A) of this section after the 
institution undergoes a change in ownership resulting in a change in 
control as defined in 34 CFR

[[Page 248]]

600.31 until the institution demonstrates that it meets the conditions 
for the agency to preapprove additional locations described in this 
paragraph.
    (E) The agency must have an effective mechanism for conducting, at 
reasonable intervals, visits to a representative sample of additional 
locations approved under paragraph (a)(2)(viii)(A) of this section.
    (ix) The acquisition of any other institution or any program or 
location of another institution.
    (x) The addition of a permanent location at a site at which the 
institution is conducting a teach-out for students of another 
institution that has ceased operating before all students have completed 
their program of study.
    (3) The agency's substantive change policy must define when the 
changes made or proposed by an institution are or would be sufficiently 
extensive to require the agency to conduct a new comprehensive 
evaluation of that institution.
    (b) The agency may determine the procedures it uses to grant prior 
approval of the substantive change. However, these procedures must 
specify an effective date, which is not retroactive, on which the change 
is included in the program's or institution's accreditation. An agency 
may designate the date of a change in ownership as the effective date of 
its approval of that substantive change if the accreditation decision is 
made within 30 days of the change in ownership. Except as provided in 
paragraph (c) of this section, these procedures may, but need not, 
require a visit by the agency.
    (c) Except as provided in paragraph (a)(2)(viii)(A) of this section, 
if the agency's accreditation of an institution enables the institution 
to seek eligibility to participate in title IV, HEA programs, the 
agency's procedures for the approval of an additional location where at 
least 50 percent of an educational program is offered must provide for a 
determination of the institution's fiscal and administrative capacity to 
operate the additional location. In addition, the agency's procedures 
must include--
    (1) A visit, within six months, to each additional location the 
institution establishes, if the institution--
    (i) Has a total of three or fewer additional locations;
    (ii) Has not demonstrated, to the agency's satisfaction, that it has 
a proven record of effective educational oversight of additional 
locations; or
    (iii) Has been placed on warning, probation, or show cause by the 
agency or is subject to some limitation by the agency on its 
accreditation or preaccreditation status;
    (2) An effective mechanism for conducting, at reasonable intervals, 
visits to a representative sample of additional locations of 
institutions that operate more than three additional locations; and
    (3) An effective mechanism, which may, at the agency's discretion, 
include visits to additional locations, for ensuring that accredited and 
preaccredited institutions that experience rapid growth in the number of 
additional locations maintain educational quality.
    (d) The purpose of the visits described in paragraph (c) of this 
section is to verify that the additional location has the personnel, 
facilities, and resources it claimed to have in its application to the 
agency for approval of the additional location.

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55428, Oct. 27, 2009]



Sec. 602.23  Operating procedures all agencies must have.

    (a) The agency must maintain and make available to the public 
written materials describing--
    (1) Each type of accreditation and preaccreditation it grants;
    (2) The procedures that institutions or programs must follow in 
applying for accreditation or preaccreditation;
    (3) The standards and procedures it uses to determine whether to 
grant, reaffirm, reinstate, restrict, deny, revoke, terminate, or take 
any other action related to each type of accreditation and 
preaccreditation that the agency grants;
    (4) The institutions and programs that the agency currently 
accredits or preaccredits and, for each institution and program, the 
year the agency will next review or reconsider it for accreditation or 
preaccreditation; and

[[Page 249]]

    (5) The names, academic and professional qualifications, and 
relevant employment and organizational affiliations of--
    (i) The members of the agency's policy and decision-making bodies; 
and
    (ii) The agency's principal administrative staff.
    (b) In providing public notice that an institution or program 
subject to its jurisdiction is being considered for accreditation or 
preaccreditation, the agency must provide an opportunity for third-party 
comment concerning the institution's or program's qualifications for 
accreditation or preaccreditation. At the agency's discretion, third-
party comment may be received either in writing or at a public hearing, 
or both.
    (c) The accrediting agency must--
    (1) Review in a timely, fair, and equitable manner any complaint it 
receives against an accredited institution or program that is related to 
the agency's standards or procedures. The agency may not complete its 
review and make a decision regarding a complaint unless, in accordance 
with published procedures, it ensures that the institution or program 
has sufficient opportunity to provide a response to the complaint;
    (2) Take follow-up action, as necessary, including enforcement 
action, if necessary, based on the results of its review; and
    (3) Review in a timely, fair, and equitable manner, and apply 
unbiased judgment to, any complaints against itself and take follow-up 
action, as appropriate, based on the results of its review.
    (d) If an institution or program elects to make a public disclosure 
of its accreditation or preaccreditation status, the agency must ensure 
that the institution or program discloses that status accurately, 
including the specific academic or instructional programs covered by 
that status and the name, address, and telephone number of the agency.
    (e) The accrediting agency must provide for the public correction of 
incorrect or misleading information an accredited or preaccredited 
institution or program releases about--
    (1) The accreditation or preaccreditation status of the institution 
or program;
    (2) The contents of reports of on-site reviews; and
    (3) The agency's accrediting or preaccrediting actions with respect 
to the institution or program.
    (f) The agency may establish any additional operating procedures it 
deems appropriate. At the agency's discretion, these may include 
unannounced inspections.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55428, Oct. 27, 2009]



Sec. 602.24  Additional procedures certain institutional accreditors
must have.

    If the agency is an institutional accrediting agency and its 
accreditation or preaccreditation enables those institutions to obtain 
eligibility to participate in Title IV, HEA programs, the agency must 
demonstrate that it has established and uses all of the following 
procedures:
    (a) Branch campus. (1) The agency must require the institution to 
notify the agency if it plans to establish a branch campus and to submit 
a business plan for the branch campus that describes--
    (i) The educational program to be offered at the branch campus;
    (ii) The projected revenues and expenditures and cash flow at the 
branch campus; and
    (iii) The operation, management, and physical resources at the 
branch campus.
    (2) The agency may extend accreditation to the branch campus only 
after it evaluates the business plan and takes whatever other actions it 
deems necessary to determine that the branch campus has sufficient 
educational, financial, operational, management, and physical resources 
to meet the agency's standards.
    (3) The agency must undertake a site visit to the branch campus as 
soon as practicable, but no later than six months after the 
establishment of that campus.

[[Page 250]]

    (b) Change in ownership. The agency must undertake a site visit to 
an institution that has undergone a change of ownership that resulted in 
a change of control as soon as practicable, but no later than six months 
after the change of ownership.
    (c) Teach-out plans and agreements. (1) The agency must require an 
institution it accredits or preaccredits to submit a teach-out plan to 
the agency for approval upon the occurrence of any of the following 
events:
    (i) The Secretary notifies the agency that the Secretary has 
initiated an emergency action against an institution, in accordance with 
section 487(c)(1)(G) of the HEA, or an action to limit, suspend, or 
terminate an institution participating in any title IV, HEA program, in 
accordance with section 487(c)(1)(F) of the HEA, and that a teach-out 
plan is required.
    (ii) The agency acts to withdraw, terminate, or suspend the 
accreditation or preaccreditation of the institution.
    (iii) The institution notifies the agency that it intends to cease 
operations entirely or close a location that provides one hundred 
percent of at least one program.
    (iv) A State licensing or authorizing agency notifies the agency 
that an institution's license or legal authorization to provide an 
educational program has been or will be revoked.
    (2) The agency must evaluate the teach-out plan to ensure it 
provides for the equitable treatment of students under criteria 
established by the agency, specifies additional charges, if any, and 
provides for notification to the students of any additional charges.
    (3) If the agency approves a teach-out plan that includes a program 
that is accredited by another recognized accrediting agency, it must 
notify that accrediting agency of its approval.
    (4) The agency may require an institution it accredits or 
preaccredits to enter into a teach-out agreement as part of its teach-
out plan.
    (5) The agency must require an institution it accredits or 
preaccredits that enters into a teach-out agreement, either on its own 
or at the request of the agency, to submit that teach-out agreement for 
approval. The agency may approve the teach-out agreement only if the 
agreement is between institutions that are accredited or preaccredited 
by a nationally recognized accrediting agency, is consistent with 
applicable standards and regulations, and provides for the equitable 
treatment of students by ensuring that--
    (i) The teach-out institution has the necessary experience, 
resources, and support services to--
    (A) Provide an educational program that is of acceptable quality and 
reasonably similar in content, structure, and scheduling to that 
provided by the institution that is ceasing operations either entirely 
or at one of its locations; and
    (B) Remain stable, carry out its mission, and meet all obligations 
to existing students; and
    (ii) The teach-out institution demonstrates that it can provide 
students access to the program and services without requiring them to 
move or travel substantial distances and that it will provide students 
with information about additional charges, if any.
    (d) Closed institution. If an institution the agency accredits or 
preaccredits closes without a teach-out plan or agreement, the agency 
must work with the Department and the appropriate State agency, to the 
extent feasible, to assist students in finding reasonable opportunities 
to complete their education without additional charges.
    (e) Transfer of credit policies. The accrediting agency must 
confirm, as part of its review for initial accreditation or 
preaccreditation, or renewal of accreditation, that the institution has 
transfer of credit policies that--
    (1) Are publicly disclosed in accordance with Sec. 668.43(a)(11); 
and
    (2) Include a statement of the criteria established by the 
institution regarding the transfer of credit earned at another 
institution of higher education.
    (f) Credit-hour policies. The accrediting agency, as part of its 
review of an institution for initial accreditation or preaccreditation 
or renewal of accreditation, must conduct an effective review and 
evaluation of the reliability and accuracy of the institution's 
assignment of credit hours.
    (1) The accrediting agency meets this requirement if--

[[Page 251]]

    (i) It reviews the institution's--
    (A) Policies and procedures for determining the credit hours, as 
defined in 34 CFR 600.2, that the institution awards for courses and 
programs; and
    (B) The application of the institution's policies and procedures to 
its programs and coursework; and
    (ii) Makes a reasonable determination of whether the institution's 
assignment of credit hours conforms to commonly accepted practice in 
higher education.
    (2) In reviewing and evaluating an institution's policies and 
procedures for determining credit hour assignments, an accrediting 
agency may use sampling or other methods in the evaluation, sufficient 
to comply with paragraph (f)(1)(i)(B) of this section.
    (3) The accrediting agency must take such actions that it deems 
appropriate to address any deficiencies that it identifies at an 
institution as part of its reviews and evaluations under paragraph 
(f)(1)(i) and (ii) of this section, as it does in relation to other 
deficiencies it may identify, subject to the requirements of this part.
    (4) If, following the institutional review process under this 
paragraph (f), the agency finds systemic noncompliance with the agency's 
policies or significant noncompliance regarding one or more programs at 
the institution, the agency must promptly notify the Secretary.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55428, Oct. 27, 2009; 
75 FR 66947, Oct. 29, 2010]



Sec. 602.25  Due process.

    The agency must demonstrate that the procedures it uses throughout 
the accrediting process satisfy due process. The agency meets this 
requirement if the agency does the following:
    (a) Provides adequate written specification of its requirements, 
including clear standards, for an institution or program to be 
accredited or preaccredited.
    (b) Uses procedures that afford an institution or program a 
reasonable period of time to comply with the agency's requests for 
information and documents.
    (c) Provides written specification of any deficiencies identified at 
the institution or program examined.
    (d) Provides sufficient opportunity for a written response by an 
institution or program regarding any deficiencies identified by the 
agency, to be considered by the agency within a timeframe determined by 
the agency, and before any adverse action is taken.
    (e) Notifies the institution or program in writing of any adverse 
accrediting action or an action to place the institution or program on 
probation or show cause. The notice describes the basis for the action.
    (f) Provides an opportunity, upon written request of an institution 
or program, for the institution or program to appeal any adverse action 
prior to the action becoming final.
    (1) The appeal must take place at a hearing before an appeals panel 
that--
    (i) May not include current members of the agency's decision-making 
body that took the initial adverse action;
    (ii) Is subject to a conflict of interest policy;
    (iii) Does not serve only an advisory or procedural role, and has 
and uses the authority to make the following decisions: to affirm, 
amend, or reverse adverse actions of the original decision-making body; 
and
    (iv) Affirms, amends, reverses, or remands the adverse action. A 
decision to affirm, amend, or reverse the adverse action is implemented 
by the appeals panel or by the original decision-making body, at the 
agency's option. In a decision to remand the adverse action to the 
original decision-making body for further consideration, the appeals 
panel must identify specific issues that the original decision-making 
body must address. In a decision that is implemented by or remanded to 
the original decision-making body, that body must act in a manner 
consistent with the appeals panel's decisions or instructions.
    (2) The agency must recognize the right of the institution or 
program to employ counsel to represent the institution or program during 
its appeal, including to make any presentation that the agency permits 
the institution or

[[Page 252]]

program to make on its own during the appeal.
    (g) The agency notifies the institution or program in writing of the 
result of its appeal and the basis for that result.
    (h)(1) The agency must provide for a process, in accordance with 
written procedures, through which an institution or program may, before 
the agency reaches a final adverse action decision, seek review of new 
financial information if all of the following conditions are met:
    (i) The financial information was unavailable to the institution or 
program until after the decision subject to appeal was made.
    (ii) The financial information is significant and bears materially 
on the financial deficiencies identified by the agency. The criteria of 
significance and materiality are determined by the agency.
    (iii) The only remaining deficiency cited by the agency in support 
of a final adverse action decision is the institution's or program's 
failure to meet an agency standard pertaining to finances.
    (2) An institution or program may seek the review of new financial 
information described in paragraph (h)(1) of this section only once and 
any determination by the agency made with respect to that review does 
not provide a basis for an appeal.

(Authority: 20 U.S.C. 1099b)

[74 FR 55429, Oct. 27, 2009]



Sec. 602.26  Notification of accrediting decisions.

    The agency must demonstrate that it has established and follows 
written procedures requiring it to provide written notice of its 
accrediting decisions to the Secretary, the appropriate State licensing 
or authorizing agency, the appropriate accrediting agencies, and the 
public. The agency meets this requirement if the agency, following its 
written procedures--
    (a) Provides written notice of the following types of decisions to 
the Secretary, the appropriate State licensing or authorizing agency, 
the appropriate accrediting agencies, and the public no later than 30 
days after it makes the decision:
    (1) A decision to award initial accreditation or preaccreditation to 
an institution or program.
    (2) A decision to renew an institution's or program's accreditation 
or preaccreditation;
    (b) Provides written notice of the following types of decisions to 
the Secretary, the appropriate State licensing or authorizing agency, 
and the appropriate accrediting agencies at the same time it notifies 
the institution or program of the decision, but no later than 30 days 
after it reaches the decision:
    (1) A final decision to place an institution or program on probation 
or an equivalent status.
    (2) A final decision to deny, withdraw, suspend, revoke, or 
terminate the accreditation or preaccreditation of an institution or 
program.
    (3) A final decision to take any other adverse action, as defined by 
the agency, not listed in paragraph (b)(2) of this section;
    (c) Provides written notice to the public of the decisions listed in 
paragraphs (b)(1), (b)(2), and (b)(3) of this section within 24 hours of 
its notice to the institution or program;
    (d) For any decision listed in paragraph (b)(2) of this section, 
makes available to the Secretary, the appropriate State licensing or 
authorizing agency, and the public, no later than 60 days after the 
decision, a brief statement summarizing the reasons for the agency's 
decision and the official comments that the affected institution or 
program may wish to make with regard to that decision, or evidence that 
the affected institution has been offered the opportunity to provide 
official comment;
    (e) Notifies the Secretary, the appropriate State licensing or 
authorizing agency, the appropriate accrediting agencies, and, upon 
request, the public if an accredited or preaccredited institution or 
program--
    (1) Decides to withdraw voluntarily from accreditation or 
preaccreditation, within 30 days of receiving notification from the 
institution or program that it is withdrawing voluntarily from 
accreditation or preaccreditation; or

[[Page 253]]

    (2) Lets its accreditation or preaccreditation lapse, within 30 days 
of the date on which accreditation or preaccreditation lapses.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55429, Oct. 27, 2009]



Sec. 602.27  Other information an agency must provide the Department.

    (a) The agency must submit to the Department--
    (1) A copy of any annual report it prepares;
    (2) A copy, updated annually, of its directory of accredited and 
preaccredited institutions and programs;
    (3) A summary of the agency's major accrediting activities during 
the previous year (an annual data summary), if requested by the 
Secretary to carry out the Secretary's responsibilities related to this 
part;
    (4) Any proposed change in the agency's policies, procedures, or 
accreditation or preaccreditation standards that might alter its--
    (i) Scope of recognition, except as provided in paragraph (a)(5) of 
this section; or
    (ii) Compliance with the criteria for recognition;
    (5) Notification that the agency has expanded its scope of 
recognition to include distance education or correspondence education as 
provided in section 496(a)(4)(B)(i)(I) of the HEA. Such an expansion of 
scope is effective on the date the Department receives the notification;
    (6) The name of any institution or program it accredits that the 
agency has reason to believe is failing to meet its title IV, HEA 
program responsibilities or is engaged in fraud or abuse, along with the 
agency's reasons for concern about the institution or program; and
    (7) If the Secretary requests, information that may bear upon an 
accredited or preaccredited institution's compliance with its title IV, 
HEA program responsibilities, including the eligibility of the 
institution or program to participate in title IV, HEA programs.
    (b) If an agency has a policy regarding notification to an 
institution or program of contact with the Department in accordance with 
paragraph (a)(6) or (a)(7) of this section, it must provide for a case-
by-case review of the circumstances surrounding the contact, and the 
need for the confidentiality of that contact. Upon a specific request by 
the Department, the agency must consider that contact confidential.

(Authority: 20 U.S.C. 1099b)

[74 FR 55430, Oct. 27, 2009]



Sec. 602.28  Regard for decisions of States and other accrediting agencies.

    (a) If the agency is an institutional accrediting agency, it may not 
accredit or preaccredit institutions that lack legal authorization under 
applicable State law to provide a program of education beyond the 
secondary level.
    (b) Except as provided in paragraph (c) of this section, the agency 
may not grant initial or renewed accreditation or preaccreditation to an 
institution, or a program offered by an institution, if the agency 
knows, or has reasonable cause to know, that the institution is the 
subject of--
    (1) A pending or final action brought by a State agency to suspend, 
revoke, withdraw, or terminate the institution's legal authority to 
provide postsecondary education in the State;
    (2) A decision by a recognized agency to deny accreditation or 
preaccreditation;
    (3) A pending or final action brought by a recognized accrediting 
agency to suspend, revoke, withdraw, or terminate the institution's 
accreditation or preaccreditation; or
    (4) Probation or an equivalent status imposed by a recognized 
agency.
    (c) The agency may grant accreditation or preaccreditation to an 
institution or program described in paragraph (b) of this section only 
if it provides to the Secretary, within 30 days of its action, a 
thorough and reasonable explanation, consistent with its standards, why 
the action of the other body does not preclude the agency's grant of 
accreditation or preaccreditation.
    (d) If the agency learns that an institution it accredits or 
preaccredits, or

[[Page 254]]

an institution that offers a program it accredits or preaccredits, is 
the subject of an adverse action by another recognized accrediting 
agency or has been placed on probation or an equivalent status by 
another recognized agency, the agency must promptly review its 
accreditation or preaccreditation of the institution or program to 
determine if it should also take adverse action or place the institution 
or program on probation or show cause.
    (e) The agency must, upon request, share with other appropriate 
recognized accrediting agencies and recognized State approval agencies 
information about the accreditation or preaccreditation status of an 
institution or program and any adverse actions it has taken against an 
accredited or preaccredited institution or program.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)



                    Subpart C_The Recognition Process

    Source: 74 FR 55430, Oct. 27, 2009, unless otherwise noted.

               Application and Review by Department Staff



Sec. 602.30  Activities covered by recognition procedures.

    Recognition proceedings are administrative actions taken on any of 
the following matters:
    (a) Applications for initial or continued recognition submitted 
under Sec. 602.31(a).
    (b) Applications for an expansion of scope submitted under 
Sec. 602.31(b).
    (c) Compliance reports submitted under Sec. 602.31(c).
    (d) Reviews of agencies that have expanded their scope of 
recognition by notice, following receipt by the Department of 
information of an increase in headcount enrollment described in 
Sec. 602.19(e).
    (e) Staff analyses identifying areas of non-compliance based on a 
review conducted under Sec. 602.33.

(Authority: 20 U.S.C. 1099b)



Sec. 602.31  Agency submissions to the Department.

    (a) Applications for recognition or renewal of recognition. An 
accrediting agency seeking initial or continued recognition must submit 
a written application to the Secretary. Each accrediting agency must 
submit an application for continued recognition at least once every five 
years, or within a shorter time period specified in the final 
recognition decision. The application must consist of--
    (1) A statement of the agency's requested scope of recognition;
    (2) Evidence, including documentation, that the agency complies with 
the criteria for recognition listed in subpart B of this part and 
effectively applies those criteria; and
    (3) Evidence, including documentation, of how an agency that 
includes or seeks to include distance education or correspondence 
education in its scope of recognition applies its standards in 
evaluating programs and institutions it accredits that offer distance 
education or correspondence education.
    (b) Applications for expansions of scope. An agency seeking an 
expansion of scope by application must submit a written application to 
the Secretary. The application must--
    (1) Specify the scope requested;
    (2) Include documentation of experience in accordance with 
Sec. 602.12(b); and
    (3) Provide copies of any relevant standards, policies, or 
procedures developed and applied by the agency and documentation of the 
application of these standards, policies, or procedures.
    (c) Compliance reports. If an agency is required to submit a 
compliance report, it must do so within 30 days following the end of the 
period for achieving compliance as specified in the decision of the 
senior Department official or Secretary, as applicable.
    (d) Review following an increase in headcount enrollment. If an 
agency that has notified the Secretary in writing of its change in scope 
to include distance education or correspondence education in accordance 
with Sec. 602.27(a)(5) reports an increase in headcount enrollment in

[[Page 255]]

accordance with Sec. 602.19(e) for an institution it accredits, or if 
the Department notifies the agency of such an increase at one of the 
agency's accredited institutions, the agency must, within 45 days of 
reporting the increase or receiving notice of the increase from the 
Department, as applicable, submit a report explaining--
    (1) How the agency evaluates the capacity of the institutions or 
programs it accredits to accommodate significant growth in enrollment 
and to maintain educational quality;
    (2) The specific circumstances regarding the growth at the 
institution(s) or programs(s) that triggered the review and the results 
of any evaluation conducted by the agency; and
    (3) Any other information that the agency deems appropriate to 
demonstrate the effective application of the criteria for recognition or 
that the Department may require.
    (e) Consent to sharing of information. By submitting an application 
for recognition, the agency authorizes Department staff throughout the 
application process and during any period of recognition--
    (1) To observe its site visits to one or more of the institutions or 
programs it accredits or preaccredits, on an announced or unannounced 
basis;
    (2) To visit locations where agency activities such as training, 
review and evaluation panel meetings, and decision meetings take place, 
on an announced or unannounced basis;
    (3) To obtain copies of all documents the staff deems necessary to 
complete its review of the agency; and
    (4) To gain access to agency records, personnel, and facilities.
    (f) Public availability of agency records obtained by the 
Department. (1) The Secretary's processing and decision making on 
requests for public disclosure of agency materials reviewed under this 
part are governed by the Freedom of Information Act, 5 U.S.C. 552; the 
Trade Secrets Act, 18 U.S.C. 1905; the Privacy Act of 1974, as amended, 
5 U.S.C 552a; the Federal Advisory Committee Act, 5 U.S.C. Appdx. 1; and 
all other applicable laws. In recognition proceedings, agencies may--
    (i) Redact information that would identify individuals or 
institutions that is not essential to the Department's review of the 
agency;
    (ii) Make a good faith effort to designate all business information 
within agency submissions that the agency believes would be exempt from 
disclosure under exemption 4 of the Freedom of Information Act (FOIA), 5 
U.S.C. 552(b)(4). A blanket designation of all information contained 
within a submission, or of a category of documents, as meeting this 
exemption will not be considered a good faith effort and will be 
disregarded;
    (iii) Identify any other material the agency believes would be 
exempt from public disclosure under FOIA, the factual basis for the 
request, and any legal basis the agency has identified for withholding 
the document from disclosure; and
    (iv) Ensure documents submitted are only those required for 
Department review or as requested by Department officials.
    (2) The Secretary processes FOIA requests in accordance with 34 CFR 
part 5 and makes all documents provided to the Advisory Committee 
available to the public.

(Authority: 20 U.S.C. 1099b)



Sec. 602.32  Procedures for Department review of applications for
recognition or for change in scope, compliance reports, and increases
in enrollment.

    (a) After receipt of an agency's application for initial or 
continued recognition, or change in scope, or an agency's compliance 
report, or an agency's report submitted under Sec. 602.31(d), Department 
staff publishes a notice of the agency's application or report in the 
Federal Register inviting the public to comment on the agency's 
compliance with the criteria for recognition and establishing a deadline 
for receipt of public comment.
    (b) The Department staff analyzes the agency's application for 
initial or renewal of recognition, compliance report, or report 
submitted under Sec. 602.31(d) to determine whether the agency satisfies 
the criteria for recognition, taking into account all available relevant 
information concerning the compliance of the agency with

[[Page 256]]

those criteria and in the agency's effectiveness in applying the 
criteria. The analysis of an application for recognition and, as 
appropriate, of a compliance report, or of a report required under 
Sec. 602.31(d), includes--
    (1) Observations from site visit(s), on an announced or unannounced 
basis, to the agency or to a location where agency activities such as 
training, review and evaluation panel meetings, and decision meetings 
take place and to one or more of the institutions or programs it 
accredits or preaccredits;
    (2) Review of the public comments and other third-party information 
the Department staff receives by the established deadline, and the 
agency's responses to the third-party comments, as appropriate, as well 
as any other information Department staff assembles for purposes of 
evaluating the agency under this part; and
    (3) Review of complaints or legal actions involving the agency.
    (c) The Department staff analyzes the materials submitted in support 
of an application for expansion of scope to ensure that the agency has 
the requisite experience, policies that comply with subpart B of this 
part, capacity, and performance record to support the request.
    (d) Department staff's evaluation of an agency may also include a 
review of information directly related to institutions or programs 
accredited or preaccredited by the agency relative to their compliance 
with the agency's standards, the effectiveness of the standards, and the 
agency's application of those standards.
    (e) If, at any point in its evaluation of an agency seeking initial 
recognition, Department staff determines that the agency fails to 
demonstrate compliance with the basic eligibility requirements in 
Secs. 602.10 through 602.13, the staff--
    (1) Returns the agency's application and provides the agency with an 
explanation of the deficiencies that caused staff to take that action; 
and
    (2) Recommends that the agency withdraw its application and reapply 
when the agency can demonstrate compliance.
    (f) Except with respect to an application that has been returned or 
is withdrawn under paragraph (e) of this section, when Department staff 
completes its evaluation of the agency, the staff--
    (1) Prepares a written draft analysis of the agency;
    (2) Sends the draft analysis including any identified areas of non-
compliance and a proposed recognition recommendation, and all supporting 
documentation, including all third-party comments the Department 
received by the established deadline, to the agency;
    (3) Invites the agency to provide a written response to the draft 
analysis and proposed recognition recommendation and third-party 
comments, specifying a deadline that provides at least 30 days for the 
agency's response;
    (4) Reviews the response to the draft analysis the agency submits, 
if any, and prepares the written final analysis. The final analysis 
includes a recognition recommendation to the senior Department official, 
as the Department staff deems appropriate, including, but not limited 
to, a recommendation to approve, deny, limit, suspend, or terminate 
recognition, require the submission of a compliance report and continue 
recognition pending a final decision on compliance, approve or deny a 
request for expansion of scope, or revise or affirm the scope of the 
agency; and
    (5) Provides to the agency, no later than seven days before the 
Advisory Committee meeting, the final staff analysis and any other 
available information provided to the Advisory Committee under 
Sec. 602.34(c).
    (g) The agency may request that the Advisory Committee defer acting 
on an application at that Advisory Committee meeting if Department staff 
fails to provide the agency with the materials described, and within the 
timeframes provided, in paragraphs (f)(3) and (f)(5) of this section. If 
the Department staff's failure to send the materials in accordance with 
the timeframe described in paragraph (f)(3) or (f)(5) of this section is 
due to the failure of the agency to submit reports to the Department, 
other information the Secretary requested, or its response to the draft 
analysis, by the deadline established by the Secretary, the agency

[[Page 257]]

forfeits its right to request a deferral of its application.

(Authority: 20 U.S.C. 1099b)



Sec. 602.33  Procedures for review of agencies during the period of
recognition.

    (a) Department staff may review the compliance of a recognized 
agency with the criteria for recognition at any time--
    (1) At the request of the Advisory Committee; or
    (2) Based on any information that, as determined by Department 
staff, appears credible and raises issues relevant to recognition.
    (b) The review may include, but need not be limited to, any of the 
activities described in Sec. 602.32(b) and (d).
    (c) If, in the course of the review, and after provision to the 
agency of the documentation concerning the inquiry and consultation with 
the agency, Department staff notes that one or more deficiencies may 
exist in the agency's compliance with the criteria for recognition or in 
the agency's effective application of those criteria, it--
    (1) Prepares a written draft analysis of the agency's compliance 
with the criteria of concern. The draft analysis reflects the results of 
the review, and includes a recommendation regarding what action to take 
with respect to recognition. Possible recommendations include, but are 
not limited to, a recommendation to limit, suspend, or terminate 
recognition, or require the submission of a compliance report and to 
continue recognition pending a final decision on compliance;
    (2) Sends the draft analysis including any identified areas of non-
compliance, and a proposed recognition recommendation, and all 
supporting documentation to the agency; and
    (3) Invites the agency to provide a written response to the draft 
analysis and proposed recognition recommendation, specifying a deadline 
that provides at least 30 days for the agency's response.
    (d) If, after review of the agency's response to the draft analysis, 
Department staff concludes that the agency has demonstrated compliance 
with the criteria for recognition, the staff notifies the agency in 
writing of the results of the review. If the review was requested by the 
Advisory Committee, staff also provides the Advisory Committee with the 
results of the review.
    (e) If, after review of the agency's response to the draft analysis, 
Department staff concludes that the agency has not demonstrated 
compliance, the staff--
    (1) Notifies the agency that the draft analysis will be finalized 
for presentation to the Advisory Committee;
    (2) Publishes a notice in the Federal Register including, if 
practicable, an invitation to the public to comment on the agency's 
compliance with the criteria in question and establishing a deadline for 
receipt of public comment;
    (3) Provides the agency with a copy of all public comments received 
and, if practicable, invites a written response from the agency;
    (4) Finalizes the staff analysis as necessary to reflect its review 
of any agency response and any public comment received; and
    (5) Provides to the agency, no later than seven days before the 
Advisory Committee meeting, the final staff analysis and a recognition 
recommendation and any other information provided to the Advisory 
Committee under Sec. 602.34(c).
    (f) The Advisory Committee reviews the matter in accordance with 
Sec. 602.34.

(Authority: 20 U.S.C. 1099b)

 Review by the National Advisory Committee on Institutional Quality and 
                                Integrity



Sec. 602.34  Advisory Committee meetings.

    (a) Department staff submits a proposed schedule to the Chairperson 
of the Advisory Committee based on anticipated completion of staff 
analyses.
    (b) The Chairperson of the Advisory Committee establishes an agenda 
for the next meeting and, in accordance with the Federal Advisory 
Committee Act, presents it to the Designated Federal Official for 
approval.
    (c) Before the Advisory Committee meeting, Department staff provides 
the Advisory Committee with--
    (1) The agency's application for recognition or for expansion of 
scope, the agency's compliance report, or the agency's report submitted 
under

[[Page 258]]

Sec. 602.31(d), and supporting documentation;
    (2) The final Department staff analysis of the agency developed in 
accordance with Sec. 602.32 or Sec. 602.33, and any supporting 
documentation;
    (3) At the request of the agency, the agency's response to the draft 
analysis;
    (4) Any written third-party comments the Department received about 
the agency on or before the established deadline;
    (5) Any agency response to third-party comments; and
    (6) Any other information Department staff relied upon in developing 
its analysis.
    (d) At least 30 days before the Advisory Committee meeting, the 
Department publishes a notice of the meeting in the Federal Register 
inviting interested parties, including those who submitted third-party 
comments concerning the agency's compliance with the criteria for 
recognition, to make oral presentations before the Advisory Committee.
    (e) The Advisory Committee considers the materials provided under 
paragraph (c) of this section in a public meeting and invites Department 
staff, the agency, and other interested parties to make oral 
presentations during the meeting. A transcript is made of all Advisory 
Committee meetings.
    (f) The written motion adopted by the Advisory Committee regarding 
each agency's recognition will be made available during the Advisory 
Committee meeting. The Department will provide each agency, upon 
request, with a copy of the motion on recognition at the meeting. Each 
agency that was reviewed will be sent an electronic copy of the motion 
relative to that agency as soon as practicable after the meeting.
    (g) After each meeting of the Advisory Committee at which a review 
of agencies occurs, the Advisory Committee forwards to the senior 
Department official its recommendation with respect to each agency, 
which may include, but is not limited to, a recommendation to approve, 
deny, limit, suspend, or terminate recognition, to grant or deny a 
request for expansion of scope, to revise or affirm the scope of the 
agency, or to require the agency to submit a compliance report and to 
continue recognition pending a final decision on compliance.

(Authority: 20 U.S.C. 1099b)



Sec. 602.35  Responding to the Advisory Committee's recommendation.

    (a) Within ten days following the Advisory Committee meeting, the 
agency and Department staff may submit written comments to the senior 
Department official on the Advisory Committee's recommendation. The 
agency must simultaneously submit a copy of its written comments, if 
any, to Department staff. Department staff must simultaneously submit a 
copy of its written comments, if any, to the agency.
    (b) Comments must be limited to--
    (1) Any Advisory Committee recommendation that the agency or 
Department staff believes is not supported by the record;
    (2) Any incomplete Advisory Committee recommendation based on the 
agency's application; and
    (3) The inclusion of any recommendation or draft proposed decision 
for the senior Department official's consideration.
    (c)(1) Neither the Department staff nor the agency may submit 
additional documentary evidence with its comments unless the Advisory 
Committee's recognition recommendation proposes finding the agency 
noncompliant with, or ineffective in its application of, a criterion or 
criteria for recognition not identified in the final Department staff 
analysis provided to the Advisory Committee.
    (2) Within ten days of receipt by the Department staff of an 
agency's comments or new evidence, if applicable, or of receipt by the 
agency of the Department staff's comments, Department staff, the agency, 
or both, as applicable, may submit a response to the senior Department 
official. Simultaneously with submission, the agency must provide a copy 
of any response to the Department staff. Simultaneously with submission, 
Department staff must provide a copy of any response to the agency.

(Authority: 20 U.S.C. 1099b)

[[Page 259]]

          Review and Decision by the Senior Department Official



Sec. 602.36  Senior Department official's decision.

    (a) The senior Department official makes a decision regarding 
recognition of an agency based on the record compiled under 
Secs. 602.32, 602.33, 602.34, and 602.35 including, as applicable, the 
following:
    (1) The materials provided to the Advisory Committee under 
Sec. 602.34(c).
    (2) The transcript of the Advisory Committee meeting.
    (3) The recommendation of the Advisory Committee.
    (4) Written comments and responses submitted under Sec. 602.35.
    (5) New evidence submitted in accordance with Sec. 602.35(c)(1).
    (6) A communication from the Secretary referring an issue to the 
senior Department official's consideration under Sec. 602.37(e).
    (b) In the event that statutory authority or appropriations for the 
Advisory Committee ends, or there are fewer duly appointed Advisory 
Committee members than needed to constitute a quorum, and under 
extraordinary circumstances when there are serious concerns about an 
agency's compliance with subpart B of this part that require prompt 
attention, the senior Department official may make a decision in a 
recognition proceeding based on the record compiled under Sec. 602.32 or 
Sec. 602.33 after providing the agency with an opportunity to respond to 
the final staff analysis. Any decision made by the senior Department 
official absent a recommendation from the Advisory Committee may be 
appealed to the Secretary as provided in Sec. 602.37.
    (c) Following consideration of an agency's recognition under this 
section, the senior Department official issues a recognition decision.
    (d) Except with respect to decisions made under paragraph (f) or (g) 
of this section and matters referred to the senior Department official 
under Sec. 602.37(e) or (f), the senior Department official notifies the 
agency in writing of the senior Department official's decision regarding 
the agency's recognition within 90 days of the Advisory Committee 
meeting or conclusion of the review under paragraph (b) of this section.
    (e) The senior Department official's decision may include, but is 
not limited to, approving, denying, limiting, suspending, or terminating 
recognition, granting or denying an application for an expansion of 
scope, revising or affirming the scope of the agency, or continuing 
recognition pending submission and review of a compliance report under 
Secs. 602.32 and 602.34 and review of the report by the senior 
Department official under this section.
    (1)(i) The senior Department official approves recognition if the 
agency complies with the criteria for recognition listed in subpart B of 
this part and if the agency effectively applies those criteria.
    (ii) If the senior Department official approves recognition, the 
recognition decision defines the scope of recognition and the 
recognition period. The recognition period does not exceed five years, 
including any time during which recognition was continued to permit 
submission and review of a compliance report.
    (iii) If the scope or period of recognition is less than that 
requested by the agency, the senior Department official explains the 
reasons for approving a lesser scope or recognition period.
    (2)(i) Except as provided in paragraph (e)(3) of this section, if 
the agency either fails to comply with the criteria for recognition 
listed in subpart B of this part, or to apply those criteria 
effectively, the senior Department official denies, limits, suspends, or 
terminates recognition.
    (ii) If the senior Department official denies, limits, suspends, or 
terminates recognition, the senior Department official specifies the 
reasons for this decision, including all criteria the agency fails to 
meet and all criteria the agency has failed to apply effectively.
    (3)(i) Except as provided in paragraph (e)(3)(ii) of this section, 
if a recognized agency fails to demonstrate compliance with or effective 
application of a criterion or criteria, but the senior Department 
official concludes that the agency will demonstrate or achieve 
compliance with the criteria for recognition and effective application 
of those criteria within 12 months or less,

[[Page 260]]

the senior Department official may continue the agency's recognition, 
pending submission by the agency of a compliance report, review of the 
report under Secs. 602.32 and 602.34, and review of the report by the 
senior Department official under this section. In such a case, the 
senior Department official specifies the criteria the compliance report 
must address, and a time period, not longer than 12 months, during which 
the agency must achieve compliance and effectively apply the criteria. 
The compliance report documenting compliance and effective application 
of criteria is due not later than 30 days after the end of the period 
specified in the senior Department official's decision.
    (ii) If the record includes a compliance report, and the senior 
Department official determines that an agency has not complied with the 
criteria for recognition, or has not effectively applied those criteria, 
during the time period specified by the senior Department official in 
accordance with paragraph (e)(3)(i) of this section, the senior 
Department official denies, limits, suspends, or terminates recognition, 
except, in extraordinary circumstances, upon a showing of good cause for 
an extension of time as determined by the senior Department official and 
detailed in the senior Department official's decision. If the senior 
Department official determines good cause for an extension has been 
shown, the senior Department official specifies the length of the 
extension and what the agency must do during it to merit a renewal of 
recognition.
    (f) If the senior Department official determines, based on the 
record, that a decision to deny, limit, suspend, or terminate an 
agency's recognition may be warranted based on a finding that the agency 
is noncompliant with, or ineffective in its application of, a criterion 
or criteria of recognition not identified earlier in the proceedings as 
an area of noncompliance, the senior Department official provides--
    (1) The agency with an opportunity to submit a written response and 
documentary evidence addressing the finding; and
    (2) The staff with an opportunity to present its analysis in 
writing.
    (g) If relevant and material information pertaining to an agency's 
compliance with recognition criteria, but not contained in the record, 
comes to the senior Department official's attention while a decision 
regarding the agency's recognition is pending before the senior 
Department official, and if the senior Department official concludes the 
recognition decision should not be made without consideration of the 
information, the senior Department official either--
    (1)(i) Does not make a decision regarding recognition of the agency; 
and
    (ii) Refers the matter to Department staff for review and analysis 
under Sec. 602.32 or Sec. 602.33, as appropriate, and consideration by 
the Advisory Committee under Sec. 602.34; or
    (2)(i) Provides the information to the agency and Department staff;
    (ii) Permits the agency to respond to the senior Department official 
and the Department staff in writing, and to include additional evidence 
relevant to the issue, and specifies a deadline;
    (iii) Provides Department staff with an opportunity to respond in 
writing to the agency's submission under paragraph (g)(2)(ii) of this 
section, specifying a deadline; and
    (iv) Issues a recognition decision based on the record described in 
paragraph (a) of this section, as supplemented by the information 
provided under this paragraph.
    (h) No agency may submit information to the senior Department 
official, or ask others to submit information on its behalf, for 
purposes of invoking paragraph (g) of this section. Before invoking 
paragraph (g) of this section, the senior Department official will take 
into account whether the information, if submitted by a third party, 
could have been submitted in accordance with Sec. 602.32(a) or 
Sec. 602.33(e)(2).
    (i) If the senior Department official does not reach a final 
decision to approve, deny, limit, suspend, or terminate an agency's 
recognition before the expiration of its recognition period, the senior 
Department official automatically extends the recognition period until a 
final decision is reached.

[[Page 261]]

    (j) Unless appealed in accordance with Sec. 602.37, the senior 
Department official's decision is the final decision of the Secretary.

(Authority: 20 U.S.C. 1099b)

                      Appeal Rights and Procedures



Sec. 602.37  Appealing the senior Department official's decision to
the Secretary.

    (a) The agency may appeal the senior Department official's decision 
to the Secretary. Such appeal stays the decision of the senior 
Department official until final disposition of the appeal. If an agency 
wishes to appeal, the agency must--
    (1) Notify the Secretary and the senior Department official in 
writing of its intent to appeal the decision of the senior Department 
official, no later than ten days after receipt of the decision;
    (2) Submit its appeal to the Secretary in writing no later than 30 
days after receipt of the decision; and
    (3) Provide the senior Department official with a copy of the appeal 
at the same time it submits the appeal to the Secretary.
    (b) The senior Department official may file a written response to 
the appeal. To do so, the senior Department official must--
    (1) Submit a response to the Secretary no later than 30 days after 
receipt of a copy of the appeal; and
    (2) Provide the agency with a copy of the senior Department 
official's response at the same time it is submitted to the Secretary.
    (c) Neither the agency nor the senior Department official may 
include in its submission any new evidence it did not submit previously 
in the proceeding.
    (d) On appeal, the Secretary makes a recognition decision, as 
described in Sec. 602.36(e). If the decision requires a compliance 
report, the report is due within 30 days after the end of the period 
specified in the Secretary's decision. The Secretary renders a final 
decision after taking into account the senior Department official's 
decision, the agency's written submissions on appeal, the senior 
Department official's response to the appeal, if any, and the entire 
record before the senior Department official. The Secretary notifies the 
agency in writing of the Secretary's decision regarding the agency's 
recognition.
    (e) The Secretary may determine, based on the record, that a 
decision to deny, limit, suspend, or terminate an agency's recognition 
may be warranted based on a finding that the agency is noncompliant 
with, or ineffective in its application with respect to, a criterion or 
criteria for recognition not identified as an area of noncompliance 
earlier in the proceedings. In that case, the Secretary, without further 
consideration of the appeal, refers the matter to the senior Department 
official for consideration of the issue under Sec. 602.36(f). After the 
senior Department official makes a decision, the agency may, if desired, 
appeal that decision to the Secretary.
    (f) If relevant and material information pertaining to an agency's 
compliance with recognition criteria, but not contained in the record, 
comes to the Secretary's attention while a decision regarding the 
agency's recognition is pending before the Secretary, and if the 
Secretary concludes the recognition decision should not be made without 
consideration of the information, the Secretary either--
    (1)(i) Does not make a decision regarding recognition of the agency; 
and
    (ii) Refers the matter to Department staff for review and analysis 
under Sec. 602.32 or Sec. 602.33, as appropriate, and review by the 
Advisory Committee under Sec. 602.34; and consideration by the senior 
Department official under Sec. 602.36; or
    (2)(i) Provides the information to the agency and the senior 
Department official;
    (ii) Permits the agency to respond to the Secretary and the senior 
Department official in writing, and to include additional evidence 
relevant to the issue, and specifies a deadline;
    (iii) Provides the senior Department official with an opportunity to 
respond in writing to the agency's submission under paragraph (f)(2)(ii) 
of this section, specifying a deadline; and
    (iv) Issues a recognition decision based on all the materials 
described in paragraphs (d) and (f) of this section.

[[Page 262]]

    (g) No agency may submit information to the Secretary, or ask others 
to submit information on its behalf, for purposes of invoking paragraph 
(f) of this section. Before invoking paragraph (f) of this section, the 
Secretary will take into account whether the information, if submitted 
by a third party, could have been submitted in accordance with 
Sec. 602.32(a) or Sec. 602.33(e)(2).
    (h) If the Secretary does not reach a final decision on appeal to 
approve, deny, limit, suspend, or terminate an agency's recognition 
before the expiration of its recognition period, the Secretary 
automatically extends the recognition period until a final decision is 
reached.

(Authority: 20 U.S.C. 1099b)



Sec. 602.38  Contesting the Secretary's final decision to deny, limit,
suspend, or terminate an agency's recognition.

    An agency may contest the Secretary's decision under this part in 
the Federal courts as a final decision in accordance with applicable 
Federal law. Unless otherwise directed by the court, a decision of the 
Secretary to deny, limit, suspend, or terminate the agency's recognition 
is not stayed during an appeal in the Federal courts.

(Authority: 20 U.S.C. 1099b)



                  Subpart D_Department Responsibilities

    Source: 64 FR 56617, Oct. 20, 1999. Redesignated at 74 FR 55435, 
Oct. 27, 2009, unless otherwise noted.



Sec. 602.50  What information does the Department share with a recognized
agency about its accredited institutions and programs?

    (a) If the Department takes an action against an institution or 
program accredited by the agency, it notifies the agency no later than 
10 days after taking that action.
    (b) If another Federal agency or a State agency notifies the 
Department that it has taken an action against an institution or program 
accredited by the agency, the Department notifies the agency as soon as 
possible but no later than 10 days after receiving the written notice 
from the other Government agency.

(Authority: 20 U.S.C. 1099b)



PART 603_SECRETARY'S RECOGNITION PROCEDURES FOR STATE AGENCIES
--Table of Contents



Subpart A [Reserved]

                  Subpart B_Criteria for State Agencies

Sec.
603.20  Scope.
603.21  Publication of list.
603.22  Inclusion on list.
603.23  Initial recognition, and reevaluation.
603.24  Criteria for State agencies.

    Authority: 20 U.S.C. 1001, 1002, 1094(c)(4); 38 U.S.C. 3675, unless 
otherwise noted.

Subpart A [Reserved]



                  Subpart B_Criteria for State Agencies

    Authority: Sec. 438 (b) of the Higher Education Act of 1965 Pub. L. 
89-329 as amended by Pub. L. 92-318, 86 Stat. 235, 264 (20 U.S.C. 1087-
1(b)), unless otherwise noted.

    Source: 39 FR 30042, Aug. 20, 1974, unless otherwise noted. 
Redesignated at 45 FR 77369, Nov. 21, 1980.



Sec. 603.20  Scope.

    (a) Pursuant to section 438(b) of the Higher Education Act of 1965 
as amended by Pub. L. 92-318, the Secretary is required to publish a 
list of State agencies which he determines to be reliable authorities as 
to the quality of public postsecondary vocational education in their 
respective States for the purpose of determining eligibility for Federal 
student assistance programs administered by the Department.
    (b) Approval by a State agency included on the list will provide an 
alternative means of satisfying statutory standards as to the quality of 
public postsecondary vocational education to be undertaken by students 
receiving assistance under such programs.

(Authority: 20 U.S.C. 1087-1(b))



Sec. 603.21  Publication of list.

    Periodically the Secretary will publish a list in the Federal 
Register of

[[Page 263]]

the State agencies which he determines to be reliable authorities as to 
the quality of public postsecondary vocational education in their 
respective States.

(Authority: 20 U.S.C. 1087-1(b))



Sec. 603.22  Inclusion on list.

    Any State agency which desires to be listed by the Secretary as 
meeting the criteria set forth in Sec. 603.24 should apply in writing to 
the Director, Division of Eligibility and Agency Evaluation, Office of 
Postsecondary Education, Department of Education, Washington, DC 20202.

(Authority: 20 U.S.C. 1087-1(b))

[45 FR 86300, Dec. 30, 1980]



Sec. 603.23  Initial recognition, and reevaluation.

    For initial recognition and for renewal of recognition, the State 
agency will furnish information establishing its compliance with the 
criteria set forth in Sec. 603.24. This information may be supplemented 
by personal interviews or by review of the agency's facilities, records, 
personnel qualifications, and administrative management. Each agency 
listed will be reevaluated by the Secretary at his discretion, but at 
least once every four years. No adverse decision will become final 
without affording an opportunity for a hearing.

(Authority: 20 U.S.C. 1087-1(b))



Sec. 603.24  Criteria for State agencies.

    The following are the criteria which the Secretary will utilize in 
designating a State agency as a reliable authority to assess the quality 
of public postsecondary vocational education in its respective State.
    (a) Functional aspects. The functional aspects of the State agency 
must be shown by:
    (1) Its scope of operations. The agency:
    (i) Is statewide in the scope of its operations and is legally 
authorized to approve public postsecondary vocational institutions or 
programs;
    (ii) Clearly sets forth the scope of its objectives and activities, 
both as to kinds and levels of public postsecondary vocational 
institutions or programs covered, and the kinds of operations performed;
    (iii) Delineates the process by which it differentiates among and 
approves programs of varying levels.
    (2) Its organization. The State agency:
    (i) Employs qualified personnel and uses sound procedures to carry 
out its operations in a timely and effective manner;
    (ii) Receives adequate and timely financial support, as shown by its 
appropriations, to carry out its operations;
    (iii) Selects competent and knowledgeable persons, qualified by 
experience and training, and selects such persons in accordance with 
nondiscriminatory practices, (A) to participate on visiting teams, (B) 
to engage in consultative services for the evaluation and approval 
process, and (C) to serve on decision-making bodies.
    (3) Its procedures. The State agency:
    (i) Maintains clear definitions of approval status and has developed 
written procedures for granting, reaffirming, revoking, denying, and 
reinstating approval status;
    (ii) Requires, as an integral part of the approval and reapproval 
process, institutional or program self-analysis and onsite reviews by 
visiting teams, and provides written and consultative guidance to 
institutions or programs and visiting teams.
    (A) Self-analysis shall be a qualitative assessment of the strengths 
and limitations of the instructional program, including the achievement 
of institutional or program objectives, and should involve a 
representative portion of the institution's administrative staff, 
teaching faculty, students, governing body, and other appropriate 
constituencies.
    (B) The visiting team, which includes qualified examiners other than 
agency staff, reviews instructional content, methods and resources, 
administrative management, student services, and facilities. It prepares 
written reports and recommendations for use by the State agency.
    (iii) Reevaluates at reasonable and regularly scheduled intervals 
institutions or programs which it has approved.

[[Page 264]]

    (b) Responsibility and reliability. The responsibility and 
reliability of the State agency will be demonstrated by:
    (1) Its responsiveness to the public interest. The State agency:
    (i) Has an advisory body which provides for representation from 
public employment services and employers, employees, postsecondary 
vocational educators, students, and the general public, including 
minority groups. Among its functions, this structure provides counsel to 
the State agency relating to the development of standards, operating 
procedures and policy, and interprets the educational needs and manpower 
projections of the State's public postsecondary vocational education 
system;
    (ii) Demonstrates that the advisory body makes a real and meaningful 
contribution to the approval process;
    (iii) Provides advance public notice of proposed or revised 
standards or regulations through its regular channels of communications, 
supplemented, if necessary, with direct communication to inform 
interested members of the affected community. In addition, it provides 
such persons the opportunity to comment on the standards or regulations 
prior to their adoption;
    (iv) Secures sufficient qualitative information regarding the 
applicant institution or program to enable the institution or program to 
demonstrate that it has an ongoing program of evaluation of outputs 
consistent with its educational goals;
    (v) Encourages experimental and innovative programs to the extent 
that these are conceived and implemented in a manner which ensures the 
quality and integrity of the institution or program;
    (vi) Demonstrates that it approves only those institutions or 
programs which meet its published standards; that its standards, 
policies, and procedures are fairly applied; and that its evaluations 
are conducted and decisions are rendered under conditions that assure an 
impartial and objective judgment;
    (vii) Regularly reviews its standards, policies and procedures in 
order that the evaluative process shall support constructive analysis, 
emphasize factors of critical importance, and reflect the educational 
and training needs of the student;
    (viii) Performs no function that would be inconsistent with the 
formation of an independent judgment of the quality of an educational 
institution or program;
    (ix) Has written procedures for the review of complaints pertaining 
to institutional or program quality as these relate to the agency's 
standards, and demonstrates that such procedures are adequate to provide 
timely treatment of such complaints in a manner fair and equitable to 
the complainant and to the institution or program;
    (x) Annually makes available to the public (A) its policies for 
approval, (B) reports of its operations, and (C) list of institutions or 
programs which it has approved;
    (xi) Requires each approved school or program to report on changes 
instituted to determine continued compliance with standards or 
regulations;
    (xii) Confers regularly with counterpart agencies that have similar 
responsibilities in other and neighboring States about methods and 
techniques that may be used to meet those responsibilities.
    (2) Its assurances that due process is accorded to institutions or 
programs seeking approval. The State agency:
    (i) Provides for adequate discussion during the on-site visit 
between the visiting team and the faculty, administrative staff, 
students, and other appropriate persons;
    (ii) Furnishes as a result of the evaluation visit, a written report 
to the institution or program commenting on areas of strength, areas 
needing improvement, and, when appropriate, suggesting means of 
improvement and including specific areas, if any, where the institution 
or program may not be in compliance with the agency's standards;
    (iii) Provides the chief executive officer of the institution or 
program with opportunity to comment upon the written report and to file 
supplemental materials pertinent to the facts and conclusions in the 
written report of the visiting team before the agency takes action on 
the report;
    (iv) Provides the chief executive officer of the institution with a 
specific

[[Page 265]]

statement of reasons for any adverse action, and notice of the right to 
appeal such action before an appeal body designated for that purpose;
    (v) Publishes rules of procedure regarding appeals;
    (vi) Continues the approval status of the institution or program 
pending disposition of an appeal;
    (vii) Furnishes the chief executive officer of the institution or 
program with a written decision of the appeal body, including a 
statement of its reasons therefor.
    (c) Credit-hour policies. The State agency, as part of its review of 
an institution for initial approval or renewal of approval, must conduct 
an effective review and evaluation of the reliability and accuracy of 
the institution's assignment of credit hours.
    (1) The State agency meets this requirement if--
    (i) It reviews the institution's--
    (A) Policies and procedures for determining the credit hours, as 
defined in 34 CFR 600.2, that the institution awards for courses and 
programs; and
    (B) The application of the institution's policies and procedures to 
its programs and coursework; and
    (ii) Makes a reasonable determination of whether the institution's 
assignment of credit hours conforms to commonly accepted practice in 
higher education.
    (2) In reviewing and evaluating an institution's policies and 
procedures for determining credit hour assignments, a State agency may 
use sampling or other methods in the evaluation, sufficient to comply 
with paragraph (c)(1)(i)(B) of this section.
    (3) The State agency must take such actions that it deems 
appropriate to address any deficiencies that it identifies at an 
institution as part of its reviews and evaluations under paragraph 
(c)(1)(i) and (ii) of this section, as it does in relation to other 
deficiencies it may identify, subject to the requirements of this part.
    (4) If, following the institutional review process under this 
paragraph (c), the agency finds systemic noncompliance with the agency's 
policies or significant noncompliance regarding one or more programs at 
the institution, the agency must promptly notify the Secretary.
    (d) Capacity to foster ethical practices. The State agency must 
demonstrate its capability and willingness to foster ethical practices 
by showing that it:
    (i) Promotes a well-defined set of ethical standards governing 
institutional or programmatic practices, including recruitment, 
advertising, transcripts, fair and equitable student tuition refunds, 
and student placement services;
    (ii) Maintains appropriate review in relation to the ethical 
practices of each approved institution or program.

(Authority: 20 U.S.C. 1094(c)(4))

[39 FR 30042, Aug. 20, 1974, as amended at 75 FR 66947, Oct. 29, 2010]



PART 604_FEDERAL-STATE RELATIONSHIP AGREEMENTS--Table of Contents



                            Subpart A_General

Sec.
604.1  Federal-State relationship agreements.
604.2  Regulations that apply to Federal-State relationship agreements.
604.3  Definitions that apply to Federal-State relationship agreements.

             Subpart B_Federal-State Relationship Agreements

604.10  Administrative requirements.
604.11  Planning requirements.
604.12  Changes in the agreement.
604.13  Denial of eligibility.

    Authority: Sec. 1203 of the Higher Education Act of 1965, as amended 
by Pub. L. 96-374 (20 U.S.C. 1143), unless otherwise noted.

    Source: 45 FR 83221, Dec. 18, 1980, unless otherwise noted.



                            Subpart A_General



Sec. 604.1  Federal-State relationship agreements.

    (a) A State shall enter into an agreement with the Secretary if it 
wishes to participate in the following programs authorized by the Higher 
Education Act of 1965, as amended: The Continuing Education Outreach 
program, title I-B, with the exception of sections 116 and 117 of the 
Act; the State Student Incentive Grant program, subpart 3 of title IV-A 
of the Act; and the Undergraduate Academic Facilities Grant

[[Page 266]]

program, title VII-A of the Act. The agreement must contain assurances 
relating to administration, financial management, treatment of 
applicants for subgrants and contracts, supplement, not supplant 
requirements, and planning. These assurances are listed in subpart B of 
this part. The means by which these assurances will be met must also be 
described.
    (b) The provisions of the agreement replace comparable provisions in 
annual plans previously required by each applicable program.

(Authority: 20 U.S.C. 1143)



Sec. 604.2  Regulations that apply to Federal-State relationship agreements.

    The following regulations apply to Federal-State relationship 
agreements:
    (a) The Education Department General Administrative Regulations 
(EDGAR) in 34 CFR part 76 (State Administered Programs) and 34 CFR part 
77 (Definitions).
    (b) The regulations in this part 604.

(Authority: 20 U.S.C. 1232(a))



Sec. 604.3  Definitions that apply to Federal-State relationship agreements.

    (a) Definitions in EDGAR. The following terms used in this part are 
defined in 34 CFR part 77:

Applicant
Application
Contract
Private
Public
Secretary
State
Subgrant

    (b) Definitions that apply to this part. The following definitions 
apply to this part:
    Act means the Higher Education Act of 1965, as amended.
    Applicable programs means the Continuing Education Outreach program, 
the State Student Incentive Grant program, and the Undergraduate 
Academic Facilities Grant program.

(Authority: 20 U.S.C. 1143)



             Subpart B_Federal-State Relationship Agreements



Sec. 604.10  Administrative requirements.

    The agreement shall contain the following assurances and a 
description of the means by which they will be met:
    (a) Management practices and procedures will assure proper and 
efficient administration of each applicable program. The description of 
these methods shall include the identification of the State entity or 
entities designated to administer each applicable program as well as the 
name of the responsible official.
    (b) Appropriate fiscal control and fund accounting procedures will 
be provided for Federal funds received under all titles of the Act.
    (c) Federal funds under the applicable programs will not supplant 
non-Federal funds.
    (d) Equitable and appropriate criteria will be used in evaluating 
applications for subgrants or proposals for contracts under each 
applicable program.

(Authority: 20 U.S.C. 1143)



Sec. 604.11  Planning requirements.

    (a) The agreement shall contain an assurance by the State that it 
has a comprehensive planning or policy formulation process which:
    (1) Considers the relationship between State administration of each 
applicable program and administration of similar State programs or 
processes;
    (2) Encourages State policies that consider the effects of declining 
enrollments on all sectors of postsecondary education within the State;
    (3) Considers the postsecondary educational needs of unserved and 
underserved individuals within the State, including individuals beyond 
traditional college age;
    (4) Considers the resources of public and private institutions, 
organizations, and agencies within the State that are capable of 
providing postsecondary educational opportunities; and
    (5) Provides for direct, equitable, and active participation in the 
comprehensive planning or policy formulation processes by 
representatives of institutions of higher education--including community 
colleges, proprietary institutions, and independent colleges and 
universities--other providers of postsecondary education services, 
students, and the general public in the State.
    (i) Participation shall be achieved through membership on State 
planning commissions, State advisory councils, or other State entities 
established by

[[Page 267]]

the State to conduct federally assisted comprehensive planning or policy 
formulation.
    (ii) Participation shall be consistent with State law.
    (b) The agreement shall include a description of the planning or 
policy formulation process through which these assurances will be 
fulfilled.

(Authority: 20 U.S.C. 1143)



Sec. 604.12  Changes in the agreement.

    (a) The agreement shall remain in effect until substantial changes 
in administrative practices or planning processes would require its 
modification.
    (b) Routine organizational or personnel changes are not subject to 
prior modification of the agreement, but information concerning these 
changes shall be promptly communicated to the Secretary.

(Authority: 20 U.S.C. 1143)



Sec. 604.13  Denial of eligibility.

    (a) If the Secretary finds that there is a failure to comply 
substantially with the assurances of Sec. 604.10 then the Secretary, 
after giving a State reasonable notice and the opportunity for a 
hearing, shall notify the State that it is ineligible to participate in 
any applicable program.
    (b) To regain eligibility, a State must satisfy the Secretary that 
the failure to comply has been remedied.

(Authority: 20 U.S.C. 1143)



PART 606_DEVELOPING HISPANIC-SERVING INSTITUTIONS PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
606.1  What is the Developing Hispanic-Serving Institutions Program?
606.2  What institutions are eligible to receive a grant under the 
          Developing Hispanic-Serving Institutions Program?
606.3  What is an enrollment of needy students?
606.4  What are low educational and general expenditures?
606.5  How does an institution apply to be designated an eligible 
          institution?
606.6  What regulations apply?
606.7  What definitions apply?
606.8  What is a comprehensive development plan and what must it 
          contain?
606.9  What are the type, duration, and limitations in the awarding of 
          grants under this part?
606.10  What activities may and may not be carried out under a grant?

          Subpart B_How Does an Institution Apply for a Grant?

606.11  What must be included in individual development grant 
          applications?
606.12  What must be included in cooperative arrangement grant 
          applications?
606.13  How many applications for a development grant may an institution 
          submit?

             Subpart C_How Does the Secretary Make an Award?

606.20  How does the Secretary choose applications for funding?
606.21  What are the selection criteria for planning grants?
606.22  What are the selection criteria for development grants?
606.23  What special funding consideration does the Secretary provide?
606.24  How does the Secretary use an applicant's performance under a 
          previous development grant when awarding a development grant?
606.25  What priority does the Secretary use in awarding cooperative 
          arrangement grants?

             Subpart D_What Conditions Must a Grantee Meet?

606.30  What are allowable costs and what are the limitations on 
          allowable costs?
606.31  How does a grantee maintain its eligibility?

    Authority: 20 U.S.C. 1101 et seq., unless otherwise noted.

    Source: 64 FR 70147, Dec. 15, 1999, unless otherwise noted.



                            Subpart A_General



Sec. 606.1  What is the Developing Hispanic-Serving Institutions Program?

    The purpose of the Developing Hispanic-Serving Institutions Program 
is to provide grants to eligible institutions of higher education to--
    (a) Expand educational opportunities for, and improve the academic 
attainment of, Hispanic students; and
    (b) Expand and enhance the academic offerings, program quality, and 
institutional stability of colleges and universities that are educating 
the majority

[[Page 268]]

of Hispanic college students and helping large numbers of Hispanic 
students and other low-income individuals complete postsecondary 
degrees.

(Authority: 20 U.S.C. 1101)



Sec. 606.2  What institutions are eligible to receive a grant under 
the Developing Hispanic-Serving Institutions Program?

    (a) An institution of higher education is eligible to receive a 
grant under this part if--
    (1) At the time of application, it has an enrollment of 
undergraduate full-time equivalent students that is at least 25 percent 
Hispanic students;
    (2) It provides assurances that not less than 50 percent of its 
Hispanic students are low-income individuals;
    (3) It has an enrollment of needy students as described in 
Sec. 606.3(a), unless the Secretary waives this requirement under 
Sec. 606.3(b);
    (4) It has low average educational and general expenditures per 
full-time equivalent undergraduate student as described in 
Sec. 606.4(a), unless the Secretary waives this requirement under 
Sec. 606.4(c);
    (5) It is legally authorized by the State in which it is located to 
be a junior college or to provide an educational program for which it 
awards a bachelor's degree; and
    (6) It is accredited or preaccredited by a nationally recognized 
accrediting agency or association that the Secretary has determined to 
be a reliable authority as to the quality of education or training 
offered.
    (b) A branch campus of a Hispanic-Serving institution is eligible to 
receive a grant under this part if--
    (1) The institution as a whole meets the requirements of paragraphs 
(a)(3) through (a)(6) of this section; and
    (2) The branch campus satisfies the requirements of paragraphs 
(a)(1) through (a)(4) of this section.
    (c)(1) An institution that receives a grant under the Strengthening 
Institutions Program (34 CFR part 607) or the Strengthening Historically 
Black Colleges and Universities Program (34 CFR part 608) for a 
particular fiscal year is not eligible to receive a grant under this 
part for that same fiscal year, and may not relinquish its grant under 
those programs to secure a grant under this part.
    (2) A Hispanic-Serving institution under this part may not 
concurrently receive grant funds under the Strengthening Institutions 
Program, Strengthening Historically Black Colleges and Universities 
Program, or Strengthening Historically Black Graduate Institutions 
Program.

(Authority: 20 U.S.C. 1101a and 1101d)

[64 FR 70147, Dec. 15, 1999, as amended at 66 FR 1263, Jan. 8, 2001]



Sec. 606.3  What is an enrollment of needy students?

    (a) Except as provided in paragraph (b) of this section, for the 
purpose of Sec. 606.2(a)(3), an applicant institution has an enrollment 
of needy students if in the base year--
    (1) At least 50 percent of its degree students received student 
financial assistance under one or more of the following programs: 
Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, 
Federal Work-Study, and Federal Perkins Loan; or
    (2) The percentage of its undergraduate degree students who were 
enrolled on at least a half-time basis and received Federal Pell Grants 
exceeded the median percentage of undergraduate degree students who were 
enrolled on at least a half-time basis and received Federal Pell Grants 
at comparable institutions that offer similar instruction.
    (b) The Secretary may waive the requirement contained in paragraph 
(a) of this section if the institution demonstrates that--
    (1) The State provides more than 30 percent of the institution's 
budget and the institution charges not more than $99.00 for tuition and 
fees for an academic year;
    (2) At least 30 percent of the students served by the institution in 
the base year were students from low-income families;
    (3) The institution substantially increases the higher education 
opportunities for low-income students who are also educationally 
disadvantaged, underrepresented in postsecondary education, or minority 
students;

[[Page 269]]

    (4) The institution substantially increases the higher education 
opportunities for individuals who reside in an area that is not included 
in a ``metropolitan statistical area'' as defined by the Office of 
Management and Budget and who are unserved by other postsecondary 
institutions; or
    (5) The institution will, if granted the waiver, substantially 
increase the higher education opportunities for Hispanic Americans.
    (c) For the purpose of paragraph (b) of this section, the Secretary 
considers ``low-income'' to be an amount which does not exceed 150 
percent of the amount equal to the poverty level as established by the 
United States Bureau of the Census.
    (d) Each year, the Secretary notifies prospective applicants of the 
low-income figures through a notice published in the Federal Register.

(Authority: 20 U.S.C. 1101a and 1103a)



Sec. 606.4  What are low educational and general expenditures?

    (a)(1) Except as provided in paragraph (b) of this section, for the 
purpose of Sec. 606.2(a)(2), an applicant institution's average 
educational and general expenditures per full-time equivalent 
undergraduate student in the base year must be less than the average 
educational and general expenditures per full-time equivalent 
undergraduate student in that year of comparable institutions that offer 
similar instruction.
    (2) For the purpose of paragraph (a)(1) of this section, the 
Secretary determines the average educational and general expenditure per 
full-time equivalent undergraduate student for institutions with 
graduate students that do not differentiate between graduate and 
undergraduate educational and general expenditures by discounting the 
graduate enrollment using a factor of 2.5 times the number of graduate 
students.
    (b) Each year, the Secretary notifies prospective applicants through 
a notice in the Federal Register of the average educational and general 
expenditures per full-time equivalent undergraduate student at 
comparable institutions that offer similar instruction.
    (c) The Secretary may waive the requirement contained in paragraph 
(a) of this section, if the Secretary determines, based upon persuasive 
evidence provided by the institution, that--
    (1) The institution's failure to satisfy the criteria in paragraph 
(a) of this section was due to factors which, if used in determining 
compliance with those criteria, distorted that determination; and
    (2) The institution's designation as an eligible institution under 
this part is otherwise consistent with the purposes of this part.
    (d) For the purpose of paragraph (c)(1) of this section, the 
Secretary considers that the following factors may distort an 
institution's educational and general expenditures per full-time 
equivalent undergraduate student--
    (1) Low student enrollment;
    (2) Location of the institution in an unusually high cost-of-living 
area;
    (3) High energy costs;
    (4) An increase in State funding that was part of a desegregation 
plan for higher education; or
    (5) Operation of high cost professional schools such as medical or 
dental schools.

(Authority: 20 U.S.C. 1101a and 1103a)



Sec. 606.5  How does an institution apply to be designated an eligible
institution?

    (a) An institution applies to the Secretary to be designated an 
eligible institution under this part by first submitting an application 
to the Secretary in the form, manner, and time established by the 
Secretary. The application must contain--
    (1) The information necessary for the Secretary to determine whether 
the institution satisfies the requirements of Secs. 606.2, 606.3(a), and 
606.4(a);
    (2) Any waiver request under Secs. 606.3(b) and 606.4(c); and
    (3) Information or explanations justifying any requested waiver.
    (b) An institution that wishes to receive a grant under this part 
must submit, as part of its application for that grant, an assurance 
that when it submits its application--

[[Page 270]]

    (1) Its enrollment of undergraduate full-time equivalent students is 
at least 25 percent Hispanic students; and
    (2) Not less than 50 percent of its Hispanic students are low-income 
individuals.

(Authority: 20 U.S.C. 1101a and 1103)



Sec. 606.6  What regulations apply?

    The following regulations apply to the Developing Hispanic-Serving 
Institutions Program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) [Reserved]
    (2) 34 CFR part 75 (Direct Grant Programs), except 34 CFR 
75.128(a)(2) and 75.129(a) in the case of applications for cooperative 
arrangements.
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 82 (New Restrictions on Lobbying).
    (6) [Reserved]
    (7) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part 606.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1101 et seq.)

[64 FR 70147, Dec. 15, 1999, as amended at 79 FR 76100, Dec. 19, 2014]



Sec. 606.7  What definitions apply?

    (a) Definitions in EDGAR. The terms used in this part are defined in 
34 CFR 77.1:

EDGAR
Fiscal year
Grant
Grantee
Grant period
Nonprofit
Private
Project period
Public
Secretary
State

    (b) The following definitions also apply to this part:
    Accredited means the status of public recognition which a nationally 
recognized accrediting agency or association grants to an institution 
which meets certain established qualifications and educational 
standards.
    Activity means an action that is incorporated into an implementation 
plan designed to meet one or more objectives. An activity is a part of a 
project and has its own budget that is approved to carry out the 
objectives of that subpart.
    Base year means the second fiscal year preceding the fiscal year for 
which an institution seeks a grant under this part.
    Branch campus means a unit of a college or university that is 
geographically apart from the main campus of the college or university 
and independent of that main campus. The Secretary considers a unit of a 
college or university to be independent of the main campus if the unit--
    (1) Is permanent in nature;
    (2) Offers courses for credit and programs leading to an associate 
or bachelor's degree; and
    (3) Is autonomous to the extent that it has--
    (i) Its own faculty and administrative or supervisory organization; 
and
    (ii) Its own budgetary and hiring authority.
    Comparable institutions that offer similar instruction means 
institutions that are being compared with an applicant institution and 
that fall within one of the following four categories--
    (1) Public junior or community colleges;
    (2) Private nonprofit junior or community colleges;
    (3) Public institutions that offer an educational program for which 
they offer a bachelor's degree; or
    (4) Private nonprofit institutions that offer an educational program 
for which they offer a bachelor's degree.
    Cooperative arrangement means an arrangement to carry out allowable 
grant activities between an institution eligible to receive a grant 
under this part and another eligible or ineligible institution of higher 
education, under which the resources of the cooperating institutions are 
combined and shared to better achieve the purposes of this part and 
avoid costly duplication of effort.

[[Page 271]]

    Degree student means a student who enrolls at an institution for the 
purpose of obtaining the degree, certificate, or other recognized 
educational credential offered by that institution.
    Developmental program and services means new or improved programs 
and services, beyond those regularly budgeted, specifically designed to 
improve the self sufficiency of the school.
    Educational and general expenditures means the total amount expended 
by an institution of higher education for instruction, research, public 
service, academic support (including library expenditures), student 
services, institutional support, scholarships and fellowships, operation 
and maintenance expenditures for the physical plant, and any mandatory 
transfers which the institution is required to pay by law.
    Educationally disadvantaged means a college student who requires 
special services and assistance to enable them to succeed in higher 
education. The phrase includes, but is not limited to, students who come 
from--
    (1) Economically disadvantaged families;
    (2) Limited English proficiency families;
    (3) Migrant worker families; or
    (4) Families in which one or both of their parents have dropped out 
of secondary school.
    Federal Pell Grant Program means the grant program authorized by 
title IV-A-1 of the HEA.
    Federal Perkins Loan Program, formerly called the National Direct 
Student Loan Program, means the loan program authorized by title IV-E of 
the HEA.
    Federal Supplemental Education Opportunity Grant Program means the 
grant program authorized by title IV-A-3 of the HEA.
    Federal Work-Study Program means the part-time employment program 
authorized under title IV-C of the HEA.
    Full-time equivalent students means the sum of the number of 
students enrolled full-time at an institution, plus the full-time 
equivalent of the number of students enrolled part time (determined on 
the basis of the quotient of the sum of the credit hours of all part-
time students divided by 12) at such institution.
    HEA means the Higher Education Act of 1965, as amended.
    Hispanic student means a person of Mexican, Puerto Rican, Cuban, 
Central or South American, or other Spanish culture or origin, 
regardless of race.
    Institution of higher education means an educational institution 
defined in section 101 of the HEA.
    Junior or community college means an institution of higher 
education--
    (1) That admits as regular students persons who are beyond the age 
of compulsory school attendance in the State in which the institution is 
located and who have the ability to benefit from the training offered by 
the institution;
    (2) That does not provide an educational program for which it awards 
a bachelor's degree (or an equivalent degree); and
    (3) That--
    (i) Provides an educational program of not less than 2 years that is 
acceptable for full credit toward such a degree; or
    (ii) Offers a 2-year program in engineering, mathematics, or the 
physical or biological sciences, designed to prepare a student to work 
as a technician or at the semiprofessional level in engineering, 
scientific, or other technological fields requiring the understanding 
and application of basic engineering, scientific, or mathematical 
principles of knowledge.
    Low-income individual means an individual from a family whose 
taxable income for the preceding year did not exceed 150 percent of an 
amount equal to the poverty level determined by using criteria of 
poverty established by the Bureau of the Census.
    Minority student means a student who is an Alaska Native, American 
Indian, Asian-American, Black (African-American), Hispanic American, 
Native Hawaiian, or Pacific Islander.
    Nationally recognized accrediting agency or association means an 
accrediting agency or association that the Secretary has recognized to 
accredit or preaccredit a particular category of institution in 
accordance with the provisions contained in 34 CFR part 603. The 
Secretary periodically publishes a list of those nationally recognized 
accrediting agencies and associations in the Federal Register.

[[Page 272]]

    Operational programs and services means the regular, ongoing 
budgeted programs and services at an institution.
    Preaccredited means a status that a nationally recognized 
accrediting agency or association, recognized by the Secretary to grant 
that status, has accorded an unaccredited institution that is 
progressing toward accreditation within a reasonable period of time.
    Project means all the funded activities under a grant.
    Self-sufficiency means the point at which an institution is able to 
survive without continued funding under the Developing Hispanic-Serving 
Institutions Program.
    Underrepresented means proportionate representation as measured by 
degree recipients, that is less than the proportionate representation in 
the general population--
    (1) As indicated by--
    (i) The most current edition of the Department's Digest of 
Educational Statistics;
    (ii) The National Research Council's Doctorate Recipients from 
United States Universities; or
    (iii) Other standard statistical references, as announced annually 
in the Federal Register notice inviting applications for new awards 
under this program; or
    (2) As documented by national survey data submitted to and accepted 
by the Secretary on a case-by-case basis.

(Authority: 20 U.S.C. 1101 et seq.; OMB Directive No. 15)



Sec. 606.8  What is a comprehensive development plan and what must
it contain?

    (a) A comprehensive development plan is an institution's strategy 
for achieving growth and self-sufficiency by strengthening its--
    (1) Academic programs;
    (2) Institutional management; and
    (3) Fiscal stability.
    (b) The comprehensive development plan must include the following:
    (1) An analysis of the strengths, weaknesses, and significant 
problems of the institution's academic programs, institutional 
management, and fiscal stability.
    (2) A delineation of the institution's goals for its academic 
programs, institutional management, and fiscal stability, based on the 
outcomes of the analysis described in paragraph (b)(1) of this section.
    (3) Measurable objectives related to reaching each goal and 
timeframes for achieving the objectives.
    (4) Methods and resources that will be used to institutionalize 
practices and improvements developed under the proposed project.
    (5) Its five year plan to improve its services to Hispanic and other 
low-income students.

(Authority: 20 U.S.C. 1101 et seq.)



Sec. 606.9  What are the type, duration, and limitations in the awarding
of grants under this part?

    (a)(1) Under this part, the Secretary may award planning grants and 
two types of development grants, individual development grants and 
cooperative arrangement development grants.
    (2) Planning grants may be awarded for a period not to exceed one 
year.
    (3) Either type of development grant may be awarded for a period of 
five years.
    (b)(1) An institution that received an individual development grant 
of five years may not subsequently receive another individual 
development grant for a period of two years from the date on which the 
five-year grant terminates.
    (2) A cooperative arrangement grant is not considered to be an 
individual development grant under paragraph (b)(1) of this section.

(Authority: 20 U.S.C. 1101c and 1103c)



Sec. 606.10  What activities may and may not be carried out under
a grant?

    (a) Planning grants. Under a planning grant, a grantee shall 
formulate--
    (1) A comprehensive development plan described in Sec. 606.8; and
    (2) An application for a development grant.
    (b) Development grants--allowable activities. Under a development 
grant, except as provided in paragraph (c) of this section, a grantee 
shall carry out activities that implement its comprehensive development 
plan and hold

[[Page 273]]

promise for strengthening the institution. Activities that may be 
carried out include, but are not limited to--
    (1) Purchase, rental, or lease of scientific or laboratory equipment 
for educational purposes, including instructional and research purposes.
    (2) Construction, maintenance, renovation, and improvement in 
classrooms, libraries, laboratories, and other instructional facilities.
    (3) Support of faculty exchanges, faculty development, curriculum 
development, academic instruction, and faculty fellowships to assist in 
attaining advanced degrees in the fellow's field of instruction.
    (4) Purchase of library books, periodicals, and other educational 
materials, including telecommunications program material.
    (5) Tutoring, counseling, and student service programs designed to 
improve academic success.
    (6) Funds management, administrative management, and acquisition of 
equipment for use in strengthening funds management.
    (7) Joint use of facilities, such as laboratories and libraries.
    (8) Establishing or improving a development office to strengthen or 
improve contributions from alumni and the private sector.
    (9) Establishing or improving an endowment fund, provided the 
grantee uses no more than 20 percent of its grant funds for this purpose 
and at least matches those grant funds with non-Federal funds.
    (10) Creating or improving facilities for Internet or other distance 
learning academic instruction capabilities, including purchase or rental 
of telecommunications technology equipment or services.
    (11) Establishing or enhancing a program of teacher education 
designed to qualify students to teach in public elementary or secondary 
schools.
    (12) Establishing community outreach programs that will encourage 
elementary school and secondary school students to develop the academic 
skills and the interest to pursue postsecondary education.
    (13) Expanding the number of Hispanic and other underrepresented 
graduate and professional students that can be served by the institution 
by expanding courses and institutional resources.
    (14) Other activities that contribute to carrying out the purposes 
of this program.
    (c) Development grants--unallowable activities. A grantee may not 
carry out the following activities or pay the following costs under a 
development grant:
    (1) Activities that are not included in the grantee's approved 
application.
    (2) Activities that are inconsistent with any State plan for higher 
education that is applicable to the institution, including, but not 
limited to, a State plan for desegregation of higher education.
    (3) Activities or services that relate to sectarian instruction or 
religious worship.
    (4) Activities provided by a school or department of divinity. For 
the purpose of this provision, a ``school or department of divinity'' 
means an institution, or a department of an institution, whose program 
is specifically for the education of students to prepare them to become 
ministers of religion or to enter into some other religious vocation or 
to prepare them to teach theological subjects.
    (5) Developing or improving non-degree or non-credit courses other 
than basic skills development courses.
    (6) Developing or improving community-based or community services 
programs, unless the program provides academic-related experiences or 
academic credit toward a degree for degree students, or, unless it is a 
program or services to encourage elementary and secondary school 
students to develop the academic skills and the interest to pursue 
postsecondary education.
    (7) Purchase of standard office equipment, such as furniture, file 
cabinets, bookcases, typewriters, or word processors.
    (8) Payment of any portion of the salary of a president, vice 
president, or equivalent officer who has college-wide administrative 
authority and responsibility at an institution to fill a position under 
the grant such as project coordinator or activity director.
    (9) Costs of organized fund-raising, including financial campaigns, 
endowment drives, solicitation of gifts and

[[Page 274]]

bequests, and similar expenses incurred solely to raise capital or 
obtain contributions.
    (10) Costs of student recruitment such as advertisements, 
literature, and college fairs.
    (11) Services to high school students, unless they are services to 
encourage such students to develop the skills and the interest to pursue 
postsecondary education.
    (12) Instruction in the institution's standard courses as indicated 
in the institution's catalog.
    (13) Costs for health and fitness programs, transportation, and day 
care services.
    (14) Student activities such as entertainment, cultural, or social 
enrichment programs, publications, social clubs, or associations.
    (15) Activities that are operational in nature rather than 
developmental in nature.
    (d) Endowment funds. If a grantee uses part of its grant funds to 
establish or increase an endowment fund, it must comply with the 
provisions of Secs. 628.3, 628.6, 628.10, and 628.41 through 628.47 of 
this chapter with regard to the use of those funds, except--
    (1) The definition of the term ``endowment fund income'' in 
Sec. 628.6 of this chapter does not apply. For the purposes of this 
paragraph (d), ``endowment fund income'' means an amount equal to the 
total value of the fund, including fund appreciation and retained 
interest and dividends, minus the endowment fund corpus;
    (2) Instead of the requirement in Sec. 628.10(a) of this chapter, 
the grantee institution must match each dollar of Federal grant funds 
used to establish or increase an endowment fund with one dollar of non-
Federal funds; and
    (3) Instead of the requirements in Sec. 628.41(a)(3) through (a)(5) 
and the introductory text in Sec. 628.41(b) and Sec. 628.41(b)(2) and 
(b)(3) of this chapter, if a grantee institution decides to use any of 
its grant funds for endowment purposes, it must match those grant funds 
immediately with non-Federal funds when it places those funds into its 
endowment fund.

(Authority: 20 U.S.C. 1101 et seq.)

[64 FR 70147, Dec. 15, 1999, as amended at 65 FR 79310, Dec. 19, 2000]



          Subpart B_How Does an Institution Apply for a Grant?



Sec. 606.11  What must be included in individual development grant
applications?

    In addition to the information needed by the Secretary to determine 
whether the institution should be awarded a grant under the funding 
criteria contained in subpart C, an application for a development grant 
must include--
    (a) The institution's comprehensive development plan;
    (b) A description of the relationship of each activity for which 
grant funds are requested to the relevant goals and objectives of its 
plan;
    (c) A description of any activities that were funded under previous 
development grants awarded under the Developing Hispanic-Serving 
Institutions Program that expired within five years of when the 
development grant will begin and the institution's justification for not 
completing the activities under the previous grant, if applicable;
    (d) If the applicant is applying to carry out more than one 
activity--
    (1) A description of those activities that would be a sound 
investment of Federal funds if funded separately;
    (2) A description of those activities that would be a sound 
investment of Federal funds only if funded with the other activities; 
and
    (3) A ranking of the activities in preferred funding order.

(Approved by the Office of Management and Budget under control number 
1840-0114)

(Authority: 20 U.S.C. 1101 et seq.)



Sec. 606.12  What must be included in cooperative arrangement grant
applications?

    (a)(1) Institutions applying for a cooperative arrangement grant 
shall submit only one application for that grant regardless of the 
number of institutions participating in the cooperative arrangement.
    (2) The application must include the names of each participating 
institution, the role of each institution, and the rationale for each 
eligible participating institution's decision to request grant funds as 
part of a cooperative arrangement rather than as an individual grantee.

[[Page 275]]

    (b) If the application is for a development grant, the application 
must contain--
    (1) Each participating institution's comprehensive development plan;
    (2) The information required under Sec. 606.11; and
    (3) An explanation from each eligible participating institution of 
why participation in a cooperative arrangement grant rather than 
performance under an individual grant will better enable it to meet the 
goals and objectives of its comprehensive development plan at a lower 
cost.
    (4) The name of the applicant for the group that is legally 
responsible for--
    (i) The use of all grant funds; and
    (ii) Ensuring that the project is carried out by the group in 
accordance with Federal requirements.

(Approved by the Office of Management and Budget under control number 
1840-0114)

(Authority: 20 U.S.C. 1103 and 1103e)



Sec. 606.13  How many applications for a development grant may an
institution submit?

    In any fiscal year, an institution of higher education may--
    (a) Submit an application for an individual development grant; and
    (b) Be part of a cooperative arrangement application.

(Authority: 20 U.S.C. 1101 et seq.)



             Subpart C_How Does the Secretary Make an Award?



Sec. 606.20  How does the Secretary choose applications for funding?

    (a) The Secretary evaluates an application on the basis of the 
criteria in--
    (1) Sections 606.21 and 606.23 for a planning grant; and
    (2) Sections 606.22, 606.23, 600.24, and 606.25 for a development 
grant.
    (b) The Secretary informs applicants of the maximum possible score 
for each criterion in the application package or in a notice published 
in the Federal Register.
    (c)(1) The Secretary considers funding an application for a planning 
grant that meets the requirements under Sec. 606.21.
    (2) The Secretary considers funding an application for a development 
grant that--
    (i) Is submitted with a comprehensive development plan that 
satisfies all the elements required of such a plan under Sec. 606.8; and
    (ii) In the case of an application for a cooperative arrangement 
grant, demonstrates that the grant will enable each eligible participant 
to meet the goals and objectives of its comprehensive development plan 
better and at a lower cost than if each eligible participant were funded 
individually.

(Authority: 20 U.S.C. 1101 et seq.)

[64 FR 70147, Dec. 15, 1999, as amended at 70 FR 13373, Mar. 21, 2005]



Sec. 606.21  What are the selection criteria for planning grants?

    The Secretary evaluates an application for a planning grant on the 
basis of the criteria in this section.
    (a) Design of the planning process. The Secretary reviews each 
application to determine the quality of the planning process that the 
applicant will use to develop a comprehensive development plan and an 
application for a development grant based on the extent to which--
    (1) The planning process is clearly and comprehensively described 
and based on sound planning practice;
    (2) The president or chief executive officer, administrators and 
other institutional personnel, students, and governing board members 
systematically and consistently will be involved in the planning 
process;
    (3) The applicant will use its own resources to help implement the 
project; and
    (4) The planning process is likely to achieve its intended results.
    (b) Key personnel. The Secretary reviews each application to 
determine the quality of key personnel to be involved in the project 
based on the extent to which--
    (1) The past experience and training of key personnel such as the 
project coordinator and persons who have key roles in the planning 
process are suitable to the tasks to be performed; and
    (2) The time commitments of key personnel are adequate.

[[Page 276]]

    (c) Project Management. The Secretary reviews each application to 
determine the quality of the plan to manage the project effectively 
based on the extent to which--
    (1) The procedures for managing the project are likely to ensure 
effective and efficient project implementation; and
    (2) The project coordinator has sufficient authority, including 
access to the president or chief executive officer, to conduct the 
project effectively.
    (d) Budget. The Secretary reviews each application to determine the 
extent to which the proposed project costs are necessary and reasonable.

(Approved by the Office of Management and Budget under control number 
1840-0114)

(Authority: 20 U.S.C. 1101 et seq.)

[64 FR 70147, Dec. 15, 1999, as amended at 70 FR 13373, Mar. 21, 2005]



Sec. 606.22  What are the selection criteria for development grants?

    The Secretary evaluates an application for a development grant on 
the basis of the criteria in this section.
    (a) Quality of the applicant's comprehensive development plan. The 
extent to which--
    (1) The strengths, weaknesses, and significant problems of the 
institution's academic programs, institutional management, and fiscal 
stability are clearly and comprehensively analyzed and result from a 
process that involved major constituencies of the institution;
    (2) The goals for the institution's academic programs, institutional 
management, and fiscal stability are realistic and based on 
comprehensive analysis;
    (3) The objectives stated in the plan are measurable, related to 
institutional goals, and, if achieved, will contribute to the growth and 
self-sufficiency of the institution; and
    (4) The plan clearly and comprehensively describes the methods and 
resources the institution will use to institutionalize practice and 
improvements developed under the proposed project, including, in 
particular, how operational costs for personnel, maintenance, and 
upgrades of equipment will be paid with institutional resources.
    (b) Quality of activity objectives. The extent to which the 
objectives for each activity are--
    (1) Realistic and defined in terms of measurable results; and
    (2) Directly related to the problems to be solved and to the goals 
of the comprehensive development plan.
    (c) Quality of implementation strategy. The extent to which--
    (1) The implementation strategy for each activity is comprehensive;
    (2) The rationale for the implementation strategy for each activity 
is clearly described and is supported by the results of relevant studies 
or projects; and
    (3) The timetable for each activity is realistic and likely to be 
attained.
    (d) Quality of key personnel. The extent to which--
    (1) The past experience and training of key professional personnel 
are directly related to the stated activity objectives; and
    (2) The time commitment of key personnel is realistic.
    (e) Quality of project management plan. The extent to which--
    (1) Procedures for managing the project are likely to ensure 
efficient and effective project implementation; and
    (2) The project coordinator and activity directors have sufficient 
authority to conduct the project effectively, including access to the 
president or chief executive officer.
    (f) Quality of evaluation plan. The extent to which--
    (1) The data elements and the data collection procedures are clearly 
described and appropriate to measure the attainment of activity 
objectives and to measure the success of the project in achieving the 
goals of the comprehensive development plan; and
    (2) The data analysis procedures are clearly described and are 
likely to produce formative and summative results on attaining activity 
objectives and measuring the success of the project on achieving the 
goals of the comprehensive development plan.

[[Page 277]]

    (g) Budget. The extent to which the proposed costs are necessary and 
reasonable in relation to the project's objectives and scope.

(Approved by the Office of Management and Budget under control number 
1840-0114)

(Authority: 20 U.S.C. 1101 et seq.)

[64 FR 70147, Dec. 15, 1999, as amended at 70 FR 13373, Mar. 21, 2005]



Sec. 606.23  What special funding consideration does the Secretary
provide?

    (a) If funds are available to fund only one additional planning 
grant and each of the next fundable applications has received the same 
number of points under Sec. 606.20 or 606.21, the Secretary awards 
additional points, as provided in the application package or in a notice 
published in the Federal Register, to any of those applicants that--
    (1) Has an endowment fund of which the current market value, per 
full-time equivalent enrolled student, is less than the average current 
market value of the endowment funds, per full-time equivalent enrolled 
student, at similar type institutions; or
    (2) Has expenditures for library materials per full-time equivalent 
enrolled student which are less than the average expenditure for library 
materials per full-time equivalent enrolled student at similar type 
institutions.
    (b) If funds are available to fund only one additional development 
grant and each of the next fundable applications has received the same 
number of points under Sec. 606.20 or 606.22, the Secretary awards 
additional points, as provided in the application package or in a notice 
published in the Federal Register, to any of those applicants that--
    (1) Has an endowment fund of which the current market value, per 
full-time equivalent enrolled student, is less than the average current 
market value of the endowment funds, per full-time equivalent enrolled 
student, at comparable institutions that offer similar instruction;
    (2) Has expenditures for library materials per full-time equivalent 
enrolled student that are less than the average expenditures for library 
materials per full-time equivalent enrolled student at comparable 
institutions that offer similar instruction; or
    (3) Propose to carry out one or more of the following activities--
    (i) Faculty development;
    (ii) Funds and administrative management;
    (iii) Development and improvement of academic programs;
    (iv) Acquisition of equipment for use in strengthening management 
and academic programs;
    (v) Joint use of facilities; and
    (vi) Student services.
    (c) As used in this section, an ``endowment fund'' does not include 
any fund established or supported under 34 CFR part 628.
    (d) Each year, the Secretary provides prospective applicants with 
the average market value of endowment funds and the average expenditure 
of library materials per full-time equivalent student.
    (e) The Secretary gives priority to each application that contains 
satisfactory evidence that the applicant has entered into or will enter 
into a collaborative arrangement with at least one local educational 
agency or community-based organization to provide that agency or 
organization with assistance (from funds other than funds provided under 
this part) in--
    (1) Reducing the dropout rates of Hispanic students;
    (2) Improving rates of academic achievement of Hispanic students; 
and
    (3) Increasing the rates at which Hispanic high school graduates 
enroll in higher education.

(Authority: 20 U.S.C. 1101 et seq.)

[64 FR 70147, Dec. 15, 1999, as amended at 70 FR 13373, Mar. 21, 2005]



Sec. 606.24  How does the Secretary use an applicant's performance
under a previous development grant when awarding a development grant?

    (a)(1) In addition to evaluating an application under the selection 
criteria in Sec. 606.22, the Secretary evaluates an applicant's 
performance under any previous development grant awarded under the 
Developing Hispanic-Serving Institutions Program that expired within 
five years of the year when the development grant will begin.
    (2) The Secretary evaluates whether the applicant fulfilled, or is 
making substantial progress toward fulfilling,

[[Page 278]]

the goals and objectives of the previous grant, including, but not 
limited to, the applicant's success in institutionalizing practices 
developed and improvements made under the grant.
    (3) The Secretary bases the evaluation of the applicant's 
performance on information contained in--
    (i) Performance and evaluation reports submitted by the applicant;
    (ii) Audit reports submitted on behalf of the applicant; and
    (iii) Other information obtained by the Secretary, including reports 
prepared by the Department.
    (b) If the Secretary initially determines that the applicant did not 
fulfill the goals and objectives of a previous grant or is not making 
substantial progress towards fulfilling those goals and objectives, the 
Secretary affords the applicant the opportunity to respond to that 
initial determination.
    (c) If the Secretary determines that the applicant did not fulfill 
the goals and objectives of a previous grant or is not making 
substantial progress towards fulfilling those goals and objectives, the 
Secretary may--
    (1) Decide not to fund the applicant; or
    (2) Fund the applicant but impose special grant terms and 
conditions, such as specific reporting and monitoring requirements.

(Authority: 20 U.S.C. 1101 et seq.)



Sec. 606.25  What priority does the Secretary use in awarding cooperative
arrangement grants?

    Among applications for cooperative arrangement grants, the Secretary 
gives priority to proposed cooperative arrangements that are 
geographically and economically sound, or will benefit the institutions 
applying for the grant.

(Authority: 20 U.S.C. 1101 et seq.)



             Subpart D_What Conditions Must a Grantee Meet?



Sec. 606.30  What are allowable costs and what are the limitations on
allowable costs?

    (a) Allowable costs. Except as provided in paragraphs (b) and (c) of 
this section, a grantee may expend grant funds for activities that are 
related to carrying out the allowable activities included in its 
approved application.
    (b) Supplement and not supplant. Grant funds shall be used so that 
they supplement and, to the extent practical, increase the funds that 
would otherwise be available for the activities to be carried out under 
the grant and in no case supplant those funds.
    (c) Limitations on allowable costs. A grantee may not use an 
indirect cost rate to determine allowable costs under its grant.

(Authority: 20 U.S.C. 1101 et seq.)



Sec. 606.31  How does a grantee maintain its eligibility?

    (a) A grantee shall maintain its eligibility under the requirements 
in Sec. 606.2, except for Sec. 606.2(a)(3) and (4), for the duration of 
the grant period.
    (b) The Secretary reviews an institution's application for a 
continuation award to ensure that--
    (1) The institution continues to meet the eligibility requirements 
described in paragraph (a) of this section; and
    (2) The institution is making substantial progress toward achieving 
the objectives described in its grant application including, if 
applicable, the institution's success in institutionalizing practices 
and improvements developed under the grant.

(Authority: 20 U.S.C. 1101 et seq.)



PART 607_STRENGTHENING INSTITUTIONS PROGRAM--Table of Contents



                            Subpart A_General

Sec.
607.1  What is the Strengthening Institutions Program?
607.2  What institutions are eligible to receive a grant under the 
          Strengthening Institutions Program?
607.3  What is an enrollment of needy students?
607.4  What are low educational and general expenditures?
607.5  How does an institution apply to be designated an eligible 
          institution?
607.6  What regulations apply?
607.7  What definitions apply?
607.8  What is a comprehensive development plan and what must it 
          contain?
607.9  What are the type, duration and limitations in the awarding of 
          grants under this part?

[[Page 279]]

607.10  What activities may and may not be carried out under a grant?

          Subpart B_How Does an Institution Apply for a Grant?

607.11  What must be included in individual development grant 
          applications?
607.12  What must be included in cooperative arrangement grant 
          applications?
607.13  How many applications for a development grant may an institution 
          submit?

             Subpart C_How Does the Secretary Make an Award?

607.20  How does the Secretary choose applications for funding?
607.21  What are the selection criteria for planning grants?
607.22  What are the selection criteria for development grants?
607.23  What special funding consideration does the Secretary provide?
607.24  How does the Secretary use an applicant's performance under a 
          previous development grant when awarding a development grant?
607.25  What priority does the Secretary use in awarding cooperative 
          arrangement grants?

             Subpart D_What Conditions Must a Grantee Meet?

607.30  What are allowable costs and what are the limitations on 
          allowable costs?
607.31  How does a grantee maintain its eligibility?

    Authority: 20 U.S.C. 1057-1059g, 1067q, 1068-1068h unless otherwise 
noted.

    Source: 52 FR 30529, Aug. 14, 1987, unless otherwise noted.



                            Subpart A_General



Sec. 607.1  What is the Strengthening Institutions Program?

    The purpose of the Strengthening Institutions Program is to provide 
grants to eligible institutions of higher education to improve their 
academic programs, institutional management, and fiscal stability in 
order to increase their self-sufficiency and strengthen their capacity 
to make a substantial contribution to the higher education resources of 
the Nation.

(Authority: 20 U.S.C. 1057)

[59 FR 41921, Aug. 15, 1994]



Sec. 607.2  What institutions are eligible to receive a grant under
the Strengthening Institutions Program?

    (a) Except as provided in paragraphs (b) and (c) of this section, an 
institution of higher education is eligible to receive a grant under the 
Strengthening Institutions Program if--
    (1) It has an enrollment of needy students as described in 
Sec. 607.3(a), unless the Secretary waives this requirement under 
Sec. 607.3(b);
    (2) It has low average educational and general expenditures per 
full-time equivalent undergraduate student as described in 
Sec. 607.4(a), unless the Secretary waives this requirement under 
Sec. 607.4(c).
    (3) It is legally authorized by the State in which it is located to 
be a junior college or to provide an educational program for which it 
awards a bachelor's degree; and
    (4) It is accredited or preaccredited by a nationally recognized 
accrediting agency or association that the Secretary has determined to 
be a reliable authority as to the quality of education or training 
offered.
    (b) A branch campus of an institution of higher education, if the 
institution as a whole meets the requirements of paragraphs (a)(1) 
through (4) of this section, is eligible to receive a grant under the 
Strengthening Institutions Program even if, by itself, it does not 
satisfy the requirements of paragraphs (a)(3) and (a)(4) of this 
section, although the branch must meet the requirements of paragraphs 
(a)(1) and (a)(2) of this section.
    (c) For the purpose of paragraphs (e)(2) and (f)(2) of this section, 
an institution's enrollment consists of a head count of its entire 
student body.
    (d) A tribal college or university may receive a grant authorized 
under section 316 of the HEA if--
    (1) It satisfies the requirements of paragraph (a) of this section, 
other than Sec. 607.2(a)(3), and
    (2)(i) It meets the definition of the term ``tribally controlled 
college or university'' in section 2 of the Tribally Controlled College 
or University Assistance Act of 1978; or
    (ii) It is listed in the Equity in Educational Land Grant Status Act 
of 1994.

[[Page 280]]

    (e) An Alaska Native-serving institution may receive a grant under 
section 317 of the HEA if--
    (1) It satisfies the requirements of paragraph (a) of this section; 
and
    (2) It has, at the time of application, an enrollment of 
undergraduate students that is at least 20 percent Alaska Native 
students.
    (f) A Native Hawaiian-serving institution may receive a grant 
authorized under section 317 of the HEA if--
    (1) It satisfies the requirements of paragraph (a) of this section; 
and
    (2) It has, at the time of application, an enrollment of 
undergraduate students that is at least 10 percent Native Hawaiian 
students.
    (g)(1) An institution that qualifies for a grant under the 
Strengthening Historically Black Colleges and Universities Program (34 
CFR part 608) or the Developing Hispanic-Serving Institutions Program 
(34 CFR part 606) and receives a grant under either of these programs 
for a particular fiscal year is not eligible to receive a grant under 
this part for the same fiscal year.
    (2) A tribal college or university that receives a grant under 
section 316 of the HEA or an Alaska Native or Native Hawaiian-serving 
institution that receives a grant under section 317 of the HEA may not 
concurrently receive other grant funds under the Strengthening 
Institutions Program, Strengthening Historically Black Colleges and 
Universities Program, or Strengthening Historically Black Graduate 
Institutions Program.

(Authority: 20 U.S.C. 1057 et seq.)

[59 FR 41922, Aug. 15, 1994, as amended at 60 FR 15447, Mar. 23, 1995; 
64 FR 70153, Dec. 15, 1999]



Sec. 607.3  What is an enrollment of needy students?

    (a) Except as provided in paragraph (b) of this section, for the 
purpose of Sec. 607.2(a)(1), an applicant institution has an enrollment 
of needy students if in the base year--
    (1) At least 50 percent of its degree students received student 
financial assistance under one or more of the following programs: Pell 
Grant, Supplemental Educational Opportunity Grant, College Work-Study, 
and Perkins Loan; or
    (2) The percentage of its undergraduate degree students who were 
enrolled on at least a half-time basis and received Pell Grants exceeded 
the median percentage of undergraduate degree students who were enrolled 
on at least a half-time basis and received Pell Grants at comparable 
institutions that offer similar instruction.
    (b) The Secretary may waive the requirement contained in paragraph 
(a) of this section if the institution demonstrates that--
    (1) The State provides more than 30 percent of the institution's 
budget and the institution charges not more than $99.00 for tuition and 
fees for an academic year;
    (2) At least 30 percent of the students served by the institution in 
the base year were students from low-income families;
    (3) The institution substantially increases the higher education 
opportunities for low-income students who are also educationally 
disadvantaged, underrepresented in postsecondary education, or minority 
students;
    (4) The institution substantially increases the higher education 
opportunities for individuals who reside in an area that is not included 
in a ``metropolitan statistical area'' as defined by the Office of 
Management and Budget and who are unserved by other postsecondary 
institutions;
    (5) The institution is located on or within 50 miles of an Indian 
reservation, or a substantial population of Indians and the institution 
will, if granted the waiver, substantially increase higher education 
opportunities for American Indians;
    (6) It is a tribal college or university; or
    (7) The institution will, if granted the waiver, substantially 
increase the higher education opportunities for Black Americans, 
Hispanic Americans, Native Americans, Asian Americans or Pacific 
Islanders, including Native Hawaiians.
    (c) For the purpose of paragraph (b) of this section, the Secretary 
considers ``low-income'' to be an amount which does not exceed 150 
percent of the amount equal to the poverty level as established by the 
United States Bureau of the Census.

[[Page 281]]

    (d) Each year, the Secretary notifies prospective applicants through 
a notice in the Federal Register of the low-income figures.

(Authority: 20 U.S.C. 1058 and 1067)

[52 FR 30529, Aug. 14, 1987, as amended at 60 FR 15447, Mar. 23, 1995; 
64 FR 70153, Dec. 15, 1999]



Sec. 607.4  What are low educational and general expenditures?

    (a)(1) Except as provided in paragraph (b) of this section, for the 
purpose of Sec. 6072(a)(2), an applicant institution's average 
educational and general expenditures per full-time equivalent 
undergraduate student in the base year must be less than the average 
educational and general expenditures per full-time equivalent 
undergraduate student of comparable institutions that offer similar 
institution in that year.
    (2) For the purpose of paragraph (a)(1) of this section, the 
Secretary determines the average educational and general expenditure per 
FTE undergraduate student for institutions with graduate students that 
do not differentiate between graduate and undergraduate E&G expenditures 
by discounting the graduate enrollment using a factor of 2.5 times the 
number of graduate students.
    (b) Each year, the Secretary notifies prospective applicants through 
a notice in the Federal Register of the average educational and general 
expenditures per full-time equivalent undergraduate student at 
comparable institutions that offer similar instruction.
    (c) The Secretary may waive the requirement contained in paragraph 
(a) of this section, if the Secretary determines, based upon persuasive 
evidence provided by the institution, that--
    (1) The institution's failure to satisfy the criteria in paragraph 
(a) of this section was due to factors which, if used in determining 
compliance with those criteria, distorted that determination; and
    (2) The institution's designation as an eligible institution under 
this part is otherwise consistent with the purposes of this part.
    (d) For the purpose of paragraph (c)(1) of this section, the 
Secretary considers that the following factors may distort an 
institution's educational and general expenditures per full-time 
equivalent undergraduate student--
    (1) Low student enrollment;
    (2) Location of the institution in an unusually high cost-of-living 
area;
    (3) High energy costs;
    (4) An increase in State funding that was part of a desegregation 
plan for higher education; or
    (5) Operation of high cost professional schools such as medical or 
dental schools.

(Authority: 20 U.S.C. 1058 and 1067)

[59 FR 41922, Aug. 15, 1994]



Sec. 607.5  How does an institution apply to be designated an eligible 
institution?

    An institution shall apply to the Secretary to be designated an 
eligible institution under the Strengthening Institutions Program by 
submitting an application to the Secretary in the form, manner and time 
established by the Secretary. The application must contain--
    (a) The information necessary for the Secretary to determine whether 
the institution satisfies the requirements of Secs. 607.2, 607.3(a) and 
607.4(a);
    (b) Any waiver request under Secs. 607.3(b) and 607.4(c); and
    (c) Information or explanations justifying any requested waiver.

(Authority: 20 U.S.C. 1058 and 1067)



Sec. 607.6  What regulations apply?

    The following regulations apply to the Strengthening Institutions 
Program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) [Reserved]
    (2) 34 CFR part 75 (Direct Grant Programs), except 34 CFR 
75.128(a)(2) and 75.129(a) in the case of applications for cooperative 
arrangements.
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 82 (New Restrictions on Lobbying).
    (6) [Reserved]

[[Page 282]]

    (7) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part 607.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1057)

[59 FR 41922, Aug. 15, 1994, as amended at 79 FR 76100, Dec. 19, 2014]



Sec. 607.7  What definitions apply?

    (a) Definitions in EDGAR. The following terms that apply to the 
Institutional Aid Programs are defined in 34 CFR 77.1:

EDGAR
Fiscal year
Grant
Grantee
Grant period
Nonprofit
Private
Project period
Public
Secretary
State

    (b) The following term used in this part is defined in section 312 
of the HEA:

Endowment fund

    (c) The following terms used in this part are defined in section 316 
of the HEA:

Indian
Indian tribe
Tribal college or university

    (d) The following terms used in this part are defined in section 317 
of the HEA:

Alaska Native
Alaska Native-serving institution
Native Hawaiian
Native Hawaiian-serving institution

    (e) The following definitions also apply to this part:
    Accredited means the status of public recognition which a nationally 
recognized accrediting agency or association grants to an institution 
which meets certain established qualifications and educational 
standards.
    Activity means an action that is incorporated into an implementation 
plan designed to meet one or more objectives. An activity is a part of a 
project and has its own budget that is approved to carry out the 
objectives of that subpart.
    Base year means the second fiscal year preceding the fiscal year for 
which an institution seeks a grant under this part.
    Branch campus means a unit of a college or university that is 
geographically apart from the main campus of the college or university 
and independent of that main campus. The Secretary considers a unit of a 
college or university to be independent of the main campus if the unit--
    (1) Is permanent in nature;
    (2) Offers courses for credit and programs leading to an associate 
or bachelor's degree; and
    (3) Is autonomous to the extent that it has--
    (i) Its own faculty and administrative or supervisory organization; 
and
    (ii) Its own budgetary and hiring authority.
    Comparable institutions that offer similar instruction means 
institutions that are being compared with an applicant institution and 
that fall within one of the following four categories--
    (1) Public junior or community colleges;
    (2) Private nonprofit junior or community colleges;
    (3) Public institutions that offer an educational program for which 
they offer a bachelor's degree; or
    (4) Private nonprofit institutions that offer an educational program 
for which they offer a bachelor's degree.
    Cooperative arrangement means an arrangement to carry out allowable 
grant activities between an institution eligible to receive a grant 
under this part and another eligible or ineligible institution of higher 
education, under which the resources of the cooperating institutions are 
combined and shared to better achieve the purposes of this part and 
avoid costly duplication of effort.
    Degree student means a student who enrolls at an institution for the 
purpose of obtaining the degree, certificate, or other recognized 
educational credential offered by that institution.
    Developmental program and services means new or improved programs 
and

[[Page 283]]

services, beyond those regularly budgeted, specifically designed to 
improve the self sufficiency of the school.
    Educational and general expenditures means the total amount expended 
by an institution of higher education for instruction, research, public 
service, academic support (including library expenditures), student 
services, institutional support, scholarships and fellowships, operation 
and maintenance expenditures for the physical plant, and any mandatory 
transfers which the institution is required to pay by law.
    Educationally disadvantaged means a college student who requires 
special services and assistance to enable them to succeed in higher 
education. The phrase includes, but is not limited to, students who come 
from--
    (1) Economically disadvantaged families;
    (2) Limited English proficiency families;
    (3) Migrant worker families; or
    (4) Families in which one or both of their parents have dropped out 
of secondary school.
    Federal Pell Grant Program means the grant program authorized by 
title IV-A-1 of the HEA.
    Federal Perkins Loan Program, formerly called the National Direct 
Student Loan Program, means the loan program authorized by title IV-E of 
the HEA.
    Federal Supplemental Education Opportunity Grant Program means the 
grant program authorized by title IV-A-3 of the HEA.
    Federal Work-Study Program means the part-time employment program 
authorized under title IV-C of the HEA.
    Full-time equivalent students means the sum of the number of 
students enrolled full-time at an institution, plus the full-time 
equivalent of the number of students enrolled part time (determined on 
the basis of the quotient of the sum of the credit hours of all part-
time students divided by 12) at such institution.
    HEA means the Higher Education Act of 1965, as amended.
    Hispanic student means a person of Mexican, Puerto Rican, Cuban, 
Central or South American, or other Spanish culture or origin, 
regardless of race.
    Institution of higher education means an educational institution 
defined in section 101 of the HEA.
    Junior or community college means an institution of higher 
education--
    (1) That admits as regular students persons who are beyond the age 
of compulsory school attendance in the State in which the institution is 
located and who have the ability to benefit from the training offered by 
the institution;
    (2) That does not provide an educational program for which it awards 
a bachelor's degree (or an equivalent degree); and
    (3) That--
    (i) Provides an educational program of not less than 2 years that is 
acceptable for full credit toward such a degree, or
    (ii) Offers a 2-year program in engineering, mathematics, or the 
physical or biological sciences, designed to prepare a student to work 
as a technician or at the semiprofessional level in engineering, 
scientific, or other technological fields requiring the understanding 
and application of basic engineering, scientific, or mathematical 
principles of knowledge.
    Low-income individual means an individual from a family whose 
taxable income for the preceding year did not exceed 150 percent of an 
amount equal to the poverty level determined by using criteria of 
poverty established by the Bureau of Census.
    Minority student means a student who is Alaskan Native, American 
Indian, Asian-American, Black (African-American), Hispanic American, 
Native Hawaiian, or Pacific Islander.
    Nationally recognized accrediting agency or association means an 
accrediting agency or association that the Secretary has recognized to 
accredit or preaccredit a particular category of institution in 
accordance with the provisions contained in 34 CFR part 603. The 
Secretary periodically publishes a list of those nationally recognized 
accrediting agencies and associations in the Federal Register.
    Operational programs and services means the regular, ongoing 
budgeted programs and services at an institution.

[[Page 284]]

    Preaccredited means a status that a nationally recognized 
accrediting agency or association, recognized by the Secretary to grant 
that status, has accorded an unaccredited institution that is 
progressing toward accreditation within a reasonable period of time.
    Project means all the funded activities under a grant.
    Self-sufficiency means the point at which an institution is able to 
survive without continued funding under the Strengthening Institutions 
Program.
    Underrepresented means proportionate representation as measured by 
degree recipients, that is less than the proportionate representation in 
the general population--
    (1) As indicated by--
    (i) The most current edition of the Department's Digest of 
Educational Statistics;
    (ii) The National Research Council's Doctorate Recipients from 
United States Universities; or
    (iii) Other standard statistical references, as announced annually 
in the Federal Register notice inviting applications for new awards 
under this program; or
    (2) As documented by national survey data submitted to and accepted 
by the Secretary on a case-by-case basis.

(Authority: 20 U.S.C. 1051, 1057-1059 and 1066-1069f; OMB Directive No. 
15)

[52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41922, Aug. 15, 1994; 
60 FR 15447, Mar. 23, 1995; 64 FR 70153, Dec. 15, 1999]



Sec. 607.8  What is a comprehensive development plan and what must
it contain?

    (a) A comprehensive development plan is an institution's strategy 
for achieving growth and self-sufficiency by strengthening its--
    (1) Academic programs;
    (2) Institutional management; and
    (3) Fiscal stability.
    (b) The comprehensive development plan must include the following:
    (1) An analysis of the strengths, weaknesses, and significant 
problems of the institution's academic programs, institutional 
management, and fiscal stability.
    (2) A delineation of the institution's goals for its academic 
programs, institutional management, and fiscal stability, based on the 
outcomes of the analysis described in paragraph (b)(1) of this section.
    (3) Measurable objectives related to reaching each goal and 
timeframes for achieving the objectives.
    (4) Methods and resources that will be used to institutionalize 
practices and improvements developed under the proposed project.
    (5) For a grant under section 316 of the HEA to a tribal college or 
university, its five-year plan for improving its services to Indian 
students, increasing the rates at which Indian secondary school students 
enroll in higher education, and increasing overall postsecondary 
retention rates for Indian students.
    (6) For a grant under section 317 of the HEA to an Alaska Native-
serving institution or to a Native Hawaiian-serving institution, its 
five-year plan for improving its services to Alaska Native or Native 
Hawaiian students, respectively.

(Authority: 20 U.S.C. 1066)

[59 FR 41923, Aug. 15, 1994, as amended at 64 FR 70154, Dec. 15, 1999]



Sec. 607.9  What are the type, duration and limitations in the 
awarding of grants under this part?

    (a)(1) Under this part, the Secretary may award planning grants and 
two types of development grants, individual development grants and 
cooperative arrangement development grants.
    (2) Planning grants may be awarded for a period not to exceed one 
year.
    (3) Either type of development grant may be awarded for a period of 
five years.
    (b)(1) An institution that received an individual development grant 
of five years may not subsequently receive another individual 
development grant for a period of two years from the date on which the 
five-year grant period terminates.
    (2) A cooperative arrangement grant is not considered to be an 
individual development grant under paragraph (b)(1) of this section.

(Authority: 20 U.S.C. 1059)

[52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41923, Aug. 15, 1994; 
64 FR 70154, Dec. 15, 1999]

[[Page 285]]



Sec. 607.10  What activities may and may not be carried out under
a grant?

    (a) Planning grants. Under a planning grant, a grantee shall 
formulate--
    (1) A comprehensive development plan described in Sec. 607.8; and
    (2) An application for a development grant.
    (b) Development grants--allowable activities. Under a development 
grant, except as provided in paragraph (c) of this section, a grantee 
shall carry out activities that implement its comprehensive development 
plan and hold promise for strengthening the institution. Activities that 
may be carried out include, but are not limited to--
    (1) Faculty exchanges, faculty fellowships, and faculty development 
that provide faculty with the skills and knowledge needed to--
    (i) Develop academic support services, including advising and 
mentoring students;
    (ii) Develop academic programs or methodology, including computer-
assisted instruction, that strengthen the academic quality of the 
institution; or
    (iii) Acquire terminal degrees that are required to obtain or retain 
accreditation of an academic program or department;
    (2) Funds and administrative management that will improve the 
institution's ability to--
    (i) Manage financial resources in an efficient and effective manner; 
and
    (ii) Collect, access, and use information about the institution's 
operations for improved decisionmaking;
    (3) Developing and improving academic programs that enable the 
institution to--
    (i) Develop new academic programs or new program options that show 
promise for increased student enrollment;
    (ii) Provide new technology or methodology to increase student 
success and retention or to retain accreditation; or
    (iii) Improve curriculum or methodology for existing academic 
programs to stabilize or increase student enrollment;
    (4) Acquiring equipment for use in strengthening management and 
academic programs to achieve objectives such as those described in 
paragraphs (b)(2) and (b)(3) of this section;
    (5) Establishing or increasing the joint use of facilities such as 
libraries and laboratories to--
    (i) Eliminate the distance and high cost associated with providing 
academic programs and academic support; or
    (ii) Provide clinical experience that is part of an approved 
academic program at off-campus locations;
    (6) Developing or improving student services to provide--
    (i) New or improved methods to deliver student services, including 
counseling, tutoring, and instruction in basic skills; or
    (ii) Improved strategies to train student services personnel;
    (7) Payment of any portion of the salary of a dean, with proper 
justification, to fill a position under the project such as project 
coordinator or activity director. For purposes of this paragraph, proper 
justification includes evidence that the position entitled ``Dean'' is 
not one that has college-wide administrative authority and 
responsibility;
    (8) Purchase, rental, or lease of scientific or laboratory equipment 
for educational purposes, including instructional and research purposes;
    (9) Construction, maintenance, renovation, and improvement in 
classrooms, libraries, laboratories, and other instructional facilities, 
including the integration of computer technology into institutional 
facilities to create smart buildings;
    (10) Establishing or improving a development office to strengthen or 
improve contributions from alumni and the private sector;
    (11) Establishing or improving an endowment fund, provided a grantee 
uses no more than 20 percent of its grant funds for this purpose and at 
least matches those grant funds with non-Federal funds;
    (12) Creating or improving facilities for Internet or other distance 
learning academic instruction capabilities, including purchase or rental 
of telecommunications technology equipment or services;
    (13) For grants authorized under section 316 of the HEA to tribal 
colleges or universities--

[[Page 286]]

    (i) Purchase, rental, or lease of scientific or laboratory equipment 
for educational purposes, including instructional and research purposes;
    (ii) Construction, maintenance, renovation, and improvement in 
classroom, library, laboratory, and other instructional facilities, 
including purchase or rental of telecommunications technology equipment 
or services;
    (iii) Support of faculty exchanges, faculty development, and faculty 
fellowships to assist in attaining advanced degrees in their field of 
instruction;
    (iv) Curriculum development and academic instruction;
    (v) Purchase of library books, periodicals, microfilm, and other 
educational materials, including telecommunications program materials;
    (vi) Funds and administrative management, and acquisition of 
equipment for use in strengthening funds management;
    (vii) Joint use of facilities such as laboratories and libraries; 
and
    (viii) Academic tutoring and counseling programs and student support 
services designed to improve academic services;
    (ix) Academic instruction in disciplines in which Indians are 
underrepresented;
    (x) Establishing or improving a development office to strengthen or 
improve contributions from the alumni and the private sector;
    (xi) Establishing or enhancing a program of teacher education 
designed to qualify students to teach in elementary schools or secondary 
schools, with a particular emphasis on teaching Indian children and 
youth, that shall include, as part of such program, preparation for 
teacher certification;
    (xii) Establishing community outreach programs that encourage Indian 
elementary school and secondary school students to develop the academic 
skills and the interest to pursue postsecondary education; and
    (xiii) Establishing or improving an endowment fund, provided a 
grantee uses no more than 20 percent of its grant funds for this purpose 
and at least matches those grant funds with non-Federal funds; or
    (14) For grants authorized under section 317 of the HEA to Alaska 
Native-serving institutions and Native Hawaiian-serving institutions--
    (i) Purchase, rental, or lease of scientific or laboratory equipment 
for educational purposes, including instructional and research purposes;
    (ii) Renovation and improvement in classroom, library, laboratory, 
and other instructional facilities;
    (iii) Support of faculty exchanges, faculty development, and faculty 
fellowships to assist in attaining advanced degrees in the faculty's 
field of instruction;
    (iv) Curriculum development and academic instruction;
    (v) Purchase of library books, periodicals, microfilm, and other 
educational materials;
    (vi) Funds and administrative management, and acquisition of 
equipment for use in strengthening funds management;
    (vii) Joint use of facilities such as laboratories and libraries;
    (viii) Academic tutoring and counseling programs and student support 
services.
    (c) Development grants--unallowable activities. A grantee may not 
carry out the following activities or pay the following costs under a 
development grant:
    (1) Activities that are not included in the grantee's approved 
application.
    (2) Activities that are inconsistent with any State plan for higher 
education that is applicable to the institution, including, but not 
limited to, a State plan for desegregation of higher education.
    (3) Activities or services that relate to sectarian instruction or 
religious worship.
    (4) Activities provided by a school or department of divinity. For 
the purpose of this provision, a ``school or department of divinity'' 
means an institution, or a department of an institution, whose program 
is specifically for the education of students to prepare them to become 
ministers of religion or to enter into some other religious vocation or 
to prepare them to teach theological subjects.

[[Page 287]]

    (5) Developing or improving non-degree or non-credit courses other 
than basic skills development courses.
    (6) Developing or improving community-based or community services 
programs, unless the program provides academic-related experiences or 
academic credit toward a degree for degree students, or unless it is an 
outreach program that encourages Indian elementary school and secondary 
school students to develop the academic skills and the interest to 
pursue postsecondary education.
    (7) Purchase of standard office equipment, such as furniture, file 
cabinets, bookcases, typewriters, or word processors.
    (8) Payment of any portion of the salary of a president, vice 
president, or equivalent officer who has college-wide administrative 
authority and responsibility at an institution to fill a position under 
the grant such as project coordinator or activity director.
    (9) Costs of organized fund-raising, including financial campaigns, 
endowment drives, solicitation of gifts and bequests, and similar 
expenses incurred solely to raise capital or obtain contributions.
    (10) Costs of student recruitment such as advertisements, 
literature, and college fairs.
    (11) Services to high school students, unless they are part of a 
program to encourage Indian students to develop the academic skills and 
the interest to pursue postsecondary education.
    (12) Instruction in the institution's standard courses as indicated 
in the institution's catalog.
    (13) Costs for health and fitness programs, transportation, and day 
care services.
    (14) Student activities such as entertainment, cultural, or social 
enrichment programs, publications, social clubs, or associations.
    (15) Activities that are operational in nature rather than 
developmental in nature.
    (d) Endowment funds. If a grantee uses part of its grant funds to 
establish or increase an endowment fund under paragraphs (b)(11) or 
(b)(13)(xiii) of this section, it must comply with the provisions of 
Secs. 628.3, 628.6, 628.10 and 628.41 through 628.47 of this chapter 
with regard to the use of those funds, except--
    (1) The definition of the term ``endowment fund income'' in 
Sec. 628.6 of this chapter does not apply. For the purposes of this 
paragraph (d), ``endowment fund income'' means an amount equal to the 
total value of the fund, including fund appreciation and retained 
interest and dividends, minus the endowment fund corpus.
    (2) Instead of the requirement in Sec. 628.10(a) of this chapter, 
the grantee institution must match each dollar of Federal grant funds 
used to establish or increase an endowment fund with one dollar of non-
Federal funds; and
    (3) Instead of the requirements in Sec. 628.41(a)(3) through (a)(5) 
and the introductory text in Sec. 628.41(b) and Sec. 628.41(b)(2) and 
(b)(3) of this chapter, if a grantee institution decides to use any of 
its grant funds for endowment purposes, it must match those grant funds 
immediately with non-Federal funds when it places those funds into its 
endowment fund.

(Authority: 20 U.S.C. 1057 et seq.)

[52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41923, Aug. 15, 1994; 
60 FR 15447, Mar. 23, 1995; 64 FR 70154, Dec. 15, 1999; 65 FR 79310, 
Dec. 19, 2000]



          Subpart B_How Does an Institution Apply for a Grant?



Sec. 607.11  What must be included in individual development grant
applications?

    In addition to the information needed by the Secretary to determine 
whether the institution should be awarded a grant under the funding 
criteria contained in subpart C, an application for a development grant 
must include--
    (a) The institution's comprehensive development plan;
    (b) A description of the relationship of each activity for which 
grant funds are requested to the relevant goals and objectives of its 
plan;
    (c) A description of any activities that were funded under previous 
development grants awarded under the Strengthening Institutions Program 
that expired within five years of when the development grant will begin 
and the institution's justification for not

[[Page 288]]

completing the activities under the previous grant, if applicable; and
    (d) If the applicant is applying to carry out more than one 
activity--
    (1) A description of those activities that would be a sound 
investment of Federal funds if funded separately;
    (2) A description of those activities that would be a sound 
investment of Federal funds only if funded with the other activities; 
and
    (3) A ranking of the activities in preferred funding order.

(Approved by the Office of Management and Budget under control number 
1840-0114)

(Authority: 20 U.S.C. 1057 et seq.)

[52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41924, Aug. 15, 1994; 
60 FR 15447, Mar. 23, 1995; 64 FR 70155, Dec. 15, 1999]



Sec. 607.12  What must be included in cooperative arrangement grant
applications?

    (a)(1) Institutions applying for a cooperative arrangement grant 
shall submit only one application for that grant regardless of the 
number of institutions participating in the cooperative arrangement.
    (2) The application must include the names of each participating 
institution, the role of each institution, and the rationale for each 
eligible participating institution's decision to request grant funds as 
part of a cooperative arrangement rather than as an individual grantee.
    (b) If the application is for a development grant, the application 
must contain--
    (1) Each participating institution's comprehensive development plan;
    (2) The information required under Sec. 607.11; and
    (3) An explanation from each eligible participating institution of 
why participation in a cooperative arrangement grant rather than 
performance under an individual grant will better enable it to meet the 
goals and objectives of its comprehensive development plan at a lower 
cost.
    (4) The name of the applicant for the group that is legally 
responsible for--
    (i) The use of all grant funds; and
    (ii) Ensuring that the project is carried out by the group in 
accordance with Federal requirements.

(Approved by the Office of Management and Budget under control number 
1840-0114)

(Authority: 20 U.S.C. 1066 and 1069)

[52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41924, Aug. 15, 1994]



Sec. 607.13  How many applications for a development grant may an
institution submit?

    In any fiscal year, an institution of higher education that meets 
the eligibility requirements under sections 311, 316, and 317 of the HEA 
may--
    (a) Submit an application for a development grant authorized under 
sections 311, 316, and 317 of the HEA; and
    (b) Be part of a cooperative arrangement application.

(Authority: 20 U.S.C. 1057, 1069)

[59 FR 41924, Aug. 15, 1994, as amended at 64 FR 70155, Dec. 15, 1999]



             Subpart C_How Does the Secretary Make an Award?



Sec. 607.20  How does the Secretary choose applications for funding?

    (a) The Secretary evaluates an application on the basis of the 
criteria in--
    (1) Sections 607.21 and 607.23 for a planning grant; and
    (2) Sections 607.22, 607.23, 607.24, and 607.25 for a development 
grant.
    (b) The Secretary informs applicants of the maximum possible score 
for each criterion in the application package or in a notice published 
in the Federal Register.
    (c)(1) With regard to applicants that satisfy the requirements of 
paragraph (d) of this section, for each fiscal year, the Secretary 
awards individual development grants to applicants that are not 
individual development grantees under this part, before the Secretary 
awards an individual development grant to any applicant that is an 
individual grantee under this part.
    (2) For purposes of paragraph (c)(1) of this section, an institution 
that is a recipient of a cooperative arrangement grant is not an 
individual grantee under this part.

[[Page 289]]

    (d) The Secretary considers funding an application for a development 
grant that--
    (1) Is submitted with a comprehensive development plan that 
satisfies all the elements required of such a plan under Sec. 607.8; and
    (2) In the case of an application for a cooperative arrangement 
grant, demonstrates that the grant will enable each eligible participant 
to meet the goals and objectives of its comprehensive development plan 
better and at a lower cost than if each eligible participant were funded 
individually.

(Authority: 20 U.S.C. 1057-1059, 1066-1069f)

[59 FR 41924, Aug. 15, 1994, as amended at 60 FR 15447, Mar. 23, 1995; 
64 FR 70155, Dec. 15, 1999; 70 FR 13373, Mar. 21, 2005]



Sec. 607.21  What are the selection criteria for planning grants?

    The Secretary evaluates an application for a planning grant on the 
basis of the criteria in this section.
    (a) Design of the planning process. The Secretary reviews each 
application to determine the quality of the planning process that the 
applicant will use to develop a comprehensive development plan and an 
application for a development grant based on the extent to which--
    (1) The planning process is clearly and comprehensively described 
and based on sound planning practice;
    (2) The president or chief executive officer, administrators and 
other institutional personnel, students, and governing board members 
systematically and consistently will be involved in the planning 
process;
    (3) The applicant will use its own resources to help implement the 
project; and
    (4) The planning process is likely to achieve its intended results.
    (b) Key personnel. The Secretary reviews each application to 
determine the quality of key personnel to be involved in the project 
based on the extent to which--
    (1) The past experience and training of key personnel such as the 
project coordinator and persons who have key roles in the planning 
process are suitable to the tasks to be performed; and
    (2) The time commitments of key personnel are adequate.
    (c) Project Management. The Secretary reviews each application to 
determine the quality of the plan to manage the project effectively 
based on the extent to which--
    (1) The procedures for managing the project are likely to ensure 
effective and efficient project implementation; and
    (2) The project coordinator has sufficient authority, including 
access to the president or chief executive officer, to conduct the 
project effectively.
    (d) Budget. The Secretary reviews each application to determine the 
extent to which the proposed project costs are necessary and reasonable.

(Approved by the Office of Management and Budget under control number 
1840-0114)

(Authority: 20 U.S.C. 1057-1059, 1066-1069)

[52 FR 30529, Aug. 14, 1987, as amended at 70 FR 13374, Mar. 21, 2005]



Sec. 607.22  What are the selection criteria for development grants?

    The Secretary evaluates an application for a development grant on 
the basis of the criteria in this section.
    (a) Quality of the applicant's comprehensive development plan. The 
extent to which--
    (1) The strengths, weaknesses, and significant problems of the 
institution's academic programs, institutional management, and fiscal 
stability are clearly and comprehensively analyzed and result from a 
process that involved major constituencies of the institution;
    (2) The goals for the institution's academic programs, institutional 
management, and fiscal stability are realistic and based on 
comprehensive analysis;
    (3) The objectives stated in the plan are measurable, related to 
institutional goals, and, if achieved, will contribute to the growth and 
self-sufficiency of the institution; and
    (4) The plan clearly and comprehensively describes the methods and 
resources the institution will use to institutionalize practice and 
improvements developed under the proposed project, including, in 
particular, how operational costs for personnel, maintenance, and 
upgrades of equipment

[[Page 290]]

will be paid with institutional resources.
    (b) Quality of activity objectives. The extent to which the 
objectives for each activity are--
    (1) Realistic and defined in terms of measurable results; and
    (2) Directly related to the problems to be solved and to the goals 
of the comprehensive development plan.
    (c) Quality of implementation strategy. The extent to which--
    (1) The implementation strategy for each activity is comprehensive;
    (2) The rationale for the implementation strategy for each activity 
is clearly described and is supported by the results of relevant studies 
or projects; and
    (3) The timetable for each activity is realistic and likely to be 
attained.
    (d) Quality of key personnel. The extent to which--
    (1) The past experience and training of key professional personnel 
are directly related to the stated activity objectives; and
    (2) The time commitment of key personnel is realistic.
    (e) Quality of project management plan. The extent to which--
    (1) Procedures for managing the project are likely to ensure 
efficient and effective project implementation; and
    (2) The project coordinator and activity directors have sufficient 
authority to conduct the project effectively, including access to the 
president or chief executive officer.
    (f) Quality of evaluation plan. The extent to which--
    (1) The data elements and the data collection procedures are clearly 
described and appropriate to measure the attainment of activity 
objectives and to measure the success of the project in achieving the 
goals of the comprehensive development plan; and
    (2) The data analysis procedures are clearly described and are 
likely to produce formative and summative results on attaining activity 
objectives and measuring the success of the project on achieving the 
goals of the comprehensive development plan.
    (g) Budget. The extent to which the proposed costs are necessary and 
reasonable in relation to the project's objectives and scope.

(Approved by the Office of Management and Budget under control number 
1840-0114)

(Authority: 20 U.S.C. 1057-1059, 1066-1069f)

[59 FR 41924, Aug. 15, 1994, as amended at 70 FR 13374, Mar. 21, 2005]



Sec. 607.23  What special funding consideration does the Secretary 
provide?

    (a) If funds are available to fund only one additional planning 
grant and each of the next fundable applications has received the same 
number of points under Sec. 607.20 or 607.21, the Secretary awards 
additional points, as provided in the application package or in a notice 
published in the Federal Register, to any of those applicants that--
    (1) Has an endowment fund of which the current market value, per 
full-time equivalent enrolled student, is less than the average current 
market value of the endowment funds, per full-time equivalent enrolled 
student, at similar type institutions; or
    (2) Has expenditures for library materials per full-time equivalent 
enrolled student which is less than the average expenditure for library 
materials per full-time equivalent enrolled student at similar type 
institutions.
    (b) If funds are available to fund only one additional development 
grant and each of the next fundable applications has received the same 
number of points under Sec. 607.20 or 607.22, the Secretary awards 
additional points, as provided in the application package or in a notice 
published in the Federal Register, to any of those applicants that--
    (1) Has an endowment fund of which the current market value, per 
full-time equivalent enrolled student, is less than the average current 
market value of the endowment funds, per full-time equivalent enrolled 
student, at comparable institutions that offer similar instruction;
    (2) Has expenditures for library materials per full-time equivalent 
enrolled student which are less than the average expenditures for 
library materials per full-time equivalent enrolled student at 
comparable institutions that offer similar instruction; or
    (3) Propose to carry out one or more of the following activities--

[[Page 291]]

    (i) Faculty development;
    (ii) Funds and administrative management;
    (iii) Development and improvement of academic programs;
    (iv) Acquisition of equipment for use in strengthening management 
and academic programs;
    (v) Joint use of facilities; and
    (vi) Student services.
    (c) As used in this section, an endowment fund does not include any 
fund established or supported under 34 CFR part 628.
    (d) Each year, the Secretary provides prospective applicants with 
the average expenditure of endowment funds and library materials per 
full-time equivalent student.

(Authority: 20 U.S.C. 1057 et seq.)

[52 FR 30529, Aug. 14, 1987, as amended at 59 FR 41925, Aug. 15, 1994; 
60 FR 15447, Mar. 23, 1995; 64 FR 70155, Dec. 15, 1999; 70 FR 13374, 
Mar. 21, 2005]



Sec. 607.24  How does the Secretary use an applicant's performance 
under a previous development grant when awarding a development grant?

    (a)(1) In addition to evaluating an application under the selection 
criteria in Sec. 607.22, the Secretary evaluates an applicant's 
performance under any previous development grant awarded under the 
Strengthening Institutions Program that expired within five years of the 
year when the development grant will begin.
    (2) The Secretary evaluates whether the applicant fulfilled, or is 
making substantial progress toward fulfilling, the goals and objectives 
of the previous grant, including, but not limited to, the applicant's 
success in institutionalizing practices developed and improvements made 
under the grant.
    (3) The Secretary bases the evaluation of the applicant's 
performance on information contained in--
    (i) Performance and evaluation reports submitted by the applicant;
    (ii) Audit reports submitted on behalf of the applicant; and
    (iii) Other information obtained by the Secretary, including reports 
prepared by the Department.
    (b) If the Secretary initially determines that the applicant did not 
fulfill the goals and objectives of a previous grant or is not making 
substantial progress towards fulfilling those goals and objectives, the 
Secretary affords the applicant the opportunity to respond to that 
initial determination.
    (c) If the Secretary determines that the applicant did not fulfill 
the goals and objectives of a previous grant or is not making 
substantial progress towards fulfilling those goals and objectives, the 
Secretary may--
    (1) Decide not to fund the applicant; or
    (2) Fund the applicant but impose special grant terms and 
conditions, such as specific reporting and monitoring requirements.

(Authority: 20 U.S.C. 1066)

[59 FR 41925, Aug. 15, 1994, as amended at 64 FR 70155, Dec. 15, 1999]



Sec. 607.25  What priority does the Secretary use in awarding cooperative
arrangement grants?

    Among applications for cooperative arrangement grants, the Secretary 
gives priority to proposed cooperative arrangements that are 
geographically and economically sound, or will benefit the institutions 
applying for the grant.

(Authority: 20 U.S.C. 1057, 1069)

[59 FR 41925, Aug. 15, 1994]



             Subpart D_What Conditions Must a Grantee Meet?



Sec. 607.30  What are allowable costs and what are the limitations on
allowable costs?

    (a) Allowable costs. Except as provided in paragraphs (b) and (c) of 
this section, a grantee may expend grant funds for activities that are 
related to carrying out the allowable activities included in its 
approved application.
    (b) Supplement and not supplant. Grant funds shall be used so that 
they supplement and, to the extent practical, increase the funds that 
would otherwise be available for the activities to be carried out under 
the grant and in no case supplant those funds.
    (c) Limitations on allowable costs. A grantee may not use an 
indirect cost rate to determine allowable costs under its grant.

(Authority: 20 U.S.C. 1057-1059 and 1066)

[[Page 292]]



Sec. 607.31  How does a grantee maintain its eligibility?

    (a) A grantee shall maintain its eligibility under the requirements 
in Sec. 607.2, except for Sec. 607.2(a) (1) and (2), for the duration of 
the grant period.
    (b) The Secretary reviews an institution's application for a 
continuation award to ensure that--
    (1) The institution continues to meet the eligibility requirements 
described in paragraph (a) of this section; and
    (2) The institution is making substantial progress toward achieving 
the objectives set forth in its grant application including, if 
applicable, the institution's success in institutionalizing practices 
and improvements developed under the grant.

(Authority: 20 U.S.C. 1057-1059b, 1066-1069f)

[59 FR 41925, Aug. 15, 1994]



PART 608_STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES
PROGRAM--Table of Contents



                            Subpart A_General

Sec.
608.1  What is the Strengthening Historically Black Colleges and 
          Universities (HBCU) Program?
608.2  What institutions are eligible to receive a grant under the HBCU 
          Program?
608.3  What regulations apply?
608.4  What definitions apply?

        Subpart B_What Kind of Projects Does the Secretary Fund?

608.10  What activities may be carried out under a grant?
608.11  What is the duration of a grant?

      Subpart C_How Does an Eligible Institution Apply for a Grant?

608.20  What are the application requirements for a grant under this 
          part?
608.21  What is a comprehensive development plan and what must it 
          contain?

             Subpart D_How Does the Secretary Make a Grant?

608.30  What is the procedure for approving and disapproving grant 
          applications?
608.31  How does the Secretary determine the amount of a grant?

             Subpart E_What Conditions Must a Grantee Meet?

608.40  What are allowable costs and what are the limitations on 
          allowable costs?
608.41  What are the audit and repayment requirements?
608.42  Under what conditions does the Secretary terminate a grant?

    Authority: 20 U.S.C. 1060 through 1063a, 1063c, 1067q and 1068-
1068h, unless otherwise noted.

    Source: 58 FR 38713, July 20, 1993, unless otherwise noted.



                            Subpart A_General



Sec. 608.1  What is the Strengthening Historically Black Colleges
and Universities (HBCU) Program?

    The Strengthening Historically Black Colleges and Universities 
Program, hereafter called the HBCU Program, provides grants to 
Historically Black Colleges and Universities (HBCUs) to assist these 
institutions in establishing and strengthening their physical plants, 
academic resources and student services so that they may continue to 
participate in fulfilling the goal of equality of educational 
opportunity.

(Authority: 20 U.S.C. 1060)



Sec. 608.2  What institutions are eligible to receive a grant under
the HBCU Program?

    (a) To be eligible to receive a grant under this part, an 
institution must--
    (1) Satisfy section 322(2) of the Higher Education Act of 1965, as 
amended (HEA);
    (2) Be legally authorized by the State in which it is located--
    (i) To be a junior or community college; or
    (ii) To provide an educational program for which it awards a 
bachelor's degree; and
    (3) Be accredited or preaccredited by a nationally recognized 
accrediting agency or association.
    (b) The Secretary has determined that the following institutions 
satisfy section 322(2) of the HEA.

                                 Alabama

Alabama A&M University-Huntsville
Alabama State University--Montgomery
Carver State Technical College--Mobile

[[Page 293]]

Concordia College--Selma
Fredd State Technical College--Tuscaloosa
J.F. Drake State Technical College--Huntsville
S.D. Bishop State Junior College--Mobile
Lawson State College--Birmingham
Miles College--Birmingham
Oakwood College--Huntsville
Selma University--Selma
Stillman College--Tuscaloosa
Talladega University--Talladega
Trenholm State Technical College--Montgomery
Tuskegee University--Tuskegee

                                Arkansas

Arkansas Baptist College--Little Rock
Philander Smith College--Little Rock
Shorter College--Little Rock
University of Arkansas at Pine Bluff--Pine Bluff

                                Delaware

Delaware State College--Dover

                          District of Columbia

Howard University
University of the District of Columbia

                                 Florida

Bethune Cookman College--Daytona Beach
Edward Waters College--Jacksonville
Florida A&M University--Tallahassee
Florida Memorial College--Miami

                                 Georgia

Albany State College--Albany
Atlanta University--Atlanta
Clark College--Atlanta
Fort Valley State College--Fort Valley
Interdenominational Theological Center--Atlanta
Morehouse College--Atlanta
Morris Brown College--Atlanta
Paine College--Augusta
Savannah State College--Savannah
Spelman College--Atlanta

                                Kentucky

Kentucky State University--Frankfurt

                                Louisiana

Dillard University--New Orleans
Grambling State University--Grambling
Southern University A&M College--Baton Rouge
Southern University at New Orleans--New Orleans
Southern University at Shreveport--Shreveport
Xavier University of Louisiana--New Orleans

                                Maryland

Bowie State College--Bowie
Coppin State College--Baltimore
Morgan State University--Baltimore
University of Maryland-Eastern Shore--Princess Anne

                                Michigan

Lewis College of Business--Detroit

                               Mississippi

Alcorn State University--Lorman
Coahoma Junior College--Clarksdale
Jackson State University--Jackson
Mary Holmes College--West Point
Mississippi Valley State University--Itta Bena
Prentiss Normal and Industrial Institute--Prentiss
Rust College--Holly Springs
Tougaloo College--Tougaloo
Hinds Junior College (Utica Jr Coll)--Raymond

                                Missouri

Lincoln University--Jefferson City
Harris-Stowe State College--St. Louis

                             North Carolina

Barber-Scotia College--Concord
Bennett College--Greensboro
Elizabeth City State University--Elizabeth City
Fayetteville State University--Fayetteville
Johnson C. Smith University--Charlotte
Livingstone College--Salisbury
North Carolina A&T State University--Greensboro
North Carolina Central University--Durham
Saint Augustine's College--Raleigh
Shaw University--Raleigh
Winston-Salem State University--Winston Salem

                                  Ohio

Central State University--Wilberforce
Wilberforce University--Wilberforce

                                Oklahoma

Langston University--Langston

                              Pennsylvania

Cheyney State University--Cheyney
Lincoln University--Lincoln

                             South Carolina

Allen University--Columbia
Benedict College--Columbia
Claflin College--Orangeburg
Clinton Junior College--Rock Hill
Denmark Technical College--Denmark
Morris College--Sumter
South Carolina State College--Orangeburg
Voorhees College--Denmark

                                Tennessee

Fisk University--Nashville
Knoxville College--Knoxville

[[Page 294]]

Lane College--Jackson
LeMoyne-Owen College--Memphis
Meharry Medical College--Nashville
Morristown College--Morristown
Tennessee State University--Nashville

                                  Texas

Huston-Tillotson College--Austin
Jarvis Christian College--Hawkins
Paul Quinn College--Waco
Prairie View A&M University--Prairie View
Saint Philip's College--San Antonio
Southwestern Christian College--Terrell
Texas College--Tyler
Texas Southern University--Houston
Wiley College--Marshall

                           U.S. Virgin Islands

College of the Virgin Islands--St. Thomas

                                Virginia

Hampton University--Hampton
Norfolk State University--Norfolk
Saint Paul's College--Lawrenceville
Virginia State University--Petersburg
Virginia Union University--Richmond

                              West Virginia

Bluefield State College--Bluefield
West Virginia State College--Institute

    (c) If an institution identified in paragraph (b) of this section 
has merged with another institution, and, as a result of the merger, 
would not otherwise qualify to receive a grant under this part, that 
institution may nevertheless qualify to receive a grant under this part 
if--
    (1) The institution would have qualified to receive a grant before 
the merger; and
    (2) The institution was eligible to receive a grant under the 
Special Needs Program in any fiscal year prior to fiscal year 1986. (The 
Special Needs Program was authorized under Title III, Part B, of the HEA 
before 1986.)
    (d) For the purpose of paragraph (a)(3) of this section, the 
Secretary publishes a list in the Federal Register of nationally 
recognized accrediting agencies and associations.
    (e) Notwithstanding any other provision of this section, for each 
fiscal year--
    (1) The University of the District of Columbia is eligible to 
receive a grant under this part only if the amount of the grant it is 
scheduled to receive under Sec. 608.31 exceeds the amount it is 
scheduled to receive in the same fiscal year under the District of 
Columbia Self-Government and Governmental Reorganization Act; and
    (2) Howard University is eligible to receive a grant under this part 
only if the amount of the grant it is scheduled to receive under 
Sec. 608.31 exceeds the amount it is scheduled to receive in the same 
fiscal year under the Act of March 2, 1867, 20 U.S.C. 123.

(Authority: 20 U.S.C. 1061, 1063, and 1063a; House Report 99-861, 99th 
Cong., 2d Sess. p. 367, September 22, 1986; Senate Report 99-296, 99th 
Cong., 2d Sess. p. 23, May 12, 1986; Cong. Rec. of June 3, 1986, pp. 
6588-6589)



Sec. 608.3  What regulations apply?

    The following regulations apply to this part:
    (a) The Department of Education General Administrative Regulations 
(EDGAR) as follows:
    (1) [Reserved]
    (2) The following sections of 34 CFR part 75 (Direct Grant 
Programs): Secs. 75.1-75.104, 75.125-75.129, 75.190-75.192, 75.230-
75.261, 75.500, 75.510-75.519, 75.524-75.534, 75.580-75.903, and 75.910;
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 82 (New Restrictions on Lobbying).
    (6) [Reserved]
    (7) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part 608.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1060-1063a, 1063c)

[58 FR 38713, July 20, 1993, as amended at 79 FR 76101, Dec. 19, 2014]



Sec. 608.4  What definitions apply?

    (a) General definitions. The following terms used in this part are 
defined in 2 CFR part 200, subpart A, or 34 CFR 77.1:


[[Page 295]]


Applicant
Application
Award
Budget
EDGAR
Equipment
Fiscal year
Grant period
Private
Project period
Public
Secretary

    (b) Other definitions. The following definitions also apply to this 
part:
    Accredited means the status of public recognition which a nationally 
recognized accrediting agency or association grants to an institution 
which meets certain established qualifications and educational 
standards.
    Graduate means a student who has attended an institution for at 
least three semesters and fulfilled academic requirements for 
undergraduate studies in not more than five consecutive school years.
    Junior or community college means an institution of higher education 
that--
    (i) Admits as regular students persons who are beyond the age of 
compulsory school attendance in the State in which the institution is 
located and who have the ability to benefit from the training offered by 
the institution;
    (ii) Does not provide an educational program for which it awards a 
bachelor's degree or an equivalent degree; and
    (iii) Provides an educational program of not less than 2 years that 
is acceptable for full credit toward such a degree; or offers a 2-year 
program in engineering, mathematics, or the physical or biological 
sciences, designed to prepare a student to work as a technician or at 
the semiprofessional level in engineering, scientific, or other 
technological fields requiring the understanding and application of 
basic engineering, scientific, or mathematical principles of knowledge.
    Pell Grant means the grant program authorized by Title IV-A-1 of the 
Higher Education Act of 1965, as amended.
    Preaccredited means a status, also called candidacy status, that a 
nationally recognized accrediting agency or association, recognized by 
the Secretary to grant that status, has accorded an unaccredited 
institution that is making reasonable progress toward accreditation.
    School year means the period of time from July 1 of one calendar 
year through June 30 of the subsequent calendar year. (A ``school year'' 
is equivalent to an ``award year'' under the Pell Grant Program.)

(Authority: 20 U.S.C. 1060-1063)

[58 FR 38713, July 20, 1993, as amended at 79 FR 76101, Dec. 19, 2014]



        Subpart B_What Kind of Projects Does the Secretary Fund?



Sec. 608.10  What activities may be carried out under a grant?

    (a) Allowable activities. Except as provided in paragraph (b) of 
this section, a grantee may carry out the following activities under 
this part--
    (1) Purchase, rental, or lease of scientific or laboratory equipment 
for educational purposes, including instructional or research purposes;
    (2) Construction, maintenance, renovation, and improvement in 
classroom, library, laboratory, and other instructional facilities, 
including purchase or rental of telecommunications technology equipment 
or services;
    (3) Support of faculty exchanges, faculty development and faculty 
fellowships to assist these faculty members in attaining advanced 
degrees in their fields of instruction;
    (4) Academic instruction in disciplines in which Black Americans are 
underrepresented;
    (5) Purchase of library books, periodicals, microfilm, and other 
educational materials, including telecommunications program materials;
    (6) Tutoring, counseling, and student service programs designed to 
improve academic success;
    (7) Funds and administrative management, and acquisition of 
equipment for use in strengthening funds management;
    (8) Joint use of facilities, such as laboratories and libraries;
    (9) Establishing or improving a development office to strengthen or 
improve contributions from alumni and the private sector;
    (10) Establishing or enhancing a program of teacher education 
designed to qualify students to teach in a public elementary or 
secondary school in the State that shall include, as part of the 
program, preparation for teacher certification;

[[Page 296]]

    (11) Establishing community outreach programs that will encourage 
elementary and secondary students to develop the academic skills and the 
interest to pursue postsecondary education; and
    (12) Other activities that it proposes in its application that 
contribute to carrying out the purpose of this part and are approved by 
the Secretary as part of the review and acceptance of the application.
    (b) Unallowable activities. A grantee may not carry out the 
following activities under this part--
    (1) Activities that are not included in the grantee's approved 
application;
    (2) Activities described in paragraph (a)(12) of this section that 
are not approved by the Secretary;
    (3) Activities that are inconsistent with any State plan of higher 
education that is applicable to the institution;
    (4) Activities that are inconsistent with a State plan for 
desegregation of higher education that is applicable to the institution;
    (5) Activities or services that relate to sectarian instruction or 
religious worship; and
    (6) Activities provided by a school or department of divinity. For 
the purpose of this section, a ``school or department of divinity'' 
means an institution, or a department of an institution, whose program 
is specifically for the education of students to prepare them to become 
ministers of religion or to enter upon some other religious vocation, or 
to prepare them to teach theological subjects.
    (c) No award under this part may be used for telecommunications 
technology equipment, facilities or services, if such equipment, 
facilities or services are available pursuant to section 396(k) of the 
Communications Act of 1934.
    (d) Endowment funds. If a grantee uses part of its grant funds to 
establish or increase an endowment fund, it is subject to the provisions 
of Secs. 628.3, 628.6, 628.10 and 628.41 through 628.47 of this chapter 
with regard to the use of those funds, except--
    (1) The definition of the term ``endowment fund income'' in 
Sec. 628.6 of this chapter does not apply. For the purposes of this 
paragraph (d), ``endowment fund income'' means an amount equal to the 
total value of the fund, including fund appreciation and retained 
interest and dividends, minus the endowment fund corpus;
    (2) Instead of the requirement in Sec. 628.10(a) of this chapter, 
the grantee institution must match each dollar of Federal grant funds 
used to establish or increase an endowment fund with one dollar of non-
Federal funds; and
    (3) Instead of the requirements in Sec. 628.41(a)(3) through (a)(5) 
and the introductory text in Sec. 628.41(b) and Sec. 628.41(b)(2) and 
(b)(3) of this chapter, if a grantee institution decides to use any of 
its grant funds for endowment purposes, it must match those grant funds 
immediately with non-Federal funds when it places those funds into its 
endowment fund.

(Authority: 20 U.S.C. 1062, 1063a, and 1069c)

[58 FR 38713, July 20, 1993, as amended at 65 FR 79311, Dec. 19, 2000]



Sec. 608.11  What is the duration of a grant?

    The Secretary may award a grant under this part for a period of up 
to five academic years.

(Authority: 20 U.S.C. 1063b(b))



      Subpart C_How Does an Eligible Institution Apply for a Grant?



Sec. 608.20  What are the application requirements for a grant
under this part?

    In order to receive a grant under this part, an institution must 
submit an application to the Secretary at such time and in such manner 
as the Secretary may prescribe. The application must contain--
    (a) A description of the activities to be carried out with grant 
funds;
    (b) A description of how the grant funds will be used so that they 
will supplement and, to the extent practical, increase the funds that 
would otherwise be made available for the activities to be carried out 
under the grant and in no case supplant those funds;
    (c) (1) A comprehensive development plan as described in 
Sec. 608.21; or

[[Page 297]]

    (2) If an applicant has already submitted a comprehensive 
development plan as described in Sec. 608.21, a description of the 
progress the applicant has made in carrying out the goals of its plan;
    (d) An assurance that the institution will provide the Secretary 
with an annual report on the activities carried out under the grant;
    (e) An assurance that the institution will provide for, and submit 
to the Secretary, the compliance and financial audit described in 
Sec. 608.41;
    (f) An assurance that the proposed activities in the application are 
in accordance with any State plan that is applicable to the institution;
    (g) The number of graduates of the applicant institution during the 
school year immediately preceding the fiscal year for which grant funds 
are requested; and
    (h) The number of graduates of the applicant institution--
    (1) Who, within five years of graduating with baccalaureate degrees, 
attended graduate or professional schools and enrolled in degree 
programs in disciplines in which Blacks are underrepresented during the 
school year immediately preceding the fiscal year for which funds are 
requested; and
    (2) Who graduated with baccalaureate degrees during any one of the 
five school years immediately preceding the school year described in 
paragraph (h)(1) of this section.

(Approved by the Office of Management and Budget under control number 
1840-0113)

(Authority: 20 U.S.C. 1063, 1063a and 1066(b)(2))



Sec. 608.21  What is a comprehensive development plan and what must
it contain?

    (a) A comprehensive development plan must describe an institution's 
strategy for achieving growth and self-sufficiency by strengthening 
its--
    (1) Financial management;
    (2) Academic programs; and
    (b) The comprehensive development plan must include the following:
    (1) An assessment of the strengths and weaknesses of the 
institution's financial management and academic programs.
    (2) A delineation of the institution's goals for its financial 
management and academic programs, based on the outcomes of the 
assessment described in paragraph (b)(1) of this section.
    (3) A listing of measurable objectives designed to assist the 
institution to reach each goal with accompanying timeframes for 
achieving the objectives.
    (4) A description of methods, processes, and procedures that will be 
used by the college or university to institutionalize financial 
management and academic program practices and improvements developed 
under the proposed funded activities.

(Approved by the Office of Management and Budget under control number 
1840-0113)

(Authority: 20 U.S.C. 1063a)



             Subpart D_How Does the Secretary Make a Grant?



Sec. 608.30  What is the procedure for approving and disapproving 
grant applications?

    The Secretary--
    (a) Approves any application that satisfies the requirements of 
Sec. 608.10 and Sec. 608.20; and
    (b) Does not disapprove any application, or any modification of an 
application, without affording the applicant reasonable notice and 
opportunity for a hearing.

(Authority: 20 U.S.C. 1063a)



Sec. 608.31  How does the Secretary determine the amount of a grant?

    (a) Except as provided in paragraph (c) of this section, for each 
fiscal year, the Secretary determines the amount of a grant under this 
part by-
    (1) Multiplying fifty percent of the amount appropriated for the 
HBCU Program by the following fraction:

Number of Pell Grant recipients at the applicant institution during the 
school year immediately preceding that fiscal year.
________________________________________________________________________
Number of Pell Grant recipients at all applicant institutions during the 
school year immediately preceding that fiscal year.

    (2) Multiplying twenty-five percent of the amount appropriated for 
the HBCU Program by the following fraction:


[[Page 298]]


Number of graduates of the applicant institution during the school year 
immediately preceding that fiscal year.
________________________________________________________________________
Number of graduates of all applicant institutions during the school year 
immediately preceding that fiscal year.

    (3) Multiplying twenty-five percent of the amount appropriated for 
the HBCU Program by the following fraction:

The percentage of graduates of an applicant institution who, within five 
years of graduating with baccalaureate degrees, are in attendance at 
graduate or professional schools and enrolled in degree programs in 
disciplines in which Blacks are underrepresented
________________________________________________________________________
The sum of the percentages of those graduates of all applicant 
institutions.

    (4) Adding the amounts obtained in paragraphs (a)(1), (a)(2), and 
(a)(3) of this section.
    (b)(1) For each fiscal year, the numerator in paragraph (a)(3) of 
this section is calculated by--
    (i) Determining the number of graduates of an applicant institution 
who, within five years of graduating with baccalaureate degrees, 
attended graduate or professional schools and enrolled in degree 
programs in disciplines in which Blacks are underrepresented during the 
school year immediately preceding that fiscal year; and
    (ii) Dividing the number obtained in paragraph (b)(1)(i) of this 
section by the number of graduates of an applicant institution who 
graduated with baccalaureate degrees during the five school years 
immediately preceding the school year described in paragraph (b)(1)(i) 
of this section.
    (2) For purposes of this section, the Secretary--
    (i) Considers that Blacks are underrepresented in a professional or 
academic discipline if the percentage of Blacks in that discipline is 
less than the percentage of Blacks in the general population of the 
United States; and
    (ii) Notifies applicants of the disciplines in which Blacks are 
underrepresented through a notice in the Federal Register, after 
consulting with the Commissioner of the Bureau of Labor Statistics.
    (c) Notwithstanding the formula in paragraph (a) of this section--
    (1) For each fiscal year, each eligible institution with an approved 
application must receive at least $500,000; and
    (2) If the amount appropriated for a fiscal year for the HBCU 
Program is insufficient to provide $500,000 to each eligible institution 
with an approved application, each grant is ratably reduced. If 
additional funds become available for the HBCU Program during a fiscal 
year, each grant is increased on the same basis as it was decreased 
until the grant amount reaches $500,000.
    (d) The amount of any grant that the Secretary determines will not 
be required by a grantee for the period for which the grant was made is 
available for reallotment by the Secretary during that period to other 
eligible institutions under the formula contained in paragraph (a) of 
this section.

(Authority: 20 U.S.C. 1063)



             Subpart E_What Conditions Must a Grantee Meet?



Sec. 608.40  What are allowable costs and what are the limitations
on allowable costs?

    (a) Allowable costs. Except as provided in paragraphs (b) and (c) of 
this section, a grantee may expend grant funds for activities that are 
related to carrying out the allowable activities included in its 
approved application.
    (b) Supplement and not supplant. Grant funds shall be used so that 
they supplement, and to the extent practical, increase the funds that 
would otherwise be available for the activities to be carried out under 
the grant, and in no case supplant those funds.
    (c) Limitations on allowable costs. A grantee may not--
    (1) Spend more than fifty percent of its grant award in each fiscal 
year for costs relating to constructing or maintaining a classroom, 
library, laboratory, or other instructional facility; or
    (2) Use an indirect cost rate to determine allowable costs under its 
grant.

(Authority: 20 U.S.C. 1062 and 1066)



Sec. 608.41  What are the audit and repayment requirements?

    (a) (1) A grantee shall provide for the conduct of a compliance and 
financial

[[Page 299]]

audit of any funds it receives under this part of a qualified, 
independent organization or person in accordance with the Standards for 
Audit of Governmental Organizations, Programs, Activities, and 
Functions, 1981 revision, established by the Comptroller General of the 
United States. This publication is available from the Superintendent of 
Documents, U.S. Government Printing Office.
    (2) The grantee shall have an audit conducted at least once every 
two years, covering the period since the previous audit, and the grantee 
shall submit the audit to the Secretary.
    (3) If a grantee is audited under Chapter 75 of Title 31 of the 
United States Code, the Secretary considers that audit to satisfy the 
requirements of paragraph (a)(1) of this section.
    (b) An institution awarded a grant under this part must submit to 
the Department of Education Inspector General three copies of the audit 
required in paragraph (a) of this section within six months after 
completion of the audit.
    (c) Any individual or firm conducting an audit described in this 
section shall give the Department of Education's Inspector General 
access to records or other documents necessary to review the results of 
the audit.
    (d) A grantee shall repay to the Treasury of the United States any 
grant funds it received that it did not expend or use to carry out the 
allowable activities included in its approved application within ten 
years following the date of the initial grant it received under this 
part.

(Authority: 20 U.S.C. 1063a and 1063c)



Sec. 608.42  Under what conditions does the Secretary terminate a grant?

    The Secretary terminates any grant under which funds were not 
expended if an institution loses--
    (a) Its accredited status; or
    (b) Its legal authority in the State in which it is located--
    (1) To be a junior or community college; or
    (2) To provide an educational program for which it awards a 
bachelor's degree.

(Authority: 20 U.S.C. 1063a)



PART 609_STRENGTHENING HISTORICALLY BLACK GRADUATE INSTITUTIONS
PROGRAM--Table of Contents



                            Subpart A_General

Sec.
609.1  What is the Strengthening Historically Black Graduate 
          Institutions Program?
609.2  What institutions are eligible to receive a grant under this 
          part?
609.3  What regulations apply?
609.4  What definitions apply?

         Subpart B_What Kind of Project Does the Secretary Fund?

609.10  What activities may be carried out under a grant?
609.11  What is the duration of a grant?

      Subpart C_How Does an Eligible Institution Apply for a Grant?

609.20  What are the application requirements for a grant under this 
          part?
609.21  What is a comprehensive development plan and what must it 
          contain?

             Subpart D_How Does the Secretary Make a Grant?

609.30  What is the procedure for approving and disapproving grant 
          applications?
609.31  How does the Secretary determine the amount of a grant?

             Subpart E_What Conditions Must a Grantee Meet?

609.40  What are the matching requirements?
609.41  What are allowable costs and what are the limitations on 
          allowable costs?
609.42  What are the audit and repayment requirements?
609.43  Under what conditions does the Secretary terminate a grant?

    Authority: 20 U.S.C. 1063b and 1063c, unless otherwise noted.

    Source: 59 FR 38717, July 20, 1993, unless otherwise noted.



                            Subpart A_General



Sec. 609.1  What is the Strengthening Historically Black Graduate
Institutions Program?

    The Strengthening Historically Black Graduate Institutions Program 
provides grants to the institutions listed in Sec. 609.2 to assist these 
institutions in establishing and strengthening their physical plants, 
development offices,

[[Page 300]]

endowment funds, academic resources and student services so that they 
may continue to participate in fulfilling the goal of equality of 
educational opportunity in graduate education.

(Authority: 20 U.S.C. 1060 and 1063b)



Sec. 609.2  What institutions are eligible to receive a grant under
this part?

    (a) An institution or an institution's qualified graduate program 
listed in paragraph (b) of this section is eligible to receive a grant 
under this part if the Secretary determines that the institution is 
making a substantial contribution to legal, medical, dental, veterinary 
or other graduate education opportunities for Black Americans.
    (b) The institutions and programs referred to in paragraph (a) of 
this section are--
    (1) Morehouse School of Medicine;
    (2) Meharry Medical School;
    (3) Charles R. Drew Postgraduate Medical School;
    (4) Clark Atlanta University;
    (5) Tuskegee Institute School of Veterinary Medicine;
    (6) Xavier University School of Pharmacy;
    (7) Southern University School of Law;
    (8) Texas Southern University School of Law and School of Pharmacy;
    (9) Florida A&M University School of Pharmaceutical Sciences;
    (10) North Carolina Central University School of Law;
    (11) Morgan State University's qualified graduate program;
    (12) Hampton University's qualified graduate program;
    (13) Alabama A&M's qualified graduate program;
    (14) North Carolina A&T State University's qualified graduate 
program;
    (15) University of Maryland Eastern Shore's qualified graduate 
program; and
    (16) Jackson State University's qualified graduate program.
    (c) An institution that was awarded a grant prior to October 1, 1992 
may continue to receive grant payments, regardless of the eligibility of 
the graduate institutions described in paragraphs (b)(6) through (16) of 
this section, until the institution's grant period has expired or 
September 30, 1993, whichever is later.
    (d) No institution of higher education or university system may 
receive more than one grant under this section in any fiscal year.

(Authority: 20 U.S.C. 1063b(e))



Sec. 609.3  What regulations apply?

    The following regulations apply to this part:
    (a) The Department of Education General Administrative Regulations 
(EDGAR) as follows:
    (1) [Reserved]
    (2) The following sections of 34 CFR part 75 (Direct Grant 
Programs): Secs. 75.1-75.104, 75.125-75.129, 75.190-75.192, 75.230-
75.261, 75.500, 75.510-75.519, 75.524-75.534, 75.580-75.903, and 75.901;
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 82 (New Restrictions on Lobbying).
    (6) [Reserved]
    (7) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part 609.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1063b)

[59 FR 38717, July 20, 1993, as amended at 79 FR 76101, Dec. 19, 2014]



Sec. 609.4  What definitions apply?

    (a) General definitions. The following terms used in this part are 
defined in 2 CFR part 200, subpart A, or 34 CFR 77.1:

Applicant
Application
Award
Budget
EDGAR
Equipment
Fiscal year
Grant period
Private
Project period
Public
Secretary

    (b) The following definition applies to a term used in this part:

[[Page 301]]

    Qualified graduate program means a graduate or professional program 
that--
    (i) Provides a program of instruction in the physical or natural 
sciences, engineering, mathematics, or other scientific disciplines in 
which African Americans are underrepresented;
    (ii) Has been accredited or approved by a nationally recognized 
accrediting agency or association. (The Secretary publishes a list in 
the Federal Register of nationally recognized accrediting agencies and 
associations.); and
    (iii) Has students enrolled in that program when the institution 
offering the program applies for a grant under this part.

(Authority: 20 U.S.C. 1063b and 1069c)

[59 FR 38717, July 20, 1993, as amended at 79 FR 76101, Dec. 19, 2014]



        Subpart B_What Kind of Projects Does the Secretary Fund?



Sec. 609.10  What activities may be carried out under a grant?

    (a) Allowable activities. Except as provided in paragraph (b) of 
this section, a grantee may carry out the following activities under 
this part--
    (1) Purchase, rental, or lease of scientific or laboratory equipment 
for educational purposes, including instructional or research purposes;
    (2) Construction, maintenance, renovation, and improvement in 
classroom, library, laboratory, and other instructional facilities, 
including purchase or rental of telecommunications technology equipment 
or services;
    (3) Support of faculty exchanges, faculty development and faculty 
fellowships to assist these faculty members in attaining advanced 
degrees in their fields of instruction;
    (4) Academic instruction in disciplines in which Black Americans are 
underrepresented;
    (5) Purchase of library books, periodicals, microfilm, and other 
educational materials, including telecommunications program materials;
    (6) Tutoring, counseling, and student service programs designed to 
improve academic success;
    (7) Funds and administrative management, and acquisition of 
equipment for use in strengthening funds management;
    (8) Joint use of facilities, such as laboratories and libraries;
    (9) Establishing or improving a development office to strengthen or 
improve contributions from alumni and the private sector;
    (10) Establishing or enhancing a program of teacher education 
designed to qualify students to teach in a public elementary or 
secondary school in the State that shall include, as part of such 
program preparation for teacher certification;
    (11) Establishing community outreach programs that will encourage 
elementary and secondary students to develop the academic skills and the 
interest to pursue postsecondary education;
    (12) Other activities that it proposes in its application that 
contribute to carrying out the purpose of this part and are approved by 
the Secretary;
    (13) Establishing or improving a development office to strengthen 
and increase contributions from alumni and the private sector; and
    (14) Establishing and maintaining an institutional endowment under 
34 CFR part 628 to facilitate financial independence.
    (b) Unallowable activities. A grantee may not carry out the 
following activities under this part--
    (1) Activities that are not included in the grantee's approved 
application;
    (2) Activities described in paragraph (a)(12) of this section that 
are not approved by the Secretary;
    (3) Activities that are inconsistent with any State plan of higher 
education that is applicable to the institution;
    (4) Activities that are inconsistent with a State plan for 
desegregation of higher education that is applicable to the institution;
    (5) Activities or services that relate to sectarian instruction or 
religious worship; and
    (6) Activities provided by a school or department of divinity. For 
the purpose of this section, a ``school or department of divinity'' 
means an institution, or a department of an institution, whose program 
is specifically for the education of students to prepare

[[Page 302]]

them to become ministers of religion or to enter upon some other 
religious vocation, or to prepare them to teach theological subjects.
    (c) No award under this part may be used for telecommunications 
technology equipment, facilities or services, if such equipment, 
facilities or services are available pursuant to section 396(k) of the 
Communications Act of 1934.

(Authority: 20 U.S.C. 1062, 1063a, and 1069c)



Sec. 609.11  What is the duration of a grant?

    The Secretary may award a grant under this part for a period of up 
to five academic years.

(Authority: 20 U.S.C. 1063b(b))



      Subpart C_How Does an Eligible Institution Apply for a Grant?



Sec. 609.20  What are the application requirements for a grant under
this part?

    In order to receive a grant under this part, an institution must 
submit an application to the Secretary at such time and in such manner 
as the Secretary may prescribe. The application must contain--
    (a) A description of the activities to be carried out with grant 
funds and how those activities will improve graduate educational 
opportunities for Black and low-income students and lead to greater 
financial independence for the applicant;
    (b) A description of how the applicant is making a substantial 
contribution to the legal, medical, dental, veterinary or other graduate 
education opportunities for Black Americans;
    (c) An assurance from each applicant requesting in excess of 
$500,000 that 50 percent of the costs of all the activities to be 
carried out under the grant will come from non-Federal sources;
    (d) A description of how the grant funds will be used so that they 
will supplement, and to the extent practical, increase the funds that 
would otherwise be made available for the activities to be carried out 
under the grant and in no case supplant those funds, for the activities 
described in Sec. 609.10(a)(1) through Sec. 609.10(a)(14);
    (e) An assurance that the proposed activities in the application are 
in accordance with any State plan that is applicable to the institution; 
and
    (f)(1) A comprehensive development plan as described in Sec. 609.21; 
or
    (2) If an applicant has already submitted a comprehensive 
development plan as described in Sec. 609.21, a description of the 
progress the applicant has made in carrying out the goals of its plan.

(Approved by the Office of Management and Budget under control number 
1840-0113)

(Authority: 20 U.S.C. 1063d and 1066(b)(2))



Sec. 609.21  What is a comprehensive development plan and what must
it contain?

    (a) A comprehensive development plan must describe an institution's 
strategy for achieving growth and self-sufficiency by strengthening 
its--
    (1) Financial management;
    (2) Academic programs; and
    (b) The comprehensive development plan must include the following:
    (1) An assessment of the strengths and weaknesses of the 
institution's financial management and academic programs.
    (2) A delineation of the institution's goals for its financial 
management and academic programs, based on the outcomes of the 
assessment described in paragraph (b)(1) of this section.
    (3) A listing of measurable objectives designed to assist the 
institution to reach each goal with accompanying timeframes for 
achieving the objectives.
    (4) A description of methods, processes and procedures that will be 
used by the college or university to institutionalize financial 
management and academic program practices and improvements developed 
under the proposed funded activities.

(Approved by the Office of Management and Budget under control number 
1840-0113)

(Authority: 20 U.S.C. 1063a)

[[Page 303]]



             Subpart D_How Does the Secretary Make a Grant?



Sec. 609.30  What is the procedure for approving and disapproving 
grant applications?

    The Secretary approves any application that satisfies the 
requirements of Secs. 609.10 and 609.20.

(Authority: 20 U.S.C. 1063a)



Sec. 609.31  How does the Secretary determine the amount of a grant?

    Of the amount appropriated for any fiscal year--
    (a)(1) The first $12,000,000 (or any lesser amount appropriated) 
shall be available only for the purpose of making grants to institutions 
or programs described in Sec. 609.2(b)(1) through Sec. 609.2(b)(5);
    (2) If the sum of the approved applications does not exceed the 
amount appropriated, the Secretary awards grants in the amounts 
requested and approved;
    (3) If the sum of the approved requests exceeds the sum 
appropriated, and Morehouse School of Medicine submits an approved 
request for at least $3,000,000, and the amount appropriated exceeds 
$3,000,000, the Secretary awards no less than $3,000,000 to Morehouse 
School of Medicine and reduces the grants to the institutions described 
in Sec. 609.2(b)(1) through Sec. 609.2(b)(5) as the Secretary considers 
appropriate, so that the sum of the approved grants equals the amount 
appropriated; and
    (4) If Morehouse School of Medicine submits an approved request for 
at least $3,000,000 and the amount appropriated does not exceed 
$3,000,000, Morehouse School of Medicine receives all the appropriated 
funds; and
    (b)(1) Any amount appropriated in excess of $12,000,000 shall be 
available for the purpose of making grants, in equal amounts not to 
exceed $500,000, to institutions or programs described in 
Sec. 609.2(b)(6) through Sec. 609.2(b)(16); and
    (2) If any funds remain, the Secretary makes grants to institutions 
or programs described in Sec. 609.2(b)(1) through Sec. 609.2(b)(16).

(Authority: 20 U.S.C. 1063b)



             Subpart E_What Conditions Must a Grantee Meet?



Sec. 609.40  What are the matching requirements?

    If an institution receives a grant in excess of $500,000, it must 
spend non-Federal funds to meet the cost of at least 50 percent of the 
activities approved in its application.

(Authority: 20 U.S.C. 1063b)



Sec. 609.41  What are allowable costs and what are the limitations
on allowable costs?

    (a) Allowable costs. Except as provided in paragraphs (b) and (c) of 
this section, a grantee may expend grant funds for activities that are 
reasonably related to carrying out the allowable activities included in 
its approved application.
    (b) Supplement and not supplant. A grantee shall use grant funds so 
that they supplement, and to the extent practical, increase the funds 
that would otherwise be available for the activities to be carried out 
under the grant, and in no case supplant those funds.
    (c) Limitations on allowable costs. A grantee may not--
    (1) Spend more than fifty percent of its grant award in each fiscal 
year for costs relating to constructing or maintaining a classroom, 
library, laboratory, or other instructional facility; and
    (2) Use an indirect cost rate to determine allowable costs under its 
grant.

(Authority: 20 U.S.C. 1062, 1063b, and 1066)



Sec. 609.42  What are the audit and repayment requirements?

    (a)(1) A grantee shall provide for the conduct of a compliance and 
financial audit of any funds it receives under this part by a qualified, 
independent organization or person in accordance with the Standards for 
Audit of Governmental Organizations, Programs, Activities, and 
Functions, 1981 revision, established by the Comptroller General of the 
United States. This publication is available from the Superintendent of 
Documents, U.S. Government Printing Office.

[[Page 304]]

    (2) The grantee shall have an audit conducted at least once every 
two years, covering the period since the previous audit, and the grantee 
shall submit the audit to the Secretary.
    (3) If a grantee is audited under chapter 75 of title 31 of the 
United States Code, the Secretary considers that audit to satisfy the 
requirements of paragraph (a)(1) of this section.
    (b) An institution awarded a grant under this part must submit to 
the Department of Education Inspector General three copies of the audit 
required in paragraph (a) of this section within six months after 
completion of the audit.
    (c) Any individual or firm conducting an audit described in this 
section shall give the Department of Education's Inspector General 
access to records or other documents necessary to review the results of 
the audit.
    (d) A grantee shall repay to the Treasury of the United States any 
grant funds it received that it did not expend or use to carry out the 
allowable activities included in its approved application within ten 
years following the date of the initial grant it received under this 
part.

(Authority: 20 U.S.C. 1063a)



Sec. 609.43  Under what conditions does the Secretary terminate a
grant?

    The Secretary terminates any grant under which funds were not 
expended if an institution loses--
    (a) Its accredited status; or
    (b) Its legal authority in the State in which it is located.

(Authority: 20 U.S.C. 1063a)



PART 611_TEACHER QUALITY ENHANCEMENT GRANTS PROGRAM--Table of Contents



                      Subpart A_General Provisions

Sec.
611.1  What definitions apply to the Teacher Quality Enhancement Grants 
          Program?
611.2  What management plan must be included in a Teacher Quality 
          Enhancement Grants Program application?
611.3  What procedures does the Secretary use to award a grant?

                     Subpart B_State Grants Program

611.11  What are the program's general selection criteria?
611.12  What additional selection criteria are used for an application 
          proposing teacher recruitment activities?
611.13  What competitive preference doe the Secretary provide?

                  Subpart C_Partnership Grants Program

611.21  What are the program's selection criteria for pre-applications?
611.22  What additional selection criteria are used for pre-application 
          that proposes teacher recruitment activities?
611.23  What are the program's general selection criteria for full 
          applications?
611.24  What additional selection criteria are used for a full 
          application that proposes teacher recruitment activities?
611.25  What competitive preference does the Secretary provide?

              Subpart D_Teacher Recruitment Grants Program

611.31  What are the program's selection criteria for pre-applications?
611.32  What are the program's general selection criteria?

                         Subpart E_Scholarships

611.41  Under what circumstances may an individual receive a scholarship 
          of program funds to attend a teacher training program?
611.42  How does the Secretary calculate the period of the scholarship 
          recipient's service obligation?
611.43  What are the consequences of a scholarship recipient's failure 
          to meet the service obligation?
611.44  Under what circumstances may the Secretary defer a scholarship 
          recipient's service obligation?
611.45  Under what circumstances does the Secretary discharge a 
          scholarship recipient's obligation to repay for failure to 
          meet the service obligation?
611.46  What are a scholarship recipient's reporting responsibilities 
          upon graduation from the teacher preparation program?
611.47  What are a scholarship recipient's reporting responsibilities 
          upon the close of the LEA's academic year?
611.48  What are a scholarship recipient's reporting responsibilities 
          upon failure to graduate or withdrawal of scholarship support?
611.49  What are a grantee's responsibilities for implementing the 
          scholarship requirements before awarding a scholarship?
611.50  What are a grantee's reporting responsibilities?

[[Page 305]]

611.51  How does a grantee ensure that a scholarship recipient 
          understands the terms and conditions of the scholarship before 
          the recipient leaves the teacher preparation program?
611.52  What are a grantee's programmatic responsibilities for ensuring 
          that scholarship recipients become successful teachers in 
          high-need schools?

                    Subpart F_Other Grant Conditions

611.61  What is the maximum indirect cost rate that applies to a 
          recipient's use of program funds?
611.62  What are a grantee's matching requirements?

    Authority: 20 U.S.C. 1021 et seq. and 1024(e), unless otherwise 
noted.

    Source: 65 FR 1782, Jan. 12, 2000, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 611.1  What definitions apply to the Teacher Quality Enhancement
Grants Program?

    The following definitions apply to this part:
    High-need local educational agency (LEA) means an LEA that meets one 
of the following definitions:
    (1) An LEA with at least one school--
    (i) In which 50 percent or more of the enrolled students are 
eligible for free and reduced lunch subsidies; or
    (ii) That otherwise is eligible, without receipt of a waiver, to 
operate as a schoolwide program under Title I of the Elementary and 
Secondary Education Act.
    (2) An LEA that has one school where--
    (i) More than 34 percent of academic classroom teachers overall 
(across all academic subjects) do not have a major, minor, or 
significant course work in their main assignment field; or
    (ii) More than 34 percent of the main assignment faculty in two of 
the core-subject departments do not have a major, minor, or significant 
work in their main assigned field.
    (3) An LEA that serves a school whose attrition rate among classroom 
teachers was 15 percent or more over the last three school years.
    High-need school means an elementary, middle, or secondary school 
operated by a high-need LEA in which the school's students or teaching 
staff meet the elements in paragraphs (1), (2), or (3) of the definition 
of a high-need LEA.
    Main assignment field means the academic field in which teachers 
have the largest percentage of their classes.
    Significant course work means four or more college-or graduate-level 
courses in the content area.

(Authority: 20 U.S.C. 1024(e))



Sec. 611.2  What management plan must be included in a Teacher Quality
Enhancement Grants Program application?

    (a) In addition to a description of the proposed multiyear project, 
timeline, and budget information required by 34 CFR 75.112 and 75.117 
and other applicable law, an applicant for a grant under this part must 
submit with its application under paragraphs (a)(1), (a)(2)(i)(B), 
(a)(2)(ii), (a)(3)(i)(B), or (a)(3)(ii) of Sec. 611.3, as appropriate, a 
management plan that includes a proposed multiyear workplan.
    (b) At a minimum, this workplan must identify, for each year of the 
project--
    (1) The project's overall objectives;
    (2) Activities that the applicant proposes to implement to promote 
each project objective;
    (3) Benchmarks and timelines for conducting project activities and 
achieving the project's objectives;
    (4) The individual who will conduct and coordinate these activities;
    (5) Measurable outcomes that are tied to each project objective, and 
the evidence by which success in achieving these objectives will be 
measured; and
    (6) Any other information that the Secretary may require.
    (c)(1) In any application for a grant that is submitted on behalf of 
a partnership, the workplan also must identify which partner will be 
responsible for which activities.
    (2) In any application for a grant that is submitted on behalf of a 
State, the workplan must identify which entities

[[Page 306]]

in the State will be responsible for which activities.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)

[65 FR 19609, Apr. 11, 2000, as amended at 70 FR 13374, Mar. 21, 2005]



Sec. 611.3  What procedures does the Secretary use to award a grant?

    The Secretary uses the selection procedures in 34 CFR 75.200 through 
75.222 except that--
    (a) Application procedures for each program. (1) For the State 
Grants Program, the Secretary evaluates applications for new grants on 
the basis of the selection criteria and competitive preference contained 
in Secs. 611.11 through 611.13.
    (2) For the Partnership Grants Program, the Secretary may use a two-
stage application process to determine which applications to fund.
    (i) If the Secretary uses a two-stage application process, the 
Secretary uses--
    (A) The selection criteria in Secs. 611.21 through 611.22 to 
evaluate pre-applications submitted for new grants, and to determine 
those applicants to invite to submit full program applications; and
    (B) For those applicants invited to submit full applications, the 
selection criteria and competitive preference in Secs. 611.23 through 
611.25 to evaluate the full program applications.
    (ii) If the Secretary does not use a two-stage application process, 
the Secretary uses the selection criteria and competitive preference in 
Secs. 611.23 through 611.25 to evaluate applications.
    (3) For the Teacher Recruitment Grants Program, the Secretary may 
use a two-stage application process to determine which applications to 
fund.
    (i) If the Secretary uses a two-stage application process, the 
Secretary uses--
    (A) The selection criteria in Sec. 611.31 to evaluate pre-
applications submitted for new grants, and to determine those applicants 
to invite to submit full program applications; and
    (B) For those applicants invited to submit full applications, the 
selection criteria in Sec. 611.32 to evaluate the full program 
applications.
    (ii) If the Secretary does not use a two-stage application process, 
the Secretary uses the selection criteria in Sec. 611.32 to evaluate 
applications.
    (b) Required budgets in pre-applications. An applicant that submits 
a pre-application for a Partnership Program or Teacher Recruitment 
Program grant under paragraphs (a)(2)(i)(A) and (a)(3)(i)(A) must also 
submit any budgetary information that the Secretary may require in the 
program application package.
    (c) Tie-breaking procedures. In the event that two or more 
applicants are ranked equally for the last available award under any 
program, the Secretary selects the applicant whose activities will focus 
(or have most impact) on LEAs and schools located in one (or more) of 
the Nation's Empowerment Zones and Enterprise Communities.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)

[65 FR 19609, Apr. 11, 2000, as amended at 70 FR 13374, Mar. 21, 2005]



                     Subpart B_State Grants Program

    Source: 65 FR 19610, Apr. 11, 2000, unless otherwise noted.



Sec. 611.11  What are the program's general selection criteria?

    In evaluating the quality of applications, the Secretary uses the 
following selection criteria.
    (a) Quality of project design. (1) The Secretary considers the 
quality of the project design.
    (2) In determining the quality of the project design, the Secretary 
considers the extent to which--
    (i) The project design will result in systemic change in the way 
that all new teachers are prepared, and includes partners from all 
levels of the education system;
    (ii) The Governor and other relevant executive and legislative 
branch officials, the K-16 education system or systems, and the business 
community are directly involved in and committed to supporting the 
proposed activities;

[[Page 307]]

    (iii) Project goals and performance objectives are clear, measurable 
outcomes are specified, and a feasible plan is presented for meeting 
them;
    (iv) The project is likely to initiate or enhance and supplement 
systemic State reforms in one or more of the following areas: teacher 
recruitment, preparation, licensing, and certification;
    (v) The applicant will ensure that a diversity of perspectives is 
incorporated into operation of the project, including those of parents, 
teachers, employers, academic and professional groups, and other 
appropriate entities; and
    (vi) The project design is based on up-to-date knowledge from 
research and effective practice.
    (b) Significance. (1) The Secretary considers the significance of 
the project.
    (2) In determining the significance of the project, the Secretary 
considers the extent to which--
    (i) The project involves the development or demonstration of 
promising new strategies or exceptional approaches in the way new 
teachers are recruited, prepared, certified, and licensed;
    (ii) Project outcomes lead directly to improvements in teaching 
quality and student achievement as measured against rigorous academic 
standards;
    (iii) The State is committed to institutionalize the project after 
federal funding ends; and
    (iv) Project strategies, methods, and accomplishments are 
replicable, thereby permitting other States to benefit from them.
    (c) Quality of resources. (1) The Secretary considers the quality of 
the project's resources.
    (2) In determining the quality of the project resources, the 
Secretary considers the extent to which--
    (i) Support available to the project, including personnel, 
equipment, supplies, and other resources, is sufficient to ensure a 
successful project;
    (ii) Budgeted costs are reasonable and justified in relation to the 
design, outcomes, and potential significance of the project; and
    (iii) The applicant's matching share of the budgeted costs 
demonstrates a significant commitment to successful completion of the 
project and to project continuation after federal funding ends.
    (d) Quality of management plan. (1) The Secretary considers the 
quality of the project's management plan.
    (2) In determining the quality of the management plan, the Secretary 
considers the following factors:
    (i) The extent to which the management plan, including the workplan, 
is designed to achieve goals and objectives of the project, and includes 
clearly defined activities, responsibilities, timelines, milestones, and 
measurable outcomes for accomplishing project tasks.
    (ii) The adequacy of procedures to ensure feedback and continuous 
improvements in the operation of the project.
    (iii) The qualifications, including training and experience, of key 
personnel charged with implementing the project successfully.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)



Sec. 611.12  What additional selection criteria are used for an 
application proposing teacher recruitment activities?

    In reviewing applications that propose to undertake teacher 
recruitment activities, the Secretary also considers the following 
selection criteria:
    (a) In addition to the elements contained in Sec. 611.11(a) (Quality 
of project design), the Secretary considers the extent to which the 
project addresses--
    (1) Systemic changes in the ways that new teachers are to be 
recruited, supported and prepared; and
    (2) Systemic efforts to recruit, support, and prepare prospective 
teachers from disadvantaged and other underrepresented backgrounds.
    (b) In addition to the elements contained in Sec. 611.11(b) 
(Significance), the Secretary considers the applicant's commitment to 
continue recruitment activities, scholarship assistance, and preparation 
and support of additional cohorts of new teachers after funding under 
this part ends.
    (c) In addition to the elements contained in Sec. 611.11(c) (Quality 
of resources), the Secretary considers the

[[Page 308]]

impact of the project on high-need LEAs and high-need schools based 
upon--
    (1) The amount of scholarship assistance the project will provide 
students from federal and non-federal funds;
    (2) The number of students who will receive scholarships; and
    (3) How those students receiving scholarships will benefit from 
high-quality teacher preparation and an effective support system during 
their first three years of teaching.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)



Sec. 611.13  What competitive preference does the Secretary provide?

    The Secretary provides a competitive preference on the basis of how 
well the State's proposed activities in any one or more of the following 
statutory priorities are likely to yield successful and sustained 
results:
    (a) Initiatives to reform State teacher licensure and certification 
requirements so that current and future teachers possess strong teaching 
skills and academic content knowledge in the subject areas in which they 
will be certified or licensed to teach.
    (b) Innovative reforms to hold higher education institutions with 
teacher preparation programs accountable for preparing teachers who are 
highly competent in the academic content areas and have strong teaching 
skills.
    (c) Innovative efforts to reduce the shortage (including the high 
turnover) of highly competent teachers in high-poverty urban and rural 
areas.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)



                  Subpart C_Partnership Grants Program

    Source: 65 FR 19611, Apr. 11, 2000, unless otherwise noted.



Sec. 611.21  What are the program's selection criteria for 
pre-applications?

    In evaluating the quality of pre-applications, the Secretary uses 
the following selection criteria.
    (a) Project goals and objectives. (1) The Secretary considers the 
goals and objectives of the project design.
    (2) In determining the quality of the project goals and objectives, 
the Secretary considers the following factors:
    (i) The extent to which the partnership's vision will produce 
significant and sustainable improvements in teacher education.
    (ii) The needs the partnership will address.
    (iii) How the partnership and its activities would be sustained once 
federal support ends.
    (b) Partnering commitment. (1) The Secretary considers the 
partnering commitment embodied in the project.
    (2) In determining the quality of the partnering commitment, the 
Secretary considers the following factors:
    (i) Evidence of how well the partnership would be able to accomplish 
objectives working together that its individual members could not 
accomplish working separately.
    (ii) The significance of the roles given to each principal partner 
in implementing project activities.
    (c) Quality and comprehensiveness of key project components. (1) The 
Secretary considers the quality and comprehensiveness of key project 
components in the process of preparing new teachers.
    (2) In determining the quality and comprehensiveness of key project 
components in the process of preparing new teachers, the Secretary 
considers the extent to which--
    (i) Specific activities are designed and would be implemented to 
ensure that students preparing to be teachers are adequately prepared, 
including activities designed to ensure that they have improved content 
knowledge, are able to use technology effectively to promote 
instruction, and participate in extensive, supervised clinical 
experiences;
    (ii) Specific activities are designed and would be implemented to 
ensure adequate support for those who have completed the teacher 
preparation program during their first years as teachers; and
    (iii) The project design reflects up-to-date knowledge from research 
and effective practice.

[[Page 309]]

    (d) Specific project outcomes. (1) The Secretary considers the 
specific outcomes the project would produce in the preparation of new 
teachers.
    (2) In determining the specific outcomes the project would produce 
in the preparation of new teachers, the Secretary considers the 
following factors:
    (i) The extent to which important aspects of the partnership's 
existing teacher preparation system would change.
    (ii) The way in which the project would demonstrate success using 
high-quality performance measures.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)



Sec. 611.22  What additional selection criteria are used for a
pre-application that proposes teacher recruitment activities?

    In reviewing pre-applications that propose to undertake teacher 
recruitment activities, the Secretary also considers the following 
selection criteria:
    (a) In addition to the elements contained in Sec. 611.21(a) (Project 
goals and objectives), the Secretary considers the extent to which--
    (1) The partnership's vision responds to LEA needs for a diverse and 
high quality teaching force, and will lead to reduced teacher shortages 
in these high-need LEAs; and
    (2) The partnership will sustain its work after federal funding has 
ended by recruiting, providing scholarship assistance, training and 
supporting additional cohorts of new teachers.
    (b) In addition to the elements contained in Sec. 611.21(c) (Quality 
and comprehensiveness of key project components), the Secretary 
considers the extent to which the project will--
    (1) Significantly improve recruitment of new students, including 
those from disadvantaged and other underrepresented backgrounds; and
    (2) Provide scholarship assistance and adequate training to 
preservice students, as well as induction support for those who become 
teachers after graduating from the teacher preparation program.
    (c) In addition to the elements contained in Sec. 611.21(d) 
(Specific project outcomes), the Secretary considers the extent to which 
the project addresses the number of new teachers to be produced and 
their ability to teach effectively in high-need schools.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)



Sec. 611.23  What are the program's general selection criteria for
full applications?

    In evaluating the quality of applications, the Secretary uses the 
following selection criteria.
    (a) Quality of project design. (1) The Secretary considers the 
quality of the project design.
    (2) In determining the quality of the project design, the Secretary 
considers the following factors:
    (i) The extent of evidence of institution-wide commitment to high 
quality teacher preparation that includes significant policy and 
practice changes supported by key leaders, and which result in permanent 
changes to ensure that preparing teachers is a central mission of the 
entire university.
    (ii) The extent to which the partnership creates and sustains 
collaborative mechanisms to integrate professional teaching skills, 
including skills in the use of technology in the classroom, with strong 
academic content from the arts and sciences.
    (iii) The extent of well-designed and extensive preservice clinical 
experiences for students, including mentoring and other forms of 
support, implemented through collaboration between the K-12 and higher 
education partners.
    (iv) Whether a well-planned, systematic induction program is 
established for new teachers to increase their chances of being 
successful in high-need schools.
    (v) The strength of linkages within the partnership between higher 
education and high-need schools or school districts so that all partners 
have important roles in project design, implementation, governance and 
evaluation.
    (vi) Whether the project design is based on up-to-date knowledge 
from research and effective practice, especially on how students learn.

[[Page 310]]

    (b) Significance of project activities. (1) The Secretary considers 
the significance of project activities.
    (2) In determining the significance of the project activities, the 
Secretary considers the following factors:
    (i) How well the project involves promising new strategies or 
exceptional approaches in the way new teachers are recruited, prepared 
and inducted into the teaching profession.
    (ii) The extent to which project outcomes include preparing teachers 
to teach to their State's highest K-12 standards, and are likely to 
result in improved K-12 student achievement.
    (iii) The extent to which the partnership has specific plans to 
institutionalize the project after federal funding ends.
    (iv) The extent to which the partnership is committed to 
disseminating effective practices to others and is willing to provide 
technical assistance about ways to improve teacher education.
    (v) How well the partnership will integrate its activities with 
other education reform efforts underway in the State or communities 
where the partners are located, and will coordinate its work with local, 
State or federal teacher training, teacher recruitment, or professional 
development programs.
    (c) Quality of resources. (1) The Secretary considers the quality of 
resources of project activities.
    (2) In determining the quality of resources, the Secretary considers 
the extent to which--
    (i) Support available to the project, including personnel, 
equipment, supplies, and other resources, is sufficient to ensure a 
successful project;
    (ii) Budgeted costs are reasonable and justified in relation to the 
design, outcomes, and potential significance of the project; and
    (iii) The applicant's matching share of the budgeted costs 
demonstrates a significant commitment to successful completion of the 
project and to project continuation after federal funding ends.
    (d) Quality of management plan. (1) The Secretary considers the 
quality of the management plan.
    (2) In determining the quality of the management plan, the Secretary 
considers the following factors:
    (i) The extent to which the management plan, including the work 
plan, is designed to achieve goals and objectives of the project, and 
includes clearly defined activities, responsibilities, timelines, 
milestones, and measurable outcomes for accomplishing project tasks.
    (ii) The extent to which the project has an effective, inclusive, 
and responsive governance and decision-making structure that will permit 
all partners to participate in and benefit from project activities, and 
to use evaluation results to ensure continuous improvements in the 
operations of the project.
    (iii) The qualifications, including training and experience, of key 
personnel charged with implementing the project successfully.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)



Sec. 611.24  What additional selection criteria are used for a full
application that proposes teacher recruitment activities?

    In reviewing full applications that propose to undertake teacher 
recruitment activities, the Secretary also considers the following 
selection criteria:
    (a) In addition to the elements contained in Sec. 611.23(a) (Quality 
of project design), the Secretary considers the extent to which the 
project reflects--
    (1) A commitment to recruit, support and prepare additional well-
qualified new teachers for high-need schools;
    (2) Appropriate academic and student support services; and
    (3) A comprehensive strategy for addressing shortages of well-
qualified and well-trained teachers in high-need LEAs, especially 
teachers from disadvantaged and other underrepresented backgrounds.
    (b) In addition to the elements contained in Sec. 611.23(b) 
(Significance of project activities), the Secretary considers the extent 
to which the project promotes the recruitment, scholarship assistance, 
preparation, and support of additional cohorts of new teachers.

[[Page 311]]

    (c) In addition to the elements contained in Sec. 611.23(c) (Quality 
of resources), the Secretary considers the impact of the project on 
high-need LEAs and high-need schools based upon--
    (1) The amount of scholarship assistance the project will provide 
students from federal and non-federal funds;
    (2) The number of students who will receive scholarships; and
    (3) How those students receiving scholarships will benefit from 
high-quality teacher preparation and an effective support system during 
their first three years of teaching.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)



Sec. 611.25  What competitive preference does the Secretary provide?

    The Secretary provides a competitive preference on the basis of how 
well the project includes a significant role for private business in the 
design and implementation of the project.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)



              Subpart D_Teacher Recruitment Grants Program

    Source: 65 FR 19612, Apr. 11, 2000, unless otherwise noted.



Sec. 611.31  What are the program's selection criteria for
pre-applications?

    In evaluating pre-applications, the Secretary considers the 
following criteria:
    (a) Project goals and objectives. (1) The Secretary considers the 
goals and objectives of the project design.
    (2) In determining the quality of the project goals and objectives, 
the Secretary considers how the partnership or State applicant intends 
to--
    (i) Produce significant and sustainable improvements in teacher 
recruitment, preparation, and support; and
    (ii) Reduce teacher shortages in high-need LEAs and schools, and 
improve student achievement in the schools in which teachers who 
participate in its project will teach.
    (b) Partnership commitment. (1) The Secretary considers the 
partnering commitment embodied in the project.
    (2) In determining the quality of the partnering commitment, the 
Secretary considers the following factors:
    (i) What the partnership, or the State and its cooperating entities, 
can accomplish by working together that could not be achieved by working 
separately.
    (ii) How the project proposed by the partnership or State is driven 
by the needs of LEA partners.
    (c) Quality of key project components. (1) The Secretary considers 
the quality of key project components.
    (2) In determining the quality of key project components, the 
Secretary considers the following factors:
    (i) The extent to which the project would make significant and 
lasting systemic changes in how the applicant recruits, trains, and 
supports new teachers, and reflects knowledge gained from research and 
practice.
    (ii) The extent to which the project would be implemented in ways 
that significantly improve recruitment, scholarship assistance to 
preservice students, training, and induction support for new entrants 
into teaching.
    (d) Specific project outcomes. (1) The Secretary considers the 
specific outcomes the project would produce in the recruitment, 
preparation, and placement of new teachers.
    (2) In determining the specific outcomes the project would produce 
in the recruitment, preparation, and placement of new teachers, the 
Secretary considers the following factors:
    (i) The number of teachers to be produced and the quality of their 
preparation.
    (ii) The partnership's or State's commitment to sustaining the work 
of the project after federal funding has ended by recruiting, providing 
scholarship assistance, training, and supporting additional cohorts of 
new teachers.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)

[[Page 312]]



Sec. 611.32  What are the program's general selection criteria?

    In evaluating the quality of full applications, the Secretary uses 
the following selection criteria.
    (a) Quality of the project design. (1) The Secretary considers the 
quality of the project design for ensuring that activities to recruit 
and prepare new teachers are a central mission of the project.
    (2) In considering the quality of the project design for ensuring 
that activities to recruit and prepare new teachers are a central 
mission of the project, the Secretary considers the extent to which the 
project design--
    (i) Shows evidence of institutional or (in the case of a State 
applicant) State-level commitment both to recruitment of additional new 
teachers, and to high-quality teacher preparation that includes 
significant policy and practice changes supported by key leaders and 
that result in permanent changes to current institutional practices;
    (ii) Creates and sustains collaborative mechanisms to integrate 
professional teaching skills, including skills in the use of technology 
in the classroom, with academic content provided by the school of arts 
and sciences;
    (iii) Includes well-designed academic and student support services 
as well as carefully planned and extensive preservice clinical 
experiences for students, including mentoring and other forms of 
support, that are implemented through collaboration between the K-12 and 
higher education partners;
    (iv) Includes establishment of a well-planned, systematic induction 
program for new teachers that increases their chances of being 
successful in high-need schools;
    (v) Includes strong linkages among the partner institutions of 
higher education and high-need schools and school districts (or, in the 
case of a State applicant, between the State and these entities in its 
project), so that all those who would implement the project have 
important roles in project design, implementation, governance, and 
evaluation;
    (vi) Responds to the shortages of well-qualified and well-trained 
teachers in high-need school districts, especially from disadvantaged 
and other underrepresented backgrounds; and
    (vii) Is based on up-to-date knowledge from research and effective 
practice.
    (b) Significance. (1) The Secretary considers the significance of 
the project.
    (2) In determining the significance of the project, the Secretary 
considers the extent to which--
    (i) The project involves promising new strategies or exceptional 
approaches in the way new teachers are recruited, prepared, and inducted 
into the teaching profession;
    (ii) Project outcomes include measurable improvements in teacher 
quality and in the number of well-prepared new teachers, that are likely 
to result in improved K-12 student achievement;
    (iii) The project will be institutionalized after federal funding 
ends, including recruitment, scholarship assistance, preparation, and 
support of additional cohorts of new teachers;
    (iv) The project will disseminate effective practices to others, and 
provide technical assistance about ways to improve teacher recruitment 
and preparation; and
    (v) The project will integrate its activities with other education 
reform activities underway in the State or communities in which the 
project is based, and will coordinate its work with local, State, and 
federal teacher recruitment, training, and professional development 
programs.
    (c) Quality of resources. (1) The Secretary considers the quality of 
the project's resources.
    (2) In determining the quality of the project's resources, the 
Secretary considers the extent to which--
    (i) The amount of support available to the project, including 
personnel, equipment, supplies, student scholarship assistance, and 
other resources is sufficient to ensure a successful project.
    (ii) Budgeted costs are reasonable and justified in relation to the 
design, outcomes, and potential significance of the project.
    (iii) The applicant's matching share of budgeted costs demonstrates 
a significant commitment to successful completion of the project, and to

[[Page 313]]

project continuation after federal funding ends.
    (d) Quality of management plan. (1) The Secretary considers the 
quality of the project's management plan.
    (2) In determining the quality of the management plan, the Secretary 
considers the following factors:
    (i) The extent to which the management plan, including the workplan, 
is designed to achieve goals and objectives of the project, and includes 
clearly defined activities, responsibilities, timelines, milestones, and 
measurable outcomes for accomplishing project tasks.
    (ii) The extent to which the project has an effective, inclusive, 
and responsive governance and decisionmaking structure that will permit 
all partners to participate in and benefit from project activities, and 
to use evaluation results to continuously improve project operations.
    (iii) The qualifications, including training and experience, of key 
personnel charged with implementing the project successfully.

(Approved by the Office of Management and Budget under control number 
1840-0007)

(Authority: 20 U.S.C. 1021 et seq.)



                         Subpart E_Scholarships



Sec. 611.41  Under what circumstances may an individual receive a
scholarship of program funds to attend a teacher training program?

    (a) General: The service obligation. An individual, whom a grantee 
finds eligible to receive a scholarship funded under this part to attend 
a teacher preparation program, may receive the scholarship only after 
executing a binding agreement with the institution of higher education 
(IHE) offering the scholarship that, after completing the program, the 
individual will either--
    (1) Teach in a high-need school of a high-need LEA for a period of 
time equivalent to the period for which the individual receives the 
scholarship; or
    (2) Repay, as set forth in Sec. 611.43, the Teacher Quality 
Enhancement Grant Program funds provided as a scholarship.
    (b) Content of the scholarship agreement. To implement the service-
obligation requirement, the scholarship agreement must include terms, 
conditions, and other information consistent with Secs. 611.42-611.49 
that the Secretary determines to be necessary.

(Approved by the Office of Management and Budget under control number 
1840-0753)

(Authority: 20 U.S.C. 1024(e))



Sec. 611.42  How does the Secretary calculate the period of the
scholarship recipient's service obligation?

    (a) Calculation of period of scholarship assistance. (1) The 
Secretary calculates the period of time for which a student received 
scholarship assistance on the basis of information provided by the 
grantee under Sec. 611.50.
    (2) The period for which the recipient received scholarship 
assistance is the period during which an individual enrolled in the 
teacher preparation program on a full-time basis, excluding the summer 
period, would have completed the same course of study.
    (b) Calculation of period needed to teach to meet the service 
obligation. (1) The period of the scholarship recipient's service 
obligation is the period of the individual's receipt of scholarship 
assistance as provided in paragraph (a) of this section.
    (2) The Secretary calculates the period that a scholarship recipient 
must teach in a high-need school of a high-need LEA in order to fulfill 
his or her service obligation by--
    (i) Comparing the period in which the recipient received a 
scholarship as provided in paragraph (a) of this section with the 
information provided by the high-need LEA under Secs. 611.46 and 611.47 
on the period the recipient has taught in one of its high-need schools; 
and
    (ii) Adjusting the period in which the recipient has taught in a 
high-need school to reflect the individual's employment, if any, as a 
teacher on a part-time basis relative to classroom teachers the LEA 
employs on a full-time basis under the LEA's standard yearly contract 
(excluding any summer or intersession period).
    (c) The Secretary adjusts the period of a scholarship recipient's 
service obligation as provided in paragraph (b) of this section to 
reflect information the high-need LEA provides under Secs. 611.46 and 
611.47 that the scholarship recipient also has taught in a high-need

[[Page 314]]

school in a summer or intersession period.

(Approved by the Office of Management and Budget under control number 
1840-0753)

(Authority: 20 U.S.C. 1024(e))



Sec. 611.43  What are the consequences of a scholarship recipient's
failure to meet the service obligation?

    (a) Obligation to repay: General. (1) A scholarship recipient who 
does not fulfill his or her service obligation must--
    (i) Repay the Department the full amount of the scholarship, 
including the principal balance, accrued interest, and any collection 
costs charged under paragraphs (c) and (d) of this section; or
    (ii) Be discharged of any repayment obligation as provided in 
Sec. 611.45.
    (2) Unless the service obligation is deferred as provided in 
Sec. 611.44 or the repayment requirement is discharged, the obligation 
to repay the amount provided in paragraph (a)(1) of this section begins 
six months after the date the recipient--
    (i) Completes the teacher training program without beginning to 
teach in a high-need school of a high-need LEA; or
    (ii) Is no longer enrolled in the teacher training program.
    (3) The Secretary determines whether a scholarship recipient has 
fulfilled the service obligation on the basis of information that the 
Department receives as provided in Secs. 611.46 and 611.47.
    (b) Obligation to Repay: Partial performance of the service 
obligation. (1) A scholarship recipient who teaches in a high-need 
school of a high-need school district for less than the period of his or 
her service obligation must repay--
    (i) The amount of the scholarship that is proportional to the unmet 
portion of the service obligation;
    (ii) Interest that accrues on this portion of the scholarship 
beginning six months after the recipient's graduation from the teacher 
preparation program; and
    (iii) Costs of collection, if any.
    (2) Unless the service obligation is deferred or the repayment 
requirement is discharged, the obligation to repay the amount provided 
in paragraph (b)(1) of this section begins six months after the date the 
recipient is no longer employed as a teacher in a high-need school of a 
high-need LEA.
    (c) Availability of payment schedule. (1) Upon request to the 
Secretary, the scholarship recipient may repay the scholarship and 
accrued interest according to a payment schedule that the Secretary 
establishes.
    (2) A payment schedule must permit the full amount of the 
scholarship and accrued interest to be repaid within ten years. The 
minimum monthly payment is $50 unless a larger monthly payment is needed 
to enable the full amount that is due to be paid within this timeframe.
    (d) Interest. In accordance with 31 U.S.C. 3717 and 34 CFR part 30, 
the Secretary charges interest on the unpaid balance that the 
scholarship recipient owes. However, except as provided in 
Sec. 611.44(d), the Secretary does not charge interest for the period of 
time that precedes the date on which the scholarship recipient is 
required to begin repayment.
    (e) Failure to meet requirements. A scholarship recipient's failure 
to satisfy the requirements of Secs. 611.42-611.48 in a timely manner 
results in the recipient being--
    (1) In non-compliance with the terms of the scholarship;
    (2) Liable for repayment of the scholarship and accrued interest; 
and
    (3) Subject to collection action.
    (f) Action by reason of default. The Secretary may take any action 
authorized by law to collect the amount of scholarship, accrued interest 
and collection costs, if any, on which a scholarship recipient obligated 
to repay under this section has defaulted. This action includes, but is 
not limited to, filing a lawsuit against the recipient, reporting the 
default to national credit bureaus, and requesting the Internal Revenue 
Service to offset the recipient's Federal income tax refund.

(Approved by the Office of Management and Budget under control number 
1840-0753)

(Authority: 20 U.S.C. 1024(e))

[64 FR 42839, Aug. 6, 1999, as amended at 65 FR 19613, Apr. 11, 2000]

[[Page 315]]



Sec. 611.44  Under what circumstances may the Secretary defer a
scholarship recipient's service obligation?

    (a) Upon written request, the Secretary may defer a service 
obligation for a scholarship recipient who--
    (1) Has not begun teaching in a high-need school of a high-need LEA 
as required by Sec. 611.41(a); or
    (2) Has begun teaching in a high-need school of a high-need LEA, and 
who requests the deferment within six months of the date he or she no 
longer teaches in this school.
    (b) To obtain a deferment of the service obligation, the recipient 
must provide the Secretary satisfactory information of one or more of 
the following circumstances:
    (1) Serious physical or mental disability that prevents or 
substantially impairs the scholarship recipient's employability as a 
teacher.
    (2) The scholarship recipient's inability, despite due diligence 
(for reasons that may include the failure to pass a required teacher 
certification or licensure examination), to secure employment as a 
teacher in a high-need school of a high-need school LEA.
    (3) Membership in the armed forces of the United States on active 
duty for a period not to exceed three years.
    (4) Other extraordinary circumstances that the Secretary accepts.
    (c) Unless the Secretary determines otherwise--
    (1) A scholarship recipient must apply to renew a deferment of the 
service obligation on a yearly basis; and
    (2) The recipient has 60 days from the end of the deferment period 
to begin teaching in a high-need school of a high-need LEA or become 
liable for repayment of the scholarship, any accrued interest, and any 
costs of collection.
    (d)(1) As provided in Sec. 611.43(a)(2), during periods for which 
the Secretary defers a scholarship recipient's service obligation, the 
scholarship recipient does not have an obligation to repay the 
scholarship. However, interest continues to accrue on the amount of the 
scholarship.
    (2) If the scholarship recipient fulfills his or her service 
obligation after the end of the deferment, the Secretary waives the 
obligation to repay accrued interest.

(Approved by the Office of Management and Budget under control number 
1840-0753)

(Authority: 20 U.S.C. 1024(e))



Sec. 611.45  Under what circumstances does the Secretary discharge
a scholarship recipient's obligation to repay for failure to meet 
the service obligation?

    (a) The Secretary discharges the obligation of a scholarship 
recipient to repay the scholarship, interest, and any costs for failure 
to meet the service obligation based on information acceptable to the 
Secretary of--
    (1) The recipient's death; or
    (2) The total and permanent physical or mental disability of the 
recipient that prevents the individual from being employable as a 
classroom teacher.
    (b) Upon receipt of acceptable documentation and approval of the 
discharge request, the Secretary returns to the scholarship recipient, 
or for a discharge based on death to the recipient's estate, those 
payments received after the date the eligibility requirements for 
discharge were met. The Secretary returns these payments whether they 
are received before or after the date the discharge was approved.

(Approved by the Office of Management and Budget under control number 
1840-0753)

(Authority: 20 U.S.C. 1024(e))



Sec. 611.46  What are a scholarship recipient's reporting
responsibilities upon graduation from the teacher preparation program?

    (a) Within six months of graduating from a teacher preparation 
program, a scholarship recipient must either--
    (1) Have the LEA in which the recipient is employed as a teacher 
provide the Department information, which the Secretary may require, to 
confirm--
    (i) The home address, phone number, social security number, and 
other identifying information about the recipient;
    (ii) That he or she is teaching in a high-need school of a high-need 
LEA; and
    (iii) Whether the individual is teaching full- or part-time and, if 
part-time,

[[Page 316]]

the full-time equivalency of this teaching compared to the LEA's full-
time teachers;
    (2) Provide the Department--
    (i) A notarized statement that the scholarship recipient has asked 
the LEA to provide the Department the information identified in 
paragraph (a)(1) of this section, including the name and telephone 
number of the LEA official to whom the request was made; and
    (ii) A copy of the information identified in paragraph (a)(1) of 
this section that the recipient has asked the LEA to provide to the 
Department; or
    (3) Provide the Department a current home address and telephone 
number, a work address and telephone number, the recipient's social 
security number, and one of the following:
    (i) The required repayment of the scholarship.
    (ii) A request that the Secretary permit the recipient to repay the 
scholarship and accrued interest in installments as permitted by 
Sec. 611.43(c).
    (iii) A request that the Secretary defer the service obligation as 
permitted by Sec. 611.44.
    (b) If the recipient provides the Department the information 
identified in paragraph (a)(1) of this section, the Department accepts 
the information provisionally, but the recipient retains responsibility 
for working to have the LEA submit the information.

(Approved by the Office of Management and Budget under control number 
1840-0753)

(Authority: 20 U.S.C. 1024(e))



Sec. 611.47  What are a scholarship recipient's reporting 
responsibilities upon the close of the LEA's academic year?

    (a) At the close of the LEA's academic year, a scholarship recipient 
whose LEA reports under Sec. 611.46(a) that he or she is teaching in a 
high-need school of a high-need LEA must--
    (1) Have the LEA provide information to the Department, as the 
Secretary may require, that confirms the recipient's actual employment 
status for the preceding period; or
    (2) Provide the Department--
    (i) A notarized statement that the scholarship recipient has asked 
the LEA to provide the Department the information identified in 
paragraph (a)(1) of this section, including the name and telephone 
number of the LEA official to whom the request was made; and
    (ii) A copy of the information identified in paragraph (a)(1) of 
this section that the recipient has asked the LEA to provide to the 
Department.
    (b) If the recipient provides the Department the notarized statement 
and accompanying information identified in paragraph (a)(2) of this 
section, the Department accepts the information provisionally, but the 
recipient retains an ongoing responsibility for working to have the LEA 
submit the information directly to the Department.
    (c) In subsequent school years, the recipient must have the LEA 
continue to provide information to the Department on the recipient's 
employment as the Secretary may require, until the Department notifies 
the recipient that the service obligation has been fulfilled. The 
alternative procedures in paragraph (a)(2) of this section also apply in 
subsequent years.
    (d)(1) The Secretary provides a scholarship recipient with credit 
toward the service obligation for teaching in a high-need school of a 
high-need LEA during a summer or intersession period (for LEAs that 
operate year-round programs).
    (2) To receive this credit, the recipient must have the LEA at the 
end of the summer or intersession period provide information to the 
Department, as the Secretary may require, that confirms that the 
recipient has taught during this period in a high-need school.

(Approved by the Office of Management and Budget under control number 
1840-0753)

(Authority: 20 U.S.C. 1024(e))



Sec. 611.48  What are a scholarship recipient's reporting
responsibilities upon failure to graduate or withdrawal of
scholarship support?

    (a)(1) Within six months of the date the scholarship recipient is no 
longer enrolled in the teacher training program, or within six months of 
the IHE's withdrawal of scholarship support for failure to maintain good 
academic standing, the recipient must submit to the Department--
    (i) The required repayment of the scholarship;

[[Page 317]]

    (ii) A request that the Secretary establish a binding schedule under 
which the recipient is obligated to repay the scholarship, accrued 
interest, and any costs of collection; or
    (iii) A request that the Secretary defer the service obligation as 
permitted by Sec. 611.44.
    (2) Upon review of the repayment or information provided under 
paragraph (a)(1) of this section, the Department notifies the recipient 
of the status of the recipient's obligations and of any schedule under 
which the recipient must repay the scholarship.
    (b) Until the Secretary determines that the individual either has 
satisfied his or her service obligation or has repaid the full amount of 
the scholarship, accrued interest, and any costs, the recipient also 
remains responsible for providing the Department--
    (1) The information identified in this part; and
    (2) A current home address and telephone number, and a current work 
address and work telephone number.

(Approved by the Office of Management and Budget under control number 
1840-0753)

(Authority: 20 U.S.C. 1024(e))



Sec. 611.49  What are a grantee's responsibilities for implementing
the scholarship requirements before awarding a scholarship?

    Before awarding scholarship assistance with funds provided under 
this part to any student attending a teacher preparation program, a 
grantee must--
    (a) Ensure that the student understands the terms and conditions 
that the Secretary has determined must be included in the scholarship 
agreement;
    (b) Have the student and the institution awarding the scholarship 
execute a scholarship agreement that contains these terms and 
conditions; and
    (c) Establish policies for--
    (1) The withdrawal of scholarship support for any student who does 
not remain in good academic standing; and
    (2) Determining when and if re-negotiation of a student's 
scholarship package over an extended period of time is appropriate.

(Approved by the Office of Management and Budget under control number 
1840-0753)

(Authority: 20 U.S.C. 1024(e))



Sec. 611.50  What are a grantee's reporting responsibilities?

    (a) Within 30 days of the beginning of the teacher preparation 
program's academic term or within 30 days of the execution of any 
scholarship agreement, whichever is later, the grantee must provide to 
the Department the following information:
    (1) The identity of each scholarship recipient.
    (2) The amount of the scholarship provided with program funds to 
each recipient.
    (3) The full-time equivalency, over each academic year, of each 
recipient's enrollment in the teacher training program for which he or 
she receives scholarship assistance.
    (4) Other information as the Secretary may require.
    (b) Within 30 days of a scholarship recipient's graduation or 
withdrawal from the teacher preparation program, the grantee must 
provide to the Department the following information:
    (1) The date of the recipient's graduation or withdrawal.
    (2) The total amount of program funds the grantee awarded as a 
scholarship to the recipient.
    (3) The original of any scholarship agreement executed by the 
scholarship recipient and the grantee (or its partnering IHE if the 
grantee is not an IHE) before the recipient was awarded a scholarship 
with program funds.
    (4) A statement of whether the institution has withdrawn scholarship 
support because of the recipient's failure to maintain good academic 
standing.
    (5) Other information as the Secretary may require.

(Approved by the Office of Management and Budget under control number 
1840-0753)

(Authority: 20 U.S.C. 1024(e))

[[Page 318]]



Sec. 611.51  How does a grantee ensure that a scholarship recipient
understands the terms and conditions of the scholarship before the
recipient leaves the teacher preparation program?

    (a) An institution that provides a scholarship with funds provided 
under this part must conduct an exit conference with each scholarship 
recipient before that individual leaves the institution. During the exit 
conference the institution must give the recipient a copy of any 
scholarship agreement the recipient has executed.
    (b) The institution also must review with the recipient the terms 
and conditions of the scholarship, including--
    (1) The recipient's service obligation;
    (2) How the recipient can confirm whether a school and LEA in which 
he or she would teach will satisfy the service obligation;
    (3) Information that the recipient will need to have the LEA provide 
to the Department to enable the Secretary to confirm that the recipient 
is meeting the service obligation;
    (4) How the recipient may request a deferment of the service 
obligation, and information that the recipient should provide the 
Department in any deferment request;
    (5) The consequences of failing to meet the service obligation 
including, at a minimum, the amount of the recipient's potential 
indebtedness; the possible referral of the indebtedness to a collection 
firm, reporting it to a credit bureau, and litigation; and the 
availability of a monthly payment schedule;
    (6) The amount of scholarship assistance and interest charges that 
the recipient must repay for failing to meet the service obligation; and
    (7) The recipient's responsibility to ensure that the Department has 
a home address and telephone number, and a work address and telephone 
number until the Secretary has determined that the recipient has 
fulfilled the service obligation or the recipient's debt has been paid 
or discharged; and
    (8) The follow-up services that the institution will provide the 
student during his or her first three years of teaching in a high-need 
school of a high-need LEA.

(Authority: 20 U.S.C. 1024(e))



Sec. 611.52  What are a grantee's programmatic responsibilities for
ensuring that scholarship recipients become successful teachers in
high-need schools?

    In implementing its approved project, the grantee must--
    (a) Provide scholarship recipients both before and after graduation 
with appropriate support services, including academic assistance, job 
counseling, placement assistance, and teaching support that will help to 
ensure that--
    (1) Upon graduation, scholarship recipients are able to secure 
teaching positions in high-need schools of high-need LEAs; and
    (2) After beginning to teach in a high-need school of a high-need 
LEA, former scholarship recipients have appropriate follow-up services 
and assistance during their first three years of teaching;
    (b) Provide LEAs with which the grantees collaborate in teacher 
recruitment activities with information and other assistance they need 
to recruit highly-qualified teachers effectively; and
    (c) Work with the high-need LEAs participating in its project to 
ensure that scholarship recipients are placed, to the extent possible, 
in highest-need schools of those LEAs.

(Authority: 20 U.S.C. 1024(e))



                    Subpart F_Other Grant Conditions

    Source: 65 FR 19614, Apr. 11, 2000, unless otherwise noted.



Sec. 611.61  What is the maximum indirect cost rate that applies to
a recipient's use of program funds?

    Notwithstanding 34 CFR 75.560-75.562 and 2 CFR 200.414, Indirect 
(F&A) costs, the maximum indirect cost rate that any recipient of funds 
under the Teacher Quality Enhancement Grants Program may use to charge 
indirect costs to these funds is the lesser of--
    (a) The rate established by the negotiated indirect cost agreement; 
or

[[Page 319]]

    (b) Eight percent.

(Authority: 20 U.S.C. 1021 et seq.)

[65 FR 19614, Apr. 11, 2000, as amended at 79 FR 76101, Dec. 19, 2014]



Sec. 611.62  What are a grantee's matching requirements?

    (a)(1) Each State receiving a grant under the State Grants Program 
or Teacher Recruitment Grants Program must provide, from non-federal 
sources, an amount equal to 50 percent of the amount of the grant to 
carry out the activities supported by the grant.
    (2) The 50 percent match required by paragraph (a)(1) of this 
section must be made annually during the project period, with respect to 
each grant award the State receives.
    (b) Each partnership receiving a grant under the Partnership Grant 
Program or the Teacher Recruitment Grant Program must provide, from non-
federal sources, an amount equal to--
    (1) 25 percent of the grant award for the first year of the grant;
    (2) 35 percent of the grant award for the second year of the grant; 
and
    (3) 50 percent of the grant award for each succeeding year of the 
grant.
    (c) The match from non-federal sources required by paragraphs (a) 
and (b) of this section may be made in cash or in kind.

(Authority: 20 U.S.C. 1021 et seq.)



PART 614_PREPARING TOMORROW'S TEACHERS TO USE TECHNOLOGY
--Table of Contents



Sec.
614.1  What is the purpose of the Preparing Tomorrow's Teachers to Use 
          Technology program?
614.2  Who is eligible for an award?
614.3  What regulations apply to this program?
614.4  Which member of the consortium must act as the lead applicant and 
          fiscal agent?
614.5  What are the matching requirements for the consortia?
614.6  What is the maximum indirect cost rate for all consortium members 
          and any cost-type contract?
614.7  What prohibitions apply to the use of grant funds under this 
          program?
614.8  What is the significance of the deadline date for applications?

    Authority: 20 U.S.C. 6832, unless otherwise noted.

    Source: 64 FR 72803, Dec. 28, 1999, unless otherwise noted.



Sec. 614.1  What is the purpose of the Preparing Tomorrow's Teachers
to Use Technology program?

    (a) This program provides grants to help future teachers become 
proficient in the use of modern learning technologies and to support 
training for pre-service teachers.
    (b) A grantee may not use funds under this program for in-service 
training or continuing education for currently certified teachers.

(Authority: 20 U.S.C. 6832)



Sec. 614.2  Who is eligible for an award?

    (a) Except as provided in paragraph (b) of this section, an eligible 
applicant is a consortium that includes at least two or more of the 
following: institutions of higher education, schools of education, 
community colleges, State educational agencies, local educational 
agencies, private elementary or secondary schools, professional 
associations, foundations, museums, libraries, private sector 
businesses, public or private nonprofit organizations, community based 
organizations, or any other entities able to contribute to teacher 
preparation program reforms that produce technology-proficient teachers.
    (b) At least one member of the consortium must be a nonprofit 
entity.

(Authority: 20 U.S.C. 6832)



Sec. 614.3  What regulations apply to this program?

    The following regulations apply to Preparing Tomorrow's Teachers to 
Use Technology:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) [Reserved]
    (2) 34 CFR part 75 (Direct Grant Programs), except for Sec. 75.102.
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5)[Reserved]

[[Page 320]]

    (6) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (7) 34 CFR part 82 (New Restrictions on Lobbying).
    (8) [Reserved]
    (9) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (10) 34 CFR part 97 (Protection of Human Subjects).
    (11) 34 CFR part 98 (Student Rights in Research, Experimental 
Programs and Testing).
    (12) 34 CFR part 99 (Family Educational Rights and Privacy).
    (b) The regulations in this part 614.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 6832)

[64 FR 72803, Dec. 28, 1999, as amended at 79 FR 76101, Dec. 19, 2014]



Sec. 614.4  Which member of the consortium must act as the lead applicant
and fiscal agent?

    (a) For purposes of 34 CFR 75.127, the lead applicant for the 
consortium must be a nonprofit member of the consortium.
    (b) The lead applicant must serve as the fiscal agent.

(Authority: 20 U.S.C. 6832)



Sec. 614.5  What are the matching requirements for the consortia?

    A consortium must provide at least 50 percent of the total project 
cost per budget period of the project using non-Federal funds.

(Authority: 20 U.S.C. 6832)



Sec. 614.6  What is the maximum indirect cost rate for all consortium
members and any cost-type contract?

    (a) The maximum indirect cost rate for all consortium partners and 
any cost-type contract made under these grants is eight percent of a 
modified total direct cost base or the partner's negotiated indirect 
cost rate, whichever rate is lower.
    (b) For purposes of this section, a modified total direct cost base 
is total direct costs less stipends, tuition, and related fees, and 
capital expenditures of $5,000 or more.
    (c) Indirect costs in excess of the maximum may not be--
    (1) Charged as direct costs by the grantee;
    (2) Used by the grantee to satisfy matching or cost sharing 
requirements; or
    (3) Charged by the grantee to another Federal award.

(Authority: 20 U.S.C. 6832)



Sec. 614.7  What prohibitions apply to the use of grant funds under
this program?

    Grant funds may not be used--
    (a) To recruit prospective teachers;
    (b) To support the cost of a prospective teacher's education through 
any form of financial aid assistance including scholarships, 
internships, or student stipends; or
    (c) For in-service training or continuing education for currently 
certified teachers.

(Authority: 20 U.S.C. 6832)



Sec. 614.8  What is the significance of the deadline date for 
applications?

    Notwithstanding Sec. 75.102 of this chapter, an application for a 
grant under this program must be received by the deadline date that will 
be announced in a separate notice in the Federal Register.

(Authority: 20 U.S.C. 6832)



PART 628_ENDOWMENT CHALLENGE GRANT PROGRAM--Table of Contents



                            Subpart A_General

Sec.
628.1  What are the purposes of the Endowment Challenge Grant Program?
628.2  Which institutions are eligible to apply for an endowment 
          challenge grant?
628.3  Under what conditions may an eligible institution designate a 
          foundation as the recipient of an endowment challenge grant?
628.4  What time limitations are placed on grantees applying for another 
          grant?
628.5  What regulations apply to the Endowment Challenge Grant Program?

[[Page 321]]

628.6  What definitions apply to the Endowment Challenge Grant Program?

    Subpart B_What Type of Grant Does the Secretary Award Under the 
                   Endowment Challenge Grant Program?

628.10  What are the characteristics of an endowment challenge grant?

   Subpart C_How Does an Eligible Institution Apply for an Endowment 
                            Challenge Grant?

628.20  What shall an applicant include in an application for an 
          endowment challenge grant?

  Subpart D_How Does the Secretary Award an Endowment Challenge Grant?

628.30  How does the Secretary evaluate an application for an endowment 
          challenge grant?
628.31  What selection criteria does the Secretary use in evaluating an 
          application for an endowment challenge grant?
628.32  What funding priorities does the Secretary use in evaluating an 
          application for an endowment challenge grant?

   Subpart E_What Conditions Must a Grantee Meet Under the Endowment 
                        Challenge Grant Program?

628.40  What are the restrictions on the amount of an endowment 
          challenge grant?
628.41  What are the obligations of an institution that the Secretary 
          selects to receive an endowment challenge grant?
628.42  What may a grantee not use to match an endowment challenge 
          grant?
628.43  What investment standards shall a grantee follow?
628.44  When and for what purpose may a grantee use the endowment fund 
          corpus?
628.45  How much endowment fund income may a grantee use and for what 
          purposes?
628.46  How shall a grantee calculate the amount of endowment fund 
          income that it may withdraw and spend?
628.47  What shall a grantee record and report?
628.48  What happens if a grantee fails to administer the endowment 
          challenge grant in accordance with applicable regulations?

    Authority: 20 U.S.C. 1065, unless otherwise noted.

    Source: 49 FR 28521, July 21, 1984, unless otherwise noted.



                            Subpart A_General



Sec. 628.1  What are the purposes of the Endowment Challenge Grant
Program?

    The Endowment Challenge Grant Program provides endowment challenge 
grants, which must be matched, to eligible institutions to--
    (a) Establish or increase endowment challenge funds;
    (b) Provide additional incentives to promote fund-raising 
activities; and
    (c) Foster increased independence and self-sufficiency at those 
institutions.

(Authority: 20 U.S.C. 1065)

[49 FR 28521, July 21, 1984, as amended at 52 FR 11258, Apr. 8, 1987; 58 
FR 11163, Feb. 23, 1993]



Sec. 628.2  Which institutions are eligible to apply for an endowment
challenge grant?

    An institution is eligible to apply for an endowment challenge grant 
if--
    (a) It qualifies as an eligible institution for the Strengthening 
Institutions Program under 34 CFR 607.2;
    (b) It qualifies as an eligible institution for the Strengthening 
Historically Black Colleges and Universities Program under 34 CFR 608.2;
    (c) It would have qualified as an eligible institution for the 
Strengthening Institutions Program if 34 CFR 607.2(a)(3) referred to a 
postgraduate degree rather than a bachelor's degree;
    (d) It would have qualified as an eligible institution for the 
Strengthening Historically Black Colleges and Universities Program if 34 
CFR 608.2(a)(4)(i) referred to a postgraduate degree rather than a 
bachelor's degree; or
    (e) It qualifies as an institution that makes a substantial 
contribution to graduate or postgraduate medical educational 
opportunities for minorities and the economically disadvantaged.

(Authority: 20 U.S.C. 1065)

[52 FR 36374, Sept. 28, 1987, as amended at 58 FR 11163, Feb. 23, 1993]

[[Page 322]]



Sec. 628.3  Under what conditions may an eligible institution designate
a foundation as the recipient of an endowment challenge grant?

    An eligible institution may designate a foundation, which was 
established for the purpose of raising money for that institution, as 
the recipient of an endowment challenge grant if--
    (a) The institution assures the Secretary in its application that 
the foundation is legally authorized to receive the endowment fund 
corpus and to administer the endowment fund in accordance with the 
regulations in this part;
    (b) The foundation agrees to administer the endowment fund in 
accordance with the regulations in this part; and
    (c) The institution agrees to be liable for any violation by the 
foundation of any applicable regulation, including any violation 
resulting in monetary liability.

(Authority: 20 U.S.C. 1065)



Sec. 628.4  What time limitations are placed on grantees applying for
another grant?

    (a) Except as provided in paragraphs (b) and (c) of this section, an 
institution that has received a grant under this part may apply for 
another grant under this part only after 10 fiscal years have elapsed 
following the fiscal year appropriation from which the institution's 
grant was awarded (base fiscal year).
    (b) An institution that has received a grant under this part may 
apply for another grant under this part after five fiscal years have 
elapsed following the base fiscal year if the appropriation for this 
part exceeds $20 million in any of those five fiscal years.
    (c) If an institution has received a grant under this part and the 
appropriation for this part exceeds $20 million in any of the sixth 
through tenth fiscal years following the base fiscal year, the 
institution may apply for another grant under this part in the fiscal 
year in which the appropriation exceeds $20 million, or any subsequent 
fiscal year.

(Authority: 20 U.S.C. 1065)

[58 FR 11163, Feb. 23, 1993]



Sec. 628.5  What regulations apply to the Endowment Challenge Grant
Program?

    (a) The following regulations apply to the Endowment Challenge Grant 
Program:
    (1) The regulations in this part 628.
    (2)-(3) [Reserved]
    (b)(1) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (i)-(ii) [Reserved]
    (iii) The regulations in 34 CFR 75.100 through 75.102, and 75.217.
    (iv) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (v) 34 CFR part 82 (New Restrictions on Lobbying).
    (vi) 34 CFR part 84 (Governmentwide Requirements For Drug-Free 
Workplace (Financial Assistance)).
    (vii) 34 CFR part 86 (Drug and Alcohol Abuse Prevention).
    (2) Except as specifically indicated in paragraph (b)(1) and (c) of 
this section, the Education Department General Administrative 
Regulations and the regulations in 2 CFR part 200 do not apply.
    (c) The following regulations in title 2 of the CFR apply to the 
Endowment Challenge Grant Program:
    (1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485.
    (2) 2 CFR 200.328 (Monitoring and reporting program performance), as 
adopted at 2 CFR part 3474.
    (3) 2 CFR part 200, subpart F (Audit Requirements), as adopted by ED 
at 2 CFR part 3474.

(Authority: 20 U.S.C. 1065)

[49 FR 28521, July 21, 1984, as amended at 52 FR 11258, Apr. 8, 1987; 52 
FR 36375, Sept. 28, 1987; 58 FR 11163, Feb. 23, 1993; 79 FR 76101, Dec. 
19, 2014]



Sec. 628.6  What definitions apply to the Endowment Challenge Grant
Program?

    The following definitions apply to the regulations in this part:
    Endowment fund means a fund which excludes real estate and which is 
established by State law, by an institution, or by a foundation that is 
exempt from

[[Page 323]]

taxation and is maintained for the purpose of generating income for the 
support of the institution. The principal or corpus of the fund may not 
be spent. ``Endowment fund'' includes ``quasi-endowment fund''.
    Endowment fund corpus means an amount equal to the endowment 
challenge grant or grants awarded under this part plus matching funds 
provided by the institution.
    Endowment fund income means an amount equal to the total value of 
the endowment fund established under the grant minus the endowment fund 
corpus.
    Quasi-endowment fund means a fund which the governing board of an 
institution or foundation establishes to function as an endowment in 
that the principal is to be retained and invested. However, the entire 
principal and income may be spent at any time at the discretion of the 
governing board.

(Authority: 20 U.S.C. 1065)

[49 FR 28521, July 21, 1984, as amended at 52 FR 11258, Apr. 8, 1987; 52 
FR 36375, Sept. 28, 1987; 58 FR 11163, Feb. 23, 1993]



    Subpart B_What Type of Grant Does the Secretary Award Under the 
                   Endowment Challenge Grant Program?



Sec. 628.10  What are the characteristics of an endowment challenge grant?

    Each endowment challenge grant awarded by the Secretary under this 
part--
    (a) Must be matched by the institution receiving the grant with one 
dollar of non-Federal funds for every two dollars of Federal grant 
funds;
    (b) Must be invested by the institution; and
    (c) Must have a duration of 20 years.

(Authority: 20 U.S.C. 1065)

[58 FR 11163, Feb. 23, 1993]



   Subpart C_How Does an Eligible Institution Apply for an Endowment 
                            Challenge Grant?



Sec. 628.20  What shall an applicant include in an application for
an endowment challenge grant?

    An applicant shall include in its application the amount of the 
endowment challenge grant it is requesting, a description of its short-
term plan and long-term plan for raising and using endowment challenge 
grant funds, and information sufficient for the Secretary to--
    (a) Evaluate the application under the selection criteria set forth 
in Sec. 628.31 and the priorities set forth in Sec. 628.32; and
    (b) Determine whether the applicant will administer the endowment 
challenge grant in accordance with the regulations in this part.

(Approved by the Office of Management and Budget under control number 
1840-0531)

(Authority: 20 U.S.C. 1065)

[49 FR 28521, July 21, 1984, as amended at 52 FR 11258, Apr. 8, 1987; 58 
FR 11163, Feb. 23, 1993; 59 FR 46175, Sept. 7, 1994]



  Subpart D_How Does the Secretary Award an Endowment Challenge Grant?



Sec. 628.30  How does the Secretary evaluate an application for an
endowment challenge grant?

    (a) In evaluating an application for an endowment challenge grant, 
the Secretary--
    (1) Judges the application using the selection criteria in 
Sec. 628.31 and the priorities in Sec. 628.32;
    (2) Gives, for each criterion and priority, a score up to the 
maximum possible points in parentheses following the description of that 
criterion or priority; and
    (3) Gives up to 130 total points, 90 points maximum for the criteria 
in Sec. 628.31, and 40 points maximum for the priorities in Sec. 628.32.
    (b) In selecting recipients for grants, the Secretary follows the 
procedures in

[[Page 324]]

34 CFR 75.217(d) and (e) of the Education Department General 
Administrative Regulations.

(Authority: 20 U.S.C. 1065)

[49 FR 28521, July 21, 1984, as amended at 52 FR 11258, Apr. 8, 1987]



Sec. 628.31  What selection criteria does the Secretary use in
evaluating an application for an endowment challenge grant?

    In evaluating an application for an endowment challenge grant, the 
Secretary uses the following three criteria:
    (a) The Secretary measures the applicant's past efforts to build or 
maintain its existing endowment and quasi-endowment funds by the dollar 
and relative increase in market value to the applicant's existing 
endowment and quasi-endowment funds over the applicant's four fiscal 
years preceding the year of application using the formulas set forth in 
paragraphs (a)(1) through (a)(5) of this section.
    (1) In measuring an applicant's dollar increase in its endowment and 
quasi-endowment funds, the Secretary--
    (i) Subtracts from an amount equal to the market value of the 
applicant's endowment and quasi-endowment funds at the end of the four-
year period described in paragraph (a) of this section an amount equal 
to the market value of the applicant's endowment and quasi-endowment 
funds at the beginning of that four-year period; and
    (ii) Divides the result obtained in paragraph (a)(1)(i) of this 
section by the applicant's full-time equivalent enrollment at the end of 
the four-year period.
    (2) The Secretary awards points on a sliding scale giving 10 points 
to applicants with the highest dollar increase as calculated in 
paragraph (a)(1) of this section and no points to applicants with the 
lowest dollar increase.
    (3) In measuring an applicant's relative increase in market value of 
its endowment and quasi-endowment funds, the Secretary--
    (i) Divides an amount equal to the market value of the applicant's 
endowment and quasi-endowment funds at the beginning of the four-year 
period described in paragraph (a) of this section by the applicant's 
full-time equivalent enrollment at the end of the four-year period.
    (ii) Adds $50 to the amount obtained in paragraph (a)(3)(i) of this 
section.
    (iii) Divides the result obtained in paragraph (a)(1)(ii) of this 
section by the amount obtained in paragraph (a)(3)(ii) of this section.
    (4)(i) If the amount of endowment per full-time equivalent student 
under paragraph (a)(3)(i) of this section is $50 or more, the Secretary 
awards points on a sliding scale giving 15 points to applicants with a 
relative increase of 100 percent or more and no points to applicants 
that have had a relative decrease of more than 20 percent.
    (ii) If the amount of endowment per full-time equivalent student 
under paragraph (a)(3)(i) of this section is less than $50, the 
Secretary awards points on a sliding scale giving 15 points to 
applicants with a relative increase of 100 percent or more and no points 
to applicants that have had no relative increase.
    (5) In measuring the applicant's past effort, the Secretary--
    (i) Excludes real estate from being considered as part of the 
applicant's existing endowment or quasi-endowment fund; and
    (ii) Includes an endowment or quasi-endowment fund operated by a 
foundation if the foundation is tax-exempt and was established for the 
purpose of raising money for the institution.
    (b) The Secretary considers the degree of proposed nongovernmental 
matching funds. (Total: 15 points maximum for the highest proposed 
percentage)
    (1) The Secretary measures the degree to which an applicant proposes 
to match the grant with funds from sources other than a State or local 
government--giving up to 15 points to applicants proposing to obtain the 
largest percentage of matching funds from those nongovernmental sources.
    (2) If an applicant is applying for an endowment challenge grant for 
the first time, the Secretary multiplies the maximum number of points 
(i.e., 15 points) on this criterion times the following fraction:

[[Page 325]]

[GRAPHIC] [TIFF OMITTED] TC15NO91.021

    (3) If an applicant has previously received an endowment challenge 
grant, the Secretary uses the following formula in awarding points under 
this criterion:
[GRAPHIC] [TIFF OMITTED] TC15NO91.022

    (c) The Secretary considers the need for an endowment challenge 
grant as measured by the applicant's lack of resources.
    (1) The Secretary gives up to 50 points to applicants with the least 
resources as measured, at the end of the applicant's fiscal year 
preceding the year it applies for an endowment challenge grant, by 
revenue per full-time equivalent student it receives from the sum of the 
following--
    (i) Federal, State and local government appropriations;
    (ii) Unrestricted Federal, State and local government grants and 
contracts;
    (iii) Eighty percent of tuition and fees; and
    (iv) Unrestricted and restricted ``endowment income''.
    (2) In measuring the applicant's resources, the Secretary--
    (i) Defines the factors in paragraphs (c)(1)(i) through (iv) as they 
are defined in the Education Department Higher Education General 
Information Survey of Financial Statistics.
    (ii) Excludes real estate from being considered as part of the 
applicant's existing endowment or quasi-endowment fund.

(Approved by the Office of Management and Budget under control number 
1840-0531)

(Authority: 20 U.S.C. 1065)

[49 FR 28521, July 12, 1984, as amended at 49 FR 37325, Sept. 21, 1984]



Sec. 628.32  What funding priorities does the Secretary use in
evaluating an application for an endowment challenge grant?

    In evaluating an endowment challenge grant application, the 
Secretary uses the following two priorities:
    (a) Recipient or former recipient of a grant under the Strengthening 
Institutions, Special Needs, Hispanic-Serving Institutions, 
Strengthening Historically Black Colleges and Universities, or 
Strengthening Historically Black Graduate Institutions Program. (Total: 
20 points) The Secretary gives 20 points to each applicant who on 
October 1 of the fiscal year in which the applicant is applying for an 
endowment challenge grant is a current recipient of a planning or 
development grant, or was a recipient of a planning or development grant 
within the five preceding fiscal years, under the Strengthening 
Institutions, Special Needs, Hispanic-Serving Institutions, 
Strengthening Historically Black Colleges and Universities, or 
Strengthening Historically Black Graduate Institutions Program.
    (b) Need for an endowment challenge grant as measured by the lack of 
endowment funds. (Total: 20 points)
    (1) The Secretary gives up to 20 total points to an applicant with 
the greatest need for an endowment challenge grant under this part, as 
measured by the applicant's lack of endowment funds.

[[Page 326]]

    (2) The Secretary gives up to 20 points to the applicant with the 
lowest market value, at the end of the applicant's fiscal year preceding 
the year it applies for an endowment challenge grant, of its existing 
endowment and quasi-endowment fund in relation to the number of full-
time equivalent students enrolled at the institution in the fall of the 
year preceding the year it applies for an endowment challenge grant.
    (3) In measuring the applicant's need for an endowment challenge 
grant, the Secretary excludes real estate from being considered as part 
of the applicant's existing endowment or quasi-endowment fund.

(Approved by the Office of Management and Budget under control number 
1840-0531)

(Authority: 20 U.S.C. 1065)

[49 FR 28521, July 21, 1984, as amended at 52 FR 11258, Apr. 8, 1987; 58 
FR 11163, Feb. 23, 1993; 59 FR 46175, Sept. 7, 1994]



   Subpart E_What Conditions Must a Grantee Meet Under the Endowment 
                        Challenge Grant Program?



Sec. 628.40  What are the restrictions on the amount of an endowment
challenge grant?

    (a) To receive an endowment challenge grant, an institution must 
raise at least $25,000 in matching funds and qualify for at least a 
$50,000 grant under paragraph (c) of this section.
    (b) If an institution obtains at least $25,000 in matching funds and 
raises all the nongovernmental funds it proposed to raise in its 
application, the institution may receive a grant equal to twice the 
amount of matching funds it raises up to--
    (1) $500,000 in any fiscal year in which the amount appropriated for 
the Endowment Challenge Grant Program is less than $15,000,000;
    (2) $1,000,000 in any fiscal year in which the amount appropriated 
for the Endowment Challenge Grant Program equals or exceeds $15,000,000 
but is less than $25,000,000; or
    (3) $1,500,000 in any fiscal year in which the amount appropriated 
for the Endowment Challenge Grant Program equals or exceeds $25,000,000.
    (c) If an institution does not raise all the nongovernmental funds 
it proposes to raise in its application, the Secretary reduces the 
institution's grant by multiplying the grant amount requested by the 
following fraction:
[GRAPHIC] [TIFF OMITTED] TC15NO91.023


(Authority: 20 U.S.C. 1065)

[57 FR 11163, Feb. 23, 1993]



Sec. 628.41  What are the obligations of an institution that the
Secretary selects to receive an endowment challenge grant?

    (a) An institution that the Secretary selects to receive an 
endowment challenge grant shall--
    (1) Enter into an agreement with the Secretary to administer the 
endowment challenge grant;
    (2) Establish an endowment fund independent of any other endowment 
fund established by or for that institution;
    (3) Deposit its matching funds in the endowment fund established 
under this part;
    (4) Upon receipt, immediately deposit the grant funds into the 
endowment fund established under this part; and
    (5) Within fifteen working days after receiving the grant funds, 
invest the endowment fund corpus.
    (b) Before the Secretary disburses grant funds and not later than a 
date established by the Secretary through a notice in the Federal 
Register (which date may not be later than the earlier of the last day 
of availability of appropriations or eighteen months after an 
institution has been notified that it has been selected to receive a 
grant), an institution shall--
    (1) Match, with cash or low-risk securities, the endowment challenge 
grant funds to be received under this part;
    (2) Certify to the Secretary--
    (i) The source, kind and amount of the eligible matching funds;
    (ii) That the matching funds are eligible under paragraph (b)(1) of 
this section and Sec. 628.42; and
    (3) Have a certified public accountant or other licensed public 
accountant,

[[Page 327]]

who is not an employee of the institution, certify that the data 
contained in the application is accurate.
    (c)(1) For the purpose of paragraph (b)(1) of this section, ``cash'' 
may include cash on hand, certificates of deposit and money market 
funds; and
    (2) A negotiable security, to be considered as part of the 
institution's match--
    (i) Must be low-risk as required in Sec. 628.43; and
    (ii) Must be assessed at its market value as of the end of the 
trading day on the date the institution deposits the security into the 
endowment fund established under this part.

(Approved by the Office of Management and Budget under control number 
1840-0564)

(Authority: 20 U.S.C. 1065)

[49 FR 28521, July 21, 1984, as amended at 49 FR 37325, Sept. 21, 1984; 
52 FR 11258, Apr. 8, 1987; 53 FR 49146, Dec. 6, 1988]



Sec. 628.42  What may a grantee not use to match an endowment 
challenge grant?

    To match an endowment challenge grant, a grantee may not use--
    (a) A pledge of funds or securities;
    (b) Deferred gifts such as a charitable remainder annuity trust or 
unitrust;
    (c) Any Federal funds;
    (d) Any borrowed funds; or
    (e) The corpus or income of an endowment fund or quasi-endowment 
fund existing at the closing date established by the Secretary for 
submission of eligibility requests under the Endowment Challenge Grant 
Program. This includes the corpus or income of an endowment or quasi-
endowment fund established by a foundation if the foundation is tax-
exempt and was established for the purpose of raising money for the 
institution.

(Authority: 20 U.S.C. 1065)



Sec. 628.43  What investment standards shall a grantee follow?

    (a) A grantee shall invest, for the duration of the grant period, 
the endowment fund established under this part in savings accounts or in 
low-risk securities in which a regulated insurance company may invest 
under the law of the State in which the institution is located.
    (b) When investing the endowment fund, the grantee shall exercise 
the judgment and care, under the circumstances, that a person of 
prudence, discretion and intelligence would exercise in the management 
of his or her own financial affairs.
    (c) An institution may invest its endowment fund in savings accounts 
permitted under paragraph (a) of this section such as--
    (1) A federally insured bank savings account;
    (2) A comparable interest bearing account offered by a bank; or
    (3) A money market fund.
    (d) An institution may invest its endowment fund in low-risk 
securities permitted under paragraph (a) of this section such as--
    (1) Certificates of deposit;
    (2) Mutual funds;
    (3) Stocks; or
    (4) Bonds.
    (e) An institution may not invest its endowment fund in real estate.

(Authority: 20 U.S.C. 1065)



Sec. 628.44  When and for what purposes may a grantee use the endowment
fund corpus?

    (a)(1) During the grant period, a grantee may not withdraw or spend 
any part of the endowment fund corpus.
    (2) If, during the grant period, a grantee withdraws or spends all 
or part of the endowment fund corpus, it must repay to the Secretary an 
amount equal of 50 percent of the amount withdrawn or spent plus the 
income earned on that amount.
    (b) At the end of the grant period, the institution may use the 
endowment fund corpus for any educational purpose.

(Authority: 20 U.S.C. 1065)



Sec. 628.45  How much endowment fund income may a grantee use and for
what purposes?

    (a) During the endowment challenge grant period, a grantee--
    (1) May withdraw and spend up to 50 percent of the total aggregate 
endowment fund income earned prior to the date of expenditure;
    (2) May spend the endowment fund income for--

[[Page 328]]

    (i) Costs necessary to operate the institution, including general 
operating and maintenance costs;
    (ii) Costs to administer and manage the endowment fund; and
    (iii) Costs associated with buying and selling securities, such as 
stockbroker commissions and fees to ``load'' mutual funds;
    (3) May not use endowment fund income for--
    (i) A school or department of divinity or any religious worship or 
sectarian activity;
    (ii) An activity that is inconsistent with a State plan for 
desegregation applicable to the grantee; or
    (iii) An activity that is inconsistent with a State plan applicable 
to the grantee; and
    (4) May not withdraw or spend the remaining 50 percent of the 
endowment fund income.
    (b) Notwithstanding paragraph (a)(1) of this section, the Secretary 
may permit a grantee that requests to spend more than 50 percent of the 
total aggregate endowment fund income to do so if the grantee 
demonstrates that the expenditure is necessary because of--
    (1) A financial emergency such as a pending insolvency or temporary 
liquidity problem;
    (2) A situation threatening the existence of the institution such as 
destruction due to a natural disaster or arson; or
    (3) Another unusual occurrence or demanding circumstance, such as a 
judgment against the institution for which the institution would be 
liable.
    (c) If, during the grant period, a grantee spends more endowment 
fund income or uses it for purposes other than permitted under 
paragraphs (a) or (b) of this section, it shall repay to the Secretary 
an amount equal to 50 percent of the amount improperly spent.
    (d) At the end of the grant period, the institution may use all of 
the endowment fund income for any educational purpose.

(Authority: 20 U.S.C. 1065)

[49 FR 28521, July 21, 1984, as amended at 52 FR 11258, Apr. 8, 1987; 58 
FR 11163, Feb. 23, 1993]



Sec. 628.46  How shall a grantee calculate the amount of endowment
fund income that it may withdraw and spend?

    A grantee shall calculate the amount of endowment fund income that 
it may withdraw and spend at a particular time as follows:
    (a) On each date that the grantee plans a withdrawal of income, it 
must--
    (1) Determine the value of endowment fund income by subtracting the 
endowment fund corpus from the current total value of the endowment fund 
on that date; and
    (2) Calculate the amount of endowment fund income previously 
withdrawn from the endowment fund.
    (b) If the value of endowment fund income in the endowment fund 
exceeds the aggregate amount of previously withdrawn endowment fund 
income, the grantee may withdraw and spend up to 50 percent of that 
excess fund income.

(Authority: 20 U.S.C. 1065)

[49 FR 28521, July 21, 1984, as amended at 52 FR 11258, Apr. 8, 1987]



Sec. 628.47  What shall a grantee record and report?

    A grantee shall--
    (a) Keep records of--
    (1) The source, kind and amount of matching funds;
    (2) The type and amount of investments of the endowment fund;
    (3) The amount of endowment fund income; and
    (4) The amount and purpose of expenditures of endowment fund income;
    (b) Retain each year's records for a minimum of five years after the 
grant period ends;
    (c) Allow the Secretary access to information that the Secretary 
judges necessary to audit or examine the records required in paragraph 
(a) of this section;
    (d) Carry out the audit required in 2 CFR part 200, subpart F;
    (e) Comply with the reporting requirements in 2 CFR 200.512; and

[[Page 329]]

    (f) Submit reports on a timely basis that are requested by the 
Secretary.

(Approved by the Office of Management and Budget under control number 
1840-0564)

(Authority: 20 U.S.C. 1065 and 1232f)

[49 FR 28521, July 12, 1984, as amended at 52 FR 11258, Apr. 8, 1987; 53 
FR 49146, Dec. 6, 1988; 58 FR 11164, Feb. 23, 1993; 79 FR 76101, Dec. 
19, 2014]



Sec. 628.48  What happens if a grantee fails to administer the 
endowment challenge grant in accordance with applicable regulations?

    (a) The Secretary may, after giving the grantee notice and an 
opportunity for a hearing, terminate an endowment challenge grant if the 
grantee--
    (1) Withdraws or spends any part of the endowment fund corpus in 
violation of Sec. 628.44(a)(1);
    (2) Spends any portion of the endowment fund income not permitted to 
be spent in Sec. 628.45;
    (3) Fails to invest the endowment fund in accordance with the 
investment standards set forth in Sec. 628.43; or
    (4) Fails to meet the requirements in Sec. 628.41.
    (b) If the Secretary terminates a grant under paragraph (a) of this 
section, the grantee must return to the Secretary an amount equal to the 
sum of the original endowment challenge grant or grants plus the income 
earned on that sum.

(Authority: 20 U.S.C. 1065)

[49 FR 28521, July 21, 1984, as amended at 52 FR 11258, Apr. 8, 1987; 52 
FR 36375, Sept. 28, 1987]

                           PART 636 [RESERVED]



PART 637_MINORITY SCIENCE AND ENGINEERING IMPROVEMENT PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
637.1  What is the Minority Science and Engineering Improvement Program 
          (MSEIP)?
637.2  Who is eligible to receive a grant?
637.3  What regulations apply to the Minority Science and Engineering 
          Improvement Program?
637.4  What definitions apply to the Minority Science and Engineering 
          Improvement Program?

 Subpart B_What Kinds of Projects Does the Secretary Assist Under This 
                                Program?

637.11  What kinds of projects are supported by this program?
637.12  What are institutional projects?
637.13  What are design projects?
637.14  What are special projects?
637.15  What are cooperative projects?

                Subpart C_How Does One Apply for a Grant?

637.21  Application procedures.

             Subpart D_How Does the Secretary Make a Grant?

637.31  How does the Secretary evaluate an application?
637.32  What selection criteria does the Secretary use?

           Subpart E_What Conditions Must Be Met by a Grantee?

637.41  What are the cost restrictions on design project grants?

    Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, 1068b, unless 
otherwise noted.

    Source: 46 FR 51204, Oct. 16, 1981, unless otherwise noted.



                            Subpart A_General



Sec. 637.1  What is the Minority Science and Engineering Improvement
Program (MSEIP)?

    The Minority Science and Engineering Improvement Program (MSEIP) is 
designed to effect long-range improvement in science and engineering 
education at predominantly minority institutions, and to increase the 
flow of underrepresented ethnic minorities, particularly minority women, 
into scientific and technological careers.

(Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, and 1068b, unless 
otherwise noted)

[65 FR 7674, Feb. 15, 2000]



Sec. 637.2  Who is eligible to receive a grant?

    The following are eligible to receive a grant under this part:
    (a) Public and private nonprofit institutions of higher education 
that--
    (1) Award baccalaureate degrees; and

[[Page 330]]

    (2) Qualify as minority institutions as defined in Sec. 637.4.
    (b) Public or private nonprofit institutions of higher education 
that--
    (1) Award associate degrees;
    (2) Qualify as minority institutions as defined in Sec. 637.4;
    (3) Have a curriculum that includes science or engineering subjects; 
and
    (4) Enter into a partnership with public or private nonprofit 
institutions of higher education that award baccalaureate degrees in 
science and engineering.
    (c) Nonprofit science-oriented organizations, professional 
scientific societies, and institutions of higher education that award 
baccalaureate degrees that--
    (1) Provide a needed service to a group of minority institutions; or
    (2) Provide in-service training to project directors, scientists, 
and engineers from minority institutions; or
    (d) A consortia of organizations, that provide needed services to 
one or more minority institutions. The consortia membership may 
include--
    (1) Institutions of higher education which have a curriculum in 
science or engineering;
    (2) Institutions of higher education that have a graduate or 
professional program in science or engineering;
    (3) Research laboratories of, or under the contract with, the 
Department of Energy;
    (4) Private organizations that have science or engineering 
facilities; or
    (5) Quasi-governmental entities that have a significant scientific 
or engineering mission.

(Authority: 20 U.S.C. 1067g)

[65 FR 7674, Feb. 15, 2000]



Sec. 637.3  What regulations apply to the Minority Science and 
Engineering Improvement Program?

    The following regulations apply to the Minority Science and 
Engineering Improvement Program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1)[Reserved]
    (2) 34 CFR part 75 (Direct Grant Programs).
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 82 (New Restrictions on Lobbying).
    (6) [Reserved]
    (7) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part 637.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, and 1068b, unless 
otherwise noted)

[46 FR 51204, Oct. 16, 1981, as amended at 52 FR 43544, Nov. 12, 1987; 
57 FR 54302, Nov. 18, 1992; 65 FR 7675, Feb. 15, 2000; 79 FR 76102, Dec. 
19, 2014]



Sec. 637.4  What definitions apply to the Minority Science and
Engineering Improvement Program?

    (a) Definitions in EDGAR. The following terms used in this part are 
defined in 34 CFR part 77.

Applicant
Application
Department
EDGAR
Grants
Grantee
Nonprofit
Private
Project
Project period
Secretary

    (b) Definitions that apply to this part:
    Accredited means currently certified by a nationally recognized 
accrediting agency or making satisfactory progress toward achieving 
accreditation.
    Act means the Higher Education Act of 1965, as amended.
    Minority means American Indian, Alaskan Native, black (not of 
Hispanic origin), Hispanic (including persons of Mexican, Puerto Rican, 
Cuban, and Central or South American origin), Pacific Islander or other 
ethnic group underrepresented in science and engineering.
    Minority institution means an accredited college or university whose 
enrollment of a single minority group or a combination of minority 
groups as defined in this section exceeds fifty percent of the total 
enrollment. The Secretary verifies this information from

[[Page 331]]

the data on enrollments (Higher Education General Information Surveys 
HEGIS XIII) furnished by the institution to the Office for Civil Rights, 
Department of Education.
    Science means, for the purposes of this program, the biological, 
engineering, mathematical, physical, behavorial and social sciences, and 
the history and philosophy of science; also included are 
interdisciplinary fields which are comprised of overlapping areas among 
two or more sciences.
    Underrepresented in science and engineering means a minority group 
whose number of scientists and engineers per 10,000 population of that 
group is substantially below the comparable figure for scientists and 
engineers who are white and not of Hispanic origin.


(Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, 1068b)

(Authority: 20 U.S.C. 1135b-1135b-3 and 1135d-5)

[46 FR 51204, Oct. 16, 1981, as amended at 52 FR 43544, Nov. 12, 1987; 
65 FR 7675, Feb. 15, 2000]



 Subpart B_What Kinds of Projects Does the Secretary Assist Under This 
                                Program?



Sec. 637.11  What kinds of projects are supported by this program?

    The Secretary awards grants under this program for all or some of 
the following categories of projects:
    (a) Institutional projects for implementing a comprehensive science 
improvement plan as described in Sec. 637.12.
    (b) Design projects for developing a long-range science improvement 
plan as described in Sec. 637.13.
    (c) Special projects to support activities as described in 
Sec. 637.14.
    (d) Cooperative projects to share facilities and personnel and 
disseminate information as described in Sec. 637.15.


(Authority: 20 U.S.C. 1135b-2)

(Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, and 1068b)



Sec. 637.12  What are institutional projects?

    (a) Institutional project grants support the implementation of a 
comprehensive science improvement plan, which may include any 
combination of activities for improving the preparation of minority 
students, particularly minority women, for careers in science.
    (b) Activities that the Secretary may assist under an institutional 
project include, but are not limited to, the following:
    (1) Faculty development programs; or
    (2) Development of curriculum materials.

(Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, and 1068b)

[46 FR 51204, Oct. 16, 1981, as amended at 52 FR 43545, Nov. 12, 1987; 
57 FR 54302, Nov. 18, 1992]



Sec. 637.13  What are design projects?

    (a) Design project grants assist minority institutions that do not 
have their own appropriate resources or personnel to plan and develop 
long-range science improvement programs.
    (b) Activities that the Secretary may assist under a design project 
include, but are not limited to, the following:
    (1) Development of planning, management, and evaluation systems; and
    (2) Improvement of institutional research or development offices.

(Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, and 1068b)

[46 FR 51204, Oct. 16, 1981, as amended at 52 FR 43545, Nov. 12, 1987]



Sec. 637.14  What are special projects?

    There are two types of special projects grants--
    (a) Special project grants for which minority institutions are 
eligible which support activities that--
    (1) Improve quality training in science and engineering at minority 
institutions; or
    (2) Enhance the minority institutions' general scientific research 
capabilities.
    (b) Special project grants for which all applicants are eligible 
which support activities that--
    (1) Provide a needed service to a group of eligible minority 
institutions; or
    (2) Provide in-service training for project directors, scientists, 
and engineers from eligible minority institutions.

[[Page 332]]

    (c) Activities that the Secretary may assist under a special project 
include, but are not limited to, the following:
    (1) Advanced science seminars;
    (2) Science faculty workshops and conferences;
    (3) Faculty training to develop specific science research or 
education skills;
    (4) Research in science education;
    (5) Programs for visiting scientists;
    (6) Preparation of films or audio-visual materials in science;
    (7) Development of learning experiences in science beyond those 
normally available to minority undergraduate students, particularly 
minority women;
    (8) Development of pre-college enrichment activities in science; and
    (9) Any other activities designed to address specific barriers to 
the entry of minorities, particularly minority women, into science.
    (d) Minority institutions are eligible to apply for special projects 
of the type listed in paragraph (a) of this section. All applicants 
eligible for assistance under this program may apply for special 
projects of the type listed in paragraphs (b) and (c) of this section.

(Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, and 1068b)

[46 FR 51204, Oct. 16, 1981, as amended at 52 FR 43545, Nov. 12, 1987; 
57 FR 54302, Nov. 18, 1992]



Sec. 637.15  What are cooperative projects?

    (a) Cooperative project grants assist groups of nonprofit accredited 
colleges and universities to work together to conduct a science 
improvement project.
    (b) Activities that the Secretary may fund under cooperative 
projects include, but are not limited to, the following:
    (1) Assisting institutions in sharing facilities and personnel;
    (2) Disseminating information about established programs in science 
and engineering;
    (3) Supporting cooperative efforts to strengthen the institutions' 
science and engineering programs; and
    (4) Carrying out a combination of any of the activities in 
paragraphs (c)(1)-(3) of this section.
    (c) Eligible applicants for cooperative projects are groups of 
nonprofit accredited colleges and universities whose primary fiscal 
agent is an eligible minority institution as defined in Sec. 637.4(b).

(Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, and 1068b)



                Subpart C_How Does One Apply for a Grant?



Sec. 637.21  Application procedures.

    One applies for a grant under the procedures of EDGAR Secs. 75.100 
through 75.129.



             Subpart D_How Does the Secretary Make a Grant?



Sec. 637.31  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec. 637.32.
    (b) The Secretary informs applicants of the maximum possible score 
for each criterion in the application package or in a notice published 
in the Federal Register.
    (c) The Secretary gives priority to applicants which have not 
previously received funding from the program and to previous grantees 
with a proven record of success, as well as to applications that 
contribute to achieving balance among funded projects with respect to:
    (1) Geographic region;
    (2) Academic discipline; and
    (3) Project type.

(Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, and 1068b)

[46 FR 51204, Oct. 16, 1981, as amended at 52 FR 43545, Nov. 12, 1987; 
70 FR 13374, Mar. 21, 2005]



Sec. 637.32  What selection criteria does the Secretary use?

    The Secretary evaluates applications on the basis of the criteria in 
this section.
    (a) Plan of operation. (1) The Secretary reviews each application 
for information that shows the quality of the plan of operation for the 
project.
    (2) The Secretary looks for information that shows--

[[Page 333]]

    (i) Higher quality in the design of the project;
    (ii) An effective plan of management that insures proper and 
efficient administration of the project;
    (iii) A clear description of how the objectives of the project 
relate to the purpose of the program;
    (iv) The way the applicant plans to use its resources and personnel 
to achieve each objective; and
    (v) Methods of coordination. (See 34 CFR 75.580)
    (b) Quality of key personnel. (1) The Secretary reviews each 
application for information that shows the quality of the key personnel 
the applicant plans to use on the project.
    (2) The Secretary looks for information that shows--
    (i) The qualifications of the project director (if one is to be 
used);
    (ii) The qualifications of each of the other key personnel to be 
used in the project;
    (iii) The time that each person referred to in paragraphs (b)(2) (i) 
and (ii) of this section plans to commit to the project.
    (iv) The extent to which the applicant, as part of its 
nondiscriminatory emloyment practices, encourages applications for 
employment from persons who are members of groups that have been 
traditionally underrepresented, such as members of a racial or ethnic 
minority group, women, handicapped persons, and the elderly.
    (3) To determine the qualifications of a person, the Secretary 
considers evidence of past experience and training, in fields related to 
the objectives of the project, as well as other information that the 
applicant provides.
    (c) Budget and cost effectiveness. (1) The Secretary reviews each 
application for information that shows that the project has an adequate 
budget and is cost effective.
    (2) The Secretary looks for information that shows--
    (i) The budget for the project is adequate to support the project 
activities; and
    (ii) Costs are reasonable in relation to the objective of the 
project.
    (d) Evaluation plan. (1) The Secretary reviews each application for 
information that shows the quality of the evaluation plan for the 
project. (See 34 CFR 75.590)
    (2) The Secretary looks for information that shows methods of 
evaluation that are appropriate for the project and, to the extent 
possible, are objective and produce data that are quantifiable.
    (e) Adequacy of resources. (1) The Secretary reviews each 
application for information that shows that the applicant plans to 
devote adequate resources to the project.
    (2) The Secretary looks for information that shows--
    (i) The facilities that the applicant plans to use are adequate; and
    (ii) The equipment and supplies that the applicant plans to use are 
adequate.
    (f) Identification of need for the project. (1) The Secretary 
reviews each application for information that shows the identification 
of need for the project.
    (2) The Secretary looks for information that shows--
    (i) An adequate needs assessment;
    (ii) An identification of specific needs in science; and
    (iii) Involvement of appropriate individuals, especially science 
faculty, in identifying the institutional needs.
    (g) Potential institutional impact of the project. (1) The Secretary 
reviews each application to determine the extent to which the proposed 
project gives evidence of potential for enhancing the institution's 
capacity for improving and maintaining quality science education for its 
minority students, particularly minority women.
    (2) The Secretary looks for information that shows--
    (i) For an institutional or cooperative project, the extent to which 
both the established science education program(s) and the proposed 
project will expand or strengthen the established program(s) in relation 
to the identified needs; or
    (ii) For a design project, the extent to which realistic long-range 
science education improvement plans will be developed with the technical 
assistance provided under the project; or
    (iii) For a special project, the extent to which it addresses needs 
that have not been adequately addressed by an existing institutional 
science program

[[Page 334]]

or takes a particularly new and exemplary approach that has not been 
taken by any existing institutional science program.
    (h) Institutional commitment to the project. (1) The Secretary 
reviews each application for information that shows that the applicant 
plans to continue the project activities when funding ceases.
    (2) The Secretary looks for information that shows--
    (i) Adequate institutional commitment to absorb any after-the-grant 
burden initiated by the project;
    (ii) Adequate plans for continuation of project activities when 
funding ceases;
    (iii) Clear evidence of past institutional commitment to the 
provision of quality science programs for its minority students; and
    (iv) A local review statement signed by the chief executive officer 
of the institution endorsing the project and indicating how the project 
will accelerate the attainment of the institutional goals in science.
    (i) Expected outcomes. (1) The Secretary reviews each application to 
determine the extent to which minority students, particularly minority 
women, will benefit from the project.
    (2) The Secretary looks for information that shows--
    (i) Expected outcomes likely to result in the accomplishment of the 
program goal;
    (ii) Educational value for science students; and
    (iii) Possibility of long-term benefits to minority students, 
faculty, or the institution.
    (j) Scientific and educational value of the proposed project. (1) 
The Secretary reviews each application for information that shows its 
potential for contributions to science education.
    (2) The Secretary looks for information that shows--
    (i) The relationship of the proposed project to the present state of 
science education;
    (ii) The use or development of effective techniques and approaches 
in science education; and
    (iii) Potential use of some aspects of the project at other 
institutions.

(Approved by the Office of Management and Budget under control number 
1840-0109)

(Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, and 1068b)

[46 FR 51204, Oct. 16, 1981, as amended at 53 FR 49146, Dec. 6, 1988; 57 
FR 54302, Nov. 18, 1992; 70 FR 13374, Mar. 21, 2005]



           Subpart E_What Conditions Must be Met by a Grantee?



Sec. 637.41  What are the cost restrictions on design project grants?

    For design project grants funds may not be used to pay more than 
fifty percent of the academic year salaries of faculty members involved 
in the project.

(Authority: 20 U.S.C. 1067-1067c, 1067g-1067k, 1068, and 1068b)



PART 642_TRAINING PROGRAM FOR FEDERAL TRIO PROGRAMS--Table of Contents



                            Subpart A_General

Sec.
642.1  What is the Training Program for Federal TRIO Programs?
642.2  Who are eligible applicants?
642.3  Who are eligible participants?
642.4  How long is a project period?
642.5  What regulations apply?
642.6  What definitions apply?
642.7  How many applications may an eligible applicant submit?

   Subpart B_What Types of Projects and Activities Does the Secretary 
                       Assist Under This Program?

642.10  What types of projects does the Secretary assist?
642.11  What activities does the Secretary assist?
642.12  What activities may a project conduct?

             Subpart C_How Does the Secretary Make a Grant?

642.20  How does the Secretary evaluate an application for a new award?
642.21  What selection criteria does the Secretary use?
642.22  How does the Secretary evaluate prior experience?
642.23  How does the Secretary ensure geographic distribution of awards?

[[Page 335]]

642.24  What are the Secretary's priorities for funding?
642.25  What is the review process for unsuccessful applicants?
642.26  How does the Secretary set the amount of a grant?

           Subpart D_What Conditions Must Be Met by a Grantee?

642.30  What are allowable costs?
642.31  What are unallowable costs?

    Authority: 20 U.S.C. 1070a-11 and 1070a-17, unless otherwise noted.

    Source: 47 FR 17788, Apr. 23, 1982, unless otherwise noted.



                            Subpart A_General



Sec. 642.1  What is the Training Program for Federal TRIO Programs?

    The Training Program for Federal TRIO programs, referred to in these 
regulations as the Training program, provides Federal financial 
assistance to train the leadership personnel and staff employed in, or 
preparing for employment in, Federal TRIO program projects.

(Authority: 20 U.S.C. 1070a-17)

[75 FR 65771, Oct. 26, 2010]



Sec. 642.2  Who are eligible applicants?

    The following are eligible to apply for a grant to carry out a 
Training Program project:
    (a) Institutions of higher education.
    (b) Public and private nonprofit agencies and organizations.

(Authority: 20 U.S.C. 1070a-17)

[47 FR 17788, Apr. 23, 1982, as amended at 58 FR 51519, Oct. 1, 1993]



Sec. 642.3  Who are eligible participants?

    The following are eligible for training under this program:
    (a) Leadership personnel and full and part-time staff members of 
projects funded under the Federal TRIO Programs.
    (b) Individuals preparing for employment as leadership personnel or 
staff in projects funded under the Federal TRIO Programs.

(Authority: 20 U.S.C. 1070a-17)

[47 FR 17788, Apr. 23, 1982, as amended at 58 FR 51519, Oct. 1, 1993; 75 
FR 65771, Oct. 26, 2010]



Sec. 642.4  How long is a project period?

    A project period under the Training program is two years.

(Authority: 20 U.S.C. 1070a-11(b))

[75 FR 65771, Oct. 26, 2010]



Sec. 642.5  What regulations apply?

    The following regulations apply to the Training Program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) in 34 CFR parts 75 (except for Secs. 75.215 through 75.221), 77, 
79, 82, 84, 86, 97, 98, and 99.
    (b) The regulations in this part 642.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1070a-11 and 1070-17)

[47 FR 17788, Apr. 23, 1982, as amended at 58 FR 51519, Oct. 1, 1993. 
Redesignated and amended at 75 FR 65771, Oct. 26, 2010; 79 FR 76102, 
Dec. 19, 2014]



Sec. 642.6  What definitions apply?

    (a) General definitions. The following terms are defined in 2 CFR 
part 200, subpart A, or 34 CFR 77.1:

Applicant
Application
Award
Budget
EDGAR
Equipment
Facilities
Fiscal year
Grant
Grantee
Nonprofit
Private
Project
Project period
Public
Secretary
State
Supplies

    (b) Definitions that apply to this part.
    Act means the Higher Education Act of 1965, as amended.
    Federal TRIO programs means those programs authorized under section 
402A of the Act: the Upward Bound, Talent Search, Student Support 
Services, Educational Opportunity Centers, and Ronald E. McNair 
Postbaccalaureate Achievement programs.
    Foster care youth means youth who are in foster care or who are 
aging out of the foster care system.

[[Page 336]]

    Homeless children and youth means persons defined in section 725 of 
the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a).
    Individual with a disability means a person who has a disability, as 
that term is defined in section 12102 of the Americans with Disabilities 
Act (42 U.S.C. 12101 et seq.).
    Institution of higher education means an educational institution as 
defined in sections 101 and 102 of the Act.
    Leadership personnel means project directors, coordinators, and 
other individuals involved with the supervision and direction of 
projects funded under the Federal TRIO programs.
    Veteran means a person who--
    (1) Served on active duty as a member of the Armed Forces of the 
United States for a period of more than 180 days and was discharged or 
released under conditions other than dishonorable;
    (2) Served on active duty as a member of the Armed Forces of the 
United States and was discharged or released because of a service 
connected disability;
    (3) Was a member of a reserve component of the Armed Forces of the 
United States and was called to active duty for a period of more than 30 
days; or
    (4) Was a member of a reserve component of the Armed Forces of the 
United States who served on active duty in support of a contingency 
operation (as that term is defined in section 101(a)(13) of title 10, 
United States Code) on or after September 11, 2001.

(Authority: 20 U.S.C. 1001 et seq., 1070a-11, 1070(b), 1088, and 1141)

[47 FR 17788, Apr. 23, 1982, as amended at 54 FR 7737, Feb. 22, 1989; 57 
FR 9005, Mar. 13, 1992; 58 FR 51519, Oct. 1, 1993; 75 FR 65771, Oct. 26, 
2010; 79 FR 76102, Dec. 19, 2014]



Sec. 642.7  How many applications may an eligible applicant submit?

    An applicant may submit more than one application for Training 
grants as long as each application describes a project that addresses a 
different absolute priority from Sec. 642.24 that is designated in the 
Federal Register notice inviting applications.

(Authority: 20 U.S.C. 1221e-3)

[75 FR 65771, Oct. 26, 2010]



   Subpart B_What Types of Projects and Activities Does the Secretary 
                       Assist Under This Program?

    Source: 75 FR 65771, Oct. 26, 2010, unless otherwise noted.



Sec. 642.10  What types of projects does the Secretary assist?

    The Secretary assists projects that train the leadership personnel 
and staff of projects funded under the Federal TRIO Programs to enable 
them to operate those projects more effectively.

(Authority: 20 U.S.C. 1070a-17)



Sec. 642.11  What activities does the Secretary assist?

    (a) Each year, one or more Training Program projects must provide 
training for new project directors.
    (b) Each year, one or more Training Program projects must offer 
training covering the following topics:
    (1) The legislative and regulatory requirements for operating 
projects funded under the Federal TRIO programs.
    (2) Assisting students to receive adequate financial aid from 
programs assisted under title IV of the Act and from other programs.
    (3) The design and operation of model programs for projects funded 
under the Federal TRIO programs.
    (4) The use of appropriate educational technology in the operation 
of projects funded under the Federal TRIO programs.
    (5) Strategies for recruiting and serving hard-to-reach populations, 
including students who are limited English proficient, students from 
groups that are traditionally underrepresented in postsecondary 
education, students who are individuals with disabilities, students who 
are homeless children and youths, students who are foster care youth, or 
other disconnected students.

(Authority: 20 U.S.C. 1070a-17)



Sec. 642.12  What activities may a project conduct?

    A Training program project may include on-site training, on-line 
training, conferences, internships, seminars, workshops, and the 
publication of

[[Page 337]]

manuals designed to improve the operations of Federal TRIO program 
projects.

(Authority: 20 U.S.C. 1070a-17(b))



             Subpart C_How Does the Secretary Make a Grant?

    Source: Redesignated at 75 FR 65772, Oct. 26, 2010, unless otherwise 
noted.



Sec. 642.20  How does the Secretary evaluate an application for a
new award?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec. 642.21.
    (1) The Secretary awards up to 75 points for these criteria.
    (2) The maximum possible score for each complete criterion is 
indicated in the parentheses next to the heading of that criterion.
    (b) In addition, for an applicant who is conducting a Training 
program in the fiscal year immediately prior to the fiscal year for 
which the applicant is applying, the Secretary evaluates the applicant's 
prior experience (PE) of high quality service delivery, as provided in 
Sec. 642.22, based on the applicant's performance during the first 
project year of that expiring Training program grant.
    (c) The Secretary selects applications for funding within each 
specific absolute priority established for the competition in rank order 
on the basis of the score received by the application in the peer review 
process.
    (d) Within each specific absolute priority, if there are 
insufficient funds to fund all applications at the next peer review 
score, the Secretary adds the PE points awarded under Sec. 642.22 to the 
peer review score to determine an adjusted total score for those 
applications. The Secretary makes awards at the next peer review score 
to the applications that have the highest total adjusted score.
    (e) In the event a tie score still exists, the Secretary will select 
for funding the applicant that has the greatest capacity to provide 
training to eligible participants in all regions of the Nation, 
consistent with Sec. 642.23.

(Authority: 20 U.S.C. 1070d, 1070d-1d)

[47 FR 17788, Apr. 23, 1982.Redesignated and amended at 75 FR 65772, 
Oct. 26, 2010]



Sec. 642.21  What selection criteria does the Secretary use?

    The Secretary uses the criteria in paragraphs (a) through (f) of 
this section to evaluate applications:
    (a) Plan of operation. (20 points) (1) The Secretary reviews each 
application for information that shows the quality of the plan of 
operation for the project.
    (2) The Secretary looks for information that shows--
    (i) High quality in the design of the project;
    (ii) An effective plan of management that insures proper and 
efficient administration of the project;
    (iii) A clear description of how the objectives of the project 
relate to the purpose of the program;
    (iv) The way the applicant plans to use its resources and personnel 
to achieve each objective; and
    (v) A clear description of how the applicant will provide equal 
access and treatment for eligible project participants who are members 
of groups that have been traditionally underrepresented, such as--
    (A) Members of racial or ethnic minority groups;
    (B) Women;
    (C) Individuals with disabilities; and
    (D) The elderly.
    (b) Quality of key personnel. (20 points) (1) The Secretary reviews 
each application for information that shows the qualifications of the 
key personnel the applicant plans to use on the project.
    (2) The Secretary looks for information that shows--
    (i) The qualifications of the project director;
    (ii) The qualifications of each of the other key personnel to be 
used in the project;
    (iii) The time that each person referred to in paragraphs (b)(2)(i) 
and (ii) of this section plans to commit to the project; and
    (iv) The extent to which the applicant, as part of its 
nondiscriminatory

[[Page 338]]

employment practices, encourages applications for employment from 
persons who are members of groups that have been traditionally 
underrepresented, such as--
    (A) Members of racial or ethnic minority groups;
    (B) Women;
    (C) Individuals with disabilities; and
    (D) The elderly.
    (3) To determine the qualifications of a person, the Secretary 
considers evidence of past experience and training, in fields related to 
the objectives of the project, as well as other information that the 
applicant provides.
    (c) Budget and cost effectiveness. (10 points) (1) The Secretary 
reviews each application for information that shows that the project has 
an adequate budget and is cost effective.
    (2) The Secretary looks for information that shows--
    (i) The budget for the project is adequate to support the project 
activities; and
    (ii) Costs are reasonable in relation to the objectives of the 
project.
    (d) Evaluation plan. (10 points) (1) The Secretary reviews each 
application for information that shows the quality of the evaluation 
plan for the project.
    (2) The Secretary looks for information that shows methods of 
evaluation that are appropriate for the project and, to the extent 
possible, are objective and produce data that are quantifiable.
    (e) Adequacy of resources. (15 points)
    (1) The Secretary reviews each application for information that 
shows that the applicant plans to devote adequate resources to the 
project.
    (2) The Secretary looks for information that shows--
    (i) The facilities that the applicant plans to use are adequate; and
    (ii) The equipment and supplies that the applicant plans to use are 
adequate.

(Approved by the Office of Management and Budget under control number 
1840--NEW1)

(Authority: 20 U.S.C. 1070a-11 and 1070a-17)

[47 FR 17788, Apr. 23, 1982, as amended at 58 FR 51519, Oct. 1, 1993. 
Redesignated and amended at 75 FR 65772, Oct. 26, 2010]

    Effective Date Note: At 58 FR 51519, Oct. 1, 1993, 
Sec. 642.31(f)(2)(i) was amended by removing ``Special Programs'' and 
adding ``Federal TRIO Programs'' in their place, and (f)(2)(iii) was 
revised. These paragraphs contain information collection and 
recordkeeping requirements and will not become effective until approval 
has been given by the Office of Management and Budget.



Sec. 642.22  How does the Secretary evaluate prior experience?

    (a) In the case of an application described in Sec. 642.20(b), the 
Secretary--
    (1) Evaluates the applicant's performance under its expiring 
Training program grant;
    (2) To determine the number of PE points to be awarded, uses the 
approved project objectives for the applicant's expiring Training 
program grant and the information the applicant submitted in its annual 
performance report (APR); and
    (3) May adjust a calculated PE score or decide not to award PE 
points if other information such as audit reports, site visit reports, 
and project evaluation reports indicate the APR data used to calculate 
PE are incorrect.
    (b)(1) The Secretary may add from 1 to 15 points to the point score 
obtained on the basis of the selection criteria in Sec. 642.21, based on 
the applicant's success in meeting the administrative requirements and 
programmatic objectives of paragraph (e) of this section.
    (2) The maximum possible score for each criterion is indicated in 
the parentheses preceding the criterion.
    (c) The Secretary awards no PE points for a given year to an 
applicant that does not serve at least 90 percent of the approved number 
of participants. For purposes of this section, the approved number of 
participants is the total number of participants the project would serve 
as agreed upon by the grantee and the Secretary.
    (d) For the criterion specified in paragraph (e)(1) of this section 
(Number of participants), the Secretary awards no PE points if the 
applicant did not serve at least the approved number of participants.
    (e) The Secretary evaluates the applicant's PE on the basis of the 
following criteria:

[[Page 339]]

    (1) (4 points) Number of participants. Whether the applicant 
provided training to no less than the approved number of participants.
    (2) Training objectives. Whether the applicant met or exceeded its 
objectives for:
    (i) (4 points) Assisting the participants in developing increased 
qualifications and skills to meet the needs of disadvantaged students.
    (ii) (4 points) Providing the participants with an increased 
knowledge and understanding of the Federal TRIO programs.
    (3) (3 points) Administrative requirements. Whether the applicant 
met all the administrative requirements under the terms of the expiring 
grant, including recordkeeping, reporting, and financial accountability.

(Approved by the Office of Management and Budget under control number 
1894-0003)

(Authority: 20 U.S.C. 1070a-11)

[Redesignated and amended at 75 FR 65772, Oct. 26, 2010]



Sec. 642.23  How does the Secretary ensure geographic distribution
of awards?

    The Secretary, to the greatest extent possible, awards grants for 
Training Program projects that will be carried out in all of the regions 
of the Nation in order to assure accessibility to prospective training 
participants.

(Authority: 20 U.S.C. 1070a-17)

[Redesignated at 75 FR 65772, Oct. 26, 2010]



Sec. 642.24  What are the Secretary's priorities for funding?

    (a) The Secretary, after consultation with regional and State 
professional associations of persons having special knowledge with 
respect to the training of Special Programs personnel, may select one or 
more of the following subjects as training priorities:
    (1) Basic skills instruction in reading, mathematics, written and 
oral communication, and study skills.
    (2) Counseling.
    (3) Assessment of student needs.
    (4) Academic tests and testing.
    (5) College and university admissions policies and procedures.
    (6) Cultural enrichment programs.
    (7) Career planning.
    (8) Tutorial programs.
    (9) Retention and graduation strategies.
    (10) Strategies for preparing students for doctoral studies.
    (11) Project evaluation.
    (12) Budget management.
    (13) Personnel management.
    (14) Reporting student and project performance.
    (15) Coordinating project activities with other available resources 
and activities.
    (16) General project management for new directors.
    (17) Statutory and regulatory requirements for the operation of 
projects funded under the Federal TRIO programs.
    (18) Assisting students in receiving adequate financial aid from 
programs assisted under title IV of the Act and from other programs.
    (19) The design and operation of model programs for projects funded 
under the Federal TRIO programs.
    (20) The use of appropriate educational technology in the operation 
of projects funded under the Federal TRIO programs.
    (21) Strategies for recruiting and serving hard to reach 
populations, including students who are limited English proficient, 
students from groups that are traditionally underrepresented in 
postsecondary education, students who are individuals with disabilities, 
students who are homeless children and youths, students who are foster 
care youth, or other disconnected students.
    (b) The Secretary annually funds training on the subjects listed in 
paragraphs (a)(17), (a)(18), (a)(19), (a)(20), and (a)(21) of this 
section.
    (c) The Secretary designates one or more of the training priorities 
from paragraph (a) of this section in the Federal Register notice 
inviting applications for the competition.

(Authority: 20 U.S.C. 1070a-11 and 1070a-17)

[Redesignated and amended at 75 FR 65773, Oct. 26, 2010]



Sec. 642.25  What is the review process for unsuccessful applicants?

    (a) Technical or administrative error for applications not reviewed. 
(1) An applicant whose grant application was not

[[Page 340]]

evaluated during the competition may request that the Secretary review 
the application if--
    (i) The applicant has met all of the application submission 
requirements included in the Federal Register notice inviting 
applications and the other published application materials for the 
competition; and
    (ii) The applicant provides evidence demonstrating that the 
Department or an agent of the Department made a technical or 
administrative error in the processing of the submitted application.
    (2) A technical or administrative error in the processing of an 
application includes--
    (i) A problem with the system for the electronic submission of 
applications that was not addressed in accordance with the procedures 
included in the Federal Register notice inviting applications for the 
competition;
    (ii) An error in determining an applicant's eligibility for funding 
consideration, which may include, but is not limited to--
    (A) An incorrect conclusion that the application was submitted by an 
ineligible applicant;
    (B) An incorrect conclusion that the application exceeded the 
published page limit;
    (C) An incorrect conclusion that the applicant requested funding 
greater than the published maximum award; or
    (D) An incorrect conclusion that the application was missing 
critical sections of the application; and
    (iii) Any other mishandling of the application that resulted in an 
otherwise eligible application not being reviewed during the 
competition.
    (3)(i) If the Secretary determines that the Department or the 
Department's agent made a technical or administrative error, the 
Secretary has the application evaluated and scored.
    (ii) If the total score assigned the application would have resulted 
in funding of the application during the competition and the program has 
funds available, the Secretary funds the application prior to the re-
ranking of applications based on the second peer review of applications 
described in paragraph (c) of this section.
    (b) Administrative or scoring error for applications that were 
reviewed. (1) An applicant that was not selected for funding during a 
competition may request that the Secretary conduct a second review of 
the application if--
    (i) The applicant provides evidence demonstrating that the 
Department, an agent of the Department, or a peer reviewer made an 
administrative or scoring error in the review of its application; and
    (ii) The final score assigned to the application is within the 
funding band described in paragraph (d) of this section.
    (2) An administrative error relates to either the PE points or the 
scores assigned to the application by the peer reviewers.
    (i) For PE points, an administrative error includes mathematical 
errors made by the Department or the Department's agent in the 
calculation of the PE points or a failure to correctly add the earned PE 
points to the peer reviewer score.
    (ii) For the peer review score, an administrative error is applying 
the wrong peer reviewer scores to an application.
    (3)(i) A scoring error relates only to the peer review process and 
includes errors caused by a reviewer who, in assigning points--
    (A) Uses criteria not required by the applicable law or program 
regulations, the Federal Register notice inviting applications, the 
other published application materials for the competition, or guidance 
provided to the peer reviewers by the Secretary; or
    (B) Does not consider relevant information included in the 
appropriate section of the application.
    (ii) The term ``scoring error'' does not include--
    (A) A peer reviewer's appropriate use of his or her professional 
judgment in evaluating and scoring an application;
    (B) Any situation in which the applicant did not include information 
needed to evaluate its response to a specific selection criterion in the 
appropriate section of the application as stipulated in the Federal 
Register notice inviting applications or the other published application 
materials for the competition; or

[[Page 341]]

    (C) Any error by the applicant.
    (c) Procedures for the second review. (1) To ensure the timely 
awarding of grants under the competition, the Secretary sets aside a 
percentage of the funds allotted for the competition to be awarded after 
the second review is completed.
    (2) After the competition, the Secretary makes new awards in rank 
order as described in Sec. 642.20 based on the available funds for the 
competition minus the funds set aside for the second review.
    (3) After the Secretary issues a notification of grant award to 
successful applicants, the Secretary notifies each unsuccessful 
applicant in writing as to the status of its application and the funding 
band for the second review and provides copies of the peer reviewers' 
evaluations of the applicant's application and the applicant's PE score, 
if applicable.
    (4) An applicant that was not selected for funding following the 
competition as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section, may request a second review if the 
applicant demonstrates that the Department, the Department's agent, or a 
peer reviewer made an administrative or scoring error as provided in 
paragraph (b) of this section.
    (5) An applicant whose application was not funded after the first 
review as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section has at least 15 calendar days after 
receiving notification that its application was not funded in which to 
submit a written request for a second review in accordance with the 
instructions and due date provided in the Secretary's written 
notification.
    (6) An applicant's written request for a second review must be 
received by the Department or submitted electronically to a designated 
e-mail or Web address by the due date and time established by the 
Secretary.
    (7) If the Secretary determines that the Department or the 
Department's agent made an administrative error that relates to the PE 
points awarded, as described in paragraph (b)(2)(i) of this section, the 
Secretary adjusts the applicant's PE score to reflect the correct number 
of PE points. If the adjusted score assigned to the application would 
have resulted in funding of the application during the competition and 
the program has funds available, the Secretary funds the application 
prior to the re-ranking of applications based on the second peer review 
of applications described in paragraph (c)(9) of this section.
    (8) If the Secretary determines that the Department, the 
Department's agent or the peer reviewer made an administrative error 
that relates to the peer reviewers' score(s), as described in paragraph 
(b)(2)(ii) of this section, the Secretary adjusts the applicant's peer 
reviewers' score(s) to correct the error. If the adjusted score assigned 
to the application would have resulted in funding of the application 
during the competition and the program has funds available, the 
Secretary funds the application prior to the re-ranking of applications 
based on the second peer review of applications described in paragraph 
(c)(9) of this section.
    (9) If the Secretary determines that a peer reviewer made a scoring 
error, as described in paragraph (b)(3) of this section, the Secretary 
convenes a second panel of peer reviewers in accordance with the 
requirements in section 402A(c)(8)(C)(iv)(III) of the HEA.
    (10) The average of the peer reviewers' scores from the second peer 
review are used in the second ranking of applications. The average score 
obtained from the second peer review panel is the final peer reviewer 
score for the application and will be used even if the second review 
results in a lower score for the application than that obtained in the 
initial review.
    (11) For applications in the funding band, the Secretary funds these 
applications in rank order based on adjusted scores and the available 
funds that have been set aside for the second review of applications.
    (d) Process for establishing a funding band. (1) For each 
competition, the Secretary establishes a funding band for the second 
review of applications.
    (2) The Secretary establishes the funding band for each competition

[[Page 342]]

based on the amount of funds the Secretary has set aside for the second 
review of applications.
    (3) The funding band is composed of those applications--
    (i) With a rank-order score before the second review that is below 
the lowest score of applications funded after the first review; and
    (ii) That would be funded if the Secretary had 150 percent of the 
funds that were set aside for the second review of applications for the 
competition.
    (e) Final decision. (1) The Secretary's determination of whether the 
applicant has met the requirements for a second review and the 
Secretary's decision on re-scoring of an application are final and not 
subject to further appeal or challenge.
    (2) An application that scored below the established funding band 
for the competition is not eligible for a second review.

(Approved by the Office of Management and Budget under control number 
1840-NEW1)

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65773, Oct. 26, 2010]



Sec. 642.26  How does the Secretary set the amount of a grant?

    (a) The Secretary sets the amount of a grant on the basis of--
    (1) 34 CFR 75.232 and 75.233, for a new grant; and
    (2) 34 CFR 75.253, for the second year of a project period.
    (b) The Secretary uses the available funds to set the amount of the 
grant at the lesser of--
    (1) 170,000; or
    (2) The amount requested by the applicant.

[75 FR 65774, Oct. 26, 2010]



           Subpart D_What Conditions Must Be Met by a Grantee?

    Source: Redesignated at 75 FR 65772, Oct. 26, 2010, unless otherwise 
noted.



Sec. 642.30  What are allowable costs?

    Allowable project costs may include the following costs reasonably 
related to carrying out a Training Program project:
    (a) Rental of space, if space is not available at a sponsoring 
institution and if the space is not owned by a sponsoring institution.
    (b) Printing.
    (c) Postage.
    (d) Purchase or rental of equipment.
    (e) Consumable supplies.
    (f) Transportation costs for participants and training staff.
    (g) Lodging and subsistence costs for participants and training 
staff.
    (h) Transportation costs, lodging and subsistence costs and fees for 
consultants, if any.
    (i) Honorariums for speakers who are not members of the staff or 
consultants to the project.
    (j) Other costs that are specifically approved in advance and in 
writing by the Secretary.

(Authority: 20 U.S.C. 1070a-11 and 1070a-17)

[47 FR 17788, Apr. 23, 1982. Redesignated and amended at 75 FR 65774, 
Oct. 26, 2010]



Sec. 642.31  What are unallowable costs?

    Costs that may not be charged against a grant under this program 
include the following:
    (a) Research not directly related to the evaluation or improvement 
of the project.
    (b) Construction, renovation, or remodeling of any facilities.
    (c) Stipends, tuition fees, and other direct financial assistance to 
trainees other than those participating in internships.

(Authority: 20 U.S.C. 1070a-11 and 1070a-17)

[47 FR 17788, Apr. 23, 1982. Redesignated and amended at 75 FR 65774, 
Oct. 26, 2010]



PART 643_TALENT SEARCH--Table of Contents



                            Subpart A_General

Sec.
643.1  What is the Talent Search program?
643.2  Who is eligible for a grant?
643.3  Who is eligible to participate in a project?
643.4  What services does a project provide?
643.5  How long is a project period?
643.6  What regulations apply?
643.7  What definitions apply?

[[Page 343]]

               Subpart B_How Does One Apply for an Award?

643.10  How many applications may an eligible applicant submit?
643.11  What assurances must an applicant submit?

             Subpart C_How Does the Secretary Make a Grant?

643.20  How does the Secretary decide which new grants to make?
643.21  What selection criteria does the Secretary use?
643.22  How does the Secretary evaluate prior experience?
643.23  How does the Secretary set the amount of a grant?
643.24  What is the review process for unsuccessful applicants?

           Subpart D_What Conditions Must Be Met by a Grantee?

643.30  What are allowable costs?
643.31  What are unallowable costs?
643.32  What other requirements must a grantee meet?

    Authority: 20 U.S.C. 1070a-11 and 1070a-12, unless otherwise noted.

    Source: 58 FR 59145, Nov. 5, 1993, unless otherwise noted.



                            Subpart A_General



Sec. 643.1  What is the Talent Search program?

    The Talent Search program provides grants for projects designed to--
    (a) Identify qualified youths with potential for education at the 
postsecondary level and encourage them to complete secondary school and 
undertake a program of postsecondary education;
    (b) Publicize the availability of, and facilitate the application 
for, student financial assistance for persons who seek to pursue 
postsecondary education; and
    (c) Encourage persons who have not completed education programs at 
the secondary or postsecondary level to enter or reenter and complete 
these programs.

(Authority: 20 U.S.C. 1070a-12)

[58 FR 59145, Nov. 5, 1993, as amended at 75 FR 65774, Oct. 26, 2010]



Sec. 643.2  Who is eligible for a grant?

    The following entities are eligible for a grant to carry out a 
Talent Search project:
    (a) An institution of higher education.
    (b) A public or private agency or organization, including a 
community-based organization with experience in serving disadvantaged 
youth.
    (c) A secondary school.
    (d) A combination of the types of institutions, agencies, and 
organizations described in paragraphs (a), (b), and (c) of this section.

(Authority: 20 U.S.C. 1070a-11)

[58 FR 59145, Nov. 5, 1993, as amended at 75 FR 65774, Oct. 26, 2010]



Sec. 643.3  Who is eligible to participate in a project?

    (a) An individual is eligible to participate in a Talent Search 
project if the individual meets all the following requirements:
    (1)(i) Is a citizen or national of the United States;
    (ii) Is a permanent resident of the United States;
    (iii) Is in the United States for other than a temporary purpose and 
provides evidence from the Immigration and Naturalization Service of his 
or her intent to become a permanent resident;
    (iv) Is a permanent resident of Guam, the Northern Mariana Islands, 
or the Trust Territory of the Pacific Islands (Palau); or
    (v) Is a resident of the Freely Associated States--the Federated 
States of Micronesia or the Republic of the Marshall Islands.
    (2)(i) Has completed five years of elementary education or is at 
least 11 years of age but not more than 27 years of age.
    (ii) However, an individual who is more than 27 years of age may 
participate in a Talent Search project if the individual cannot be 
appropriately served by an Educational Opportunity Center project under 
34 CFR part 644 and if the individual's participation would not dilute 
the Talent Search project's services to individuals described in 
paragraph (a)(2)(i) of this section.

[[Page 344]]

    (3)(i) Is enrolled in or has dropped out of any grade from six 
through 12, or has graduated from secondary school, ; or
    (ii) Has undertaken, but is not presently enrolled in, a program of 
postsecondary education,
    (b) A veteran as defined in Sec. 643.6(b), regardless of age, is 
eligible to participate in a Talent Search project if he or she 
satisfies the eligibility requirements in paragraph (a) of this section 
other than the age requirement in paragraph (a)(2).

(Authority: 20 U.S.C. 1070a-11 and 1070a-12)

[58 FR 59145, Nov. 5, 1993, as amended at 75 FR 65775, Oct. 26, 2010]



Sec. 643.4  What services does a project provide?

    (a) A Talent Search project must provide the following services:
    (1) Connections for participants to high quality academic tutoring 
services to enable the participants to complete secondary or 
postsecondary courses.
    (2) Advice and assistance in secondary school course selection and, 
if applicable, initial postsecondary course selection.
    (3) Assistance in preparing for college entrance examinations and 
completing college admission applications.
    (4)(i) Information on the full range of Federal student financial 
aid programs and benefits (including Federal Pell Grant awards and loan 
forgiveness) and on resources for locating public and private 
scholarships; and
    (ii) Assistance in completing financial aid applications, including 
the Free Application for Federal Student Aid (FAFSA).
    (5) Guidance on and assistance in--
    (i) Secondary school reentry;
    (ii) Alternative education programs for secondary school dropouts 
that lead to the receipt of a regular secondary school diploma;
    (iii) Entry into general educational development (GED) programs; or
    (iv) Entry into postsecondary education.
    (6) Connections for participants to education or counseling services 
designed to improve the financial and economic literacy of the 
participants or the participants' parents, including financial planning 
for postsecondary education.
    (b) A Talent Search project may provide services such as the 
following:
    (1) Academic tutoring, which may include instruction in reading, 
writing, study skills, mathematics, science, and other subjects.
    (2) Personal and career counseling or activities.
    (3) Information and activities designed to acquaint youth with the 
range of career options available to the youth.
    (4) Exposure to the campuses of institutions of higher education, as 
well as to cultural events, academic programs, and other sites or 
activities not usually available to disadvantaged youth.
    (5) Workshops and counseling for families of participants served.
    (6) Mentoring programs involving elementary or secondary school 
teachers or counselors, faculty members at institutions of higher 
education, students, or any combination of these persons.
    (7) Programs and activities as described in this section that are 
specially designed for participants who are limited English proficient, 
from groups that are traditionally underrepresented in postsecondary 
education, individuals with disabilities, homeless children and youths, 
foster care youth, or other disconnected participants.
    (8) Other activities designed to meet the purposes of the Talent 
Search Program in Sec. 643.1.

(Authority: 20 U.S.C. 1070a-12)

[75 FR 65775, Oct. 26, 2010]



Sec. 643.5  How long is a project period?

    A project period under the Talent Search program is five years.

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65775, Oct. 26, 2010]



Sec. 643.6  What regulations apply?

    The following regulations apply to the Talent Search program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) in 34 CFR parts 75 (except for Secs. 75.215 through 75.221), 77, 
79, 82, 84, 86, 97, 98, and 99.
    (b) The regulations in this part 643.

[[Page 345]]

    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Debarment and 
Suspension (Nonprocurement)), as adopted at 2 CFR part 3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1070a-11 and 1070a-12)

[58 FR 59145, Nov. 5, 1993, as amended at 75 FR 65775, Oct. 26, 2010; 79 
FR 76102, Dec. 19, 2014]



Sec. 643.7  What definitions apply?

    (a) General definitions. The following terms used in this part are 
defined in 2 CFR part 200, subpart A, or in 34 CFR 77.1:

Applicant
Application
Budget
Budget period
EDGAR
Equipment
Facilities
Fiscal year
Grant
Grantee
Private
Project
Project period
Public
Secretary
Supplies

    (b) Other definitions. The following definitions also apply to this 
part:
    Different population means a group of individuals that an eligible 
entity desires to serve through an application for a grant under the 
Talent Search program and that--
    (1) Is separate and distinct from any other population that the 
entity has applied for a grant to serve; or
    (2) While sharing some of the same needs as another population that 
the eligible entity has applied for a grant to serve, has distinct needs 
for specialized services.
    Financial and economic literacy means knowledge about personal 
financial decision-making, which may include but is not limited to 
knowledge about--
    (1) Personal and family budget planning;
    (2) Understanding credit building principles to meet long-term and 
short-term goals (e.g., loan to debt ratio, credit scoring, negative 
impacts on credit scores);
    (3) Cost planning for postsecondary or postbaccalaureate education 
(e.g., spending, saving, personal budgeting);
    (4) College cost of attendance (e.g., public vs. private, tuition 
vs. fees, personal costs);
    (5) Financial assistance (e.g., searches, application processes, and 
differences between private and government loans, assistanceships); and
    (6) Assistance in completing the Free Application for Federal 
Student Aid (FAFSA).
    Foster care youth means youth who are in foster care or are aging 
out of the foster care system.
    HEA means the Higher Education Act of 1965, as amended.
    Homeless children and youth means persons defined in section 725 of 
the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a).
    Individual with a disability means a person who has a disability, as 
that term is defined in section 12102 of the Americans with Disabilities 
Act (42 U.S.C. 12101 et seq.).
    Institution of higher education means an educational institution as 
defined in sections 101 and 102 of the HEA.
    Low-income individual means an individual whose family's taxable 
income did not exceed 150 percent of the poverty level amount in the 
calendar year preceding the year in which the individual initially 
participated in the project. The poverty level amount is determined by 
using criteria of poverty established by the Bureau of the Census of the 
U.S. Department of Commerce.
    Participant means an individual who--
    (1) Is determined to be eligible to participate in the project under 
Sec. 643.3; and
    (2) Receives project services designed for his or her age or grade 
level.
    Postsecondary education means education beyond the secondary school 
level.
    Potential first-generation college student means--
    (1) An individual neither of whose natural or adoptive parents 
received a baccalaureate degree;
    (2) An individual who, prior to the age of 18, regularly resided 
with and received support from only one parent and whose supporting 
parent did not receive a baccalaureate degree; or
    (3) An individual who, prior to the age of 18, did not regularly 
reside with or receive support from a natural or an adoptive parent.

[[Page 346]]

    Regular secondary school diploma means a level attained by 
individuals who meet or exceed the coursework and performance standards 
for high school completion established by the individual's State.
    Rigorous secondary school program of study means a program of study 
that is--
    (1) Established by a state educational agency (SEA) or local 
educational agency (LEA) and recognized as a rigorous secondary school 
program of study by the Secretary through the process described in 34 
CFR 691.16(a) through 691.16(c) for the Academic Competitiveness Grant 
(ACG) Program;
    (2) An advanced or honors secondary school program established by 
States and in existence for the 2004-2005 school year or later school 
years;
    (3) Any secondary school program in which a student successfully 
completes at a minimum the following courses:
    (i) Four years of English.
    (ii) Three years of mathematics, including algebra I and a higher-
level class such as algebra II, geometry, or data analysis and 
statistics.
    (iii) Three years of science, including one year each of at least 
two of the following courses: Biology, chemistry, and physics.
    (iv) Three years of social studies.
    (v) One year of a language other than English;
    (4) A secondary school program identified by a State-level 
partnership that is recognized by the State Scholars Initiative of the 
Western Interstate Commission for Higher Education (WICHE), Boulder, 
Colorado;
    (5) Any secondary school program for a student who completes at 
least two courses from an International Baccalaureate Diploma Program 
sponsored by the International Baccalaureate Organization, Geneva, 
Switzerland, and receives a score of a ``4'' or higher on the 
examinations for at least two of those courses; or
    (6) Any secondary school program for a student who completes at 
least two Advanced Placement courses and receives a score of ``3'' or 
higher on the College Board's Advanced Placement Program Exams for at 
least two of those courses.
    Secondary school means a school that provides secondary education as 
determined under State law, except that it does not include education 
beyond grade 12.
    Target area means a geographic area served by a Talent Search 
project.
    Target school means a school designated by the applicant as a focus 
of project services.
    Veteran means a person who--
    (1) Served on active duty as a member of the Armed Forces of the 
United States for a period of more than 180 days and was discharged or 
released under conditions other than dishonorable;
    (2) Served on active duty as a member of the Armed Forces of the 
United States and was discharged or released because of a service 
connected disability;
    (3) Was a member of a reserve component of the Armed Forces of the 
United States and was called to active duty for a period of more than 30 
days; or
    (4) Was a member of a reserve component of the Armed Forces of the 
United States who served on active duty in support of a contingency 
operation (as that term is defined in section 101(a)(13) of title 10, 
United States Code) on or after September 11, 2001.

(Authority: 20 U.S.C. 1070a-11, 1070a-12 and 1141)

[58 FR 59145, Nov. 5, 1993, as amended at 75 FR 65775, Oct. 26, 2010; 79 
FR 76102, Dec. 19, 2014]



               Subpart B_How Does One Apply for an Award?



Sec. 643.10  How many applications may an eligible applicant submit?

    (a) An applicant may submit more than one application for Talent 
Search grants as long as each application describes a project that 
serves a different target area or target schools, or another designated 
different population.
    (b) For each grant competition, the Secretary designates, in the 
Federal Register notice inviting applications and the other published 
application materials for the competition, the different populations for 
which an eligible

[[Page 347]]

entity may submit a separate application.

(Authority: 20 U.S.C. 1070a-12; 1221e-3)

[75 FR 65776, Oct. 26, 2010]



Sec. 643.11  What assurance must an applicant submit?

    An applicant must submit, as part of its application, assurances 
that--
    (a) At least two-thirds of the individuals it serves under its 
proposed Talent Search project will be low-income individuals who are 
potential first-generation college students;
    (b) The project will collaborate with other Federal TRIO projects, 
GEAR UP projects, or programs serving similar populations that are 
serving the same target schools or target area in order to minimize the 
duplication of services and promote collaborations so that more students 
can be served.
    (c) The project will be located in a setting or settings accessible 
to the individuals proposed to be served by the project; and
    (d) If the applicant is an institution of higher education, it will 
not use the project as a part of its recruitment program.

(Authority: 20 U.S.C. 1070a-12)

[58 FR 59145, Nov. 5, 1993. Redesignated and amended at 75 FR 65776, 
Oct. 26, 2010]



             Subpart C_How Does the Secretary Make a Grant?



Sec. 643.20  How does the Secretary decide which new grants to make?

    (a) The Secretary evaluates an application for a new grant as 
follows:
    (1)(i) The Secretary evaluates the application on the basis of the 
selection criteria in Sec. 643.21.
    (ii) The maximum score for all the criteria in Sec. 643.21 is 100 
points. The maximum score for each criterion is indicated in parentheses 
with the criterion.
    (2)(i) For an application for a new grant to continue to serve 
substantially the same populations and campuses that the applicant is 
serving under an expiring project, the Secretary evaluates the 
applicant's prior experience of high quality service delivery under the 
expiring project on the basis of the outcome criteria in Sec. 643.22.
    (ii) The maximum total score for all the criteria in Sec. 643.22 is 
15 points. The maximum score for each criterion is indicated in 
parentheses with the criterion.
    (iii) The Secretary evaluates the PE of an applicant for each of the 
three project years that the Secretary designates in the Federal 
Register notice inviting applications and the other published 
application materials for the competition.
    (iv) An applicant may earn up to 15 PE points for each of the 
designated project years for which annual performance report data are 
available.
    (v) The final PE score is the average of the scores for the three 
project years assessed.
    (b) The Secretary makes new grants in rank order on the basis of the 
applications' total scores under paragraphs (a)(1) and (a)(2) of this 
section.
    (c) If the total scores of two or more applications are the same and 
there are insufficient funds for these applications after the approval 
of higher-ranked applications, the Secretary uses the remaining funds to 
serve geographic areas and eligible populations that have been 
underserved by the Talent Search program.
    (d) The Secretary does not make a new grant to an applicant if the 
applicant's prior project involved the fraudulent use of program funds.

(Authority: 20 U.S.C. 1070a-11, 1070a-12, and 1144a(a))

[58 FR 59145, Nov. 5, 1993, as amended at 75 FR 65776, Oct. 26, 2010]



Sec. 643.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an application 
for a new grant:
    (a) Need for the project (24 points). The Secretary evaluates the 
need for a Talent Search project in the proposed target area on the 
basis of the extent to which the application contains clear evidence of 
the following:
    (1) (4 points) A high number or high percentage of the following--
    (i) Low-income families residing in the target area; or

[[Page 348]]

    (ii) Students attending the target schools who are eligible for free 
or reduced priced lunch as described in sections 9(b)(1) and 17(c)(4) of 
the Richard B. Russell National School Lunch Act.
    (2) (2 points) Low rates of high school persistence among 
individuals in the target schools as evidenced by the annual student 
persistence rates in the proposed target schools for the most recent 
year for which data are available.
    (3) (4 points) Low rates of students in the target school or schools 
who graduate high school with a regular secondary school diploma in the 
standard number of years for the most recent year for which data are 
available.
    (4) (6 points) Low postsecondary enrollment and completion rates 
among individuals in the target area and schools as evidenced by--
    (i) Low rates of enrollment in programs of postsecondary education 
by graduates of the target schools in the most recent year for which 
data are available; and
    (ii) A high number or high percentage of individuals residing in the 
target area with education completion levels below the baccalaureate 
degree level.
    (5) (2 points) The extent to which the target secondary schools do 
not offer their students the courses or academic support to complete a 
rigorous secondary school program of study or have low participation or 
low success by low-income or first generation students in such courses.
    (6) (6 points) Other indicators of need for a TS project, including 
low academic achievement and low standardized test scores of students 
enrolled in the target schools, a high ratio of students to school 
counselors in the target schools, and the presence of unaddressed 
academic or socio-economic problems of eligible individuals, including 
foster care youth and homeless children and youth in the target schools 
or the target area.
    (b) Objectives (8 points). The Secretary evaluates the quality of 
the applicant's objectives and proposed targets (percentages) in the 
following areas on the basis of the extent to which they are both 
ambitious, as related to the need data provided under paragraph (a) of 
this section, and attainable, given the project's plan of operation, 
budget, and other resources:
    (1) (2 points) Secondary school persistence.
    (2) (2 points) Secondary school graduation (regular secondary school 
diploma).
    (3) (1 point) Secondary school graduation (rigorous secondary school 
program of study).
    (4) (2 points) Postsecondary education enrollment.
    (5) (1 point) Postsecondary degree attainment.
    (c) Plan of operation (30 points). The Secretary evaluates the 
quality of the applicant's plan of operation on the basis of the 
following:
    (1) (3 points) The plan to inform the residents, schools, and 
community organizations in the target area of the purpose, objectives, 
and services of the project and the eligibility requirements for 
participation in the project.
    (2) (3 points) The plan to identify and select eligible project 
participants.
    (3) (10 points) The plan for providing the services delineated in 
Sec. 643.4 as appropriate based on the project's assessment of each 
participant's need for services.
    (4) (6 points) The plan to work in a coordinated, collaborative, and 
cost-effective manner as part of an overarching college access strategy 
with the target schools or school system and other programs for 
disadvantaged students to provide participants with access to and 
assistance in completing a rigorous secondary school program of study.
    (5) (6 points) The plan, including timelines, personnel, and other 
resources, to ensure the proper and efficient administration of the 
project, including the project's organizational structure; the time 
commitment of key project staff; and financial, personnel, and records 
management.
    (6) (2 points) The plan to follow former participants as they enter, 
continue in, and complete postsecondary education.
    (d) Applicant and community support (16 points). The Secretary 
evaluates the applicant and community support for the proposed project 
on the basis of the extent to which the applicant has

[[Page 349]]

made provision for resources to supplement the grant and enhance the 
project's services, including--
    (1) (8 points) Facilities, equipment, supplies, personnel, and other 
resources committed by the applicant; and
    (2) (8 points) Resources secured through written commitments from 
community partners.
    (i) An applicant that is an institution of higher education must 
include in its application commitments from the target schools and 
community organizations;
    (ii) An applicant that is a secondary school must include in its 
commitments from institutions of higher education, community 
organizations, and, as appropriate, other secondary schools and the 
school district; and
    (iii) An applicant that is a community organization must include in 
its application commitments from the target schools and institutions of 
higher education.
    (e) Quality of personnel (9 points). (1) The Secretary evaluates the 
quality of the personnel the applicant plans to use in the project on 
the basis of the following:
    (i) The qualifications required of the project director.
    (ii) The qualifications required of each of the other personnel to 
be used in the project.
    (iii) The plan to employ personnel who have succeeded in overcoming 
the disadvantages of circumstances like those of the population of the 
target area.
    (2) In evaluating the qualifications of a person, the Secretary 
considers his or her experience and training in fields related to the 
objectives of the project.
    (f) Budget (5 points). The Secretary evaluates the extent to which 
the project budget is reasonable, cost-effective, and adequate to 
support the project.
    (g) Evaluation plan (8 points). The Secretary evaluates the quality 
of the evaluation plan for the project on the basis of the extent to 
which the applicant's methods of evaluation--
    (1) Are appropriate to the project's objectives;
    (2) Provide for the applicant to determine, using specific and 
quantifiable measures, the success of the project in--
    (i) Making progress toward achieving its objectives (a formative 
evaluation); and
    (ii) Achieving its objectives at the end of the project period (a 
summative evaluation); and
    (3) Provide for the disclosure of unanticipated project outcomes, 
using quantifiable measures if appropriate.

(Approved by the Office of Management and Budget under control number 
1840-0065)

(Authority: 20 U.S.C. 1070a-12)

[58 FR 59145, Nov. 5, 1993, as amended at 75 FR 65776, Oct. 26, 2010]



Sec. 643.22  How does the Secretary evaluate prior experience?

    (a) In the case of an application described in Sec. 643.20(a)(2)(i), 
the Secretary--
    (1) Evaluates the applicant's performance under its expiring Talent 
Search project;
    (2) Uses the approved project objectives for the applicant's 
expiring Talent Search grant and the information the applicant submitted 
in its annual performance reports (APRs) to determine the number of PE 
points; and
    (3) May adjust a calculated PE score or decide not to award PE 
points if other information such as audit reports, site visit reports, 
and project evaluation reports indicates the APR data used to calculate 
PE are incorrect.
    (b) The Secretary does not award PE points for a given year to an 
applicant that does not serve at least 90 percent of the approved number 
of participants. For purposes of this section, the approved number of 
participants is the total number of participants the project would serve 
as agreed upon by the grantee and the Secretary.
    (c) The Secretary does not award any PE points for the criterion 
specified in paragraph (d)(1) of this section (Number of participants) 
if the applicant did not serve at least the approved number of 
participants.
    (d) For purposes of the evaluation of grants awarded after January 
1, 2009, the Secretary evaluates the applicant's PE on the basis of the 
following outcome criteria:

[[Page 350]]

    (1) (3 points) Number of participants. Whether the applicant 
provided services to no less than the approved number of participants.
    (2) (3 points) Secondary school persistence. Whether the applicant 
met or exceeded its objective regarding the continued secondary school 
enrollment of participants.
    (3) (3 points) Secondary school graduation (regular secondary school 
diploma). Whether the applicant met or exceeded its objective regarding 
the graduation of participants served during the project year from 
secondary school with a regular secondary school diploma in the standard 
number of years.
    (4) (1.5 points) Secondary school graduation (rigorous secondary 
school program of study). Whether the applicant met or exceeded its 
objective regarding the graduation of participants served during the 
project year who completed a rigorous secondary school program of study.
    (5) (3 points) Postsecondary enrollment. Whether the applicant met 
or exceeded its objective regarding the participants expected to 
graduate from high school in the school year who enrolled in an 
institution of higher education within the time period specified in the 
approved objective.
    (6) (1.5 points) Postsecondary completion. Whether the applicant met 
or exceeded its objective regarding project participants who enrolled in 
and completed a program of postsecondary education within the number of 
years specified in the approved objective. The applicant may determine 
success in meeting the objective by using a randomly selected sample of 
participants in accordance with the parameters established by the 
Secretary in the Federal Register notice inviting applications or other 
published application materials for the competition.

(Approved by the Office of Management and Budget under control number 
1840--NEW7)

(Authority: 20 U.S.C. 1070a-12)

[75 FR 65777, Oct. 26, 2010]



Sec. 643.23  How does the Secretary set the amount of a grant?

    (a) The Secretary sets the amount of a grant on the basis of--
    (1) 34 CFR 75.232 and 75.233, for new grants; and
    (2) 34 CFR 75.253, for the second and subsequent years of a project 
period.
    (b) If the circumstances described in section 402A(b)(3) of the HEA 
exist, the Secretary uses the available funds to set the amount of the 
grant at the lesser of--
    (1) $200,000; or
    (2) The amount requested by the applicant.

(Approved by the Office of Management and Budget under control number 
1840-0549)

(Authority: 20 U.S.C. 1070a-11)

[58 FR 59145, Nov. 5, 1993, as amended at 75 FR 65778, Oct. 26, 2010]



Sec. 643.24  What is the review process for unsuccessful applicants?

    (a) Technical or administrative error for applications not reviewed. 
(1) An applicant whose grant application was not evaluated during the 
competition may request that the Secretary review the application if--
    (i) The applicant has met all application submission requirements 
included in the Federal Register notice inviting applications and the 
other published application materials for the competition; and
    (ii) The applicant provides evidence demonstrating that the 
Department or an agent of the Department made a technical or 
administrative error in the processing of the submitted application.
    (2) A technical or administrative error in the processing of an 
application includes--
    (i) A problem with the system for the electronic submission of 
applications that was not addressed in accordance with the procedures 
included in the Federal Register notice inviting applications for the 
competition;
    (ii) An error in determining an applicant's eligibility for funding 
consideration, which may include, but is not limited to--
    (A) An incorrect conclusion that the application was submitted by an 
ineligible applicant;
    (B) An incorrect conclusion that the application exceeded the 
published page limit;

[[Page 351]]

    (C) An incorrect conclusion that the applicant requested funding 
greater than the published maximum award; or
    (D) An incorrect conclusion that the application was missing 
critical sections of the application; and
    (iii) Any other mishandling of the application that resulted in an 
otherwise eligible application not being reviewed during the 
competition.
    (3)(i) If the Secretary determines that the Department or the 
Department's agent made a technical or administrative error, the 
Secretary has the application evaluated and scored.
    (ii) If the total score assigned the application would have resulted 
in funding of the application during the competition and the program has 
funds available, the Secretary funds the application prior to the re-
ranking of applications based on the second peer review of applications 
described in paragraph (c) of this section.
    (b) Administrative or scoring error for applications that were 
reviewed. (1) An applicant that was not selected for funding during a 
competition may request that the Secretary conduct a second review of 
the application if--
    (i) The applicant provides evidence demonstrating that the 
Department, an agent of the Department, or a peer reviewer made an 
administrative or scoring error in the review of its application; and
    (ii) The final score assigned to the application is within the 
funding band described in paragraph (d) of this section.
    (2) An administrative error relates to either the PE points or the 
scores assigned to the application by the peer reviewers.
    (i) For PE points, an administrative error includes mathematical 
errors made by the Department or the Department's agent in the 
calculation of the PE points or a failure to correctly add the earned PE 
points to the peer reviewer score.
    (ii) For the peer review score, an administrative error is applying 
the wrong peer reviewer scores to an application.
    (3)(i) A scoring error relates only to the peer review process and 
includes errors caused by a reviewer who, in assigning points--
    (A) Uses criteria not required by the applicable law or program 
regulations, the Federal Register notice inviting applications, the 
other published application materials for the competition, or guidance 
provided to the peer reviewers by the Secretary; or
    (B) Does not consider relevant information included in the 
appropriate section of the application.
    (ii) The term ``scoring error'' does not include--
    (A) A peer reviewer's appropriate use of his or her professional 
judgment in evaluating and scoring an application;
    (B) Any situation in which the applicant did not include information 
needed to evaluate its response to a specific selection criterion in the 
appropriate section of the application as stipulated in the Federal 
Register notice inviting applications or the other published application 
materials for the competition; or
    (C) Any error by the applicant.
    (c) Procedures for the second review. (1) To ensure the timely 
awarding of grants under the competition, the Secretary sets aside a 
percentage of the funds allotted for the competition to be awarded after 
the second review is completed.
    (2) After the competition, the Secretary makes new awards in rank 
order as described in Sec. 643.20 based on the available funds for the 
competition minus the funds set aside for the second review.
    (3) After the Secretary issues a notification of grant award to 
successful applicants, the Secretary notifies each unsuccessful 
applicant in writing as to the status of its application and the funding 
band for the second review and provides copies of the peer reviewers' 
evaluations of the applicant's application and the applicant's PE score, 
if applicable.
    (4) An applicant that was not selected for funding following the 
competition as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section, may request a second review if the 
applicant demonstrates that the Department, the Department's

[[Page 352]]

agent, or a peer reviewer made an administrative or scoring error as 
provided in paragraph (b) of this section.
    (5) An applicant whose application was not funded after the first 
review as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section has at least 15 calendar days after 
receiving notification that its application was not funded in which to 
submit a written request for a second review in accordance with the 
instructions and due date provided in the Secretary's written 
notification.
    (6) An applicant's written request for a second review must be 
received by the Department or submitted electronically to the designated 
e-mail or Web address by the due date and time established by the 
Secretary.
    (7) If the Secretary determines that the Department or the 
Department's agent made an administrative error that relates to the PE 
points awarded, as described in paragraph (b)(2)(i) of this section, the 
Secretary adjusts the applicant's PE score to reflect the correct number 
of PE points. If the adjusted score assigned to the application would 
have resulted in funding of the application during the competition and 
the program has funds available, the Secretary funds the application 
prior to the re-ranking of applications based on the second peer review 
of applications described in paragraph (c)(9) of this section.
    (8) If the Secretary determines that the Department, the 
Department's agent or the peer reviewer made an administrative error 
that relates to the peer reviewers' score(s), as described in paragraph 
(b)(2)(ii) of this section, the Secretary adjusts the applicant's peer 
reviewers' score(s) to correct the error. If the adjusted score assigned 
to the application would have resulted in funding of the application 
during the competition and the program has funds available, the 
Secretary funds the application prior to the re-ranking of applications 
based on the second peer review of applications described in paragraph 
(c)(9) of this section.
    (9) If the Secretary determines that a peer reviewer made a scoring 
error, as described in paragraph (b)(3) of this section, the Secretary 
convenes a second panel of peer reviewers in accordance with the 
requirements in section 402A(c)(8)(C)(iv)(III) of the HEA.
    (10) The average of the peer reviewers' scores from the second peer 
review are used in the second ranking of applications. The average score 
obtained from the second peer review panel is the final peer reviewer 
score for the application and will be used even if the second review 
results in a lower score for the application than that obtained in the 
initial review.
    (11) For applications in the funding band, the Secretary funds these 
applications in rank order based on adjusted scores and the available 
funds that have been set aside for the second review of applications.
    (d) Process for establishing a funding band. (1) For each 
competition, the Secretary establishes a funding band for the second 
review of applications.
    (2) The Secretary establishes the funding band for each competition 
based on the amount of funds the Secretary has set aside for the second 
review of applications.
    (3) The funding band is composed of those applications--
    (i) With a rank-order score before the second review that is below 
the lowest score of applications funded after the first review; and
    (ii) That would be funded if the Secretary had 150 percent of the 
funds that were set aside for the second review of applications for the 
competition.
    (e) Final decision. (1) The Secretary's determination of whether the 
applicant has met the requirements for a second review and the 
Secretary's decision on re-scoring of an application are final and not 
subject to further appeal or challenge.
    (2) An application that scored below the established funding band 
for the competition is not eligible for a second review.

(Approved by the Office of Management and Budget under control number 
1840-NEW2)

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65778, Oct. 26, 2010]

[[Page 353]]



           Subpart D_What Conditions Must Be Met by a Grantee?



Sec. 643.30  What are allowable costs?

    The cost principles that apply to the Talent Search program are in 2 
CFR part 200, subpart E. Allowable costs include the following if they 
are reasonably related to the objectives of the project:
    (a) Transportation, meals, and, if necessary, lodging for 
participants and project staff for--
    (1) Visits to postsecondary educational institutions;
    (2) Participation in ``College Day'' activities;
    (3) Field trips for participants to observe and meet with persons 
who are employed in various career fields and who can act as role models 
for participants; and
    (4) Transportation to institutions of higher education, secondary 
schools not attended by the participants, or other locations at which 
the participant receives instruction that is part of a rigorous 
secondary school program of study.
    (b) Purchase of testing materials and test preparation programs for 
participants.
    (c) Fees required for admission applications for postsecondary 
education, college entrance examinations, or alternative education 
examinations if--
    (1) A waiver of the fee is unavailable; and
    (2) The fee is paid by the grantee to a third party on behalf of a 
participant.
    (d) In-service training of project staff.
    (e) Rental of space if--
    (1) Space is not available at the site of the grantee; and
    (2) The rented space is not owned by the grantee.
    (f) Purchase, lease, or rental of computer hardware, software, and 
other equipment, service agreements for such equipment, and supplies 
that support the delivery of services to participants, including 
technology used by participants in a rigorous secondary school program 
of study.
    (g) Purchase, lease, service agreement, or rental of computer 
equipment and software needed for project administration and 
recordkeeping.
    (h) Tuition costs for a course that is part of a rigorous secondary 
school program of study if--
    (1) The course or a similar course is not offered at the secondary 
school that the participant attends or at another school within the 
school district;
    (2) The grantee demonstrates to the Secretary's satisfaction that 
using grant funds is the most cost-effective way to deliver the course 
or courses necessary for the completion of a rigorous secondary school 
program of study for program participants;
    (3) The course is taken through an accredited institution of higher 
education;
    (4) The course is comparable in content and rigor to courses that 
are part of a rigorous secondary school program of study as defined in 
Sec. 643.7(b);
    (5) The secondary school accepts the course as meeting one or more 
of the course requirements for obtaining a regular secondary school 
diploma;
    (6) A waiver of the tuition costs is unavailable;
    (7) The tuition is paid with Talent Search grant funds to an 
institution of higher education on behalf of a participant; and
    (8) The Talent Search project pays for no more than the equivalent 
of two courses for a participant each school year.

(Authority: 20 U.S.C. 1070a-11 and 1070a-12)

[58 FR 59145, Nov. 5, 1993, as amended at 75 FR 65779, Oct. 26, 2010; 79 
FR 76102, Dec. 19, 2014]



Sec. 643.31  What are unallowable costs?

    Costs that are unallowable under the Talent Search program include, 
but are not limited to, the following:
    (a) Stipends and other forms of direct financial support for 
participants.
    (b) Application fees for financial aid.
    (c) Research not directly related to the evaluation or improvement 
of the project.
    (d) Construction, renovation, and remodeling of any facilities.

(Authority: 20 U.S.C. 1070a-11 and 1070a-12)

[58 FR 59145, Nov. 5, 1993, as amended at 75 FR 65779, Oct. 26, 2010]

[[Page 354]]



Sec. 643.32  What other requirements must a grantee meet?

    (a) Eligibility of participants. (1) A grantee shall determine the 
eligibility of each participant in the project at the time that the 
individual is selected to participate.
    (2) A grantee shall determine the status of a low-income individual 
on the basis of the documentation described in section 402A(e) of the 
HEA.
    (b) Number of Participants. For each year of the project period, a 
grantee must serve at least the number of participants that the 
Secretary identifies in the Federal Register notice inviting 
applications for a competition. Through this notice, the Secretary also 
provides the minimum and maximum grant award amounts for the 
competition.
    (c) Recordkeeping. For each participant, a grantee must maintain a 
record of--
    (1) The basis for the grantee's determination that the participant 
is eligible to participate in the project under Sec. 643.3;
    (2) The grantee's needs assessment for the participant;
    (3) The services that are provided to the participant;
    (4) The specific educational progress made by the participant as a 
result of the services; and
    (5) To the extent practicable, any services the TS participant 
receives during the project year from another Federal TRIO program or 
another federally funded program that serves populations similar to 
those served under the TS program.
    (d) Project director. (1) A grantee must employ a full-time project 
director unless--
    (i) The director is also administering one or two additional 
programs for disadvantaged students operated by the sponsoring 
institution or agency; or
    (ii) The Secretary grants a waiver of this requirement.
    (2) The grantee must give the project director sufficient authority 
to administer the project effectively.
    (3) The Secretary waives the requirements in paragraph (d)(1) of 
this section if the applicant demonstrates that the project director 
will be able to effectively administer more than three programs and that 
this arrangement would promote effective coordination between the TS 
program and other Federal TRIO Programs (sections 402B through 402F of 
the HEA) or similar programs funded through other sources.

(Approved by the Office of Management and Budget under control number 
1840-NEW2)

(Authority: 20 U.S.C. 1070a-11 and 1070a-12)

[58 FR 59145, Nov. 5, 1993, as amended at 75 FR 65779, Oct. 26, 2010]



PART 644_EDUCATIONAL OPPORTUNITY CENTERS--Table of Contents



                            Subpart A_General

Sec.
644.1  What is the Educational Opportunity Centers program?
644.2  Who is eligible for a grant?
644.3  Who is eligible to participate in a project?
644.4  What services may a project provide?
644.5  How long is a project period?
644.6  What regulations apply?
644.7  What definitions apply?

               Subpart B_How Does One Apply for an Award?

644.10  How many applications may an eligible applicant submit?
644.11  What assurances must an applicant submit?

             Subpart C_How Does the Secretary Make a Grant?

644.20  How does the Secretary decide which new grants to make?
644.21  What selection criteria does the Secretary use?
644.22  How does the Secretary evaluate prior experience?
644.23  How does the Secretary set the amount of a grant?
644.24  What is the review process for unsuccessful applicants?

           Subpart D_What Conditions Must Be Met by a Grantee?

644.30  What are allowable costs?
644.31  What are unallowable costs?
644.32  What other requirements must a grantee meet?

    Authority: 20 U.S.C. 1070a-11 and 1070a-16, unless otherwise noted.

    Source: 59 FR 2658, Jan. 18, 1994, unless otherwise noted.

[[Page 355]]



                            Subpart A_General



Sec. 644.1  What is the Educational Opportunity Centers program?

    The Educational Opportunity Centers program provides grants for 
projects designed--
    (a) To provide information regarding financial and academic 
assistance available to individuals who desire to pursue a program of 
postsecondary education;
    (b) To provide assistance to individuals in applying to admission to 
institutions that offer programs of postsecondary education, including 
assistance in preparing necessary applications for use by admissions and 
financial aid officers; and
    (c) To improve the financial and economic literacy of participants 
on topics such as--
    (1) Basic personal income, household money management, and financial 
planning skills; and
    (2) Basic economic decision-making skills.

(Authority: 20 U.S.C. 1070a-16)

[59 FR 2658, Jan. 18, 1994, as amended at 75 FR 65780, Oct. 26, 2010]



Sec. 644.2  Who is eligible for a grant?

    The following entities are eligible for a grant to carry out an 
Educational Opportunity Centers project:
    (a) An institution of higher education.
    (b) A public or private agency or organization, including a 
community-based organization with experience in serving disadvantaged 
youth.
    (c) A secondary school.
    (d) A combination of the types of institutions, agencies, and 
organizations described in paragraphs (a), (b), and (c) of this section.

(Authority: 20 U.S.C. 1070a-11)

[59 FR 2658, Jan. 18, 1994, as amended at 75 FR 65780, Oct. 26, 2010]



Sec. 644.3  Who is eligible to participate in a project?

    (a) An individual is eligible to participate in an Educational 
Opportunity Centers project if the individual meets all of the following 
requirements:
    (1)(i) Is a citizen or national of the United States;
    (ii) Is a permanent resident of the United States;
    (iii) Is in the United States for other than a temporary purpose and 
provides evidence from the Immigration and Naturalization Service of his 
or her intent to become a permanent resident;
    (iv) Is a permanent resident of Guam, the Northern Mariana Islands, 
or the Trust Territory of the Pacific Islands (Palau); or
    (v) Is a resident of the Freely Associated States--the Federated 
States of Micronesia or the Republic of the Marshall Islands.
    (2)(i) Is at least 19 years of age; or
    (ii) Is less than 19 years of age, and the individual cannot be 
appropriately served by a Talent Search project under 34 CFR part 643, 
and the individual's participation would not dilute the Educational 
Opportunity Centers project's services to individuals described in 
paragraph (a)(2)(i) of this section.
    (3) Expresses a desire to enroll, or is enrolled, in a program of 
postsecondary education, and requests information or assistance in 
applying for admission to, or financial aid for, such a program.
    (b) A veteran as defined in Sec. 644.7(b), regardless of age, is 
eligible to participate in an Educational Opportunity Centers project if 
he or she satisfies the eligibility requirements in paragraph (a) of 
this section other than the age requirement in paragraph (a)(2) of this 
section.

(Authority: 20 U.S.C. 1070a-11 and 1070a-16)



Sec. 644.4  What services may a project provide?

    An Educational Opportunity Centers project may provide the following 
services:
    (a) Public information campaigns designed to inform the community 
about opportunities for postsecondary education and training.
    (b) Academic advice and assistance in course selection.
    (c) Assistance in completing college admission and financial aid 
applications.
    (d) Assistance in preparing for college entrance examinations.
    (e) Education or counseling services designed to improve the 
financial and economic literacy of participants.

[[Page 356]]

    (f) Guidance on secondary school reentry or entry to a General 
Educational Development (GED) program or other alternative education 
program for secondary school dropouts.
    (g) Individualized personal, career, and academic counseling.
    (h) Tutorial services.
    (i) Career workshops and counseling.
    (j) Mentoring programs involving elementary or secondary school 
teachers, faculty members at institutions of higher education, students, 
or any combination of these persons.
    (k) Programs and activities described in this section that are 
specially designed for participants who are limited English proficient, 
participants from groups that are traditionally underrepresented in 
postsecondary education, participants who are individuals with 
disabilities, participants who are homeless children and youth, 
participants who are foster care youth, or other disconnected 
participants.
    (l) Other activities designed to meet the purposes of the 
Educational Opportunity Centers program stated in Sec. 644.1.

(Authority: 20 U.S.C. 1070a-16)

[59 FR 2658, Jan. 18, 1994, as amended at 75 FR 65780, Oct. 26, 2010]



Sec. 644.5  How long is a project period?

    A project period under the Educational Opportunity Centers program 
is five years.

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65780, Oct. 26, 2010]



Sec. 644.6  What regulations apply?

    The following regulations apply to the Educational Opportunity 
Centers program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) in 34 CFR parts 75 (except for Secs. 75.215 through 75.221), 77, 
79, 82, 84, 86, 97, 98, and 99.
    (b) The regulations in this part 644.

(Authority: 20 U.S.C. 1070a-11 and 1070a-16)
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

[59 FR 2658, Jan. 18, 1994, as amended at 75 FR 65780, Oct. 26, 2010; 79 
FR 76102, Dec. 19, 2014]



Sec. 644.7  What definitions apply?

    (a) General definitions. The following terms used in this part are 
defined in 2 CFR part 200, subpart A, or in 34 CFR 77.1:

Applicant
Application
Budget
Budget period
EDGAR
Equipment
Facilities
Fiscal year
Grant
Grantee
Private
Project
Project period
Public
Secretary
Supplies

    (b) Other definitions. The following definitions also apply to this 
part:
    Different population means a group of individuals that an eligible 
entity desires to serve through an application for a grant under the 
Educational Opportunity Centers program and that--
    (i) Is separate and distinct from any other population that the 
entity has applied for a grant under this chapter to serve; or
    (ii) While sharing some of the same needs as another population that 
the eligible entity has applied for a grant to serve, has distinct needs 
for specialized services.
    Financial and economic literacy means knowledge about personal 
financial decision-making, which may include but is not limited to 
knowledge about--
    (i) Personal and family budget planning;
    (ii) Understanding credit building principles to meet long-term and 
short-term goals (e.g., loan to debt ratio, credit scoring, negative 
impacts on credit scores);
    (iii) Cost planning for postsecondary or postbaccalaureate education 
(e.g., spending, saving, personal budgeting);
    (iv) College cost of attendance (e.g., public vs. private, tuition 
vs. fees, personal costs);
    (v) Financial assistance (e.g., searches, application processes, and 
differences between private and government loans, assistanceships); and

[[Page 357]]

    (vi) Assistance in completing the Free Application for Federal 
Student Aid (FAFSA).
    Foster care youth means youth who are in foster care or are aging 
out of the foster care system.
    HEA means the Higher Education Act of 1965, as amended.
    Homeless children and youth means those persons defined in section 
725 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a).
    Individual with a disability means a person who has a disability, as 
that term is defined in section 12102 of the Americans with Disabilities 
Act (42 U.S.C. 12101 et seq.).
    Institution of higher education means an educational institution as 
defined in sections 101 and 102 of the HEA.
    Low-income individual means an individual whose family's taxable 
income did not exceed 150 percent of the poverty level amount in the 
calendar year preceding the year in which the individual initially 
participated in the project. The poverty level amount is determined by 
using criteria of poverty established by the Bureau of the Census of the 
U.S. Department of Commerce.
    Participant means an individual who--
    (i) Is determined to be eligible to participate in the project under 
Sec. 644.3; and
    (ii) Receives project services.
    Postsecondary education means education beyond the secondary school 
level.
    Potential first-generation college student means--
    (i) An individual neither of whose parents received a baccalaureate 
degree; or
    (ii) An individual who regularly resided with and received support 
from only one parent and whose supporting parent did not receive a 
baccalaureate degree.
    Secondary school means a school that provides secondary education as 
determined under State law, except that it does not include education 
beyond grade 12.
    Target area means a geographic area served by an Educational 
Opportunity Centers project.
    Veteran means a person who--
    (i) Served on active duty as a member of the Armed Forces of the 
United States for a period of more than 180 days and was discharged or 
released under conditions other than dishonorable;
    (ii) Served on active duty as a member of the Armed Forces of the 
United States and was discharged or released because of a service 
connected disability;
    (iii) Was a member of a reserve component of the Armed Forces of the 
United States and was called to active duty for a period of more than 30 
days; or
    (iv) Was a member of a reserve component of the Armed Forces of the 
United States who served on active duty in support of a contingency 
operation (as that term is defined in section 101(a)(13) of title 10, 
United States Code) on or after September 11, 2001.

(Authority: 20 U.S.C. 1070a-11, 1070a-16, and 1141)

[59 FR 2658, Jan. 18, 1994, as amended at 75 FR 65780, Oct. 26, 2010; 79 
FR 76102, Dec. 19, 2014]



               Subpart B_How Does One Apply for an Award?



Sec. 644.10  How many applications may an eligible applicant submit?

    (a) An applicant may submit more than one application for 
Educational Opportunity Centers grants as long as each application 
describes a project that serves a different target area or another 
designated different population.
    (b) For each grant competition, the Secretary designates, in the 
Federal Register notice inviting applications and other published 
application materials for the competition, the different populations for 
which an eligible entity may submit a separate application.

(Authority: 20 U.S.C. 1070a-11, 1221e-3)

[75 FR 65781, Oct. 26, 2010]



Sec. 644.11  What assurances must an applicant submit?

    An applicant must submit, as part of its application, assurances 
that--
    (a) At least two-thirds of the individuals it serves under its 
proposed Educational Opportunity Centers project

[[Page 358]]

will be low-income individuals who are potential first-generation 
college students;
    (b) The project will collaborate with other Federal TRIO projects, 
GEAR UP projects, or programs serving similar populations that are 
serving the same target schools or target area in order to minimize the 
duplication of services and promote collaborations so that more students 
can be served.
    (c) The project will be located in a setting or settings accessible 
to the individuals proposed to be served by the project; and
    (d) If the applicant is an institution of higher education, it will 
not use the project as a part of its recruitment program.

(Authority: 20 U.S.C. 1070a-16)

[59 FR 2658, Jan. 18, 1994. Redesignated and amended at 75 FR 65781, 
Oct. 26, 2010]



             Subpart C_How Does the Secretary Make a Grant?



Sec. 644.20  How does the Secretary decide which new grants to make?

    (a) The Secretary evaluates an application for a new grant as 
follows:
    (1)(i) The Secretary evaluates the application on the basis of the 
selection criteria in Sec. 644.21.
    (ii) The maximum score for all the criteria in Sec. 644.21 is 100 
points. The maximum score for each criterion is indicated in parentheses 
with the criterion.
    (2)(i) For an application for a new grant to continue to serve 
substantially the same populations and campuses that the applicant is 
serving under an expiring project, the Secretary evaluates the 
applicant's prior experience of high quality service delivery under the 
expiring project on the basis of the outcome criteria in Sec. 644.22.
    (ii) The maximum total score for all the criteria in Sec. 644.22 is 
15 points. The maximum score for each criterion is indicated in 
parentheses with the criterion.
    (iii) The Secretary evaluates the PE of an applicant for each of the 
three project years that the Secretary designates in the Federal 
Register notice inviting applications and the other published 
application materials for the competition.
    (iv) An applicant may earn up to 15 PE points for each of the 
designated project years for which annual performance report data are 
available.
    (v) The final PE score is the average of the scores for the three 
project years assessed.
    (b) The Secretary makes new grants in rank order on the basis of the 
applications' total scores under paragraph (a) of this section.
    (c) If the total scores of two or more applications are the same and 
there are insufficient funds for these applications after the approval 
of higher-ranked applications, the Secretary uses the remaining funds to 
serve geographic areas and eligible populations that have been 
underserved by the Educational Opportunity Centers program.
    (d) The Secretary does not make a new grant to an applicant if the 
applicant's prior project involved the fraudulent use of program funds.

(Authority: 20 U.S.C. 1070a-11, 1070a-16, and 1144a(a))

[59 FR 2658, Jan. 18, 1994, as amended at 75 FR 65781, Oct. 26, 2010]



Sec. 644.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an application 
for a new grant:
    (a) Need for the project (24 points). The Secretary evaluates the 
need for an Educational Opportunity Centers project in the proposed 
target area on the basis of the extent to which the application contains 
clear evidence of--
    (1) A high number or percentage, or both, of low-income families 
residing in the target area;
    (2) A high number or percentage, or both, of individuals residing in 
the target area with education completion levels below the baccalaureate 
level;
    (3) A high need on the part of residents of the target area for 
further education and training from programs of postsecondary education 
in order to meet changing employment trends; and
    (4) Other indicators of need for an Educational Opportunity Centers 
project, including the presence of

[[Page 359]]

unaddressed educational or socioeconomic problems of adult residents in 
the target area.
    (b) Objectives (8 points). The Secretary evaluates the quality of 
the applicant's objectives and proposed targets (percentages) in the 
following areas on the basis of the extent to which they are both 
ambitious, as related to the need data provided under paragraph (a) of 
this section, and attainable, given the project's plan of operation, 
budget, and other resources:
    (1) (2 points) Secondary school diploma or equivalent.
    (2) (3 points) Postsecondary enrollment.
    (3) (1.5 points) Financial aid applications.
    (4) (1.5 points) College admission applications.
    (c) Plan of operation (30 points). The Secretary evaluates the 
quality of the applicant's plan of operation on the basis of the 
following:
    (1) (4 points) The plan to inform the residents, schools, and 
community organizations in the target area of the goals, objectives, and 
services of the project and the eligibility requirements for 
participation in the project;
    (2) (4 points) The plan to identify and select eligible participants 
and ensure their participation without regard to race, color, national 
origin, gender, or disability;
    (3) (2 points) The plan to assess each participant's need for 
services provided by the project;
    (4) (12 points) The plan to provide services that meet participants' 
needs and achieve the objectives of the project; and
    (5) (8 points) The management plan to ensure the proper and 
efficient administration of the project including, but not limited to, 
the project's organizational structure, the time committed to the 
project by the project director and other personnel, and, where 
appropriate, its coordination with other projects for disadvantaged 
students.
    (d) Applicant and community support (16 points). The Secretary 
evaluates the applicant and community support for the proposed project 
on the basis of the extent to which the applicant has made provision for 
resources to supplement the grant and enhance the project's services, 
including--
    (1) (8 points) Facilities, equipment, supplies, personnel, and other 
resources committed by the applicant; and
    (2) (8 points) Resources secured through written commitments from 
schools, community organizations, and others.
    (e) Quality of personnel (9 points). (1) The Secretary evaluates the 
quality of the personnel the applicant plans to use in the project on 
the basis of the following:
    (i) The qualifications required of the project director.
    (ii) The qualifications required of each of the other personnel to 
be used in the project.
    (iii) The plan to employ personnel who have succeeded in overcoming 
the disadvantages or circumstances like those of the population of the 
target area.
    (2) In evaluating the qualifications of a person, the Secretary 
considers his or her experience and training in fields related to the 
objectives of the project.
    (f) Budget (5 points). The Secretary evaluates the extent to which 
the project budget is reasonable, cost-effective, and adequate to 
support the project.
    (g) Evaluation plan (8 points). The Secretary evaluates the quality 
of the evaluation plan for the project on the basis of the extent to 
which the applicant's methods of evaluation--
    (1) Are appropriate to the project's objectives;
    (2) Provide for the applicant to determine, using specific and 
quantifiable measures, the success of the project in--
    (i) Making progress toward achieving its objectives (a formative 
evaluation); and
    (ii) Achieving its objectives at the end of the project period (a 
summative evaluation); and

[[Page 360]]

    (3) Provide for the disclosure of unanticipated project outcomes, 
using quantifiable measures if appropriate.

(Approved by the Office of Management and Budget under control number 
1840-NEW3)

(Authority: 20 U.S.C. 1070a-16)

[59 FR 2658, Jan. 18, 1994, as amended at 75 FR 65781, Oct. 26, 2010]



Sec. 644.22  How does the Secretary evaluate prior experience?

    (a) In the case of an application described in Sec. 644.20(a)(2)(i), 
the Secretary--
    (1) Evaluates the applicant's performance under its expiring 
Educational Opportunity Centers project;
    (2) Uses the approved project objectives for the applicant's 
expiring Educational Opportunity Centers grant and the information the 
applicant submitted in its annual performance reports (APRs) to 
determine the number of PE points; and
    (3) May adjust a calculated PE score or decide not to award PE 
points if other information such as audit reports, site visit reports, 
and project evaluation reports indicates the APR data used to calculate 
PE points are incorrect.
    (b) The Secretary does not award PE points for a given year to an 
applicant that does not serve at least 90 percent of the approved number 
of participants. For purposes of this section, the approved number of 
participants is the total number of participants the project would serve 
as agreed upon by the grantee and the Secretary.
    (c) The Secretary does not award PE points for the criterion 
specified in paragraph (d)(1) of this section (Number of participants) 
if the applicant did not serve at least the approved number of 
participants.
    (d) For purposes of the PE evaluation of grants awarded after 
January 1, 2009, the Secretary evaluates the applicant's PE on the basis 
of the following outcome criteria:
    (1) (3 points) Number of participants. Whether the applicant 
provided services to no less than the approved number of participants.
    (2) (3 points) Secondary school diploma. Whether the applicant met 
or exceeded its approved objective with regard to participants served 
during the project year who do not have a secondary school diploma or 
its equivalent who receive a secondary school diploma or its equivalent 
within the time period specified in the approved objective.
    (3) (5 points) Postsecondary enrollment. Whether the applicant met 
or exceeded its approved objective with regard to the secondary school 
graduates served during the project year who enroll in programs of 
postsecondary education within the time period specified in the approved 
objective.
    (4) (2 points) Financial aid applications. Whether the applicant met 
or exceeded its objective regarding participants applying for financial 
aid.
    (5) (2 points) College admission applications. Whether the applicant 
met or exceeded its objective regarding participants applying for 
college admission.

(Approved by the Office of Management and Budget under control number 
1840-NEW8)

(Authority: 20 U.S.C. 1070a-16)

[75 FR 65781, Oct. 26, 2010]



Sec. 644.23  How does the Secretary set the amount of a grant?

    (a) The Secretary sets the amount of a grant on the basis of--
    (1) 34 CFR 75.232 and 75.233, for new grants; and
    (2) 34 CFR 75.253, for the second and subsequent years of a project 
period.
    (b) If the circumstances described in section 402A(b)(3) of the HEA 
exist, the Secretary uses the available funds to set the amount of the 
grant at the lesser of--
    (1) $200,000; or
    (2) The amount requested by the applicant.

(Authority: 20 U.S.C. 1070a-11)

[59 FR 2658, Jan. 18, 1994, as amended at 75 FR 65782, Oct. 26, 2010]



Sec. 644.24  What is the review process for unsuccessful applicants?

    (a) Technical or administrative error for applications not reviewed. 
(1) An applicant whose grant application was not evaluated during the 
competition may request that the Secretary review the application if--
    (i) The applicant has met all of the application submission 
requirements

[[Page 361]]

included in the Federal Register notice inviting applications and the 
other published application materials for the competition; and
    (ii) The applicant provides evidence demonstrating that the 
Department or an agent of the Department made a technical or 
administrative error in the processing of the submitted application.
    (2) A technical or administrative error in the processing of an 
application includes--
    (i) A problem with the system for the electronic submission of 
applications that was not addressed in accordance with the procedures 
included in the Federal Register notice inviting applications for the 
competition;
    (ii) An error in determining an applicant's eligibility for funding 
consideration, which may include, but is not limited to--
    (A) An incorrect conclusion that the application was submitted by an 
ineligible applicant;
    (B) An incorrect conclusion that the application exceeded the 
published page limit;
    (C) An incorrect conclusion that the applicant requested funding 
greater than the published maximum award; or
    (D) An incorrect conclusion that the application was missing 
critical sections of the application; and
    (iii) Any other mishandling of the application that resulted in an 
otherwise eligible application not being reviewed during the 
competition.
    (3)(i) If the Secretary determines that the Department or the 
Department's agent made a technical or administrative error, the 
Secretary has the application evaluated and scored.
    (ii) If the total score assigned the application would have resulted 
in funding of the application during the competition and the program has 
funds available, the Secretary funds the application prior to the re-
ranking of applications based on the second peer review of applications 
described in paragraph (c) of this section.
    (b) Administrative or scoring error for applications that were 
reviewed. (1) An applicant that was not selected for funding during a 
competition may request that the Secretary conduct a second review of 
the application if--
    (i) The applicant provides evidence demonstrating that the 
Department, an agent of the Department, or a peer reviewer made an 
administrative or scoring error in the review of its application; and
    (ii) The final score assigned to the application is within the 
funding band described in paragraph (d) of this section.
    (2) An administrative error relates to either the PE points or the 
scores assigned to the application by the peer reviewers.
    (i) For PE points, an administrative error includes mathematical 
errors made by the Department or the Department's agent in the 
calculation of the PE points or a failure to correctly add the earned PE 
points to the peer reviewer score.
    (ii) For the peer review score, an administrative error is applying 
the wrong peer reviewer scores to an application.
    (3)(i) A scoring error relates only to the peer review process and 
includes errors caused by a reviewer who, in assigning points--
    (A) Uses criteria not required by the applicable law or program 
regulations, the Federal Register notice inviting applications, the 
other published application materials for the competition, or guidance 
provided to the peer reviewers by the Secretary; or
    (B) Does not consider relevant information included in the 
appropriate section of the application.
    (ii) The term ``scoring error'' does not include--
    (A) A peer reviewer's appropriate use of his or her professional 
judgment in evaluating and scoring an application;
    (B) Any situation in which the applicant did not include information 
needed to evaluate its response to a specific selection criterion in the 
appropriate section of the application as stipulated in the Federal 
Register notice inviting applications or the other published application 
materials for the competition; or
    (C) Any error by the applicant.
    (c) Procedures for the second review. (1) To ensure the timely 
awarding of grants under the competition, the Secretary sets aside a 
percentage of the funds allotted for the competition to be

[[Page 362]]

awarded after the second review is completed.
    (2) After the competition, the Secretary makes new awards in rank 
order as described in Sec. 644.20 based on the available funds for the 
competition minus the funds set aside for the second review.
    (3) After the Secretary issues a notification of grant award to 
successful applicants, the Secretary notifies each unsuccessful 
applicant in writing as to the status of its application and the funding 
band for the second review and provides copies of the peer reviewers' 
evaluations of the applicant's application and the applicant's PE score, 
if applicable.
    (4) An applicant that was not selected for funding following the 
competition as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section, may request a second review if the 
applicant demonstrates that the Department, the Department's agent, or a 
peer reviewer made an administrative or scoring error as provided in 
paragraph (b) of this section.
    (5) An applicant whose application was not funded after the first 
review as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section has at least 15 calendar days after 
receiving notification that its application was not funded in which to 
submit a written request for a second review in accordance with the 
instructions and due date provided in the Secretary's written 
notification.
    (6) An applicant's written request for a second review must be 
received by the Department or submitted electronically to the designated 
e-mail or Web address by the due date and time established by the 
Secretary.
    (7) If the Secretary determines that the Department or the 
Department's agent made an administrative error that relates to the PE 
points awarded, as described in paragraph (b)(2)(i) of this section, the 
Secretary adjusts the applicant's PE score to reflect the correct number 
of PE points. If the adjusted score assigned to the application would 
have resulted in funding of the application during the competition and 
the program has funds available, the Secretary funds the application 
prior to the re-ranking of applications based on the second peer review 
of applications described in paragraph (c)(9) of this section.
    (8) If the Secretary determines that the Department, the 
Department's agent or the peer reviewer made an administrative error 
that relates to the peer reviewers' score(s), as described in paragraph 
(b)(2)(ii) of this section, the Secretary adjusts the applicant's peer 
reviewers' score(s) to correct the error. If the adjusted score assigned 
to the application would have resulted in funding of the application 
during the competition and the program has funds available, the 
Secretary funds the application prior to the re-ranking of applications 
based on the second peer review of applications described in paragraph 
(c)(9) of this section.
    (9) If the Secretary determines that a peer reviewer made a scoring 
error, as described in paragraph (b)(3) of this section, the Secretary 
convenes a second panel of peer reviewers in accordance with the 
requirements in section 402A(c)(8)(C)(iv)(III) of the HEA.
    (10) The average of the peer reviewers' scores from the second peer 
review are used in the second ranking of applications. The average score 
obtained from the second peer review panel is the final peer reviewer 
score for the application and will be used even if the second review 
results in a lower score for the application than that obtained in the 
initial review.
    (11) For applications in the funding band, the Secretary funds these 
applications in rank order based on adjusted scores and the available 
funds that have been set aside for the second review of applications.
    (d) Process for establishing a funding band. (1) For each 
competition, the Secretary establishes a funding band for the second 
review of applications.
    (2) The Secretary establishes the funding band for each competition 
based on the amount of funds the Secretary has set aside for the second 
review of applications.
    (3) The funding band is composed of those applications--

[[Page 363]]

    (i) With a rank-order score before the second review that is below 
the lowest score of applications funded after the first review; and
    (ii) That would be funded if the Secretary had 150 percent of the 
funds that were set aside for the second review of applications for the 
competition.
    (e) Final decision. (1) The Secretary's determination of whether the 
applicant has met the requirements for a second review and the 
Secretary's decision on re-scoring of an application are final and not 
subject to further appeal or challenge.
    (2) An application that scored below the established funding band 
for the competition is not eligible for a second review.

(Approved by the Office of Management and Budget under control number 
1840--NEW3)

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65782, Oct. 26, 2010]



           Subpart D_What Conditions Must Be Met by a Grantee?



Sec. 644.30  What are allowable costs?

    The cost principles that apply to the Educational Opportunity 
Centers program are in 2 CFR part 200, subpart E. Allowable costs 
include the following if they are reasonably related to the objectives 
of the project:
    (a) Transportation, meals, and, with specific prior approval of the 
Secretary, lodging for participants and project staff for--
    (1) Visits to postsecondary educational institutions;
    (2) Participation in ``College Day'' activities; and
    (3) Field trips for participants to observe and meet with persons 
who are employed in various career fields and can act as role models for 
participants.
    (b) Purchase of testing materials and test preparation programs for 
participants.
    (c) Fees required for admission applications for postsecondary 
education, college entrance examinations, or alternative education 
examinations if--
    (1) A waiver is unavailable; and
    (2) The fee is paid by the grantee to a third party on behalf of a 
participant.
    (d) In-service training of project staff.
    (e) Rental of space if--
    (1) Space is not available at the site of the grantee; and
    (2) The rented space is not owned by the grantee.
    (f) Purchase, lease, or rental of computer hardware, software, and 
other equipment, service agreements for such equipment, and supplies for 
participant development, project administration, or project 
recordkeeping.

(Authority: 20 U.S.C. 1070a-11 and 1070a-16)

[59 FR 2658, Jan. 18, 1994, as amended at 75 FR 65783, Oct. 26, 2010; 79 
FR 76102, Dec. 19, 2014]



Sec. 644.31  What are unallowable costs?

    Costs that are unallowable under the Educational Opportunity Centers 
program include, but are not limited to, the following:
    (a) Tuition, fees, stipends, and other forms of direct financial 
support for participants.
    (b) Research not directly related to the evaluation or improvement 
of the project.
    (c) Construction, renovation, and remodeling of any facilities.

(Authority: 20 U.S.C. 1070a-11 and 1070a-16)



Sec. 644.32  What other requirements must a grantee meet?

    (a) Eligibility of participants. (1) A grantee shall determine the 
eligibility of each participant in the project at the time that the 
individual is selected to participate.
    (2) A grantee shall determine the status of a low-income individual 
on the basis of the documentation described in section 402A(e) of the 
HEA.
    (b) Number of Participants. For each year of the project period, a 
grantee must serve at least the number of participants that the 
Secretary identifies in the Federal Register notice inviting 
applications for a competition. Through this notice, the Secretary also 
provides the minimum and maximum grant award amounts for the 
competition.
    (c) Recordkeeping. For each participant, a grantee must maintain a 
record of--

[[Page 364]]

    (1) The basis for the grantee's determination that the participant 
is eligible to participate in the project under Sec. 644.3;
    (2) The services that are provided to the participant;
    (3) The specific educational benefits received by the participant; 
and
    (4) To the extent practicable, any services the participant receives 
during the project year from another Federal TRIO program or another 
federally funded program that serves populations similar to those served 
under the EOC program.
    (d) Project director. (1) A grantee must employ a full-time project 
director unless--
    (i) The director is also administering one or two additional 
programs for disadvantaged students operated by the sponsoring 
institution or agency; or
    (ii) The Secretary grants a waiver of this requirement.
    (2) The grantee must give the project director sufficient authority 
to administer the project effectively.
    (3) The Secretary waives the requirements in paragraph (d)(1) of 
this section if the applicant demonstrates that that the project 
director will be able to effectively administer more than three programs 
and that this arrangement would promote effective coordination between 
the program and other Federal TRIO programs (sections 402B through 402F 
of the HEA) and similar programs funded through other sources.

(Approved by the Office of Management and Budget under control number 
1840--NEW8)

(Authority: 20 U.S.C. 1070a-11 and 1070a-16).

[59 FR 2658, Jan. 18, 1994, as amended at 75 FR 65783, Oct. 26, 2010]



PART 645_UPWARD BOUND PROGRAM--Table of Contents



                            Subpart A_General

Sec.
645.1  What is the Upward Bound Program?
645.2  Who is eligible for a grant?
645.3  Who is eligible to participate in an Upward Bound project?
645.4  What are the grantee requirements for documenting the low-income 
          and first-generation status of participants?
645.5  What regulations apply?
645.6  What definitions apply to the Upward Bound Program?

Subpart B_What Kinds of Projects and Services Does the Secretary Assist 
                           Under This Program?

645.10  What kinds of projects are supported under the Upward Bound 
          Program?
645.11  What services do all Upward Bound projects provide?
645.12  What services may regular Upward Bound and Upward Bound Math-
          Science projects provide?
645.13  How are regular Upward Bound projects organized?
645.14  What additional services do Upward Bound Math and Science 
          Centers provide and how are they organized?
645.15  What additional services may Veterans Upward Bound projects 
          provide?

               Subpart C_How Does One Apply for An Award?

645.20  How many applications for an Upward Bound award may an eligible 
          applicant submit?
645.21  What assurances must an applicant include in an application?

             Subpart D_How Does the Secretary Make a Grant?

645.30  How does the Secretary decide which grants to make?
645.31  What selection criteria does the Secretary use?
645.32  How does the Secretary evaluate prior experience?
645.33  How does the Secretary set the amount of a grant?
645.34  How long is a project period?
645.35  What is the review process for unsuccessful applicants?

           Subpart E_What Conditions Must Be Met by a Grantee?

645.40  What are allowable costs?
645.41  What are unallowable costs?
645.42  What are Upward Bound stipends?
645.43  What other requirements must a grantee meet?

    Authority: 20 U.S.C. 1070a-11 and 1070a-13, unless otherwise noted.

    Source: 60 FR 4748, Jan. 24, 1995, unless otherwise noted.

[[Page 365]]



                            Subpart A_General



Sec. 645.1  What is the Upward Bound Program?

    (a) The Upward Bound Program provides Federal grants to projects 
designed to generate in program participants the skills and motivation 
necessary to complete a program of secondary education and to enter and 
succeed in a program of postsecondary education.
    (b) The Upward Bound Program provides Federal grants for the 
following three types of projects:
    (1) Regular Upward Bound projects.
    (2) Upward Bound Math and Science Centers.
    (3) Veterans Upward Bound projects.

(Authority: 20 U.S.C. 1070a-11 and 1070a-13)



Sec. 645.2  Who is eligible for a grant?

    The following entities are eligible to apply for a grant to carry 
out an Upward Bound project:
    (a) An institution of higher education.
    (b) A public or private agency or organization, including a 
community-based organization with experience in serving disadvantaged 
youth.
    (c) A secondary school.
    (d) A combination of the types of institutions, agencies, and 
organizations described in paragraphs (a), (b), and (c) of this section.

(Authority: 20 U.S.C 1070a-11 and 1070a-13)

[60 FR 4748, Jan. 24, 1995, as amended at 75 FR 65784, Oct. 26, 2010]



Sec. 645.3  Who is eligible to participate in an Upward Bound project?

    An individual is eligible to participate in a Regular, Veterans, or 
a Math and Science Upward Bound project if the individual meets all of 
the following requirements:
    (a)(1) Is a citizen or national of the United States.
    (2) Is a permanent resident of the United States.
    (3) Is in the United States for other than a temporary purpose and 
provides evidence from the Immigration and Naturalization Service of his 
or her intent to become a permanent resident.
    (4) Is a permanent resident of Guam, the Northern Mariana Islands, 
or the Trust Territory of the Pacific Islands.
    (5) Is a resident of the Freely Associated States--the Federated 
States of Micronesia, the Republic of the Marshall Islands, or the 
Republic of Palau.
    (b) Is--
    (1) A potential first-generation college student;
    (2) A low-income individual; or
    (3) An individual who has a high risk for academic failure.
    (c) Has a need for academic support, as determined by the grantee, 
in order to pursue successfully a program of education beyond high 
school.
    (d) At the time of initial selection, has completed the eighth grade 
and is at least 13 years old but not older than 19, although the 
Secretary may waive the age requirement if the applicant demonstrates 
that the limitation would defeat the purposes of the Upward Bound 
program. However, a veteran as defined in Sec. 645.6, regardless of age, 
is eligible to participate in an Upward Bound project if he or she 
satisfies the eligibility requirements in paragraphs (a), (b), and (c) 
of this section.

(Authority: 20 U.S.C. 1070a-11 and 1070a-13)

[60 FR 4748, Jan. 24, 1995, as amended at 75 FR 65784, Oct. 26, 2010]



Sec. 645.4  What are the grantee requirements for documenting the
low-income and first-generation status of participants?

    (a) For purposes of documenting a participant's low-income status 
the following applies:
    (1) In the case of a student who is not an independent student, an 
institution shall document that the student is a low-income individual 
by obtaining and maintaining--
    (i) A signed statement from the student's parent or legal guardian 
regarding family income;
    (ii) Verification of family income from another governmental source;
    (iii) A signed financial aid application; or
    (iv) A signed United States or Puerto Rican income tax return.
    (2) In the case of a student who is an independent student, an 
institution shall document that the student is a

[[Page 366]]

low-income individual by obtaining and maintaining--
    (i) A signed statement from the student regarding family income;
    (ii) Verification of family income from another governmental source;
    (iii) A signed financial aid application; or
    (iv) A signed United States or Puerto Rican income tax return.
    (b) For purposes of documenting potential first generation college 
student status, documentation consists of a signed statement from a 
dependent participant's parent, or a signed statement from an 
independent participant.
    (c) A grantee does not have to revalidate a participant's 
eligibility after the participant's initial selection.

(Approved by the Office of Management and Budget under control number 
1840-0550)

(Authority: 20 U.S.C. 1070a-11)

[60 FR 4748, Jan. 24, 1995, as amended at 75 FR 65784, Oct. 26, 2010]



Sec. 645.5  What regulations apply?

    The following regulations apply to the Upward Bound Program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) in 34 CFR parts 75 (except for Secs. 75.215 through 75.221), 77, 
79, 80, 82, 84, 85, 86, 97, 98, and 99.
    (b) The regulations in this part 645.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1070a-11 and 1070a-13)

[60 FR 4748, Jan. 24, 1995, as amended at 75 FR 65784, Oct. 26, 2010; 79 
FR 76102, Dec. 19, 2014]



Sec. 645.6  What definitions apply to the Upward Bound Program?

    (a) General definitions. The following terms used in this part are 
defined in 2 CFR part 200, subpart A, or 34 CFR 77.1:

Applicant
Application
Award
Budget
Budget period
EDGAR
Equipment
Facilities
Grant
Grantee
Project
Project period
Secretary
State
Supplies

    (b) Other Definitions. The following definitions also apply to this 
part:
    Different population means a group of individuals that an eligible 
entity desires to serve through an application for a grant under the 
Upward Bound program and that--
    (1) Is separate and distinct from any other population that the 
entity has applied for a grant to serve; or
    (2) While sharing some of the same needs as another population that 
the eligible entity has applied for a grant to serve, has distinct needs 
for specialized services.
    Family taxable income means--
    (1) With regard to a dependent student, the taxable income of the 
individual's parents;
    (2) With regard to a dependent student who is an orphan or ward of 
the court, no taxable income;
    (3) With regard to an independent student, the taxable income of the 
student and his or her spouse.
    Financial and economic literacy means knowledge about personal 
financial decision-making, which may include but is not limited to 
knowledge about--
    (1) Personal and family budget planning;
    (2) Understanding credit building principles to meet long-term and 
short-term goals (e.g., loan to debt ratio, credit scoring, negative 
impacts on credit scores);
    (3) Cost planning for postsecondary or postbaccalaureate education 
(e.g., spending, saving, personal budgeting);
    (4) College cost of attendance (e.g., public vs. private, tuition 
vs. fees, personal costs);
    (5) Financial assistance (e.g., searches, application processes, and 
differences between private and government loans, assistanceships); and
    (6) Assistance in completing the Free Application for Federal 
Student Aid (FAFSA).
    Foster care youth means youth who are in foster care or are aging 
out of the foster care system.
    HEA means the Higher Education Act of 1965, as amended.

[[Page 367]]

    Homeless children and youth means persons defined in section 725 of 
the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a).
    Independent student means a student who--
    (1) Is an orphan or ward of the court;
    (2) Is a veteran of the Armed Forces of the United States (as 
defined in this section);
    (3) Is a married individual; or
    (4) Has legal dependents other than a spouse.
    Individual who has a high risk for academic failure (regular Upward 
Bound participant) means an individual who--
    (1) Has not achieved at the proficient level on State assessments in 
reading or language arts;
    (2) Has not achieved at the proficient level on State assessments in 
math;
    (3) Has not successfully completed pre-algebra or algebra by the 
beginning of the tenth grade; or
    (4) Has a grade point average of 2.5 or less (on a 4.0 scale) for 
the most recent school year for which grade point averages are 
available.
    Individual with a disability means a person who has a disability, as 
that term is defined in section 12102 of the Americans with Disabilities 
Act (42 U.S.C. 12101 et seq.).
    Institution of higher education means an educational institution as 
defined in sections 101 and 102 of the HEA.
    Limited English proficiency with reference to an individual, means 
an individual whose native language is other than English and who has 
sufficient difficulty speaking, reading, writing, or understanding the 
English language to deny that individual the opportunity to learn 
successfully in classrooms in which English is the language of 
instruction.
    Low-income individual means an individual whose family taxable 
income did not exceed 150 percent of the poverty level amount in the 
calendar year preceding the year in which the individual initially 
participates in the project. The poverty level amount is determined by 
using criteria of poverty established by the Bureau of the Census of the 
U.S. Department of Commerce.
    Organization/Agency means an entity that is legally authorized to 
operate programs such as Upward Bound in the State where it is located.
    Participant means an individual who--
    (1) Is determined to be eligible to participate in the project under 
Sec. 645.3;
    (2) Resides in the target area, or is enrolled in a target school at 
the time of acceptance into the project; and
    (3) Has been determined by the project director to be committed to 
the project, as evidenced by being allowed to continue in the project 
for at least--
    (i) Ten days in a summer component if the individual first enrolled 
in an Upward Bound project's summer component; or
    (ii) Sixty days if the individual first enrolled in an Upward Bound 
project's academic year component.
    Potential first-generation college student means--
    (1) An individual neither of whose natural or adoptive parents 
received a baccalaureate degree; or
    (2) A student who, prior to the age of 18, regularly resided with 
and received support from only one natural or adoptive parent and whose 
supporting parent did not receive a baccalaureate degree.
    Regular secondary school diploma means a diploma attained by 
individuals who meet or exceed the coursework and performance standards 
for high school completion established by the individual's State.
    Rigorous secondary school program of study means a program of study 
that is--
    (1) Established by a State educational agency (SEA) or local 
educational agency (LEA) and recognized as a rigorous secondary school 
program of study by the Secretary through the process described in 34 
CFR 691.16(a) through (c) for the Academic Competitiveness Grant (ACG) 
Program;
    (2) An advanced or honors secondary school program established by 
States and in existence for the 2004-2005 school year or later school 
years;
    (3) Any secondary school program in which a student successfully 
completes at a minimum the following courses:
    (i) Four years of English.
    (ii) Three years of mathematics, including algebra I and a higher-
level

[[Page 368]]

class such as algebra II, geometry, or data analysis and statistics.
    (iii) Three years of science, including one year each of at least 
two of the following courses: biology, chemistry, and physics.
    (iv) Three years of social studies.
    (v) One year of a language other than English;
    (4) A secondary school program identified by a State-level 
partnership that is recognized by the State Scholars Initiative of the 
Western Interstate Commission for Higher Education (WICHE), Boulder, 
Colorado;
    (5) Any secondary school program for a student who completes at 
least two courses from an International Baccalaureate Diploma Program 
sponsored by the International Baccalaureate Organization, Geneva, 
Switzerland, and receives a score of a ``4'' or higher on the 
examinations for at least two of those courses; or
    (6) Any secondary school program for a student who completes at 
least two Advanced Placement courses and receives a score of ``3'' or 
higher on the College Board's Advanced Placement Program Exams for at 
least two of those courses.
    Secondary school means a school that provides secondary education as 
determined under State law.
    Target area means a discrete local or regional geographical area 
designated by the applicant as the area to be served by an Upward Bound 
project.
    Target school means a school designated by the applicant as a focus 
of project services.
    Veteran means a person who--
    (1) Served on active duty as a member of the Armed Forces of the 
United States for a period of more than 180 days and was discharged or 
released under conditions other than dishonorable;
    (2) Served on active duty as a member of the Armed Forces of the 
United States and was discharged or released because of a service 
connected disability;
    (3) Was a member of a reserve component of the Armed Forces of the 
United States and was called to active duty for a period of more than 30 
days; or
    (4) Was a member of a reserve component of the Armed Forces of the 
United States who served on active duty in support of a contingency 
operation (as that term is defined in section 101(a)(13) of title 10, 
United States Code) on or after September 11, 2001.
    Veteran who has a high risk for academic failure means a veteran 
who--
    (1) Has been out of high school or dropped out of a program of 
postsecondary education for five or more years;
    (2) Has scored on standardized tests below the level that 
demonstrates a likelihood of success in a program of postsecondary 
education; or
    (3) Meets the definition of an individual with a disability as 
defined in Sec. 645.6(b).

(Authority: 20 U.S.C. 1001 et seq., 1070a-11, 1070a-13, 1088, 1141, 
1141a, and 3283(a)).

[60 FR 4748, Jan. 24, 1995, as amended at 75 FR 65784, Oct. 26, 2010; 79 
FR 76103, Dec. 19, 2014]



Subpart B_What Kinds of Projects and Services Does the Secretary Assist 
                           Under This Program?



Sec. 645.10  What kinds of projects are supported under the Upward
Bound Program?

    The Secretary provides grants to the following three types of Upward 
Bound projects:
    (a) Regular Upward Bound projects designed to prepare high school 
students for programs of postsecondary education.
    (b) Upward Bound Math and Science Centers designed to prepare high 
school students for postsecondary education programs that lead to 
careers in the fields of math and science.
    (c) Veterans Upward Bound projects designed to assist veterans to 
prepare for a program of postsecondary education.

(Authority: 20 U.S.C. 1070a-11 and 1070a-13)



Sec. 645.11  What services do all Upward Bound projects provide?

    (a) Any project assisted under this part must provide--
    (1) Academic tutoring to enable students to complete secondary or 
postsecondary courses, which may include instruction in reading, 
writing, study

[[Page 369]]

skills, mathematics, science, and other subjects;
    (2) Advice and assistance in secondary and postsecondary course 
selection;
    (3) Assistance in preparing for college entrance examinations and 
completing college admission applications;
    (4)(i) Information on the full range of Federal student financial 
aid programs and benefits (including Federal Pell Grant awards and loan 
forgiveness) and resources for locating public and private scholarships; 
and
    (ii) Assistance in completing financial aid applications, including 
the Free Application for Federal Student Aid;
    (5) Guidance on and assistance in--
    (i) Secondary school reentry;
    (ii) Alternative education programs for secondary school dropouts 
that lead to the receipt of a regular secondary school diploma;
    (iii) Entry into general educational development (GED) programs; or
    (iv) Entry into postsecondary education; and
    (6) Education or counseling services designed to improve the 
financial and economic literacy of students or the students' parents, 
including financial planning for postsecondary education.
    (b) Any project that has received funds under this part for at least 
two years must include as part of its core curriculum in the next and 
succeeding years, instruction in--
    (1) Mathematics through pre-calculus;
    (2) Laboratory science;
    (3) Foreign language;
    (4) Composition; and
    (5) Literature.

(Authority: 20 U.S.C. 1070a-13)

[75 FR 65785, Oct. 26, 2010]



Sec. 645.12  What services may regular Upward Bound and Upward Bound 
Math-Science projects provide?

    Any project assisted under this part may provide such services as--
    (a) Exposure to cultural events, academic programs, and other 
activities not usually available to disadvantaged youth;
    (b) Information, activities, and instruction designed to acquaint 
youth participating in the project with the range of career options 
available to the youth;
    (c) On-campus residential programs;
    (d) Mentoring programs involving elementary school or secondary 
school teachers or counselors, faculty members at institutions of higher 
education, students, or any combination of these persons;
    (e) Work-study positions where youth participating in the project 
are exposed to careers requiring a postsecondary degree;
    (f) Programs and activities as described in Sec. 645.11 that are 
specially designed for participants who are limited English proficient, 
participants from groups that are traditionally underrepresented in 
postsecondary education, participants who are individuals with 
disabilities, participants who are homeless children and youths, 
participants in or who are aging out of foster care, or other 
disconnected participants; and
    (g) Other activities designed to meet the purposes of the Upward 
Bound program in Sec. 645.1.

(Authority: 20 U.S.C. 1070a-13)

[75 FR 65785, Oct. 26, 2010]



Sec. 645.13  How are regular Upward Bound projects organized?

    (a) Regular Upward Bound projects--
    (1) Must provide participants with a summer instructional component 
that is designed to simulate a college-going experience for 
participants, and an academic year component; and
    (2) May provide a summer bridge component to those Upward Bound 
participants who have graduated from secondary school and intend to 
enroll in an institution of higher education in the following fall term. 
A summer bridge component provides participants with services and 
activities, including college courses, that aid in the transition from 
secondary education to postsecondary education.
    (b) A summer instructional component shall--
    (1) Be six weeks in length unless the grantee can demonstrate to the 
Secretary that a shorter period will not hinder the effectiveness of the 
project nor prevent the project from achieving

[[Page 370]]

its goals and objectives, and the Secretary approves that shorter 
period; and
    (2) Provide participants with one or more of the services described 
in Sec. 645.11 at least five days per week.
    (c)(1) Except as provided in paragraph (c)(2) of this section, an 
academic year component shall provide program participants with one or 
more of the services described in Sec. 645.11 on a weekly basis 
throughout the academic year and, to the extent possible, shall not 
prevent participants from fully participating in academic and 
nonacademic activities at the participants' secondary school.
    (2) If an Upward Bound project's location or the project's staff are 
not readily accessible to participants because of distance or lack of 
transportation, the grantee may, with the Secretary's permission, 
provide project services to participants every two weeks during the 
academic year.

(Authority: 20 U.S.C. 1070a-13)

[60 FR 4748, Jan. 24, 1995. Redesignated at 75 FR 65785, Oct. 26, 2010]



Sec. 645.14  What additional services do Upward Bound Math and Science
Centers provide and how are they organized?

    (a) In addition to the services that must be provided under 
Sec. 645.11(a) and may be provided under Sec. 645.11(b), an Upward Bound 
Math and Science Center must provide--
    (1) Intensive instruction in mathematics and science, including 
hands-on experience in laboratories, in computer facilities, and at 
field-sites;
    (2) Activities that will provide participants with opportunities to 
learn from mathematicians and scientists who are engaged in research and 
teaching at the applicant institution, or who are engaged in research or 
applied science at hospitals, governmental laboratories, or other public 
and private agencies;
    (3) Activities that will involve participants with graduate and 
undergraduate science and mathematics majors who may serve as tutors and 
counselors for participants; and
    (4) A summer instructional component that is designed to simulate a 
college-going experience that is at least six weeks in length and 
includes daily coursework and other activities as described in this 
section as well as in Sec. 645.11.
    (b) Math Science Upward Bound Centers may also include--
    (1) A summer bridge component consisting of math and science related 
coursework for those participants who have completed high school and 
intend on enrolling in an institution of higher education in the 
following fall term; and
    (2) An academic year component designed by the applicant to enhance 
achievement of project objectives in the most cost-effective way taking 
into account the distances involved in reaching participants in the 
project's target area.

(Approved by the Office of Management and Budget under control number 
1840-0550)

(Authority: 20 U.S.C. 1070a-11 and 1070a-13)

[60 FR 4748, Jan. 24, 1995. Redesignated at 75 FR 65785, Oct. 26, 2010]



Sec. 645.15  What additional services may Veterans Upward Bound
projects provide?

    In addition to the services that must be provided under Sec. 645.11, 
a Veterans Upward Bound project must--
    (a) Provide intensive basic skills development in those academic 
subjects required for successful completion of a high school equivalency 
program and for admission to postsecondary education programs;
    (b) Provide short-term remedial or refresher courses for veterans 
who are high school graduates but who have delayed pursuing 
postsecondary education. If the grantee is an institution of higher 
education, these courses shall not duplicate courses otherwise available 
to veterans at the institution;
    (c) Assist veterans in securing support services from other locally 
available resources such as the Veterans Administration, State veterans 
agencies, veterans associations, and other State and local agencies that 
serve veterans; and
    (d) Provide special services, including mathematics and science 
preparation,

[[Page 371]]

to enable veterans to make the transition to postsecondary education.

(Authority: 20 U.S.C. 1070a-11 and 1070a-13)

[60 FR 4748, Jan. 24, 1995. Redesignated and amended at 75 FR 65785, 
65786, Oct. 26, 2010]



               Subpart C_How Does One Apply for An Award?



Sec. 645.20  How many applications for an Upward Bound award may an
eligible applicant submit?

    (a) An applicant may submit more than one application as long as 
each application describes a project that serves a different target area 
or target school, or another designated different population.
    (b) For each grant competition, the Secretary designates, in the 
Federal Register notice inviting applications and other published 
application materials for the competition, the different populations for 
which an eligible entity may submit a separate application.

(Authority: 20 U.S.C. 1070a-13, 1221e-3)

[75 FR 65786, Oct. 26, 2010]



Sec. 645.21  What assurances must an applicant include in an application?

    (a) An applicant for a Regular Upward Bound award must assure the 
Secretary that--
    (1) Not less than two-thirds of the project's participants will be 
low-income individuals who are potential first-generation college 
students;
    (2) The remaining participants will be low-income individuals, 
potential first-generation college students, or individuals who have a 
high risk for academic failure;
    (3) No student will be denied participation in a project because the 
student would enter the project after the 9th grade; and
    (4) The project will collaborate with other Federal TRIO projects, 
GEAR UP projects, or programs serving similar populations that are 
serving the same target schools or target area in order to minimize the 
duplication of services and promote collaborations so that more students 
can be served.
    (b) An applicant for an Upward Bound Math and Science Centers award 
must assure the Secretary that--
    (1) Not less than two-thirds of the project's participants will be 
low-income individuals who are potential first-generation college 
students;
    (2) The remaining participants will be either low-income individuals 
or potential first-generation college students;
    (3) No student will be denied participation in a project because the 
student would enter the project after the 9th grade; and
    (4) The project will collaborate with other Federal TRIO projects, 
GEAR UP projects, or programs serving similar populations that are 
serving the same target schools or target area in order to minimize the 
duplication of services and promote collaborations so that more students 
can be served.
    (c) An applicant for a Veterans Upward Bound award must assure the 
Secretary that--
    (1) Not less than two-thirds of the project's participants will be 
low-income individuals who are potential first-generation college 
students;
    (2) The remaining participants will be low-income individuals, 
potential first-generation college students, or veterans who have a high 
risk for academic failure; and
    (3) The project will collaborate with other Federal TRIO projects or 
programs serving similar populations in the target area in order to 
minimize the duplication of services and promote collaborations so that 
more students can be served.

(Authority: 20 U.S.C. 1070a-13)

[75 FR 65786, Oct. 26, 2010]



             Subpart D_How Does the Secretary Make a Grant?



Sec. 645.30  How does the Secretary decide which grants to make?

    (a) The Secretary evaluates an application for a grant as follows:
    (1)(i) The Secretary evaluates the application on the basis of the 
selection criteria in Sec. 645.31.
    (ii) The maximum score for all the criteria in Sec. 645.31 is 100 
points. The maximum score for each criterion is indicated in parentheses 
with the criterion.

[[Page 372]]

    (2)(i) If an applicant for a new grant proposes to continue to serve 
substantially the same target population and schools that the applicant 
is serving under an expiring project, the Secretary evaluates the 
applicant's prior experience of high quality service delivery under the 
expiring Upward Bound project on the basis of the outcome criteria in 
Sec. 645.32.
    (ii) The maximum total score for all the criteria in Sec. 645.32 is 
15 points. The maximum score for each criterion is indicated in 
parentheses with the criterion.
    (iii) The Secretary evaluates the PE of an applicant for each of the 
three project years that the Secretary designates in the Federal 
Register notice inviting applications and the other published 
application materials for the competition.
    (iv) An applicant may earn up to 15 PE points for each of the 
designated project years for which annual performance report data are 
available.
    (v) The final PE score is the average of the scores for the three 
project years assessed.
    (b) The Secretary makes grants in rank order on the basis of the 
application's total scores under paragraphs (a)(1) and (a)(2) of this 
section.
    (c) If the total scores of two or more applications are the same and 
there are insufficient funds for these applications after the approval 
of higher-ranked applications, the Secretary uses whatever remaining 
funds are available to serve geographic areas that have been underserved 
by the Upward Bound Program.
    (d) The Secretary does not make a new grant to an applicant if the 
applicant's prior project involved the fraudulent use of program funds.

(Authority: 20 U.S.C. 1070a-11, 1070a-13)

[60 FR 4748, Jan. 24, 1995, as amended at 75 FR 65786, Oct. 26, 2010]



Sec. 645.31  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an application 
for a grant:
    (a) Need for the project (24 points). In determining need for an 
Upward Bound project, the Secretary reviews each type of project 
(Regular, Math and Science, or Veterans) using different need criteria. 
The criteria for each type of project contain the same maximum score of 
24 points and read as follows:
    (1) The Secretary evaluates the need for a Regular Upward Bound 
project in the proposed target area on the basis of information 
contained in the application which clearly demonstrates that--
    (i) The income level of families in the target area is low;
    (ii) The education attainment level of adults in the target area is 
low;
    (iii) Target high school dropout rates are high;
    (iv) College-going rates in target high schools are low;
    (v) Student/counselor ratios in the target high schools are high; 
and
    (vi) Unaddressed academic, social and economic conditions in the 
target area pose serious problems for low-income, potentially first-
generation college students.
    (2) The Secretary evaluates the need for an Upward Bound Math and 
Science Center in the proposed target area on the basis of--
    (i) The extent to which student performance on standardized 
achievement and assessment tests in mathematics and science in the 
target area is lower than State or national norms.
    (ii) The extent to which potential participants attend schools in 
the target area that lack the resources and coursework that would help 
prepare persons for entry into postsecondary programs in mathematics, 
science, or engineering;
    (iii) The extent to which such indicators as attendance data, 
dropout rates, college-going rates and student/counselor ratios in the 
target area indicate the importance of having additional educational 
opportunities available to low-income, first-generation students; and
    (iv) The extent to which there are eligible students in the target 
area who have demonstrated interest and capacity to pursue academic 
programs and careers in mathematics and science, and who could benefit 
from an Upward Bound Math and Science program.
    (3) The Secretary evaluates the need for a Veterans Upward Bound 
project

[[Page 373]]

in the proposed target area on the basis of clear evidence that shows--
    (i) The proposed target area lacks the services for eligible 
veterans that the applicant proposes to provide;
    (ii) A large number of veterans who reside in the target area are 
low income and potential first generation college students;
    (iii) A large number of veterans who reside in the target area who 
have not completed high school or, have completed high school but have 
not enrolled in a program of postsecondary education; and
    (iv) Other indicators of need for a Veterans Upward Bound project, 
including the presence of unaddressed academic or socio-economic 
problems of veterans in the area.
    (b) Objectives (9 points). The Secretary evaluates the quality of 
the applicant's objectives and proposed targets (percentages) in the 
following areas on the basis of the extent to which they are both 
ambitious, as related to the need data provided under paragraph (a) of 
this section, and attainable, given the project's plan of operation, 
budget, and other resources:
    (1) For Regular Upward Bound and Upward Bound Math and Science 
Centers--
    (i) (1 point) Academic performance (GPA);
    (ii) (1 point) Academic performance (standardized test scores);
    (iii) (2 points) Secondary school retention and graduation (with 
regular secondary school diploma);
    (iv) (1 point) Completion of rigorous secondary school program of 
study;
    (v) (3 points) Postsecondary enrollment; and
    (vi) (1 point) Postsecondary completion.
    (2) For Veterans Upward Bound--
    (i) (2 points) Academic performance (standardized test scores);
    (ii) (3 points) Education program retention and completion;
    (iii) (3 points) Postsecondary enrollment; and
    (iv) (1 point) Postsecondary completion.
    (c) Plan of operation (30 points). The Secretary determines the 
quality of the applicant's plan of operation by assessing the quality 
of--
    (1) The plan to inform the faculty and staff at the applicant 
institution or agency and the interested individuals and organizations 
throughout the target area of the goals and objectives of the project;
    (2) The plan for identifying, recruiting, and selecting participants 
to be served by the project;
    (3) The plan for assessing individual participant needs and for 
monitoring the academic progress of participants while they are in 
Upward Bound;
    (4) The plan for locating the project within the applicant's 
organizational structure;
    (5) The curriculum, services and activities that are planned for 
participants in both the academic year and summer components;
    (6) The planned timelines for accomplishing critical elements of the 
project;
    (7) The plan to ensure effective and efficient administration of the 
project, including, but not limited to, financial management, student 
records management, and personnel management;
    (8) The applicant's plan to use its resources and personnel to 
achieve project objectives and to coordinate the Upward Bound project 
with other projects for disadvantaged students;
    (9) The plan to work cooperatively with parents and key 
administrative, teaching, and counseling personnel at the target schools 
to achieve project objectives; and
    (10) A follow-up plan for tracking graduates of Upward Bound as they 
enter and continue in postsecondary education.
    (d) Applicant and community support (16 points). The Secretary 
evaluates the applicant and community support for the proposed project 
on the basis of the extent to which--
    (1) The applicant is committed to supplementing the project with 
resources that enhance the project such as: space, furniture and 
equipment, supplies, and the time and effort of personnel other than 
those employed in the project.
    (2) Resources secured through written commitments from community 
partners.
    (i) An applicant that is an institution of higher education must 
include in its

[[Page 374]]

application commitments from the target schools and community 
organizations;
    (ii) An applicant that is a secondary school must include in its 
commitments from institutions of higher education, community 
organizations, and, as appropriate, other secondary schools and the 
school district;
    (iii) An applicant that is a community organization must include in 
its application commitments from the target schools and institutions of 
higher education.
    (e) Quality of personnel (8 points). To determine the quality of 
personnel the applicant plans to use, the Secretary looks for 
information that shows--
    (1) The qualifications required of the project director, including 
formal training or work experience in fields related to the objectives 
of the project and experience in designing, managing, or implementing 
similar projects;
    (2) The qualifications required of each of the other personnel to be 
used in the project, including formal training or work experience in 
fields related to the objectives of the project;
    (3) The quality of the applicant's plan for employing personnel who 
have succeeded in overcoming barriers similar to those confronting the 
project's target population.
    (f) Budget and cost effectiveness (5 points). The Secretary reviews 
each application to determine the extent to which--
    (1) The budget for the project is adequate to support planned 
project services and activities; and
    (2) Costs are reasonable in relation to the objectives and scope of 
the project.
    (g) Evaluation plan (8 points). The Secretary evaluates the quality 
of the evaluation plan for the project on the basis of the extent to 
which the applicant's methods of evaluation--
    (1) Are appropriate to the project and include both quantitative and 
qualitative evaluation measures; and
    (2) Examine in specific and measurable ways the success of the 
project in making progress toward achieving its process and outcomes 
objectives.

(Approved by the Office of Management and Budget under control number 
1840-0550)

(Authority: 20 U.S.C. 1070a-11 and 1070a-13)

[60 FR 4748, Jan. 24, 1995, as amended at 75 FR 65786, Oct. 26, 2010]



Sec. 645.32  How does the Secretary evaluate prior experience?

    (a) In the case of an application described in Sec. 645.30(a)(2)(i), 
the Secretary--
    (1) Evaluates the applicant's performance under its expiring Upward 
Bound project;
    (2) Uses the approved project objectives for the applicant's 
expiring Upward Bound grant and the information the applicant submitted 
in its annual performance reports (APRs) to determine the number of PE 
points; and
    (3) May adjust a calculated PE score or decide not to award any PE 
points if other information such as audit reports, site visit reports, 
and project evaluation reports indicates the APR data used to calculate 
PE points are incorrect.
    (b) The Secretary does not award PE points for a given year to an 
applicant that does not serve at least 90 percent of the approved number 
of participants. For purposes of this section, the approved number of 
participants is the total number of participants the project would serve 
as agreed upon by the grantee and the Secretary.
    (c) The Secretary does not award PE points for the criteria 
specified in paragraphs (e)(1)(i) and (e)(2)(i) of this section (Number 
of participants) if the applicant did not serve at least the approved 
number of participants.
    (d) The Secretary uses the approved number of participants, or the 
actual number of participants served in a given year if greater than the 
approved number of participants, as the denominator for calculating 
whether the applicant has met its approved objectives related to the 
following PE criteria:
    (1) Regular Upward Bound and Upward Bound Math and Science Centers 
PE criteria in paragraph (e)(1)(ii) of this section (Academic 
performance) and paragraph (e)(1)(iii) of this section

[[Page 375]]

(Secondary school retention and graduation).
    (2) Veterans Upward Bound PE criteria in paragraph (e)(2)(iii) of 
this section (Education program retention and completion).
    (e) For purposes of the PE evaluation of grants awarded after 
January 1, 2009, the Secretary evaluates the applicant's PE on the basis 
of the following outcome criteria:
    (1) Regular Upward Bound and Upward Bound Math and Science Centers.
    (i) (3 points) Number of participants. Whether the applicant 
provided services to no less than the approved number of participants.
    (ii) Academic Performance. (A) (1.5 points) Whether the applicant 
met or exceeded its approved objective with regard to participants 
served during the project year who had a cumulative GPA at the end of 
the school year that was not less than the GPA specified in the approved 
objective.
    (B) (1.5 points) Whether the applicant met or exceeded its approved 
objective with regard to participants served during the project period 
who met the academic performance levels on standardized tests as 
specified in the approved objectives.
    (iii) (3 points) Secondary school retention and graduation. Whether 
the applicant met or exceeded its approved objective with regard to 
participants served during the project year who returned the next school 
year or graduated from secondary school with a regular secondary school 
diploma.
    (iv) (1.5 points) Rigorous secondary school program of study. 
Whether the applicant met or exceeded its approved objective with regard 
to current and prior participants with an expected high school 
graduation date in the school year who completed a rigorous secondary 
school program of study.
    (v) (3 points) Postsecondary enrollment. Whether the applicant met 
or exceeded its approved objective with regard current and prior 
participants with an expected high school graduation date in the school 
year who enrolled in a program of postsecondary education within the 
time period specified in the approved objective.
    (vi) (1.5 points) Postsecondary completion. Whether the applicant 
met or exceeded its approved objective with regard to participants who 
enrolled in a program of postsecondary education and attained a 
postsecondary degree within the number of years specified in the 
approved objective.
    (2) Veterans Upward Bound.
    (i) (3 points) Number of participants. Whether the applicant 
provided services to no less than the approved number of participants.
    (ii) (3 points) Academic improvement on standardized test. Whether 
the applicant met or exceeded its approved objective with regard to 
participants who completed their Veterans Upward Bound educational 
program during the project year and who improved their academic 
performance as measured by a standardized test taken by participants 
before and after receiving services from the project.
    (iii) (3 points) Education program retention and completion. Whether 
the applicant met or exceeded its approved objective with regard to 
participants served during the project year who remained in or completed 
their Veterans Upward Bound educational program.
    (iv) (3 points) Postsecondary enrollment. Whether the applicant met 
or exceeded its approved objective with regard to participants who 
completed their Veterans Upward Bound educational program and enrolled 
in an institution of higher education within the time period specified 
in the approved objective.
    (v) (3 points) Postsecondary completion. Whether the applicant met 
or exceeded its approved objective with regard to participants who 
enrolled in and completed a program of postsecondary education within 
the number of years specified in the approved objective.

(Approved by the Office of Management and Budget under control number 
1840-NEW9)

(Authority: 20 U.S.C. 1070a-11 and 1070a-13)

[75 FR 65787, Oct. 26, 2010]



Sec. 645.33  How does the Secretary set the amount of a grant?

    (a) The Secretary sets the amount of a grant on the basis of--
    (1) 34 CFR 75.232 and 75.233, for new grants; and

[[Page 376]]

    (2) 34 CFR 75.253, for the second and subsequent years of a project 
period.
    (b) If the circumstances described in section 402A(b)(3) of the HEA 
exist, the Secretary uses the available funds to set the amount of the 
grant at the lesser of--
    (1) $200,000; or
    (2) The amount requested by the applicant.

(Authority: 20 U.S.C. 1070a-11)

[60 FR 4748, Jan. 24, 1995, as amended at 75 FR 65787, Oct. 26, 2010]



Sec. 645.34  How long is a project period?

    A project period under the Upward Bound program is five years.

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65787, Oct. 26, 2010]



Sec. 645.35  What is the review process for unsuccessful applicants?

    (a) Technical or administrative error for applications not reviewed. 
(1) An applicant whose grant application was not evaluated during the 
competition may request that the Secretary review the application if--
    (i) The applicant has met all of the application submission 
requirements included in the Federal Register notice inviting 
applications and the other published application materials for the 
competition; and
    (ii) The applicant provides evidence demonstrating that the 
Department or an agent of the Department made a technical or 
administrative error in the processing of the submitted application.
    (2) A technical or administrative error in the processing of an 
application includes--
    (i) A problem with the system for the electronic submission of 
applications that was not addressed in accordance with the procedures 
included in the Federal Register notice inviting applications for the 
competition;
    (ii) An error in determining an applicant's eligibility for funding 
consideration, which may include, but is not limited to--
    (A) An incorrect conclusion that the application was submitted by an 
ineligible applicant;
    (B) An incorrect conclusion that the application exceeded the 
published page limit;
    (C) An incorrect conclusion that the applicant requested funding 
greater than the published maximum award; or
    (D) An incorrect conclusion that the application was missing 
critical sections of the application; and
    (iii) Any other mishandling of the application that resulted in an 
otherwise eligible application not being reviewed during the 
competition.
    (3)(i) If the Secretary determines that the Department or the 
Department's agent made a technical or administrative error, the 
Secretary has the application evaluated and scored.
    (ii) If the total score assigned the application would have resulted 
in funding of the application during the competition and the program has 
funds available, the Secretary funds the application prior to the re-
ranking of applications based on the second peer review of applications 
described in paragraph (c) of this section.
    (b) Administrative or scoring error for applications that were 
reviewed. (1) An applicant that was not selected for funding during a 
competition may request that the Secretary conduct a second review of 
the application if--
    (i) The applicant provides evidence demonstrating that the 
Department, an agent of the Department, or a peer reviewer made an 
administrative or scoring error in the review of its application; and
    (ii) The final score assigned to the application is within the 
funding band described in paragraph (d) of this section.
    (2) An administrative error relates to either the PE points or the 
scores assigned to the application by the peer reviewers.
    (i) For PE points, an administrative error includes mathematical 
errors made by the Department or the Department's agent in the 
calculation of the PE points or a failure to correctly add the earned PE 
points to the peer reviewer score.
    (ii) For the peer review score, an administrative error is applying 
the wrong peer reviewer scores to an application.

[[Page 377]]

    (3)(i) A scoring error relates only to the peer review process and 
includes errors caused by a reviewer who, in assigning points--
    (A) Uses criteria not required by the applicable law or program 
regulations, the Federal Register notice inviting applications, the 
other published application materials for the competition, or guidance 
provided to the peer reviewers by the Secretary; or
    (B) Does not consider relevant information included in the 
appropriate section of the application.
    (ii) The term ``scoring error'' does not include--
    (A) A peer reviewer's appropriate use of his or her professional 
judgment in evaluating and scoring an application;
    (B) Any situation in which the applicant did not include information 
needed to evaluate its response to a specific selection criterion in the 
appropriate section of the application as stipulated in the Federal 
Register notice inviting applications or the other published application 
materials for the competition; or
    (C) Any error by the applicant.
    (c) Procedures for the second review. (1) To ensure the timely 
awarding of grants under the competition, the Secretary sets aside a 
percentage of the funds allotted for the competition to be awarded after 
the second review is completed.
    (2) After the competition, the Secretary makes new awards in rank 
order as described in Sec. 645.30 based on the available funds for the 
competition minus the funds set aside for the second review.
    (3) After the Secretary issues a notification of grant award to 
successful applicants, the Secretary notifies each unsuccessful 
applicant in writing as to the status of its application and the funding 
band for the second review and provides copies of the peer reviewers' 
evaluations of the applicant's application and the applicant's PE score, 
if applicable.
    (4) An applicant that was not selected for funding following the 
competition as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section, may request a second review if the 
applicant demonstrates that the Department, the Department's agent, or a 
peer reviewer made an administrative or scoring error as provided in 
paragraph (b) of this section.
    (5) An applicant whose application was not funded after the first 
review as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section has at least 15 calendar days after 
receiving notification that its application was not funded in which to 
submit a written request for a second review in accordance with the 
instructions and due date provided in the Secretary's written 
notification.
    (6) An applicant's written request for a second review must be 
received by the Department or submitted electronically to the designated 
e-mail or Web address by the due date and time established by the 
Secretary.
    (7) If the Secretary determines that the Department or the 
Department's agent made an administrative error that relates to the PE 
points awarded, as described in paragraph (b)(2)(i) of this section, the 
Secretary adjusts the applicant's PE score to reflect the correct number 
of PE points. If the adjusted score assigned to the application would 
have resulted in funding of the application during the competition and 
the program has funds available, the Secretary funds the application 
prior to the re-ranking of applications based on the second peer review 
of applications described in paragraph (c)(9) of this section.
    (8) If the Secretary determines that the Department, the 
Department's agent or the peer reviewer made an administrative error 
that relates to the peer reviewers' score(s), as described in paragraph 
(b)(2)(ii) of this section, the Secretary adjusts the applicant's peer 
reviewers' score(s) to correct the error. If the adjusted score assigned 
to the application would have resulted in funding of the application 
during the competition and the program has funds available, the 
Secretary funds the application prior to the re-ranking of applications 
based on the second peer review of applications described in paragraph 
(c)(9) of this section.

[[Page 378]]

    (9) If the Secretary determines that a peer reviewer made a scoring 
error, as described in paragraph (b)(3) of this section, the Secretary 
convenes a second panel of peer reviewers in accordance with the 
requirements in section 402A(c)(8)(C)(iv)(III) of the HEA.
    (10) The average of the peer reviewers' scores from the second peer 
review are used in the second ranking of applications. The average score 
obtained from the second peer review panel is the final peer reviewer 
score for the application and will be used even if the second review 
results in a lower score for the application than that obtained in the 
initial review.
    (11) For applications in the funding band, the Secretary funds these 
applications in rank order based on adjusted scores and the available 
funds that have been set aside for the second review of applications.
    (d) Process for establishing a funding band. (1) For each 
competition, the Secretary establishes a funding band for the second 
review of applications.
    (2) The Secretary establishes the funding band for each competition 
based on the amount of funds the Secretary has set aside for the second 
review of applications.
    (3) The funding band is composed of those applications--
    (i) With a rank-order score before the second review that is below 
the lowest score of applications funded after the first review; and
    (ii) That would be funded if the Secretary had 150 percent of the 
funds that were set aside for the second review of applications for the 
competition.
    (e) Final decision. (1) The Secretary's determination of whether the 
applicant has met the requirements for a second review and the 
Secretary's decision on re-scoring of an application are final and not 
subject to further appeal or challenge.
    (2) An application that scored below the established funding band 
for the competition is not eligible for a second review.

(Approved by the Office of Management and Budget under control number 
1840-NEW4)

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65788, Oct. 26, 2010]



           Subpart E_What Conditions Must Be Met by a Grantee?



Sec. 645.40  What are allowable costs?

    The cost principles that apply to the Upward Bound Program are in 2 
CFR part 200, subpart E. Allowable costs include the following if they 
are reasonably related to the objectives of the project:
    (a) In-service training of project staff.
    (b) Rental of space if space is not available at the host 
institution and the space rented is not owned by the host institution.
    (c) For participants in an Upward Bound residential summer 
component, room and board--computed on a weekly basis--not to exceed the 
weekly rate the host institution charges regularly enrolled students at 
the institution.
    (d) Room and board for those persons responsible for dormitory 
supervision of participants during a residential summer component.
    (e) Educational pamphlets and similar materials for distribution at 
workshops for the parents of participants.
    (f) Student activity fees for Upward Bound participants.
    (g) Admissions fees, transportation, Upward Bound T-shirts, and 
other costs necessary to participate in field trips, attend educational 
activities, visit museums, and attend other events that have as their 
purpose the intellectual, social, and cultural development of 
participants.
    (h) Costs for one project-sponsored banquet or ceremony.
    (i) Tuition costs for postsecondary credit courses at the host 
institution for participants in the summer bridge component.
    (j)(1) Accident insurance to cover any injuries to a project 
participant while participating in a project activity; and
    (2) Medical insurance and health service fees for the project 
participants while participating full-time in the summer component.
    (k) Courses in English language instruction for project participants 
with limited proficiency in English and for whom English language 
proficiency is necessary to succeed in postsecondary education.

[[Page 379]]

    (l) Transportation costs of participants for regularly scheduled 
project activities.
    (m) Transportation, meals, and overnight accommodations for staff 
members when they are required to accompany participants in project 
activities such as field trips.
    (n) Purchase, lease, or rental of computer hardware, software, and 
other equipment, service agreements for such equipment, and supplies 
that support the delivery of services to participants, including 
technology used by participants in a rigorous secondary school program 
of study.
    (o) Purchase, lease, or rental of computer equipment and software, 
service agreements for such equipment, and supplies needed for project 
administration and recordkeeping.
    (p) Fees required for college admissions applications or entrance 
examinations if--
    (1) A waiver of the fee is unavailable;
    (2) The fee is paid by the grantee to a third party on behalf of a 
participant.
    (q) Tuition costs for a course that is part of a rigorous secondary 
school program of study if--
    (1) The course or a similar course is not offered at the secondary 
school that the participant attends or at another school within the 
school district;
    (2) The grantee demonstrates to the Secretary's satisfaction that 
using grant funds is the most cost-effective way to deliver the course 
or courses necessary for the completion of a rigorous secondary school 
program of study for program participants;
    (3) The course is taken through an accredited institution of higher 
education;
    (4) The course is comparable in content and rigor to courses that 
are part of a rigorous secondary school program of study as defined in 
Sec. 645.6(b);
    (5) The secondary school accepts the course as meeting one or more 
of the course requirements for obtaining a regular secondary school 
diploma;
    (6) A waiver of the tuition costs is unavailable;
    (7) The tuition is paid with Upward Bound grant funds to an 
institution of higher education on behalf of a participant; and
    (8) The Upward Bound project pays for no more than the equivalent of 
two courses for a participant each school year.

(Authority: 20 U.S.C. 1070a-11 and 1070a-13)

[60 FR 4748, Jan. 24, 1995, as amended at 75 FR 65789, Oct. 26, 2010; 79 
FR 76103, Dec. 19, 2014]



Sec. 645.41  What are unallowable costs?

    Costs that may not be charged against a grant under this program 
include the following:
    (a) Research not directly related to the evaluation or improvement 
of the project.
    (b) Meals for staff except as provided in Sec. 645.40 (d) and (m) 
and in paragraph (c) of this section.
    (c) Room and board for administrative and instructional staff 
personnel who do not have responsibility for dormitory supervision of 
project participants during a residential summer component unless these 
costs are approved by the Secretary.
    (d) Room and board for participants in Veterans Upward Bound 
projects.
    (e) Construction, renovation or remodeling of any facilities.
    (f) Tuition, stipends, or any other form of student financial aid 
for project staff beyond that provided to employees of the grantee as 
part of its regular fringe benefit package.

(Authority: 20 U.S.C. 1070a-11 and 1070a-13)



Sec. 645.42  What are Upward Bound stipends?

    (a) An Upward Bound project may provide stipends for all 
participants who participate on a full-time basis.
    (b) In order to receive the stipend, the participant must show 
evidence of satisfactory participation in activities of the project 
including--
    (1) Regular attendance; and
    (2) Performance in accordance with standards established by the 
grantee and described in the application.
    (c) The grantee may prorate the amount of the stipend according to 
the number of scheduled sessions in which the student participated.
    (d) The following rules govern the amounts of stipends a grantee is 
permitted to provide:

[[Page 380]]

    (1) For Regular Upward Bound projects and Upward Bound Math and 
Science Centers--
    (i) For the academic year component, the stipend may not exceed $40 
per month; and
    (ii) The stipend may not exceed $60 per month for the summer school 
recess for a period not to exceed three months, except that youth 
participating in a work-study position may be paid $300 per month during 
the summer school recess.
    (2) For Veterans Upward Bound projects, the stipend may not exceed 
$40 per month.

(Authority: 20 U.S.C. 1070a-11 and 1070a-13)

[60 FR 4748, Jan. 24, 1995, as amended at 75 FR 65789, Oct. 26, 2010]



Sec. 645.43  What other requirements must a grantee meet?

    (a) Number of Participants. For each year of the project period, a 
grantee must serve at least the number of participants that the 
Secretary identifies in the Federal Register notice inviting 
applications for a competition. Through this notice, the Secretary also 
provides the minimum and maximum grant award amounts for the 
competition.
    (b) Project director. (1) A grantee must employ a full-time project 
director unless--
    (i) The director is also administering one or two additional 
programs for disadvantaged students operated by the sponsoring 
institution or agency; or
    (ii) The Secretary grants a waiver of this requirement.
    (2) The grantee must give the project director sufficient authority 
to administer the project effectively.
    (3) The Secretary waives the requirements in paragraph (b)(1) of 
this section if the applicant demonstrates that the project director 
will be able to effectively administer more than three programs and that 
this arrangement would promote effective coordination between the 
program and other Federal TRIO programs (sections 402B through 402F of 
the HEA) and similar programs funded through other sources.
    (c) Recordkeeping. For each participant, a grantee must maintain a 
record of--
    (1) The basis for the grantee's determination that the participant 
is eligible to participate in the project under Sec. 645.3;
    (2) The basis for the grantee's determination that the participant 
has a need for academic support in order to pursue successfully a 
program of education beyond secondary school;
    (3) The services that are provided to the participant;
    (4) The educational progress of the participant during high school 
and, to the degree possible, during the participant's pursuit of a 
postsecondary education program; and
    (5) To the extent practicable, any services the participant receives 
during the project year from another Federal TRIO program or another 
federally funded program that serves populations similar to those served 
under the UB program.

(Approved by the Office of Management and Budget under control number 
1840-NEW9)

(Authority: 20 U.S.C. 1070a-11 and 1070a-13).

[60 FR 4748, Jan. 24, 1995, as amended at 75 FR 65789, Oct. 26, 2010]



PART 646_STUDENT SUPPORT SERVICES PROGRAM--Table of Contents



                            Subpart A_General

Sec.
646.1  What is the Student Support Services Program?
646.2  Who is eligible to receive a grant?
646.3  Who is eligible to participate in a Student Support Services 
          project?
646.4  What activities and services does a project provide
646.5  How long is a project period?
646.6  What regulations apply?
646.7  What definitions apply?

               Subpart B_How Does One Apply for an Award?

646.10  How many applications may an eligible applicant submit and for 
          what different populations may an eligible application be 
          submitted?
646.11  What assurances and other information must an applicant include 
          in an application?

             Subpart C_How Does the Secretary Make a Grant?

646.20  How does the Secretary decide which new grants to make?

[[Page 381]]

646.21  What selection criteria does the Secretary use to evaluate an 
          application?
646.22  How does the Secretary evaluate prior experience?
646.23  How does the Secretary set the amount of a grant?
646.24  What is the review process for unsuccessful applicants?

           Subpart D_What Conditions Must Be Met by a Grantee?

646.30  What are allowable costs?
646.31  What are unallowable costs?
646.32  What other requirements must a grantee meet?
646.33  What are the matching requirements for a grantee that uses 
          Student Support Services program funds for student grant aid?

    Authority: 20 U.S.C. 1070a-11 and 1070a-14, unless otherwise noted.

    Source: 61 FR 38537, July 24, 1996, unless otherwise noted.



                            Subpart A_General



Sec. 646.1  What is the Student Support Services Program?

    The Student Support Services Program provides grants for projects 
designed to--
    (a) Increase the college retention and graduation rates of eligible 
students;
    (b) Increase the transfer rate of eligible students from two-year to 
four-year institutions; and
    (c) Foster an institutional climate supportive of the success of 
students who are limited English proficient, students from groups that 
are traditionally underrepresented in postsecondary education, 
individuals with disabilities, homeless children and youth, foster care 
youth, or other disconnected students; and
    (d) Improve the financial and economic literacy of students in areas 
such as--
    (1) Basic personal income, household money management, and financial 
planning skills; and
    (2) Basic economic decision-making skills.

(Authority: 20 U.S.C. 1070a-11 and 1070a-14)

[61 FR 38537, July 24, 1996, as amended at 75 FR 65790, Oct. 26, 2010]



Sec. 646.2  Who is eligible to receive a grant?

    An institution of higher education or a combination of institutions 
of higher education is eligible to receive a grant to carry out a 
Student Support Services project.

(Authority: 20 U.S.C. 1070a-14)



Sec. 646.3  Who is eligible to participate in a Student Support 
Services project?

    A student is eligible to participate in a Student Support Services 
project if the student meets all of the following requirements:
    (a) Is a citizen or national of the United States or meets the 
residency requirements for Federal student financial assistance.
    (b) Is enrolled at the grantee institution or accepted for 
enrollment in the next academic term at that institution.
    (c) Has a need for academic support, as determined by the grantee, 
in order to pursue successfully a postsecondary educational program.
    (d) Is--
    (1) A low-income individual;
    (2) A first generation college student; or
    (3) An individual with disabilities.

(Authority: 20 U.S.C. 1070a-14)



Sec. 646.4  What activities and services does a project provide?

    (a) A Student Support Services project must provide the following 
services:
    (1) Academic tutoring, directly or through other services provided 
by the institution, to enable students to complete postsecondary 
courses, which may include instruction in reading, writing, study 
skills, mathematics, science, and other subjects.
    (2) Advice and assistance in postsecondary course selection.
    (3)(i) Information on both the full range of Federal student 
financial aid programs and benefits (including Federal Pell Grant awards 
and loan forgiveness) and resources for locating public and private 
scholarships; and
    (ii) Assistance in completing financial aid applications, including 
the Free Application for Federal Student Aid.

[[Page 382]]

    (4) Education or counseling services designed to improve the 
financial and economic literacy of students, including financial 
planning for postsecondary education.
    (5) Activities designed to assist participants enrolled in four-year 
institutions of higher education in applying for admission to, and 
obtaining financial assistance for enrollment in, graduate and 
professional programs.
    (6) Activities designed to assist students enrolled in two-year 
institutions of higher education in applying for admission to, and 
obtaining financial assistance for enrollment in, a four-year program of 
postsecondary education.
    (b) A Student Support Services project may provide the following 
services:
    (1) Individualized counseling for personal, career, and academic 
matters provided by assigned counselors.
    (2) Information, activities, and instruction designed to acquaint 
students participating in the project with the range of career options 
available to the students.
    (3) Exposure to cultural events and academic programs not usually 
available to disadvantaged students.
    (4) Mentoring programs involving faculty or upper class students, or 
a combination thereof.
    (5) Securing temporary housing during breaks in the academic year 
for--
    (i) Students who are homeless children and youths or were formerly 
homeless children and youths; and
    (ii) Foster care youths.
    (6) Programs and activities as described in paragraph (a) of this 
section or paragraphs (b)(1) through (b)(4) of this section that are 
specially designed for students who are limited English proficient, 
students from groups that are traditionally underrepresented in 
postsecondary education, students who are individuals with disabilities, 
students who are homeless children and youths, students who are foster 
care youth, or other disconnected students.
    (7) Other activities designed to meet the purposes of the Student 
Support Services Program in Sec. 646.1.

(Authority: 20 U.S.C. 1070a-14)

[75 FR 65790, Oct. 26, 2010]



Sec. 646.5  How long is a project period?

    A project period under the Student Support Services program is five 
years.

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65790, Oct. 26, 2010]



Sec. 646.6  What regulations apply?

    The following regulations apply to the Student Support Services 
Program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) in 34 CFR parts 75 (except for Secs. 75.215 through 75.221), 77, 
79, 82, 84, 86, 97, 98, and 99.
    (b) The regulations in this part 646.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1070a-11 and 1070a-14)

[61 FR 38537, July 24, 1996, as amended at 75 FR 65790, Oct. 26, 2010; 
79 FR 76103, Dec. 19, 2014]



Sec. 646.7  What definitions apply?

    (a) General definitions. The following terms used in this part are 
defined in 2 CFR part 200, subpart A, or 34 CFR 77.1:

Applicant
Application
Award
Budget
Budget Period
Department
EDGAR
Equipment
Facilities
Fiscal year
Grant
Grant Period
Grantee
Project
Project period
Public
Secretary
Supplies

    (b) Other definitions. The following definitions also apply to this 
part:
    Academic need with reference to a student means a student whom the 
grantee determines needs one or more of the services stated under 
Sec. 646.4 to succeed in a postsecondary educational program.
    Combination of institutions of higher education means two or more 
institutions of higher education that have entered into a cooperative 
agreement for the purpose of carrying out a common objective, or an 
entity designated or created by a group of institutions of

[[Page 383]]

higher education for the purpose of carrying out a common objective on 
their behalf.
    Different campus means a site of an institution of higher education 
that--
    (1) Is geographically apart from the main campus of the institution;
    (2) Is permanent in nature; and
    (3) Offers courses in educational programs leading to a degree, 
certificate, or other recognized educational credential.
    Different population means a group of individuals that an eligible 
entity desires to serve through an application for a grant under the 
Student Support Services program and that--
    (1) Is separate and distinct from any other population that the 
entity has applied for a grant to serve; or
    (2) While sharing some of the same needs as another population that 
the eligible entity has applied for a grant to serve, has distinct needs 
for specialized services.
    Financial and economic literacy means knowledge about personal 
financial decision-making, which may include but is not limited to 
knowledge about--
    (1) Personal and family budget planning;
    (2) Understanding credit building principles to meet long-term and 
short-term goals (e.g., loan to debt ratio, credit scoring, negative 
impacts on credit scores);
    (3) Cost planning for postsecondary or postbaccalaureate education 
(e.g., spending, saving, personal budgeting);
    (4) College cost of attendance (e.g., public vs. private, tuition 
vs. fees, personal costs);
    (5) Financial assistance (e.g., searches, application processes, 
differences between private and government loans, assistanceships); and
    (6) Assistance in completing the Free Application for Federal 
Student Aid (FAFSA).
    First generation college student means--
    (1) A student neither of whose natural or adoptive parents received 
a baccalaureate degree;
    (2) A student who, prior to the age of 18, regularly resided with 
and received support from only one parent and whose supporting parent 
did not receive a baccalaureate degree; or
    (3) An individual who, prior to the age of 18, did not regularly 
reside with or receive support from a natural or an adoptive parent.
    Foster care youth means youth who are in foster care or are aging 
out of the foster care system.
    Homeless children and youth means persons defined in section 725 of 
the McKinney-Vento Homeless Assistance Act (42 U.S.C. 1143a).
    Individual with a disability means a person who has a disability, as 
that term is defined in section 12102 of the Americans with Disabilities 
Act (42 U.S.C. 12101 et seq.).
    Institution of higher education means an educational institution as 
defined in sections 101 and 102 of the Act.
    Limited English proficiency with reference to an individual, means a 
person whose native language is other than English and who has 
sufficient difficulty speaking, reading, writing, or understanding the 
English language to deny that individual the opportunity to learn 
successfully in classrooms in which English is the language of 
instruction.
    Low-income individual means an individual whose family's taxable 
income did not exceed 150 percent of the poverty level amount in the 
calendar year preceding the year in which the individual initially 
participated in the project. The poverty level amount is determined by 
using criteria of poverty established by the Bureau of the Census of the 
U.S. Department of Commerce.
    Participant means an individual who--
    (1) Is determined to be eligible to participate in the project under 
Sec. 646.3; and
    (2) Receives project services that the grantee has determined to be 
sufficient to increase the individual's chances for success in a 
postsecondary educational program.
    Sufficient financial assistance means the amount of financial aid 
offered a Student Support Services student, inclusive of Federal, State, 
local, private, and institutional aid which, together with parent or 
student contributions, is equal to the cost of attendance

[[Page 384]]

as determined by a financial aid officer at the institution.

(Authority: 20 U.S.C. 1070a-11 and 1070a-14)

[61 FR 38537, July 24, 1996, as amended at 75 FR 65790, Oct. 26, 2010; 
79 FR 76103, Dec. 19, 2014]



               Subpart B_How Does One Apply for an Award?

    Source: 75 FR 65791, Oct. 26, 2010, unless otherwise noted.



Sec. 646.10  How many applications may an eligible applicant submit
and for what different populations may an eligible application be
submitted?

    (a) An eligible applicant may submit more than one application as 
long as each application describes a project that serves a different 
campus or a designated different population.
    (b) For each grant competition, the Secretary designates, in the 
Federal Register notice inviting applications and other published 
application materials for the competition, the different populations for 
which an eligible entity may submit a separate application.

(Authority: 20 U.S.C. 1070a-11 and 1070a-14; 20 U.S.C. 1221e-3)



Sec. 646.11  What assurances and other information must an applicant
include in an application?

    (a) An applicant must assure the Secretary in the application that--
    (1) Not less than two-thirds of the project participants will be--
    (i) Low-income individuals who are first generation college 
students; or
    (ii) Individuals with disabilities;
    (2) The remaining project participants will be low-income 
individuals, first generation college students, or individuals with 
disabilities; and
    (3) Not less than one-third of the individuals with disabilities 
served also will be low-income individuals.
    (b) The applicant must describe in the application its efforts, and 
where applicable, past history, in--
    (1) Providing sufficient financial assistance to meet the full 
financial need of each student in the project; and
    (2) Maintaining the loan burden of each student in the project at a 
manageable level.
    (c) The applicant must assure the Secretary in the application that 
a student will not be served by more than one SSS project at any one 
time and that the SSS project will collaborate with other SSS and McNair 
projects and other State and institutional programs at the grantee-
institution so that more students can be served.
    (d) The applicant must assure the Secretary in the application that 
the institution's financial aid office will consult with the SSS project 
with respect to which SSS participants should receive grant aid and the 
amount of the grant aid awards.

(Approved by the Office of Management and Budget under control number 
1840-NEW5)

(Authority: 20 U.S.C. 1070a-14)



             Subpart C_How Does the Secretary Make a Grant?



Sec. 646.20  How does the Secretary decide which new grants to make?

    (a) The Secretary evaluates an application for a new grant as 
follows:
    (1)(i) The Secretary evaluates the application on the basis of the 
selection criteria in Sec. 646.21.
    (ii) The maximum score for all the criteria in Sec. 646.21 is 100 
points. The maximum score for each criterion is indicated in parentheses 
with the criterion.
    (2)(i) If an application for a new grant proposes to continue to 
serve substantially the same population and campus that the applicant is 
serving under an expiring grant, the Secretary evaluates the applicant's 
prior experience of high quality service delivery under the expiring 
grant on the basis of the outcome criteria in Sec. 646.22.
    (ii) The maximum total score for all the criteria in Sec. 646.22 is 
15 points. The maximum score for each criterion is indicated in 
parentheses with the criterion.
    (iii) The Secretary evaluates the PE of an applicant for each of the 
three project years that the Secretary designates in the Federal 
Register notice inviting applications and the other published 
application materials for the competition.
    (iv) An applicant may earn up to 15 PE points for each of the 
designated

[[Page 385]]

project years for which annual performance report data are available.
    (v) The final PE score is the average of the scores for the three 
project years assessed.
    (b) The Secretary makes new grants in rank order on the basis of the 
applications' total scores under paragraphs (a)(1) and (a)(2) of this 
section.
    (c) If the total scores of two or more applications are the same and 
there is insufficient money available to fully fund them both after 
funding the higher-ranked applications, the Secretary chooses among the 
tied applications so as to serve geographic areas that have been 
underserved by the Student Support Services Program.
    (d) The Secretary does not make a new grant to an applicant if the 
applicant's prior project involved the fraudulent use of program funds.

(Authority: 20 U.S.C. 1070a-11 and 1070a-14)

[61 FR 38537, July 24, 1996, as amended at 75 FR 65791, Oct. 26, 2010]



Sec. 646.21  What selection criteria does the Secretary use to evaluate
an application?

    The Secretary uses the following criteria to evaluate an application 
for a new grant:
    (a) Need for the project (24 points). The Secretary evaluates the 
need for a Student Support Services project proposed at the applicant 
institution on the basis of the extent to which the application contains 
clear evidence of--
    (1) (8 points) A high number or percentage, or both, of students 
enrolled or accepted for enrollment at the applicant institution who 
meet the eligibility requirements of Sec. 646.3;
    (2) (8 points) The academic and other problems that eligible 
students encounter at the applicant institution; and
    (3) (8 points) The differences between eligible Student Support 
Services students compared to an appropriate group, based on the 
following indicators:
    (i) Retention and graduation rates.
    (ii) Grade point averages.
    (iii) Graduate and professional school enrollment rates (four-year 
colleges only).
    (iv) Transfer rates from two-year to four-year institutions (two-
year colleges only).
    (b) Objectives (8 points). The Secretary evaluates the quality of 
the applicant's proposed objectives in the following areas on the basis 
of the extent to which they are both ambitious, as related to the need 
data provided under paragraph (a) of this section, and attainable, given 
the project's plan of operation, budget, and other resources.
    (1) (3 points) Retention in postsecondary education.
    (2) (2 points) In good academic standing at grantee institution.
    (3) Two-year institutions only. (i) (1 point) Certificate or degree 
completion; and
    (ii) (2 points) Certificate or degree completion and transfer to a 
four-year institution.
    (4) Four-year institutions only. (3 points) Completion of a 
baccalaureate degree.
    (c) Plan of operation (30 points). The Secretary evaluates the 
quality of the applicant's plan of operation on the basis of the 
following:
    (1) (3 points) The plan to inform the institutional community 
(students, faculty, and staff) of the goals, objectives, and services of 
the project and the eligibility requirements for participation in the 
project.
    (2) (3 points) The plan to identify, select, and retain project 
participants with academic need.
    (3) (4 points) The plan for assessing each individual participant's 
need for specific services and monitoring his or her academic progress 
at the institution to ensure satisfactory academic progress.
    (4) (10 points) The plan to provide services that address the goals 
and objectives of the project.
    (5) (10 points) The applicant's plan to ensure proper and efficient 
administration of the project, including the organizational placement of 
the project; the time commitment of key project staff; the specific 
plans for financial management, student records management, and 
personnel management; and, where appropriate, its plan for coordination 
with other programs for disadvantaged students.
    (d) Institutional commitment (16 points). The Secretary evaluates 
the

[[Page 386]]

institutional commitment to the proposed project on the basis of the 
extent to which the applicant has--
    (1) (6 points) Committed facilities, equipment, supplies, personnel, 
and other resources to supplement the grant and enhance project 
services;
    (2) (6 points) Established administrative and academic policies that 
enhance participants' retention at the institution and improve their 
chances of graduating from the institution;
    (3) (2 points) Demonstrated a commitment to minimize the dependence 
on student loans in developing financial aid packages for project 
participants by committing institutional resources to the extent 
possible; and
    (4) (2 points) Assured the full cooperation and support of the 
Admissions, Student Aid, Registrar and data collection and analysis 
components of the institution.
    (e) Quality of personnel (9 points). To determine the quality of 
personnel the applicant plans to use, the Secretary looks for 
information that shows--
    (1) (3 points) The qualifications required of the project director, 
including formal education and training in fields related to the 
objectives of the project, and experience in designing, managing, or 
implementing Student Support Services or similar projects;
    (2) (3 points) The qualifications required of other personnel to be 
used in the project, including formal education, training, and work 
experience in fields related to the objectives of the project; and
    (3) (3 points) The quality of the applicant's plan for employing 
personnel who have succeeded in overcoming barriers similar to those 
confronting the project's target population.
    (f) Budget (5 points). The Secretary evaluates the extent to which 
the project budget is reasonable, cost-effective, and adequate to 
support the project.
    (g) Evaluation plan (8 points). The Secretary evaluates the quality 
of the evaluation plan for the project on the basis of the extent to 
which--
    (1) The applicant's methods for evaluation--
    (i) (2 points) Are appropriate to the project and include both 
quantitative and qualitative evaluation measures; and
    (ii) (2 points) Examine in specific and measurable ways, using 
appropriate baseline data, the success of the project in improving 
academic achievement, retention and graduation of project participants; 
and
    (2) (4 points) The applicant intends to use the results of an 
evaluation to make programmatic changes based upon the results of 
project evaluation.

(Approved by the Office of Management and Budget under control number 
1840-NEW5)

(Authority: 20 U.S.C. 1070a-14)

[61 FR 38537, July 24, 1996, as amended at 75 FR 65791, Oct. 26, 2010]



Sec. 646.22  How does the Secretary evaluate prior experience?

    (a) In the case of an application described in Sec. 646.20(a)(2)(i), 
the Secretary--
    (1) Evaluates the applicant's performance under its expiring Student 
Support Services project;
    (2) Uses the approved project objectives for the applicant's 
expiring Student Support Services grant and the information the 
applicant submitted in its annual performance reports (APRs) to 
determine the number of prior PE points; and
    (3) May adjust a calculated PE score or decide not to award PE 
points if other information such as audit reports, site visit reports, 
and project evaluation reports indicates the APR data used to calculate 
PE points are incorrect.
    (b) The Secretary does not award PE points for a given year to an 
applicant that does not serve at least 90 percent of the approved number 
of participants. For purposes of this section, the approved number of 
participants is the total number of participants the project would serve 
as agreed upon by the grantee and the Secretary.
    (c) The Secretary does not award PE points for the criterion 
specified in paragraph (e)(1) of this section (Number of participants) 
if the applicant did not serve at least the approved number of 
participants.
    (d) The Secretary uses the approved number of participants, or the 
actual number of participants served in a

[[Page 387]]

given year if greater than the approved number of participants, as the 
denominator for calculating whether the applicant has met its approved 
objectives related to paragraph (e)(2) of this section (Postsecondary 
retention) and paragraph (e)(3) of this section (Good academic 
standing).
    (e) For purposes of the PE evaluation of grants awarded after 
January 1, 2009, the Secretary evaluates the applicant's PE on the basis 
of the following outcome criteria:
    (1) (3 points) Number of participants. Whether the applicant 
provided services to no less than the approved number of participants.
    (2) (4 points) Postsecondary retention. Whether the applicant met or 
exceeded its objective regarding the participants served during the 
project year who continue to be enrolled in a program of postsecondary 
education from one academic year to the beginning of the next academic 
year or who complete a program of postsecondary education at the grantee 
institution during the academic year or transfer from a two-year 
institution to a four-year institution during the academic year.
    (3) (4 points) Good academic standing. Whether the applicant met or 
exceeded its objective regarding the participants served during the 
project year who are in good academic standing at the grantee 
institution.
    (4) (4 points) Degree completion (for an applicant institution of 
higher education offering primarily a baccalaureate or higher degree). 
Whether the applicant met or exceeded its objective regarding the 
current and prior participants receiving a baccalaureate degree at the 
grantee institution within the specified number of years.
    (5) Degree completion and transfer (for an applicant institution of 
higher education offering primarily an associate degree). Whether the 
applicant met or exceeded its objectives regarding the current and prior 
participants at the grantee institution who--
    (i) (2 points) Complete a degree or certificate within the number of 
years specified in the approved objective; and
    (ii) (2 points) Transfer within the number of years specified in the 
approved objective to institutions of higher education that offer 
baccalaureate degrees.

(Approved by the Office of Management and Budget under control number 
1840-NEW10)

(Authority: 20 U.S.C. 1070a-11; 1070a-14)

[75 FR 65792, Oct. 26, 2010]



Sec. 646.23  How does the Secretary set the amount of a grant?

    (a) The Secretary sets the amount of a grant on the basis of--
    (1) 34 CFR 75.232 and 75.233, for new grants; and
    (2) 34 CFR 75.253, for the second and subsequent years of a project 
period.
    (b) If the circumstances described in section 402A(b)(3) of the HEA 
exist, the Secretary uses the available funds to set the amount of the 
grant at the lesser of--
    (1) $200,000; or
    (2) The amount requested by the applicant.

(Authority: 20 U.S.C. 1070a-11)

[61 FR 38537, July 24, 1996, as amended at 75 FR 65792, Oct. 26, 2010]



Sec. 646.24  What is the review process for unsuccessful applicants?

    (a) Technical or administrative error for applications not reviewed. 
(1) An applicant whose grant application was not evaluated during the 
competition may request that the Secretary review the application if--
    (i) The applicant has met all of the application submission 
requirements included in the Federal Register notice inviting 
applications and the other published application materials for the 
competition; and
    (ii) The applicant provides evidence demonstrating that the 
Department or an agent of the Department made a technical or 
administrative error in the processing of the submitted application.
    (2) A technical or administrative error in the processing of an 
application includes--
    (i) A problem with the system for the electronic submission of 
applications that was not addressed in accordance with the procedures 
included in the Federal Register notice inviting applications for the 
competition;

[[Page 388]]

    (ii) An error in determining an applicant's eligibility for funding 
consideration, which may include, but is not limited to--
    (A) An incorrect conclusion that the application was submitted by an 
ineligible applicant;
    (B) An incorrect conclusion that the application exceeded the 
published page limit;
    (C) An incorrect conclusion that the applicant requested funding 
greater than the published maximum award; or
    (D) An incorrect conclusion that the application was missing 
critical sections of the application; and
    (iii) Any other mishandling of the application that resulted in an 
otherwise eligible application not being reviewed during the 
competition.
    (3)(i) If the Secretary determines that the Department or the 
Department's agent made a technical or administrative error, the 
Secretary has the application evaluated and scored.
    (ii) If the total score assigned the application would have resulted 
in funding of the application during the competition and the program has 
funds available, the Secretary funds the application prior to the re-
ranking of applications based on the second peer review of applications 
described in paragraph (c) of this section.
    (b) Administrative or scoring error for applications that were 
reviewed. (1) An applicant that was not selected for funding during a 
competition may request that the Secretary conduct a second review of 
the application if--
    (i) The applicant provides evidence demonstrating that the 
Department, an agent of the Department, or a peer reviewer made an 
administrative or scoring error in the review of its application; and
    (ii) The final score assigned to the application is within the 
funding band described in paragraph (d) of this section.
    (2) An administrative error relates to either the PE points or the 
scores assigned to the application by the peer reviewers.
    (i) For PE points, an administrative error includes mathematical 
errors made by the Department or the Department's agent in the 
calculation of the PE points or a failure to correctly add the earned PE 
points to the peer reviewer score.
    (ii) For the peer review score, an administrative error is applying 
the wrong peer reviewer scores to an application.
    (3)(i) A scoring error relates only to the peer review process and 
includes errors caused by a reviewer who, in assigning points--
    (A) Uses criteria not required by the applicable law or program 
regulations, the Federal Register notice inviting applications, the 
other published application materials for the competition, or guidance 
provided to the peer reviewers by the Secretary; or
    (B) Does not consider relevant information included in the 
appropriate section of the application.
    (ii) The term ``scoring error'' does not include--
    (A) A peer reviewer's appropriate use of his or her professional 
judgment in evaluating and scoring an application;
    (B) Any situation in which the applicant did not include information 
needed to evaluate its response to a specific selection criterion in the 
appropriate section of the application as stipulated in the Federal 
Register notice inviting applications or the other published application 
materials for the competition; or
    (C) Any error by the applicant.
    (c) Procedures for the second review. (1) To ensure the timely 
awarding of grants under the competition, the Secretary sets aside a 
percentage of the funds allotted for the competition to be awarded after 
the second review is completed.
    (2) After the competition, the Secretary makes new awards in rank 
order as described in Sec. 646.20 based on the available funds for the 
competition minus the funds set aside for the second review.
    (3) After the Secretary issues a notification of grant award to 
successful applicants, the Secretary notifies each unsuccessful 
applicant in writing as to the status of its application and the funding 
band for the second review and provides copies of the peer reviewers' 
evaluations of the applicant's application and the applicant's PE score, 
if applicable.

[[Page 389]]

    (4) An applicant that was not selected for funding following the 
competition as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section, may request a second review if the 
applicant demonstrates that the Department, the Department's agent, or a 
peer reviewer made an administrative or scoring error as provided in 
paragraph (b) of this section.
    (5) An applicant whose application was not funded after the first 
review as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section has at least 15 calendar days after 
receiving notification that its application was not funded in which to 
submit a written request for a second review in accordance with the 
instructions and due date provided in the Secretary's written 
notification.
    (6) An applicant's written request for a second review must be 
received by the Department or submitted electronically to the designated 
e-mail or Web address by the due date and time established by the 
Secretary.
    (7) If the Secretary determines that the Department or the 
Department's agent made an administrative error that relates to the PE 
points awarded, as described in paragraph (b)(2)(i) of this section, the 
Secretary adjusts the applicant's PE score to reflect the correct number 
of PE points. If the adjusted score assigned to the application would 
have resulted in funding of the application during the competition and 
the program has funds available, the Secretary funds the application 
prior to the re-ranking of applications based on the second peer review 
of applications described in paragraph (c)(9) of this section.
    (8) If the Secretary determines that the Department, the 
Department's agent or the peer reviewer made an administrative error 
that relates to the peer reviewers' score(s), as described in paragraph 
(b)(2)(ii) of this section, the Secretary adjusts the applicant's peer 
reviewers' score(s) to correct the error. If the adjusted score assigned 
to the application would have resulted in funding of the application 
during the competition and the program has funds available, the 
Secretary funds the application prior to the re-ranking of applications 
based on the second peer review of applications described in paragraph 
(c)(9) of this section.
    (9) If the Secretary determines that a peer reviewer made a scoring 
error, as described in paragraph (b)(3) of this section, the Secretary 
convenes a second panel of peer reviewers in accordance with the 
requirements in section 402A(c)(8)(C)(iv)(III) of the HEA.
    (10) The average of the peer reviewers' scores from the second peer 
review are used in the second ranking of applications. The average score 
obtained from the second peer review panel is the final peer reviewer 
score for the application and will be used even if the second review 
results in a lower score for the application than that obtained in the 
initial review.
    (11) For applications in the funding band, the Secretary funds these 
applications in rank order based on adjusted scores and the available 
funds that have been set aside for the second review of applications.
    (d) Process for establishing a funding band. (1) For each 
competition, the Secretary establishes a funding band for the second 
review of applications.
    (2) The Secretary establishes the funding band for each competition 
based on the amount of funds the Secretary has set aside for the second 
review of applications.
    (3) The funding band is composed of those applications--
    (i) With a rank-order score before the second review that is below 
the lowest score of applications funded after the first review; and
    (ii) That would be funded if the Secretary had 150 percent of the 
funds that were set aside for the second review of applications for the 
competition.
    (e) Final decision. (1) The Secretary's determination of whether the 
applicant has met the requirements for a second review and the 
Secretary's decision on re-scoring of an application are final and not 
subject to further appeal or challenge.
    (2) An application that scored below the established funding band 
for the

[[Page 390]]

competition is not eligible for a second review.

(Approved by the Office of Management and Budget under control number 
1840-NEW5)

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65792, Oct. 26, 2010]



           Subpart D_What Conditions Must Be Met by a Grantee?



Sec. 646.30  What are allowable costs?

    The cost principles that apply to the Student Support Services 
Program are in 2 CFR part 200, subpart E. Allowable costs include the 
following if they are reasonably related to the objectives of the 
project:
    (a) Cost of remedial and special classes if--
    (1) These classes are not otherwise available at the grantee 
institution;
    (2) Are limited to eligible project participants; and
    (3) Project participants are not charged tuition for classes paid 
for by the project.
    (b) Courses in English language instruction for students of limited 
English proficiency if these classes are limited to eligible project 
participants and not otherwise available at the grantee institution.
    (c) In-service training of project staff.
    (d) Activities of an academic or cultural nature, such as field 
trips, special lectures, and symposiums, that have as their purpose the 
improvement of the participants' academic progress and personal 
development.
    (e) Transportation and, with the prior approval of the Secretary, 
meals and lodging for participants and staff during approved educational 
and cultural activities sponsored by the project.
    (f) Purchase, lease, or rental of computer hardware, software, and 
other equipment, service agreements for such equipment, and supplies for 
participant development, project administration, or project 
recordkeeping.
    (g) Professional development travel for staff if directly related to 
the project's overall purpose and activities, except that these costs 
may not exceed four percent of total project salaries. The Secretary may 
adjust this percentage if the applicant demonstrates to the Secretary's 
satisfaction that a higher percentage is necessary and reasonable.
    (h) Project evaluation that is directly related to assessing the 
project's impact on student achievement and improving the delivery of 
services.
    (i) Grant aid to eligible students who--
    (1) Are in their first two years of postsecondary education and who 
are receiving Federal Pell Grants under subpart 1 of part A of title IV 
of the Act; or
    (2) Have completed their first two years of postsecondary education 
and who are receiving Federal Pell Grants under subpart 1 of part A of 
title IV of the Act if the institution demonstrates to the satisfaction 
of the Secretary that--
    (i) These students are at high risk of dropping out; and
    (ii) It will first meet the needs of all its eligible first- and 
second-year students for services under this paragraph.
    (j) Temporary housing during breaks in the academic year for--
    (1) Students who are homeless children and youths or were formerly 
homeless children and youths; and
    (2) Students who are foster care youth.

(Authority: 20 U.S.C. 1070a-14)

[61 FR 38537, July 24, 1996, 75 FR 65793, Oct. 26, 2010; 79 FR 76103, 
Dec. 19, 2014]



Sec. 646.31  What are unallowable costs?

    Costs that may not be charged against a grant under the Student 
Support Services Program include, but are not limited to, the following:
    (a) Costs involved in recruiting students for enrollment at the 
institution.
    (b) Tuition, fees, stipends, and other forms of direct financial 
support, except for Grant aid under Sec. 646.30(i) for staff or 
participants.
    (c) Research not directly related to the evaluation or improvement 
of the project.
    (d) Construction, renovation, or remodeling of any facilities.

(Authority: 20 U.S.C. 1070a-14)

[61 FR 38537, July 24, 1996, as amended at 75 FR 65794, Oct. 26, 2010]

[[Page 391]]



Sec. 646.32  What other requirements must a grantee meet?

    (a) Number of Participants. For each year of the project period, a 
grantee must serve at least the number of participants that the 
Secretary identifies in the Federal Register notice inviting 
applications for a competition. Through this notice, the Secretary also 
provides the minimum and maximum grant award amounts for the 
competition.
    (b) Eligibility of participants. (1) A grantee shall determine the 
eligibility of each participant in the project when the individual is 
selected to participate. The grantee does not have to revalidate a 
participant's eligibility after the participant's initial selection.
    (2) A grantee shall determine the low-income status of an individual 
on the basis of the documentation described in section 402A(e) of the 
Act.
    (c) Recordkeeping. A grantee must maintain participant records that 
show--
    (1) The basis for the grantee's determination that each participant 
is eligible to participate in the project under Sec. 646.3;
    (2) The grantee's basis for determining the academic need for each 
participant;
    (3) The services that are provided to each participant;
    (4) The performance and progress of each participant by cohort for 
the duration of the participant's attendance at the grantee institution; 
and
    (5) To the extent practicable, any services the participant receives 
during the project year from another Federal TRIO program or another 
federally funded program that serves populations similar to those served 
under the SSS program.
    (d) Project director. (1) A grantee must employ a full-time project 
director unless--
    (i) The director is also administering one or two additional 
programs for disadvantaged students operated by the sponsoring 
institution or agency; or
    (ii) The Secretary grants a waiver of this requirement.
    (2) The grantee must give the project director sufficient authority 
to administer the project effectively.
    (3) The Secretary waives the requirements in paragraph (d)(1) of 
this section if the applicant demonstrates that the project director 
will be able to effectively administer more than three programs and that 
this arrangement would promote effective coordination between the 
program and other Federal TRIO programs (sections 402B through 402F of 
the HEA) or similar programs funded through other sources.
    (e) Project coordination. (1) The Secretary encourages grantees to 
coordinate project services with other programs for disadvantaged 
students operated by the grantee institution provided the Student 
Support Services grant funds are not used to support activities 
reasonably available to the general student population.
    (2) To the extent practical, the grantee may share staff with 
programs serving similar populations provided the grantee maintains 
appropriate records of staff time and effort and does not commingle 
grant funds.
    (3) Costs for special classes and events that would benefit Student 
Support Services students and participants in other programs for 
disadvantaged students must be proportionately divided among the 
benefiting projects.

(Approved by the Office of Management and Budget under control number 
1840-NEW5)

(Authority: 20 U.S.C. 1070a-11 and 1070a)

[61 FR 38537, July 24, 1996, as amended at 75 FR 65794, Oct. 26, 2010]



Sec. 646.33  What are the matching requirements for a grantee that
uses Student Support Services program funds for student grant aid?

    (a) Except for grantees described in paragraph (b) of this section, 
a grantee that uses Student Support Services program funds for grant aid 
to eligible students described in Sec. 646.30(i) must--
    (1) Match the Federal funds used for grant aid, in cash, from non-
Federal funds, in an amount that is not less than 33 percent of the 
total amount of Federal grant funds used for Grant aid; and
    (2) Use no more than 20 percent of the Federal program funds awarded 
the grantee each year for grant aid.
    (b) A grant recipient that is an institution of higher education 
eligible to receive funds under part A or B of title

[[Page 392]]

III or title V of the HEA, as amended, is not required to match the 
Federal funds used for grant aid.

(Approved by the Office of Management and Budget under control number 
1840-NEW10)

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65794, Oct. 26, 2010]



PART 647_RONALD E. MCNAIR POSTBACCALAUREATE ACHIEVEMENT PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
647.1  What is the Ronald E. McNair Postbaccalaureate Achievement 
          Program?
647.2  Who is eligible for a grant?
647.3  Who is eligible to participate in a McNair project?
647.4  What activities and services does a project provide?
647.5  How long is a project period?
647.6  What regulations apply?
647.7  What definitions apply?

               Subpart B_How Does One Apply for an Award?

647.10  How many applications may an eligible applicant submit?
647.11  What assurances must an applicant submit?

             Subpart C_How Does the Secretary Make a Grant?

647.20  How does the Secretary decide which new grants to make?
647.21  What selection criteria does the Secretary use?
647.22  How does the Secretary evaluate prior experience?
647.23  How does the Secretary set the amount of a grant?
647.24  What is the review process for unsuccessful applicants?

           Subpart D_What Conditions Must Be Met by a Grantee?

647.30  What are allowable costs?
647.31  What are unallowable costs?
647.32  What other requirements must a grantee meet?

    Authority: 20 U.S.C. 1070a-11 and 1070a-15, unless otherwise noted.

    Source: 59 FR 43989, Aug. 25, 1994, unless otherwise noted.



                            Subpart A_General



Sec. 647.1  What is the Ronald E. McNair Postbaccalaureate
Achievement Program?

    The Ronald E. McNair Postbaccalaureate Achievement Program--referred 
to in these regulations as the McNair program--awards grants to 
institutions of higher education for projects designed to provide 
disadvantaged college students with effective preparation for doctoral 
study.

(Authority: 20 U.S.C. 1070a-15)



Sec. 647.2  Who is eligible for a grant?

    Institutions of higher education and combinations of those 
institutions are eligible for grants to carry out McNair projects.

(Authority: 20 U.S.C. 1070a-11, 1070a-15, 1088, and 1141(a) and 1144a)



Sec. 647.3  Who is eligible to participate in a McNair project?

    A student is eligible to participate in a McNair project if the 
student meets all the following requirements:
    (a)(1) Is a citizen or national of the United States; or
    (2) Is a permanent resident of the United States; or
    (3) Is in the United States for other than a temporary purpose and 
provides evidence from the Immigration and Naturalization Service of his 
or her intent to become a permanent resident; or
    (4) Is a permanent resident of Guam, the Northern Mariana Islands, 
or the Trust Territory of the Pacific Islands; or
    (5) Is a resident of one of the Freely Associated States.
    (b) Is currently enrolled in a degree program at an institution of 
higher education that participates in the student financial assistance 
programs authorized under Title IV of the HEA.
    (c) Is--
    (1) A low-income individual who is a first-generation college 
student;
    (2) A member of a group that is underrepresented in graduate 
education; or

[[Page 393]]

    (3) A member of a group that is not listed in Sec. 647.7 if the 
group is underrepresented in certain academic disciplines as documented 
by standard statistical references or other national survey data 
submitted to and accepted by the Secretary on a case-by-case basis.
    (d) Has not enrolled in doctoral level study at an institution of 
higher education.

(Authority: 20 U.S.C. 1070a-15)



Sec. 647.4  What activities and services does a project provide?

    (a) A McNair project must provide the following services and 
activities:
    (1) Opportunities for research or other scholarly activities at the 
grantee institution or at graduate centers that are designed to provide 
students with effective preparation for doctoral study.
    (2) Summer internships.
    (3) Seminars and other educational activities designed to prepare 
students for doctoral study.
    (4) Tutoring.
    (5) Academic counseling.
    (6) Assistance to students in securing admission to, and financial 
assistance for, enrollment in graduate programs.
    (b) A McNair project may provide the following services and 
activities:
    (1) Education or counseling services designed to improve the 
financial and economic literacy of students, including financial 
planning for postsecondary education.
    (2) Mentoring programs involving faculty members at institutions of 
higher education, students, or a combination of faculty members and 
students.
    (3) Exposure to cultural events and academic programs not usually 
available to disadvantaged students.
    (4) Other activities designed to meet the purpose of the McNair 
Program in Sec. 647.1.

(Authority: 20 U.S.C. 1070a-15)

[75 FR 65794, Oct. 26, 2010]



Sec. 647.5  How long is a project period?

    A project period under the McNair program is five years.

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65794, Oct. 26, 2010]



Sec. 647.6  What regulations apply?

    (a) The Education Department General Administrative Regulations 
(EDGAR) in 34 CFR parts 75 (except for Secs. 75.215 through 75.221), 77, 
79, 82, 84, 86, 97, 98, and 99.
    (b) The regulations in this part 647.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1070a-11 and 1070a-15)

[59 FR 43989, Aug. 25, 1994, as amended at 75 FR 65794, Oct. 26, 2010; 
79 FR 76103, Dec. 19, 2014]



Sec. 647.7  What definitions apply?

    (a) General definitions. The following terms used in this part are 
defined in 2 CFR part 200, subpart A, or 34 CFR 77.1:

Applicant
Application
Budget
Budget Period
EDGAR
Equipment
Facilities
Fiscal Year
Grant
Grantee
Project
Project Period
Public
Secretary
Supplies

    (b) Other definitions. The following definitions also apply to this 
part:
    Different campus means a site of an institution of higher education 
that--
    (1) Is geographically apart from the main campus of the institution;
    (2) Is permanent in nature; and
    (3) Offers courses in educational programs leading to a degree, 
certificate, or other recognized educational credential.
    Different population means a group of individuals that an eligible 
entity desires to serve through an application for a grant under the 
McNair TRIO program and that--

[[Page 394]]

    (1) Is separate and distinct from any other population that the 
entity has applied for a grant to serve; or
    (2) While sharing some of the same needs as another population that 
the eligible entity has applied for a grant to serve, has distinct needs 
for specialized services.
    Financial and economic literacy means knowledge about personal 
financial decision-making, which may include but is not limited to 
knowledge about--
    (1) Personal and family budget planning;
    (2) Understanding credit-building principles to meet long-term and 
short-term goals (e.g., loan to debt ratio, credit scoring, negative 
impacts on credit scores);
    (3) Cost planning for postsecondary or postbaccalaureate education 
(e.g., spending, saving, personal budgeting);
    (4) College cost of attendance (e.g., public vs. private, tuition 
vs. fees, personal costs);
    (5) Financial assistance (e.g., searches, application processes, and 
differences between private and government loans, assistanceships); and
    (6) Assistance in completing the Free Application for Federal 
Student Aid (FAFSA).
    First-generation college student means--
    (1) A student neither of whose natural or adoptive parents received 
a baccalaureate degree; or
    (2) A student who, prior to the age of 18, regularly resided with 
and received support from only one parent, and whose supporting parent 
did not receive a baccalaureate degree.
    (3) An individual who, prior to the age of 18, did not regularly 
reside with or receive support from a natural or an adoptive parent.
    Graduate center means an institution of higher education as defined 
in sections 101 and 102 of the HEA; and that--
    (1) Provides instruction in one or more programs leading to a 
doctoral degree;
    (2) Maintains specialized library collections;
    (3) Employs scholars engaged in research that relates to the subject 
areas of the center; and
    (4) Provides outreach and consultative services on a national, 
regional or local basis.
    Graduate education means studies beyond the bachelor's degree 
leading to a postbaccalaureate degree.
    Groups underrepresented in graduate education. The following ethnic 
and racial groups are considered underrepresented in graduate education: 
Black (non-Hispanic), Hispanic, American Indian, Alaskan Native (as 
defined in section 7306 of the Elementary and Secondary Education Act of 
1965, as amended (ESEA)), Native Hawaiians (as defined in section 7207 
of the ESEA), and Native American Pacific Islanders (as defined in 
section 320 of the HEA).
    HEA means the Higher Education Act of 1965, as amended.
    Institution of higher education means an educational institution as 
defined in sections 101 and 102 of the HEA.
    Low-income individual means an individual whose family's taxable 
income did not exceed 150 percent of the poverty level in the calendar 
year preceding the year in which the individual participates in the 
project. Poverty level income is determined by using criteria of poverty 
established by the Bureau of the Census of the U.S. Department of 
Commerce.
    Research or scholarly activity means an educational activity that is 
more rigorous than is typically available to undergraduates in a 
classroom setting, that is definitive in its start and end dates, 
contains appropriate benchmarks for completion of various components, 
and is conducted under the guidance of an appropriate faculty member 
with experience in the relevant discipline.
    Target population means the universe from which McNair participants 
will be selected. The universe may be expressed in terms of geography, 
type of institution, academic discipline, type of disadvantage, type of 
underrepresentation, or any other qualifying descriptor that would 
enable an applicant to more precisely identify the

[[Page 395]]

kinds of eligible project participants they wish to serve.

(Authority: 20 U.S.C. 1070a-11, 1070a-15, and 1141)

[59 FR 43989, Aug. 25, 1994, as amended at 75 FR 65794, Oct. 26, 2010; 
79 FR 76103, Dec. 19, 2014]



               Subpart B_How Does One Apply for an Award?



Sec. 647.10  How many applications may an eligible applicant submit?

    (a) An applicant may submit more than one application for McNair 
grants as long as each application describes a project that serves a 
different campus or a designated different population.
    (b) For each grant competition, the Secretary designates, in the 
Federal Register notice inviting applications and the other published 
application materials for the competition, the different populations for 
which an eligible entity may submit a separate application.

(Authority: 20 U.S.C. 1070a-15; 20 U.S.C. 1221e-3))

[75 FR 65795, Oct. 26, 2010]



Sec. 647.11  What assurances must an applicant submit?

    An applicant must submit as part of its application, assurances 
that--
    (a) Each participant enrolled in the project will be enrolled in a 
degree program at an institution of higher education that participates 
in one or more of the student financial assistance programs authorized 
under Title IV of the HEA;
    (b) Each participant given a summer research internship will have 
completed his or her sophomore year of study; and
    (c)(1) At least two thirds of the students to be served will be low-
income individuals who are first-generation college students; and
    (2) The remaining students to be served will be members of groups 
underrepresented in graduate education.
    (d) A student will not be served by more than one McNair project at 
any one time and that the McNair project will collaborate with other 
McNair and SSS projects and other State and institutional programs at 
the grantee-institution, including those supporting undergraduate 
research, so that more students can be served.

(Authority: 20 U.S.C. 1070a-15)

[59 FR 43989, Aug. 25, 1994. Redesignated and amended at 75 FR 65795, 
Oct. 26, 2010]



             Subpart C_How Does the Secretary Make a Grant?



Sec. 647.20  How does the Secretary decide which new grants to make?

    (a) The Secretary evaluates an application for a new grant as 
follows:
    (1)(i) The Secretary evaluates an application on the basis of the 
selection criteria in Sec. 647.21.
    (ii) The maximum score for all the criteria in Sec. 647.21 is 100 
points. The maximum score for each criterion is indicated in parentheses 
with the criterion.
    (2)(i) For an application from an applicant who has carried out a 
McNair project in the fiscal year immediately preceding the fiscal year 
for which the applicant is applying, the Secretary evaluates the 
applicant's prior experience of high quality service delivery on the 
basis of the outcome criteria in Sec. 647.22.
    (ii) The maximum total score for all the criteria in Sec. 647.22 is 
15 points. The maximum score for each criterion is indicated in 
parentheses with the criterion.
    (iii) If an applicant described in paragraph (a)(2)(i) of this 
section applies for more than one new grant in the same fiscal year, the 
Secretary applies the criteria in Sec. 647.22 to a project that seeks to 
continue support for an existing McNair project on that campus.
    (iv) The Secretary evaluates the PE of an applicant for each of the 
three project years that the Secretary designates in the Federal 
Register notice inviting applications and the other published 
application materials for the competition.
    (v) An applicant may earn up to 15 PE points for each of the 
designated project years for which annual performance report data are 
available.
    (vi) The final PE score is the average of the scores for the three 
project years assessed.

[[Page 396]]

    (b) The Secretary makes new grants in rank order on the basis of the 
total scores received by applications under paragraphs (a)(1) through 
(a)(3) of this section.
    (c)(1) If the total scores of two or more applications are the same 
and there are insufficient funds for these applications after the 
approval of higher-ranked applications, the Secretary uses the remaining 
funds to achieve an equitable geographic distribution of all new 
projects.
    (2) In making an equitable geographic distribution of new projects, 
the Secretary considers only the locations of new projects.
    (d) The Secretary does not make a new grant to an applicant if the 
applicant's prior project involved the fraudulent use of program funds.

(Authority: 20 U.S.C. 1070a-11 and 1070a-15)

[59 FR 43989, Aug. 25, 1994, as amended at 75 FR 65795, Oct. 26, 2010]



Sec. 647.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an application 
for a new grant:
    (a) Need (16 Points). The Secretary reviews each application to 
determine the extent to which the applicant can clearly and definitively 
demonstrate the need for a McNair project to serve the target 
population. In particular, the Secretary looks for information that 
clearly defines the target population; describes the academic, financial 
and other problems that prevent potentially eligible project 
participants in the target population from completing baccalaureate 
programs and continuing to postbaccalaureate programs; and demonstrates 
that the project's target population is underrepresented in graduate 
education, doctorate degrees conferred and careers where a doctorate is 
a prerequisite.
    (b) Objectives (9 points). The Secretary evaluates the quality of 
the applicant's objectives and proposed targets (percentages) in the 
following areas on the basis of the extent to which they are both 
ambitious, as related to the need data provided under paragraph (a) of 
this section, and attainable, given the project's plan of operation, 
budget, and other resources:
    (1) (2 points) Research or scholarly activity.
    (2) (3 points) Enrollment in a graduate program.
    (3) (2 points) Continued enrollment in graduate study.
    (4) (2 points) Doctoral degree attainment.
    (c) Plan of Operation (44 points). The Secretary reviews each 
application to determine the quality of the applicant's plans of 
operation, including--
    (1) (4 points) The plan for identifying, recruiting and selecting 
participants to be served by the project, including students enrolled in 
the Student Support Services program;
    (2) (4 points) The plan for assessing individual participant needs 
and for monitoring the academic growth of participants during the period 
in which the student is a McNair participant;
    (3) (5 points) The plan for providing high quality research and 
scholarly activities in which participants will be involved;
    (4) (5 points) The plan for involving faculty members in the design 
of research activities in which students will be involved;
    (5) (5 points) The plan for providing internships, seminars, and 
other educational activities designed to prepare undergraduate students 
for doctoral study;
    (6) (5 points) The plan for providing individual or group services 
designed to enhance a student's successful entry into postbaccalaureate 
education;
    (7) (3 points) The plan to inform the institutional community of the 
goals and objectives of the project;
    (8) (8 points) The plan to ensure proper and efficient 
administration of the project, including, but not limited to matters 
such as financial management, student records management, personnel 
management, the organizational structure, and the plan for coordinating 
the McNair project with other programs for disadvantaged students; and
    (9) (5 points) The follow-up plan that will be used to track the 
academic and career accomplishments of participants after they are no 
longer participating in the McNair project.
    (d) Quality of key personnel (9 points). The Secretary evaluates the 
quality of

[[Page 397]]

key personnel the applicant plans to use on the project on the basis of 
the following:
    (1)(i) The job qualifications of the project director.
    (ii) The job qualifications of each of the project's other key 
personnel.
    (iii) The quality of the project's plan for employing highly 
qualified persons, including the procedures to be used to employ members 
of groups underrepresented in higher education, including Blacks, 
Hispanics, American Indians, Alaska Natives, Asian Americans and Pacific 
Islanders (including Native Hawaiians).
    (2) In evaluating the qualifications of a person, the Secretary 
considers his or her experience and training in fields related to the 
objectives of the project.
    (e) Adequacy of the resources and budget (15 points). The Secretary 
evaluates the extent to which--
    (1) The applicant's proposed allocation of resources in the budget 
is clearly related to the objectives of the project;
    (2) Project costs and resources, including facilities, equipment, 
and supplies, are reasonable in relation to the objectives and scope of 
the project; and
    (3) The applicant's proposed commitment of institutional resources 
to the McNair participants, as for example, the commitment of time from 
institutional research faculty and the waiver of tuition and fees for 
McNair participants engaged in summer research projects.
    (f) Evaluation plan (7 points). The Secretary evaluates the quality 
of the evaluation plan for the project on the basis of the extent to 
which the applicant's methods of evaluation--
    (1) Are appropriate to the project's objectives;
    (2) Provide for the applicant to determine, in specific and 
measurable ways, the success of the project in--
    (i) Making progress toward achieving its objectives (a formative 
evaluation); and
    (ii) Achieving its objectives at the end of the project period (a 
summative evaluation); and
    (3) Provide for a description of other project outcomes, including 
the use of quantifiable measures, if appropriate.

(Approved by the Office of Management and Budget under control number 
1840-NEW6)

(Authority: 20 U.S.C. 1070a-15)

[59 FR 43989, Aug. 25, 1994, as amended at 75 FR 65795, Oct. 26, 2010]



Sec. 647.22  How does the Secretary evaluate prior experience?

    (a) In the case of an applicant described in Sec. 647.20(a)(2)(i), 
the Secretary--
    (1) Evaluates an applicant's performance under its expiring McNair 
project;
    (2) Uses the approved project objectives for the applicant's 
expiring McNair grant and the information the applicant submitted in its 
annual performance reports (APRs) to determine the number of PE points; 
and
    (3) May adjust a calculated PE score or decide not to award PE 
points if other information such as audit reports, site visit reports, 
and project evaluation reports indicates the APR data used to calculate 
PE are incorrect.
    (b) The Secretary does not award PE points for a given year to an 
applicant that does not serve at least 90 percent of the approved number 
of participants. For purposes of this section, the approved number of 
participants is the total number of participants the project would serve 
as agreed upon by the grantee and the Secretary.
    (c) The Secretary does not award any PE points for the criteria 
specified in paragraph (e)(1) of this section (Number of participants) 
if the applicant did not serve at least the approved number of 
participants.
    (d) The Secretary uses the approved number of participants, or the 
actual number of participants served in a given year if greater than the 
approved number of participants, as the denominator for calculating 
whether the applicant has met its approved objective related to 
paragraph (e)(2) of this section (Research and scholarly activities).
    (e) For purposes of the PE evaluation of grants awarded after 
January 1, 2009, the Secretary evaluates the applicant's

[[Page 398]]

PE on the basis of the following outcome criteria:
    (1) (3 points) Number of participants. Whether the applicant 
provided services to no less than the approved number of participants.
    (2) (3 points) Research or scholarly activities. Whether the 
applicant met or exceeded its objective for providing participants 
served during the project year with appropriate research and scholarly 
activities each academic year.
    (3) (3 points) Graduate school enrollment. Whether the applicant met 
or exceeded its objective with regard to the acceptance and enrollment 
in graduate programs of participants served during the project year who 
complete the baccalaureate program during the academic year.
    (4) (4 points) Continued enrollment in graduate school. Whether the 
applicant met or exceeded its objective with regard to the continued 
enrollment in graduate school of prior participants.
    (5) (2 points) Doctoral degree attainment. Whether the applicant met 
or exceeded its objective with regard to the attainment of doctoral 
level degrees of prior participants in the specified number of years.

(Approved by the Office of Management and Budget under control number 
1840-NEW11)

(Authority: 20 U.S.C. 1070a-11 and 1070a-15)

[75 FR 65796, Oct. 26, 2010]



Sec. 647.23  How does the Secretary set the amount of a grant?

    (a) The Secretary sets the amount of a grant on the basis of--
    (1) 34 CFR 75.232 and 75.233 for new grants; and
    (2) 34 CFR 75.253 for the second and subsequent years of a project 
period.
    (b) If the circumstances described in section 402A(b)(3) of the HEA 
exist, the Secretary uses the available funds to set the amount of the 
grant at the lesser of--
    (1) $200,000; or
    (2) The amount requested by the applicant.

(Authority: 20 U.S.C. 1070a-11)

[59 FR 43989, Aug. 25, 1994, as amended at 75 FR 65796, Oct. 26, 2010]



Sec. 647.24  What is the review process for unsuccessful applicants?

    (a) Technical or administrative error for applications not reviewed. 
(1) An applicant whose grant application was not evaluated during the 
competition may request that the Secretary review the application if--
    (i) The applicant has met all of the application submission 
requirements included in the Federal Register notice inviting 
applications and the other published application materials for the 
competition; and
    (ii) The applicant provides evidence demonstrating that the 
Department or an agent of the Department made a technical or 
administrative error in the processing of the submitted application.
    (2) A technical or administrative error in the processing of an 
application includes--
    (i) A problem with the system for the electronic submission of 
applications that was not addressed in accordance with the procedures 
included in the Federal Register notice inviting applications for the 
competition;
    (ii) An error in determining an applicant's eligibility for funding 
consideration, which may include, but is not limited to--
    (A) An incorrect conclusion that the application was submitted by an 
ineligible applicant;
    (B) An incorrect conclusion that the application exceeded the 
published page limit;
    (C) An incorrect conclusion that the applicant requested funding 
greater than the published maximum award; or
    (D) An incorrect conclusion that the application was missing 
critical sections of the application; and
    (iii) Any other mishandling of the application that resulted in an 
otherwise eligible application not being reviewed during the 
competition.
    (3)(i) If the Secretary determines that the Department or the 
Department's agent made a technical or administrative error, the 
Secretary has the application evaluated and scored.
    (ii) If the total score assigned the application would have resulted 
in funding of the application during the competition and the program has 
funds

[[Page 399]]

available, the Secretary funds the application prior to the re-ranking 
of applications based on the second peer review of applications 
described in paragraph (c) of this section.
    (b) Administrative or scoring error for applications that were 
reviewed. (1) An applicant that was not selected for funding during a 
competition may request that the Secretary conduct a second review of 
the application if--
    (i) The applicant provides evidence demonstrating that the 
Department, an agent of the Department, or a peer reviewer made an 
administrative or scoring error in the review of its application; and
    (ii) The final score assigned to the application is within the 
funding band described in paragraph (d) of this section.
    (2) An administrative error relates to either the PE points or the 
scores assigned to the application by the peer reviewers.
    (i) For PE points, an administrative error includes mathematical 
errors made by the Department or the Department's agent in the 
calculation of the PE points or a failure to correctly add the earned PE 
points to the peer reviewer score.
    (ii) For the peer review score, an administrative error is applying 
the wrong peer reviewer scores to an application.
    (3)(i) A scoring error relates only to the peer review process and 
includes errors caused by a reviewer who, in assigning points--
    (A) Uses criteria not required by the applicable law or program 
regulations, the Federal Register notice inviting applications, the 
other published application materials for the competition, or guidance 
provided to the peer reviewers by the Secretary; or
    (B) Does not consider relevant information included in the 
appropriate section of the application.
    (ii) The term ``scoring error'' does not include--
    (A) A peer reviewer's appropriate use of his or her professional 
judgment in evaluating and scoring an application;
    (B) Any situation in which the applicant did not include information 
needed to evaluate its response to a specific selection criterion in the 
appropriate section of the application as stipulated in the Federal 
Register notice inviting applications or the other published application 
materials for the competition; or
    (C) Any error by the applicant.
    (c) Procedures for the second review. (1) To ensure the timely 
awarding of grants under the competition, the Secretary sets aside a 
percentage of the funds allotted for the competition to be awarded after 
the second review is completed.
    (2) After the competition, the Secretary makes new awards in rank 
order as described in Sec. 647.20 based on the available funds for the 
competition minus the funds set aside for the second review.
    (3) After the Secretary issues a notification of grant award to 
successful applicants, the Secretary notifies each unsuccessful 
applicant in writing as to the status of its application and the funding 
band for the second review and provides copies of the peer reviewers' 
evaluations of the applicant's application and the applicant's PE score, 
if applicable.
    (4) An applicant that was not selected for funding following the 
competition as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section, may request a second review if the 
applicant demonstrates that the Department, the Department's agent, or a 
peer reviewer made an administrative or scoring error as provided in 
paragraph (b) of this section.
    (5) An applicant whose application was not funded after the first 
review as described in paragraph (c)(2) of this section and whose 
application received a score within the funding band as described in 
paragraph (d) of this section has at least 15 calendar days after 
receiving notification that its application was not funded in which to 
submit a written request for a second review in accordance with the 
instructions and due date provided in the Secretary's written 
notification.
    (6) An applicant's written request for a second review must be 
received by the Department or submitted electronically to a designated 
e-mail or

[[Page 400]]

Web address by the due date and time established by the Secretary.
    (7) If the Secretary determines that the Department or the 
Department's agent made an administrative error that relates to the PE 
points awarded, as described in paragraph (b)(2)(i) of this section, the 
Secretary adjusts the applicant's PE score to reflect the correct number 
of PE points. If the adjusted score assigned to the application would 
have resulted in funding of the application during the competition and 
the program has funds available, the Secretary funds the application 
prior to the re-ranking of applications based on the second peer review 
of applications described in paragraph (c)(9) of this section.
    (8) If the Secretary determines that the Department, the 
Department's agent or the peer reviewer made an administrative error 
that relates to the peer reviewers' score(s), as described in paragraph 
(b)(2)(ii) of this section, the Secretary adjusts the applicant's peer 
reviewers' score(s) to correct the error. If the adjusted score assigned 
to the application would have resulted in funding of the application 
during the competition and the program has funds available, the 
Secretary funds the application prior to the re-ranking of applications 
based on the second peer review of applications described in paragraph 
(c)(9) of this section.
    (9) If the Secretary determines that a peer reviewer made a scoring 
error, as described in paragraph (b)(3) of this section, the Secretary 
convenes a second panel of peer reviewers in accordance with the 
requirements in section 402A(c)(8)(C)(iv)(III) of the HEA.
    (10) The average of the peer reviewers' scores from the second peer 
review are used in the second ranking of applications. The average score 
obtained from the second peer review panel is the final peer reviewer 
score for the application and will be used even if the second review 
results in a lower score for the application than that obtained in the 
initial review.
    (11) For applications in the funding band, the Secretary funds these 
applications in rank order based on adjusted scores and the available 
funds that have been set aside for the second review of applications.
    (d) Process for establishing a funding band. (1) For each 
competition, the Secretary establishes a funding band for the second 
review of applications.
    (2) The Secretary establishes the funding band for each competition 
based on the amount of funds the Secretary has set aside for the second 
review of applications.
    (3) The funding band is composed of those applications--
    (i) With a rank-order score before the second review that is below 
the lowest score of applications funded after the first review; and
    (ii) That would be funded if the Secretary had 150 percent of the 
funds that were set aside for the second review of applications for the 
competition.
    (e) Final decision. (1) The Secretary's determination of whether the 
applicant has met the requirements for a second review and the 
Secretary's decision on re-scoring of an application are final and not 
subject to further appeal or challenge.
    (2) An application that scored below the established funding band 
for the competition is not eligible for a second review.

(Approved by the Office of Management and Budget under control number 
1840-NEW6)

(Authority: 20 U.S.C. 1070a-11)

[75 FR 65796, Oct. 26, 2010]



           Subpart D_What Conditions Must Be Met by a Grantee?



Sec. 647.30  What are allowable costs?

    The cost principles in 2 CFR part 200, subpart E, may include the 
following costs reasonably related to carrying out a McNair project:
    (a) Activities of an academic or scholarly nature, such as trips to 
institutions of higher education offering doctoral programs, and special 
lectures, symposia, and professional conferences, which have as their 
purpose the encouragement and preparation of project participants for 
doctoral studies.
    (b) Stipends of up to $2,800 per year for students engaged in 
research internships, provided that the student has completed the 
sophomore year of study at an eligible institution before the internship 
begins.

[[Page 401]]

    (c) Necessary tuition, room and board, and transportation for 
students engaged in research internships during the summer.
    (d) Purchase, lease, or rental of computer hardware, software, and 
other equipment, service agreements for such equipment, and supplies for 
participant development, project administration, or project 
recordkeeping.

[59 FR 43989, Aug. 25, 1994, as amended at 75 FR 65797, Oct. 26, 2010; 
79 FR 76103, Dec. 19, 2014]



Sec. 647.31  What are unallowable costs?

    Costs that may not be charged against a grant under this program 
include the following:
    (a) Payment of tuition, stipends, test preparation and fees or any 
other form of student financial support to staff or participants not 
expressly allowed under Sec. 647.30.
    (b) Construction, renovation, and remodeling of any facilities.

(Authority: 20 U.S.C. 1070a-5)



Sec. 647.32  What other requirements must a grantee meet?

    (a) Number of Participants. For each year of the project period, a 
grantee must serve at least the number of participants that the 
Secretary identifies in the Federal Register notice inviting 
applications for a competition. Through this notice, the Secretary also 
provides the minimum and maximum grant award amounts for the 
competition.
    (b) Eligibility of participants. (1) A grantee shall determine the 
eligibility of each student before the student is selected to 
participate. A grantee does not have to redetermine a student's 
eligibility once the student has been determined eligible in accordance 
with the provisions of Sec. 647.3; and
    (2) A grantee shall determine the status of a low-income individual 
on the basis of the documentation described in section 402A(e) of the 
HEA.
    (c) Recordkeeping. For each student, a grantee shall maintain a 
record of--
    (1) The basis for the grantee's determination that the student is 
eligible to participate in the project under Sec. 647.3;
    (2) The individual needs assessment;
    (3) The services provided to the participant; and
    (4) The specific educational progress made by the student during and 
after participation in the project.
    (5) To the extent practicable, any services the participant receives 
during the project year from another Federal TRIO program or another 
federally funded program that serves populations similar to those served 
under the McNair program.
    (d) Other reporting requirements. A grantee shall submit to the 
Secretary reports and other information as requested in order to 
demonstrate program effectiveness.
    (e) Project director. A grantee shall designate a project director 
who has--
    (1) Authority to conduct the project effectively; and
    (2) Appropriate professional qualifications, experience and 
administrative skills to effectively fulfill the objectives of the 
project.

(Approved by the Office of Management and Budget under control number 
1840-NEW11)

(Authority: 20 U.S.C. 1070a-15)

[59 FR 43989, Aug. 25, 1994, as amended at 75 FR 65797, Oct. 26, 2010]



PART 648_GRADUATE ASSISTANCE IN AREAS OF NATIONAL NEED--Table of Contents



                            Subpart A_General

Sec.
648.1  What is the Graduate Assistance in Areas of National Need 
          program?
648.2  Who is eligible for a grant?
648.3  What activities may the Secretary fund?
648.4  What is included in the grant?
648.5  What is the amount of a grant?
648.6  What is the duration of a grant?
648.7  What is the institutional matching contribution?
648.8  What regulations apply?
648.9  What definitions apply?

Subpart B_How Does an Institution of Higher Education Apply for a Grant?

648.20  How does an institution of higher education apply for a grant?

             Subpart C_How Does the Secretary Make an Award?

648.30  How does the Secretary evaluate an application?
648.31  What selection criteria does the Secretary use?

[[Page 402]]

648.32  What additional factors does the Secretary consider?
648.33  What priorities and absolute preferences does the Secretary 
          establish?

                   Subpart D_How Are Fellows Selected?

648.40  How does an academic department select fellows?
648.41  How does an individual apply for a fellowship?

           Subpart E_How Does the Secretary Distribute Funds?

648.50  What are the Secretary's payment procedures?
648.51  What is the amount of a stipend?
648.52  What is the amount of the institutional payment?

     Subpart F_What Are the Administrative Responsibilities of the 
                              Institution?

648.60  When does an academic department make a commitment to a fellow 
          to provide stipend support?
648.61  How must the academic department supervise the training of 
          fellows?
648.62  How can the institutional payment be used?
648.63  How can the institutional matching contribution be used?
648.64  What are unallowable costs?
648.65  How does an institution of higher education disburse and return 
          funds?
648.66  What records and reports are required from the institution?

    Subpart G_What Conditions Must Be Met by a Fellow After an Award?

648.70  What conditions must be met by a fellow?

Appendix to Part 648--Academic Areas

    Authority: 20 U.S.C. 1135-1135e, unless otherwise noted.

    Source: 58 FR 65842, Dec. 16, 1993, unless otherwise noted.



                            Subpart A_General



Sec. 648.1  What is the Graduate Assistance in Areas of National
Need program?

    The Graduate Assistance in Areas of National Need program provides 
fellowships through academic departments of institutions of higher 
education to assist graduate students of superior ability who 
demonstrate financial need.

(Authority: 20 U.S.C. 1135, 1135a)

[58 FR 65842, Dec. 16, 1993, as amended at 64 FR 13487, Mar. 18, 1999]



Sec. 648.2  Who is eligible for a grant?

    (a) The Secretary awards grants to the following:
    (1) Any academic department of an institution of higher education 
that provides a course of study that--
    (i) Leads to a graduate degree in an area of national need; and
    (ii) Has been in existence for at least four years at the time of an 
application for a grant under this part.
    (2) An academic department of an institution of higher education 
that--
    (i) Satisfies the requirements of paragraph (a)(1) of this section; 
and
    (ii) Submits a joint application with one or more eligible 
nondegree-granting institutions that have formal arrangements for the 
support of doctoral dissertation research with one or more degree-
granting institutions.
    (b) A formal arrangement under paragraph (a)(2)(ii) of this section 
is a written agreement between a degree-granting institution and an 
eligible nondegree-granting institution whereby the degree-granting 
institution accepts students from the eligible nondegree-granting 
institution as doctoral degree candidates with the intention of awarding 
these students doctorates in an area of national need.
    (c) The Secretary does not award a grant under this part for study 
at a school or department of divinity.

(Authority: 20 U.S.C. 1135, 1135a)



Sec. 648.3  What activities may the Secretary fund?

    (a) The Secretary awards grants to institutions of higher education 
to fund fellowships in one or more areas of national need.
    (b)(1) For the purposes of this part, the Secretary designates areas 
of national need from the academic areas listed in the appendix to this 
part or from the resulting inter-disciplines.
    (2) The Secretary announces these areas of national need in a notice 
published in the Federal Register.

(Authority: 20 U.S.C. 1135, 1135a)

[[Page 403]]



Sec. 648.4  What is included in the grant?

    Each grant awarded by the Secretary consists of the following:
    (a) The stipends paid by the Secretary through the institution of 
higher education to fellows. The stipend provides an allowance to a 
fellow for the fellow's (and his or her dependents') subsistence and 
other expenses.
    (b) The institutional payments paid by the Secretary to the 
institution of higher education to be applied against each fellow's 
tuition, fees, and the costs listed in Sec. 648.62(b).

(Authority: 20 U.S.C. 1135c, 1135d)



Sec. 648.5  What is the amount of a grant?

    (a) The amount of a grant to an academic department may not be less 
than $100,000 and may not be more than $750,000 in a fiscal year.
    (b) In any fiscal year, no academic department may receive more than 
$750,000 as an aggregate total of new and continuing grants.

(Authority: 20 U.S.C. 1135)



Sec. 648.6  What is the duration of a grant?

    The duration of a grant awarded under this part is a maximum of 
three annual budget periods during a three-year (36-month) project 
period.

(Authority: 20 U.S.C. 1135)



Sec. 648.7  What is the institutional matching contribution?

    An institution shall provide, from non-Federal funds, an 
institutional matching contribution equal to at least 25 percent of the 
amount of the grant received under this part, for the uses indicated in 
Sec. 648.63.

(Authority: 20 U.S.C. 1135b, 1135c)



Sec. 648.8  What regulations apply?

    The following regulations apply to this program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) [Reserved]
    (2) 34 CFR part 75 (Direct Grant Programs).
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 82 (New Restrictions on Lobbying).
    (6) [Reserved]
    (7) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1135)

[58 FR 65842, Dec. 16, 1993, as amended at 79 FR 76103, Dec. 19, 2014]



Sec. 648.9  What definitions apply?

    (a) General definitions. The following terms used in this part are 
defined in 2 CFR part 200, subpart A, or 34 CFR 77.1:

Applicant
Application
Award
Budget
Budget period
Department
EDGAR
Equipment
Grant
Nonprofit
Project period
Secretary
Supplies

    (b) Other definitions. The following definitions also apply to this 
part:
    Academic department means any department, program, unit, orany other 
administrative subdivision of an institution of higher education that--
    (i) Directly administers or supervises post-baccalaureate 
instruction in a specific discipline; and
    (ii) Has the authority to award academic course credit acceptable to 
meet degree requirements at an institution of higher education.
    Academic field means an area of study in an academic department 
within an institution of higher education other than a school or 
department of divinity.
    Academic year means the 12-month period commencing with the fall 
instructional term of the institution.
    Application period means the period in which the Secretary solicits 
applications for this program.

[[Page 404]]

    Discipline means a branch of instruction or learning.
    Eligible non-degree granting institution means any institution 
that--
    (i) Conducts post-baccalaureate academic programs of study but does 
not award doctoral degrees in an area of national need;
    (ii) Is described in section 501(c)(3) of the Internal Revenue Code 
of 1986 and is exempt from tax under section 501(a) of the Code;
    (iii) Is organized and operated substantially to conduct scientific 
and cultural research and graduate training programs;
    (iv) Is not a private foundation;
    (v) Has academic personnel for instruction and counseling who meet 
the standards of the institution of higher education in which the 
students are enrolled; and
    (vi) Has necessary research resources not otherwise readily 
available in the institutions in which students are enrolled.
    Fees mean non-refundable charges paid by a graduate student for 
services, materials, and supplies that are not included within the 
tuition charged by the institution in which the student is enrolled.
    Fellow means a recipient of a fellowship under this part.
    Fellowship means an award made by an institution of higher education 
to an individual for graduate study under this part at the institution 
of higher education.
    Financial need means the fellow's financial need as determined under 
title IV, part F, of the HEA for the period of the fellow's enrollment 
in the approved academic field of study for which the fellowship was 
awarded.
    General operational overhead means non-instructional expenses 
incurred by an academic department in the normal administration and 
conduct of its academic program, including the costs of supervision, 
recruitment, capital outlay, debt service, indirect costs, or any other 
costs not included in the determination of tuition and non-refundable 
fee charges.
    Graduate student means an individual enrolled in a program of post-
baccalaureate study at an institution of higher education.
    Graduate study means any program of postbaccalaureate study at an 
institution of higher education.
    HEA means the Higher Education Act of 1965, as amended.
    Highest possible degree available means a doctorate in an academic 
field or a master's degree, professional degree, or other post-
baccalaureate degree if a doctorate is not available in that academic 
field.
    Institution of higher education (Institution) means an institution 
of higher education, other than a school or department of divinity, as 
defined in section 1201(a) of the HEA.
    Inter-discipline means a course of study that involves academic 
fields in two or more disciplines.
    Minority means Alaskan Native, American Indian, Asian-American, 
Black (African-American), Hispanic American, Native Hawaiian, or Pacific 
Islander.
    Multi-disciplinary application means an application that requests 
fellowships for more than a single academic department in areas of 
national need designated as priorities by the Secretary under this part.
    Project means the activities necessary to assist, whether from grant 
funds or institutional resources, fellows in the successful completion 
of their designated educational programs.
    Satisfactory progress means that a fellow meets or exceeds the 
institution's criteria and standards established for a graduate 
student's continued status as an applicant for the graduate degree in 
the academic field for which the fellowship was awarded.
    School or department of divinity means an institution, or an 
academic department of an institution, whose program is specifically for 
the education of students to prepare them to become ministers of 
religion or to enter into some other religious vocation or to prepare 
them to teach theological subjects.
    Students from traditionally underrepresented backgrounds mean women 
and minorities who traditionally are underrepresented in areas of 
national need as designated by the Secretary.
    Supervised training means training provided to fellows under the 
guidance and direction of faculty in the academic department.

[[Page 405]]

    Tuition means the charge for instruction by the institution of 
higher education in which the fellow is enrolled.
    Underrepresented in areas of national need means proportionate 
representation as measured by degree recipients, that is less than the 
proportionate representation in the general population, as indicated 
by--
    (i) The most current edition of the Department's Digest of 
Educational Statistics;
    (ii) The National Research Council's Doctorate Recipients from 
United States Universities;
    (iii) Other standard statistical references, as announced annually 
in the Federal Register notice inviting applications for new awards 
under this program; or
    (iv) As documented by national survey data submitted to and accepted 
by the Secretary on a case-by-case basis.

(Authority: 20 U.S.C. 1135-1135d)

[58 FR 65842, Dec. 16, 1993, as amended at 79 FR 76103, Dec. 19, 2014]



Subpart B_How Does an Institution of Higher Education Apply for a Grant?



Sec. 648.20  How does an institution of higher education apply for a grant?

    (a) To apply for a grant under this part, an institution of higher 
education shall submit an application that responds to the appropriate 
selection criteria in Sec. 648.31.
    (b) In addition, an application for a grant must--
    (1) Describe the current academic program for which the grant is 
sought;
    (2) Request a specific number of fellowships to be awarded on a 
full-time basis for the academic year covered under the grant in each 
academic field included in the application;
    (3) Set forth policies and procedures to ensure that in making 
fellowship awards under this part the institution will seek talented 
students from traditionally underrepresented backgrounds;
    (4) Set forth policies and procedures to assure that in making 
fellowship awards under this part the institution will make awards to 
individuals who satisfy the requirements of Sec. 648.40;
    (5) Set forth policies and procedures to ensure that Federal funds 
made available under this part for any fiscal year will be used to 
supplement and, to the extent practical, increase the funds that 
otherwise would be made available for the purposes of this part and, in 
no case, to supplant those funds;
    (6) Provide assurances that the institution will provide the 
institutional matching contribution described in Sec. 648.7;
    (7) Provide assurances that, in the event that funds made available 
to the academic department under this part are insufficient to provide 
the assistance due a student under the commitment entered into between 
the academic department and the student, the academic department will, 
from any funds available to it, fulfill the commitment to the student;
    (8) Provide that the institution will comply with the requirements 
in subpart F; and
    (9) Provide assurances that the academic department will provide at 
least one year of supervised training in instruction to students 
receiving fellowships under this program.
    (c) In any application period, an academic department may not submit 
more than one application for new awards.

(Approved by the Office of Management and Budget under control number 
1840-0604)

(Authority: 20 U.S.C. 1135b)

[58 FR 65842, Dec. 16, 1993, as amended at 64 FR 13487, Mar. 18, 1999]



             Subpart C_How Does the Secretary Make an Award?



Sec. 648.30  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec. 648.31.
    (b) The Secretary informs applicants of the maximum possible score 
for each criterion in the application package or in a notice published 
in the Federal Register.

(Authority: 20 U.S.C. 1135, 1135b)

[58 FR 65842, Dec. 16, 1993, as amended at 70 FR 13375, Mar. 21, 2005]

[[Page 406]]



Sec. 648.31  What selection criteria does the Secretary use?

    The Secretary evaluates an application on the basis of the criteria 
in this section.
    (a) Meeting the purposes of the program. The Secretary reviews each 
application to determine how well the project will meet the purposes of 
the program, including the extent to which--
    (1) The applicant's general and specific objectives for the project 
are realistic and measurable;
    (2) The applicant's objectives for the project seek to sustain and 
enhance the capacity for teaching and research at the institution and at 
State, regional, or national levels;
    (3) The applicant's objectives seek to institute policies and 
procedures to ensure the enrollment of talented graduate students from 
traditionally underrepresented backgrounds; and
    (4) The applicant's objectives seek to institute policies and 
procedures to ensure that it will award fellowships to individuals who 
satisfy the requirements of Sec. 648.40.
    (b) Extent of need for the project. The Secretary considers the 
extent to which a grant under the program is needed by the academic 
department by considering--
    (1) How the applicant identified the problems that form the specific 
needs of the project;
    (2) The specific problems to be resolved by successful realization 
of the goals and objectives of the project; and
    (3) How increasing the number of fellowships will meet the specific 
and general objectives of the project.
    (c) Quality of the graduate academic program. The Secretary reviews 
each application to determine the quality of the current graduate 
academic program for which project funding is sought, including--
    (1) The course offerings and academic requirements for the graduate 
program;
    (2) The qualifications of the faculty, including education, research 
interest, publications, teaching ability, and accessibility to graduate 
students;
    (3) The focus and capacity for research; and
    (4) Any other evidence the applicant deems appropriate to 
demonstrate the quality of its academic program.
    (d) Quality of the supervised teaching experience. The Secretary 
reviews each application to determine the quality of the teaching 
experience the applicant plans to provide fellows under this program, 
including the extent to which the project--
    (1) Provides each fellow with the required supervised training in 
instruction;
    (2) Provides adequate instruction on effective teaching techniques;
    (3) Provides extensive supervision of each fellow's teaching 
performance; and
    (4) Provides adequate and appropriate evaluation of the fellow's 
teaching performance.
    (e) Recruitment plan. The Secretary reviews each application to 
determine the quality of the applicant's recruitment plan, including--
    (1) How the applicant plans to identify, recruit, and retain 
students from traditionally underrepresented backgrounds in the academic 
program for which fellowships are sought;
    (2) How the applicant plans to identify eligible students for 
fellowships;
    (3) The past success of the academic department in enrolling 
talented graduate students from traditionally underrepresented 
backgrounds; and
    (4) The past success of the academic department in enrolling 
talented graduate students for its academic program.
    (f) Project administration. The Secretary reviews the quality of the 
proposed project administration, including--
    (1) How the applicant will select fellows, including how the 
applicant will ensure that project participants who are otherwise 
eligible to participate are selected without regard to race, color, 
national origin, religion, gender, age, or disabling condition;
    (2) How the applicant proposes to monitor whether a fellow is making 
satisfactory progress toward the degree for which the fellowship has 
been awarded;
    (3) How the applicant proposes to identify and meet the academic 
needs of fellows;

[[Page 407]]

    (4) How the applicant proposes to maintain enrollment of graduate 
students from traditionally underrepresented backgrounds; and
    (5) The extent to which the policies and procedures the applicant 
proposes to institute for administering the project are likely to ensure 
efficient and effective project implementation, including assistance to 
and oversight of the project director.
    (g) Institutional commitment. The Secretary reviews each application 
for evidence that--
    (1) The applicant will provide, from any funds available to it, 
sufficient funds to support the financial needs of the fellows if the 
funds made available under the program are insufficient;
    (2) The institution's social and academic environment is supportive 
of the academic success of students from traditionally underrepresented 
backgrounds on the applicant's campus;
    (3) Students receiving fellowships under this program will receive 
stipend support for the time necessary to complete their courses of 
study, but in no case longer than 5 years; and
    (4) The applicant demonstrates a financial commitment, including the 
nature and amount of the institutional matching contribution, and other 
institutional commitments that are likely to ensure the continuation of 
project activities for a significant period of time following the period 
in which the project receives Federal financial assistance.
    (h) Quality of key personnel. The Secretary reviews each application 
to determine the quality of key personnel the applicant plans to use on 
the project, including--
    (1) The qualifications of the project director;
    (2) The qualifications of other key personnel to be used in the 
project;
    (3) The time commitment of key personnel, including the project 
director, to the project; and
    (4) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected without regard to 
race, color, national origin, religion, gender, age, or disabling 
condition, except pursuant to a lawful affirmative action plan.
    (i) Budget. The Secretary reviews each application to determine the 
extent to which--
    (1) The applicant shows a clear understanding of the acceptable uses 
of program funds; and
    (2) The costs of the project are reasonable in relation to the 
objectives of the project.
    (j) Evaluation plan. The Secretary reviews each application to 
determine the quality of the evaluation plan for the project, including 
the extent to which the applicant's methods of evaluation--
    (1) Relate to the specific goals and measurable objectives of the 
project;
    (2) Assess the effect of the project on the students receiving 
fellowships under this program, including the effect on persons of 
different racial and ethnic backgrounds, genders, and ages, and on 
persons with disabilities who are served by the project;
    (3) List both process and product evaluation questions for each 
project activity and outcome, including those of the management plan;
    (4) Describe both the process and product evaluation measures for 
each project activity and outcome;
    (5) Describe the data collection procedures, instruments, and 
schedules for effective data collection;
    (6) Describe how the applicant will analyze and report the data so 
that it can make adjustments and improvements on a regular basis; and
    (7) Include a time-line chart that relates key evaluation processes 
and benchmarks to other project component processes and benchmarks.
    (k) Adequacy of resources. The Secretary reviews each application to 
determine the adequacy of the resources that the applicant makes 
available to graduate students receiving fellowships under this program, 
including facilities, equipment, and supplies.

(Approved by the Office of Management and Budget under control number 
1840-0604)

(Authority: 20 U.S.C. 1135-1135c)

[58 FR 65842, Dec. 16, 1993, as amended at 70 FR 13375, Mar. 21, 2005]

[[Page 408]]



Sec. 648.32  What additional factors does the Secretary consider?

    (a) Continuation awards. (1) Before funding new applications, the 
Secretary gives preference to grantees requesting their second or third 
year of funding.
    (2) If appropriations for this program are insufficient to fund all 
continuation grantees for the second and third years at the approved 
funding level, the Secretary prorates the available funds, if any, among 
the continuation grantees and, if necessary, awards continuation grants 
of less than $100,000.
    (b) Equitable distribution. In awarding grants, the Secretary will, 
consistent with an allocation of awards based on the quality of 
competing applications, ensure the following:
    (1) An equitable geographic distribution of grants to eligible 
applicant institutions of higher education.
    (2) An equitable distribution of grants to eligible applicant public 
and eligible applicant private institutions of higher education.

(Authority: 20 U.S.C. 1135-1135c)



Sec. 648.33  What priorities and absolute preferences does the
Secretary establish?

    (a) For each application period, the Secretary establishes as an 
area of national need and gives absolute preference to one or more of 
the general disciplines and sub-disciplines listed as priorities in the 
appendix to this part or the resulting interdisciplines.
    (b) The Secretary announces the absolute preferences in a notice 
published in the Federal Register.

(Authority: 20 U.S.C. 1135, 1135a)



                   Subpart D_How Are Fellows Selected?



Sec. 648.40  How does an academic department select fellows?

    (a) In selecting individuals to receive fellowships, an academic 
department shall consider only individuals who--
    (1) Are currently enrolled as graduate students, have been accepted 
at the grantee institution, or are enrolled or accepted as graduate 
students at an eligible nondegree-granting institution;
    (2) Are of superior ability;
    (3) Have an excellent academic record;
    (4) Have financial need;
    (5) Are planning to pursue the highest possible degree available in 
their course of study;
    (6) Are planning a career in teaching or research;
    (7) Are not ineligible to receive assistance under 34 CFR 75.60; and
    (8)(i) Are United States citizens or nationals;
    (ii) Are permanent residents of the United States;
    (iii) Provide evidence from the Immigration and Naturalization 
Service that they are in the United States for other than a temporary 
purpose with the intention of becoming permanent residents; or
    (iv) Are citizens of any one of the Freely Associated States.
    (b) An individual who satisfies the eligibility criteria in 
paragraph (a) of this section, but who attends an institution that does 
not offer the highest possible degree available in the individual's 
course of study, is eligible for a fellowship if the individual plans to 
attend subsequently an institution that offers this degree.

(Authority: 20 U.S.C. 1135, 1135b)

[58 FR 65842, Dec. 16, 1993, as amended at 64 FR 13487, Mar. 18, 1999]



Sec. 648.41  How does an individual apply for a fellowship?

    An individual shall apply directly to an academic department of an 
institution of higher education that has received a grant.

(Authority: 20 U.S.C. 1135, 1135c)



           Subpart E_How Does the Secretary Distribute Funds?



Sec. 648.50  What are the Secretary's payment procedures?

    (a) The Secretary awards to the institution of higher education a 
stipend and an institutional payment for each individual awarded a 
fellowship under this part.
    (b) If an academic department of an institution of higher education 
is unable to use all of the amounts available

[[Page 409]]

to it under this part, the Secretary reallots the amounts not used to 
academic departments of other institutions of higher education for use 
in the academic year following the date of the reallotment.

(Authority: 20 U.S.C. 1135a, 1135c, 1135d)



Sec. 648.51  What is the amount of a stipend?

    (a) For a fellowship initially awarded for an academic year prior to 
the academic year 1993-94, the institution shall pay the fellow a 
stipend in an amount that equals the fellow's financial need or $10,000, 
whichever is less.
    (b) For a fellowship initially awarded for the academic year 1993-
94, or any succeeding academic year, the institution shall pay the 
fellow a stipend at a level of support equal to that provided by the 
National Science Foundation graduate fellowships, except that this 
amount must be adjusted as necessary so as not to exceed the fellow's 
demonstrated level of financial need as determined under part F of title 
IV of the HEA. The Secretary announces the amount of the stipend in a 
notice published in the Federal Register.

(Authority: 20 U.S.C. 1135c)

[58 FR 65842, Dec. 16, 1993, as amended at 64 FR 13487, Mar. 18, 1999]



Sec. 648.52  What is the amount of the institutional payment?

    (a) For academic year 1998-1999, the amount of the institutional 
payment received by an institution of higher education for each student 
awarded a fellowship at the institution is $10,222. Thereafter, the 
Secretary adjusts the amount of the institutional payment annually in 
accordance with inflation as determined by the United States Department 
of Labor's Consumer Price Index for the previous calendar year. The 
Secretary announces the amount of the institutional payment in a notice 
published in the Federal Register.
    (b) The institutional allowance paid under paragraph (a) of this 
section is reduced by the amount the institution charges and collects 
from a fellowship recipient for tuition and other expenses as part of 
the recipient's instructional program.

(Authority: 20 U.S.C. 1135d)

[58 FR 65842, Dec. 16, 1993, as amended at 64 FR 13487, Mar. 18, 1999]



     Subpart F_What Are the Administrative Responsibilities of the 
                              Institution?



Sec. 648.60  When does an academic department make a commitment to
a fellow to provide stipend support?

    (a) An academic department makes a commitment to a fellow at any 
point in his or her graduate study for the length of time necessary for 
the fellow to complete the course of graduate study, but in no case 
longer than five years.
    (b) An academic department shall not make a commitment under 
paragraph (a) of this section to provide stipend support unless the 
academic department has determined that adequate funds are available to 
fulfill the commitment either from funds received or anticipated under 
this part or from institutional funds.

(Authority: 20 U.S.C. 1135c)



Sec. 648.61  How must the academic department supervise the training
of fellows?

    The institution shall provide to fellows at least one academic year 
of supervised training in instruction at the graduate or undergraduate 
level at the schedule of at least one-half-time teaching assistant.

(Authority: 20 U.S.C. 1135b)



Sec. 648.62  How can the institutional payment be used?

    (a) The institutional payment must be first applied against a 
fellow's tuition and fees.
    (b) After payment of a fellow's tuition and fees, the institutional 
payment may be applied against educational expenses of the fellow that 
are not covered by tuition and fees and are related to the academic 
program in which the fellow is enrolled. These expenses include the 
following:
    (1) Costs for rental or purchase of any books, materials, or 
supplies required

[[Page 410]]

of students in the same course of study.
    (2) Costs of computer hardware, project specific software, and other 
equipment prorated by the length of the student's fellowship over the 
reasonable life of the equipment.
    (3) Membership fees of professional associations.
    (4) Travel and per diem to professional association meetings and 
registration fees.
    (5) International travel, per diem, and registration fees to 
participate in educational activities.
    (6) Expenses incurred in research.
    (7) Costs of reproducing and binding of educational products.
    (c) The institutional payment must supplement and, to the extent 
practical, increase the funds that would otherwise be made available for 
the purpose of the program and, in no case, to supplant institutional 
funds currently available for fellowships.

(Authority: 20 U.S.C. 1135b, 1135d)



Sec. 648.63  How can the institutional matching contribution be used?

    (a) The institutional matching contribution may be used to--
    (1) Provide additional fellowships to graduate students who are not 
already receiving fellowships under this part and who satisfy the 
requirements of Sec. 648.40;
    (2) Pay for tuition, fees, and the costs listed in Sec. 648.62(b);
    (3) Pay for costs of providing a fellow's instruction that are not 
included in the tuition or fees paid to the institution in which the 
fellow is enrolled; and
    (4) Supplement the stipend received by a fellow under Sec. 648.51 in 
an amount not to exceed a fellow's financial need.
    (b) An institution may not use its institutional matching 
contribution to fund fellowships that were funded by the institution 
prior to the award of the grant.

(Authority: 20 U.S.C. 1135, 1135b, 1135c)



Sec. 648.64  What are unallowable costs?

    Neither grant funds nor the institutional matching funds may be used 
to pay for general operational overhead costs of the academic 
department.

(Authority: 20 U.S.C. 1135, 1135d)



Sec. 648.65  How does the institution of higher education disburse and
return funds?

    (a) An institution that receives a grant shall disburse a stipend to 
a fellow in accordance with its regular payment schedule, but shall not 
make less than one payment per academic term.
    (b) If a fellow withdraws from an institution before completion of 
an academic term, the institution may award the fellowship to another 
individual who satisfies the requirements in Sec. 648.40.
    (c) If a fellowship is vacated or discontinued for any period of 
time, the institution shall return a prorated portion of the 
institutional payment and unexpended stipend funds to the Secretary, 
unless the Secretary authorizes the use of those funds for a subsequent 
project period. The institution shall return the prorated portion of the 
institutional payment and unexpended stipend funds at a time and in a 
manner determined by the Secretary.
    (d) If a fellow withdraws from an institution before the completion 
of the academic term for which he or she received a stipend installment, 
the fellow shall return a prorated portion of the stipend installment to 
the institution at a time and in a manner determined by the Secretary.

(Authority: 20 U.S.C. 1135c, 1135d)



Sec. 648.66  What records and reports are required from the institution?

    (a) An institution of higher education that receives a grant shall 
provide to the Secretary, prior to the receipt of grant funds for 
disbursement to a fellow, a certification that the fellow is enrolled 
in, is making satisfactory progress in, and is devoting essentially full 
time to study in the academic field for which the grant was made.
    (b) An institution of higher education that receives a grant shall 
keep records necessary to establish--
    (1) That each student receiving a fellowship satisfies the 
eligibility requirements in Sec. 648.40;

[[Page 411]]

    (2) The time and amount of all disbursements and return of stipend 
payments;
    (3) The appropriate use of the institutional payment; and
    (4) That assurances, policies, and procedures provided in its 
application have been satisfied.

(Approved by the Office of Management and Budget under control number 
1840-0604)

(Authority: 20 U.S.C. 1135-1135d)



    Subpart G_What Conditions Must Be Met by a Fellow After an Award?



Sec. 648.70  What conditions must be met by a fellow?

    To continue to be eligible for a fellowship, a fellow must--
    (a) Maintain satisfactory progress in the program for which the 
fellowship was awarded;
    (b) Devote essentially full time to study or research in the 
academic field in which the fellowship was awarded; and
    (c) Not engage in gainful employment, except on a part-time basis in 
teaching, research, or similar activities determined by the academic 
department to be in support of the fellow's progress toward a degree.

(Authority: 20 U.S.C. 1135c)



                Sec. Appendix to Part 648--Academic Areas

    The Secretary may give an absolute preference to any of the academic 
areas listed as disciplines or subdisciplines below, or the resulting 
inter-disciplines. The list was derived from the Classification of 
Instructional Programs (CIP) developed by the Office of Educational 
Research and Improvement of the U.S. Department of Education and 
includes the instructional programs that may constitute courses of 
studies toward graduate degrees. The code number to the left of each 
discipline and subdiscipline is the Department's identification code for 
that particular type of instructional program.

05.  Area, Ethnic, and Cultural Studies
    05.01  Area Studies
    05.02  Ethnic and Cultural Studies
11.  Computer and Information Sciences
    11.01  Computer and Information Sciences, General
    11.02  Computer Programming
    11.04  Information Sciences and Systems
    11.05  Computer Systems Analysis
    11.07  Computer Science
13.  Education
    13.01  Education, General
    13.02  Bilingual/Bicultural Education
    13.03  Curriculum and Instruction
    13.04  Education Administration and Supervision
    13.05  Educational/Instructional Media Design
    13.06  Educational Evaluation, Research, and Statistics
    13.07  International and Comparative Education
    13.08  Educational Psychology
    13.09  Social and Philosophical Foundations of Education
    13.10  Special Education
    13.11  Student Counseling and Personnel Services
    13.12  General Teacher Education
    13.13  Teacher Education, Specific Academic, and Vocational Programs
    13.14  Teaching English as a Second Language/Foreign Language
14.  Engineering
    14.01  Engineering, General
    14.02  Aerospace, Aeronautical, and Astronautical Engineering
    14.03  Agricultural Engineering
    14.04  Architectural Engineering
    14.05  Bioengineering and Biomedical Engineering
    14.06  Ceramic Sciences and Engineering
    14.07  Chemical Engineering
    14.08  Civil Engineering
    14.09  Computer Engineering
    14.10  Electrical, Electronic, and Communications Engineering
    14.11  Engineering Mechanics
    14.12  Engineering Physics
    14.13  Engineering Science
    14.14  Environmental/Environmental Health Engineering
    14.15  Geological Engineering
    14.16  Geophysical Engineering
    14.17  Industrial/Manufacturing Engineering
    14.18  Materials Engineering
    14.19  Mechanical Engineering
    14.20  Metallurgical Engineering
    14.21  Mining and Mineral Engineering
    14.22  Naval Architecture and Marine Engineering
    14.23  Nuclear Engineering
    14.24  Ocean Engineering
    14.25  Petroleum Engineering
    14.27  Systems Engineering
    14.28  Textile Sciences and Engineering
    14.29  Engineering Design
    14.30  Engineering/Industrial Management
    14.31  Materials Science
    14.32  Polymer/Plastics Engineering
16.  Foreign Languages
    16.01  Foreign Languages and Literatures
    16.03  East and Southeast Asian Languages and Literatures

[[Page 412]]

    16.04  East European Languages and Literatures
    16.05  Germanic Languages and Literatures
    16.06  Greek Languages and Literatures
    16.07  South Asian Languages and Literatures
    16.09  Romance Languages and Literatures
    16.11  Middle Eastern Languages and Literatures
    16.12  Classical and Ancient Near Eastern Languages and Literatures
22.  Law and Legal Studies
    22.01  Law and Legal Studies
    25.  Library Science
    25.01  Library Science/Librarianship
    25.03  Library Assistant
26.  Biological Sciences/Life Sciences
    26.01  Biology, General
    26.02  Biochemistry and Biophysics
    26.03  Botany
    26.04  Cell and Molecular Biology
    26.05  Microbiology/Bacteriology
    26.06  Miscellaneous Biological Specializations
    26.07  Zoology
27.  Mathematics
    27.01  Mathematics
    27.03  Applied Mathematics
    27.05  Mathematic Statistics
40.  Physical Sciences
    40.01  Physical Sciences, General
    40.02  Astronomy
    40.03  Astrophysics
    40.04  Atmospheric Sciences and Meteorology
    40.05  Chemistry
    40.06  Geological and Related Sciences
    40.07  Miscellaneous Physical Sciences
    40.08  Physics
42.  Psychology
    42.01  Psychology
    42.02  Clinical Psychology
    42.03  Cognitive Psychology and Psycholinguistics
    42.04  Community Psychology
    42.06  Counseling Psychology
    42.07  Developmental and Child Psychology
    42.08  Experimental Psychology
    42.09  Industrial and Organizational Psychology
    42.11  Physiological Psychology/Psychobiology
    42.16  Social Psychology
    42.17  School Psychology
50.  Visual and Performing Arts
    50.01  Visual and Performing Arts
    50.02  Crafts, Folk Art, and Artisanry
    50.03  Dance
    50.04  Design and Applied Arts
    50.05  Dramatic/Theater Arts and Stagecraft
    50.06  Film/Video and Photographic Arts
    50.07  Fine Arts and Art Studies
    50.09  Music
51.  Health Professions and Related Sciences
    51.01  Chiropractic (D.C., D.C.M.)
    51.02  Communication Disorders Sciences and Services
    51.03  Community Health Services
    51.04  Dentistry (D.D.S., D.M.D.)
    51.05  Dental Clinical Sciences/Graduate Dentistry (M.S., Ph.D.)
    51.06  Dental Services
    51.07  Health and Medical Administrative Services
    51.08  Health and Medical Assistants
    51.09  Health and Medical Diagnostic and Treatment Services
    51.10  Health and Medical Laboratory Technologies/Technicians
    51.11  Health and Medical Preparatory Programs
    51.12  Medicine (M.D.)
    51.13  Medical Basic Science
    51.14  Medical Clinical Services (M.S., Ph.D)
    51.15  Mental Health Services
    51.16  Nursing
    51.17  Optometry (O.D.)
    51.18  Ophthalmic/Optometric Services
    51.19  Osteopathic Medicine (D.O.)
    51.20  Pharmacy
    51.21  Podiatry (D.P.M., D.P., Pod.D.)
    51.22  Public Health
    51.23  Rehabilitation/Therapeutic Services
    51.24  Veterinary Medicine (D.V.M.)
    51.25  Veterinary Clinical Services
    51.27  Miscellaneous Health Professions

                           PART 649 [RESERVED]



PART 650_JACOB K. JAVITS FELLOWSHIP PROGRAM--Table of Contents



                            Subpart A_General

Sec.
650.1  What is the Jacob K. Javits Fellowship Program?
650.2  Who is eligible to receive a fellowship?
650.3  What regulations apply to the Jacob K. Javits Fellowship Program?
650.4  What definitions apply to the Jacob K. Javits Fellowship Program?
650.5  What does a fellowship award include?

        Subpart B_How Does an Individual Apply for a Fellowship?

650.10  How does an individual apply for a fellowship?

                   Subpart C_How Are Fellows Selected?

650.20  What are the selection procedures?

            Subpart D_What Conditions Must Be Met by Fellows?

650.30  Where may fellows study?

[[Page 413]]

650.31  How does an individual accept a fellowship?
650.32  How does the Secretary withdraw an offer of a fellowship?
650.33  What is the duration of a fellowship?
650.34  What conditions must be met by fellows?
650.35  May fellowship tenure be interrupted?
650.36  May fellows make changes in institution or field of study?
650.37  What records and reports are required from fellows?

     Subpart E_What Are the Administrative Responsibilities of the 
                              Institution?

650.40  What institutional agreements are needed?
650.41  How are institutional payments to be administered?
650.42  How are stipends to be administered?
650.43  How are disbursement and return of funds made?
650.44  What records and reports are required from institutions?

    Authority: 20 U.S.C. 1134-1134d, unless otherwise noted.

    Source: 58 FR 58084, Oct. 28, 1993, unless otherwise noted.



                            Subpart A_General



Sec. 650.1  What is the Jacob K. Javits Fellowship Program?

    (a) Under the Jacob K. Javits Fellowship Program the Secretary 
awards fellowships to students of superior ability selected on the basis 
of demonstrated achievement, financial need, and exceptional promise, 
for study at the doctoral level in selected fields of the arts, 
humanities, and social sciences.
    (b) Students awarded fellowships under this program are called Jacob 
K. Javits Fellows.

(Authority: 20 U.S.C. 1134)

[58 FR 58084, Oct. 28, 1993, as amended at 64 FR 3199, Jan. 20, 1999]



Sec. 650.2  Who is eligible to receive a fellowship?

    An individual is eligible to receive a fellowship if the 
individual--
    (a) Is enrolled at an institution of higher education in the program 
of study leading to a doctoral degree, and is not studying for a 
religious vocation, in the academic field for which the fellowship is 
awarded;
    (b) Meets the eligibility requirements established by the Fellowship 
Board;
    (c) Is not ineligible to receive assistance under 34 CFR 75.60, as 
added on July 8, 1992 (57 FR 30328, 30337); and
    (d)(1) Is pursuing a doctoral degree that will not lead to an 
academic career and is--
    (i) A citizen or national of the United States;
    (ii) A permanent resident of the United States;
    (iii) In the United States for other than a temporary purpose and 
intends to become a permanent resident; or
    (iv) A citizen of any one of the Freely Associated States; or
    (2) Is pursuing a doctoral degree that will lead to an academic 
career and is a citizen of the United States.

(Authority: 20 U.S.C. 1134-1134d)

[58 FR 58084, Oct. 28, 1993, as amended at 64 FR 3199, Jan. 20, 1999]



Sec. 650.3  What regulations apply to the Jacob K. Javits Fellowship
Program?

    The following regulations apply to this program:
    (a) The regulations in this part 650.
    (b) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) [Reserved]
    (2) 34 CFR part 75 (Direct Grant Programs), except for the 
following:
    (i) Subpart C (How to Apply for a Grant);
    (ii) Subpart D (How Grants Are Made); and
    (iii) Sections 75.580 through 75.592 of subpart E.
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations), except for the terms ``grantee'' and ``recipient.''
    (4) 34 CFR part 82 (New Restrictions on Lobbying).
    (5) [Reserved]
    (6) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles,

[[Page 414]]

and Audit Requirements for Federal Awards), as adopted at 2 CFR part 
3474.

(Authority: 20 U.S.C. 1134)

[58 FR 58084, Oct. 28, 1993, as amended at 79 FR 76103, Dec. 19, 2014]



Sec. 650.4  What definitions apply to the Jacob K. Javits Fellowship
Program?

    The following definitions apply to terms used in this part:
    Academic year means the 12-month period beginning with the fall 
instructional term of the institution of higher education.
    Act means the Higher Education Act of 1965, as amended.
    Department means any program, unit or any other administrative 
subdivision of an institution of higher education that--
    (1) Directly administers or supervises post-baccalaureate 
instruction in a specific discipline; and
    (2) Has the authority to award academic course credit acceptable to 
meet degree requirements at an institution of higher education.
    Fellow means a recipient of a Jacob K. Javits fellowship under this 
part.
    Fellowship means an award made to a person for graduate study under 
this part.
    Fellowship Board means the Jacob K. Javits Fellowship Program 
Fellowship Board, composed of individual representatives of both public 
and private institutions of higher education who are appointed by the 
Secretary to establish general policies for the program and oversee its 
operation.
    Financial need means the fellow's financial need as determined under 
part F of title IV of the HEA, for the period of the fellow's enrollment 
in the approved academic field of study for which the fellowship was 
awarded.
    Grantee means an institution of higher education that administers a 
fellowship award under this part.
    HEA means the Higher Education Act of 1965, as amended.
    Institution means an institution of higher education.
    Institution of higher education means an institution of higher 
education as defined in section 1201(a) of the HEA.
    Institutional payment means the amount paid by the Secretary to the 
institution of higher education in which the fellow is enrolled to be 
applied against the tuition and fees required of the fellow by the 
institution as part of the fellow's instructional program.
    Knows or has reason to know means that a person with respect to a 
statement--
    (1) Has actual knowledge that the statement is false or fictitious;
    (2) Acts in deliberate ignorance of the truth or falsity of the 
statement; or
    (3) Acts in reckless disregard of the truth or falsity of the 
statement.
    Recipient means an institution of higher education that administers 
a fellowship award under this part.
    Satisfactory progress means that the fellow meets or exceeds the 
institution's criteria and standards established for all doctoral 
students' continued status as applicants for the doctoral degree in the 
academic field of study for which the fellowship was awarded.
    Secretary means Secretary of the Department of Education or an 
official or employee of the Department acting for the Secretary under a 
delegation of authority.
    Stipend means the amount paid to an individual awarded a fellowship, 
including an allowance for subsistence and other expenses for the 
individual and his or her dependents.

(Authority: 20 U.S.C. 1134-1134d)

[58 FR 58084, Oct. 28, 1993, as amended at 64 FR 3199, Jan. 20, 1999]



Sec. 650.5  What does a fellowship award include?

    The Secretary awards fellowships consisting of the following:
    (a) A stipend paid to the fellow, based upon an annual determination 
of the fellow's financial need, as described in Sec. 650.42.
    (b) An annual payment made to the institution in which the fellow is 
enrolled as described in Sec. 650.41.

(Authority: 20 U.S.C. 1134b)

[[Page 415]]



        Subpart B_How Does an Individual Apply for a Fellowship?



Sec. 650.10  How does an individual apply for a fellowship?

    An individual shall apply to the Secretary for a fellowship award in 
response to an application notice published by the Secretary in the 
Federal Register.

(Authority: 20 U.S.C. 1134)



                   Subpart C_How Are Fellows Selected?



Sec. 650.20  What are the selection procedures?

    (a) The Fellowship Board establishes criteria for the selection of 
fellows.
    (b) Each year the Fellowship Board selects specific fields of study, 
and the number of fellows in each field (within the humanities, arts and 
social sciences), for which fellowships will be awarded.
    (c) The Fellowship Board, or in the event the Secretary contracts 
with a non-governmental entity to administer the program, that non-
governmental entity, appoints panels of distinguished individuals in 
each field to evaluate applications.
    (d) The Secretary may make awards of the fellowships each year in 
two or more stages, taking into account at each stage the amount of 
funds remaining after the level of funding for awards previously made 
has been established or adjusted.

(Authority: 20 U.S.C. 1134a)

[58 FR 58084, Oct. 28, 1993, as amended at 64 FR 3199, Jan. 20, 1999]



            Subpart D_What Conditions Must be Met By Fellows?



Sec. 650.30  Where may fellows study?

    A fellow may use the fellowship only for enrollment in a doctoral 
program at an institution of higher education accredited by an 
accrediting agency or association recognized by the Secretary, which 
accepts the fellow for graduate study, and which has agreed to comply 
with the provisions of this part applicable to institutions.

(Authority: 20 U.S.C. 1134-1134d)

[58 FR 58084, Oct. 28, 1993, as amended at 64 FR 3199, Jan. 20, 1999]



Sec. 650.31  How does an individual accept a fellowship?

    (a) An individual notified by the Secretary of selection as a fellow 
shall inform the Secretary of the individual's acceptance in the manner 
and time prescribed by the Secretary in the notification.
    (b) If an individual fails to comply with the provisions of 
paragraph (a) of this section, the Secretary treats the individual's 
failure to comply as a refusal of the fellowship.

(Authority: 20 U.S.C. 1134)



Sec. 650.32  How does the Secretary withdraw an offer of a fellowship?

    (a) The Secretary withdraws an offer of a fellowship to an 
individual only if the Secretary determines that the individual 
submitted fraudulent information on the application.
    (b) The Secretary considers the application to contain fraudulent 
information if the application contains a statement that--
    (1) The applicant knows or has reason to know--
    (i) Asserts a material fact that is false or fictitious; or
    (ii) Is false or fictitious because it omits a material fact that 
the person making the statement has a duty to include in the statement; 
and
    (2) Contains or is accompanied by an express certification or 
affirmation of the truthfulness and accuracy of the contents of the 
statement.

(Authority: 20 U.S.C. 1134b)



Sec. 650.33  What is the duration of a fellowship?

    (a) An individual may receive a fellowship for a doctoral degree 
program of study for a total of 48 months or the time required for 
receiving the doctoral degree, whichever is less.
    (b)(1) An individual may receive a fellowship for no more than 24 
months for dissertation work, without the prior approval of the 
Secretary.

[[Page 416]]

    (2) A fellow may apply to the Secretary for an additional period of 
fellowship support for dissertation work. The fellow's application must 
include--
    (i) The specific facts detailing the reasons why the additional 
period of dissertation work support is necessary;
    (ii) A certification by the institution that it is aware of the 
fellow's application and that the fellow has attained satisfactory 
progress in the fellow's academic studies; and
    (iii) A recommendation from the institution that the additional 
period of fellowship support for dissertation work is necessary.
    (c) A fellow who maintains satisfactory progress in the program of 
study for which the fellowship was awarded may have the fellowship 
renewed annually for the total length of time described in paragraph (a) 
of this section.

(Authority: 20 U.S.C. 1134, 1134c)



Sec. 650.34  What conditions must be met by fellows?

    In order to continue to receive payments under a fellowship, a 
fellow shall--
    (a) Maintain satisfactory progress in the program for which the 
fellowship was awarded as determined by the institution of higher 
education;
    (b) Devote essentially full time to study or research in the field 
in which the fellowship was awarded, as determined by the institution of 
higher education;
    (c) Not engage in gainful employment during the period of the 
fellowship except on a part-time basis, for the institution of higher 
education at which the fellowship was awarded, in teaching, research, or 
similar activities approved by the Secretary; and
    (d) Begin study under the fellowship in the academic year specified 
in the fellowship award.

(Authority: 20 U.S.C. 1134-1134d)



Sec. 650.35  May fellowship tenure be interrupted?

    (a) An institution of higher education may allow a fellow to 
interrupt study for a period not to exceed 12 months, but only if the 
interruption of study is--
    (1) For the purpose of work, travel, or independent study, if the 
independent study is away from the institution and supportive of the 
fellow's academic program; and
    (2) Approved by the institution of higher education.
    (b) A fellow may continue to receive payments during the period of 
interruption only if the fellow's interruption of study is for the 
purpose of travel or independent study that is supportive of the 
fellow's academic program.
    (c) A fellow may not receive payments during the period of 
interruption if the fellow's interruption of study is for the purpose of 
travel that is not supportive of the fellow's academic program, or work, 
whether supportive of the fellow's academic program or not.
    (d) The Secretary makes a pro rata institutional payment to the 
institution of higher education in which the fellow is enrolled during 
the period the fellow receives payments as described in paragraph (b) of 
this section.

(Authority: 20 U.S.C. 1134)



Sec. 650.36  May fellows make changes in institution or field of study?

    After an award is made, a fellow may not make any change in the 
field of study or institution attended without the prior approval of the 
Secretary.

(Authority: 20 U.S.C. 1134c)



Sec. 650.37  What records and reports are required from fellows?

    Each individual who is awarded a fellowship shall keep such records 
and submit such reports as are required by the Secretary.

(Authority: 20 U.S.C. 1134c)



     Subpart E_What Are the Administrative Responsibilities of the 
                              Institution?



Sec. 650.40  What institutional agreements are needed?

    Students enrolled in an otherwise eligible institution of higher 
education may receive fellowships only if the institution enters into an 
agreement

[[Page 417]]

with the Secretary to comply with the provisions of this part.

(Authority: 20 U.S.C. 1134-1134d)



Sec. 650.41  How are institutional payments to be administered?

    (a) With respect to the awards made for the academic year 1998-1999, 
the Secretary makes a payment of $10,222 to the institution of higher 
education for each individual awarded a fellowship for pursuing a course 
of study at the institution. The Secretary adjusts the amount of the 
institutional payment annually thereafter in accordance with inflation 
as determined by the U.S. Department of Labor's Consumer Price Index for 
the previous calendar year.
    (b) If the institution of higher education charges and collects 
amounts from a fellow for tuition or other expenses required by the 
institution as part of the fellow's instructional program, the Secretary 
deducts that amount from the institutional payment.
    (c) If the fellow is enrolled for less than a full academic year, 
the Secretary pays the institution a pro rata share of the allowance.

(Authority: 20 U.S.C. 1134b)

[58 FR 58084, Oct. 28, 1993, as amended at 64 FR 3199, Jan. 20, 1999]



Sec. 650.42  How are stipends to be administered?

    (a) The institution annually shall calculate the amount of a 
fellow's financial need in the same manner as that in which the 
institution calculates its students' financial need under part F of 
title IV of the HEA.
    (b) For a fellowship initially awarded for an academic year prior to 
the academic year 1993-1994, the institution shall pay the fellow a 
stipend in the amount of the fellow's financial need or $10,000, 
whichever is less.
    (c) For a fellowship initially awarded for the academic year 1993-
1994 or any succeeding academic year, the institution shall pay the 
fellow a stipend at a level of support equal to that provided by the 
National Science Foundation graduate fellowships, except that the amount 
must be adjusted as necessary so as not to exceed the fellow's 
demonstrated level of financial need.

(Authority: 20 U.S.C. 1134b)



Sec. 650.43  How are disbursement and return of funds made?

    (a) An institution shall disburse a stipend to a fellow no less 
frequently than once per academic term. If the fellowship is vacated or 
discontinued, the institution shall return any unexpended funds to the 
Secretary at such time and in such manner as the Secretary may require.
    (b) If a fellow withdraws from an institution before completion of 
an academic term, the institution shall refund to the Secretary a 
prorated portion of the institutional payment that it received with 
respect to that fellow. The institution shall return those funds to the 
Secretary at such time and in such manner as the Secretary may require.
    (c) A fellow who withdraws from an institution before completion of 
an academic term for which the fellow received a stipend installment 
shall return a prorated portion of the stipend installment to the 
institution at such time and in such manner as the Secretary may 
require.

(Authority: 20 U.S.C. 1134b)



Sec. 650.44  What records and reports are required from institutions?

    (a) An institution shall provide to the Secretary, prior to 
receiving funds for disbursement to a fellow, a certification from an 
appropriate official at the institution stating whether that fellow is 
making satisfactory progress in, and is devoting essentially full time 
to the program for which the fellowship was awarded.
    (b) An institution shall keep such records as are necessary to 
establish the timing and amount of all disbursements of stipends.

(Approved by the Office of Management and Budget under control number 
1840-0562)

(Authority: 20 U.S.C. 1134c)

[[Page 418]]



PART 654_ROBERT C. BYRD HONORS SCHOLARSHIP PROGRAM--Table of Contents



                            Subpart A_General

Sec.
654.1  What is the Robert C. Byrd Honors Scholarship Program?
654.2  Who is eligible for an award?
654.3  What kind of activity may be assisted?
654.4  What regulations apply?
654.5  What definitions apply?

              Subpart B_How Does a State Apply for a Grant?

654.10  What must a State do to apply for a grant?
654.11  What is the content of a participation agreement?

        Subpart C_How Does the Secretary Make a Grant to a State?

654.20  How does the Secretary approve a participation agreement?
654.21   How does the Secretary determine the amount of the grant to 
          each participating State?

     Subpart D_How Does a Student Apply to an SEA for a Scholarship?

654.30  How does a student apply to an SEA for a scholarship?

   Subpart E_How Does an SEA Select an Eligible Student To Be Scholar?

654.40  Who is an eligible student?
654.41  What are the selection criteria and procedures?

       Subpart F_How Does a Scholar Receive Scholarship Payments?

654.50  How does an SEA disburse scholarship funds?
654.51  What are the continuing eligibility criteria?
654.52  What are the consequences of a scholar's failure to meet the 
          eligibility criteria?

         Subpart G_What Post-Award Conditions Must an SEA Meet?

654.60  What requirements must an SEA meet in the administration of this 
          program?

    Authority: 20 U.S.C. 1070d-31 to 1070d-41, unless otherwise noted.

    Source: 58 FR 42669, Aug. 11, 1993, unless otherwise noted.



                            Subpart A_General



Sec. 654.1  What is the Robert C. Byrd Honors Scholarship Program?

    Under the Robert C. Byrd Honors Scholarship Program, the Secretary 
makes grants to the States to provide scholarships for study at 
institutions of higher education to outstanding high school graduates 
who show promise of continued excellence, in an effort to recognize and 
promote student excellence and achievement.

(Authority: 20 U.S.C. 1070d-31, 1070d-33)



Sec. 654.2  Who is eligible for an award?

    (a) States are eligible for grants under this program.
    (b) Students who meet the eligibility criteria in Secs. 654.40 and 
654.51 are eligible for scholarships under this program.

(Authority: 20 U.S.C. 1070d-33, 1070d-36)



Sec. 654.3  What kind of activity may be assisted?

    A State may use its funds under this program, including funds 
collected from scholars under Sec. 654.60(a)(3), only to make 
scholarship payments to scholars.

(Authority: 20 U.S.C. 1070d-35, 1070d-38)



Sec. 654.4  What regulations apply?

    The following regulations apply to this program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) 34 CFR 75.60-75.62 (regarding the ineligibility of certain 
individuals to receive assistance under part 75 (Direct Grant 
Programs)).
    (2) 34 CFR part 76 (State-Administered Programs).
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) [Reserved]
    (6) 34 CFR part 82 (New Restrictions on Lobbying).
    (7) [Reserved]
    (8) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part 654.

[[Page 419]]

    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 1070d-31 et seq.)

[58 FR 42669, Aug. 11, 1993, as amended at 79 FR 76103, Dec. 19, 2014]



Sec. 654.5  What definitions apply?

    (a) Definitions in EDGAR. The following terms used in this part are 
defined in 34 CFR 77.1:

EDGAR
Fiscal year
Private
Public
Secretary
State
State educational agency

    (b) Other definitions. The following definitions also apply to this 
part:
    Award year means the period of time from July 1 of one year through 
June 30 of the following year.
    Cost of attendance has the meaning given that term in section 472 of 
the HEA.
    Full-time student means a student enrolled at an institution of 
higher education who is carrying a full-time academic workload, as 
determined by that institution under standards applicable to all 
students enrolled in that student's program.
    HEA means the Higher Education Act of 1965, as amended.
    High school graduate means an individual who has--
    (i) A high school diploma;
    (ii) A General Education Development (GED) Certificate; or
    (iii) Any other evidence recognized by the State as the equivalent 
of a high school diploma.
    Institution of higher education means any public or private 
nonprofit institution of higher education, proprietary institution of 
higher education, or postsecondary vocational institution, as defined in 
section 481 of the HEA.
    Participating State means a State that has submitted a participation 
agreement that has been approved by the Secretary.
    Scholar means an individual who is selected as a Byrd Scholar.
    Scholarship means an award made to a scholar under this part.
    Secondary school year means the period of time during which a 
secondary school is in session, as determined by State law.
    Year of study means the period of time during which a full-time 
student at an institution of higher education is expected to complete 
the equivalent of one year of course work, as defined by the 
institution.

(Authority: 20 U.S.C. 1070d-31 et seq., 20 U.S.C. 1088)



              Subpart B_How Does a State Apply for a Grant?



Sec. 654.10  What must a State do to apply for a grant?

    (a) To apply for a grant under this program, a State must submit a 
participation agreement to the Secretary for review and approval by the 
deadline announced annually by the Secretary in the Federal Register.
    (b) On the Secretary's approval of its initial participation 
agreement for fiscal year 1993 or thereafter, a State need not submit a 
new participation agreement to be considered for funding under this 
program in subsequent years, except that any changes in the State's 
criteria and procedures must be incorporated in a revised participation 
agreement which must be submitted to the Secretary for review and 
approval.

(Approved by the Office of Management and Budget under control number 
1840-0612)

(Authority: 20 U.S.C. 1070d-35)



Sec. 654.11  What is the content of a participation agreement?

    A State's participation agreement must include the following:
    (a) A description of the criteria and procedures that the State, 
through its State educational agency (SEA), plans to use to administer 
this program in accordance with the requirements of this part, including 
the criteria and procedures it plans to use to--
    (1) Publicize the availability of Byrd scholarships to students in 
the State,

[[Page 420]]

with particular emphasis on procedures designed to ensure that students 
from low- and moderate-income families know about their opportunity for 
participation in the program;
    (2) Select eligible students;
    (3) Notify scholars of their selections and scholarship awards;
    (4) Monitor the continuing eligibility of scholars;
    (5) Disburse scholarship funds in accordance with the requirements 
of Sec. 654.50; and
    (6) Collect scholarship funds improperly disbursed.
    (b) Assurances that the SEA will--
    (1) Comply with the criteria and procedures in its approved 
participation agreement;
    (2) Submit for the prior written approval of the Secretary any 
changes in the criteria and procedures in the approved participation 
agreement; and
    (3) Expend the payments it receives under this program only as 
provided in Sec. 654.3.

(Approved by the Office of Management and Budget under control number 
1840-0612)

(Authority: 20 U.S.C. 1070d-35 to 1070d-38)



        Subpart C_How Does the Secretary Make a Grant to a State?



Sec. 654.20  How does the Secretary approve a participation agreement?

    The Secretary approves a participation agreement if it contains all 
of the information and assurances required in Sec. 654.11 and is in 
compliance with the requirements of this part.

(Authority: 20 U.S.C. 1070d-31 et seq.)



Sec. 654.21  How does the Secretary determine the amount of the grant
to each participating State?

    (a) From the funds appropriated for this program, the Secretary 
allots to each participating State a grant equal to $1,500 multiplied by 
the number of scholarships the Secretary determines to be available to 
that State on the basis of the formula described in paragraph (b) of 
this section.
    (b) The number of scholarships that the Secretary allots to each 
participating State for any fiscal year bears the same ratio to the 
number of scholarships allotted to all participating States as each 
State's population ages 5 through 17 which is derived from the most 
recently available data from the U.S. Bureau of the Census bears to the 
population ages 5 through 17 in all participating States, except that--
    (1) Not fewer than 10 scholarships are allotted to any participating 
State; and
    (2) The District of Columbia, the Commonwealth of Puerto Rico, the 
U.S. Virgin Islands, American Samoa, the Commonwealth of Northern 
Mariana Islands, Guam, and the Trust Territory of the Pacific Islands 
(Palau) each are allotted 10 scholarships.

(Authority: 20 U.S.C. 1070d-34, 1070d-37)



     Subpart D_How Does a Student Apply to an SEA for a Scholarship?



Sec. 654.30  How does a student apply to an SEA for a scholarship?

    To apply for a scholarship under this program, a student must follow 
the application procedures established by the SEA in the student's State 
of legal residence.

(Authority: 20 U.S.C. 1070d-37)



  Subpart E_How Does an SEA Select an Eligible Student To Be a Scholar?



Sec. 654.40  Who is an eligible student?

    A student is eligible to be selected as a scholar if he or she--
    (a) Is a legal resident of the State to which he or she is applying 
for a scholarship;
    (b)(1) Is a U.S. citizen or national;
    (2) Provides evidence from the U.S. Immigration and Naturalization 
Service that he or she--
    (i) Is a permanent resident of the United States; or
    (ii) Is in the United States for other than a temporary purpose with 
the intention of becoming a citizen or permanent resident; or
    (3) Is a permanent resident of the Trust Territory of the Pacific 
Islands (Palau);
    (c) Becomes a high school graduate in the same secondary school year 
in

[[Page 421]]

which he or she submits the scholarship application;
    (d) Has applied or been accepted for enrollment as a full-time 
student at an institution of higher education;
    (e) Is not ineligible to receive assistance as a result of default 
on a Federal student loan or other obligation, as provided under 34 CFR 
75.60; and
    (f) Files a Statement of Selective Service Registration Status, in 
accordance with the provisions of 34 CFR 668.33 of the Student 
Assistance General Provisions regulations, with the institution he or 
she plans to attend or is attending.

(Authority: 20 U.S.C. 1070d-36, 50 U.S.C. App. 462, 20 U.S.C. 1091)



Sec. 654.41  What are the selection criteria and procedures?

    (a) The SEA shall establish criteria and procedures for the 
selection of scholars, in accordance with the requirements of this part, 
after consultation with school administrators, school boards, teachers, 
counselors, and parents.
    (b) The SEA shall establish the selection criteria and procedures to 
ensure that it selects scholars--
    (1) Who are eligible students under the criteria provided in 
Sec. 654.40;
    (2) Who have demonstrated outstanding academic achievement and show 
promise of continued achievement;
    (3) In a manner that ensures an equitable geographic distribution of 
awards within the State; and
    (4) Without regard to--
    (i) Whether the secondary school each scholar attends is within or 
outside the scholar's State of legal residence;
    (ii) Whether the institution of higher education each scholar plans 
to attend is public or private or is within or outside the scholar's 
State of legal residence;
    (iii) Race, color, national origin, sex, religion, disability, or 
economic background; and
    (iv) The scholar's educational expenses or financial need.

(Approved by the Office of Management and Budget under control number 
1840-0612)

(Authority: 20 U.S.C. 1070d-33, 1070d-35 to 1070d-37)



       Subpart F_How Does a Scholar Receive Scholarship Payments?



Sec. 654.50  How does an SEA disburse scholarship funds?

    (a) Except as provided in paragraph (b) of this section, the SEA 
shall disburse $1,500 for each year of study for a maximum of four years 
of study to each scholar who--
    (1) Is selected in accordance with the criteria established under 
Sec. 654.41; and
    (2) Meets the requirements for continuing eligibility under 
Sec. 654.51.
    (b)(1) The SEA shall ensure that the total amount of financial aid 
awarded to a scholar for a year of study does not exceed the total cost 
of attendance.
    (2) The SEA shall ensure that loans are reduced prior to reducing a 
scholarship awarded under this program.
    (c) The SEA shall ensure that the selection process is completed, 
and the awards made, prior to the end of each secondary school academic 
year.

(Authority: 20 U.S.C. 1070d-38)



Sec. 654.51  What are the continuing eligibility criteria?

    (a) A scholar continues to be eligible for scholarship funds as long 
as the scholar continues to--
    (1) Meet the eligibility requirements in Sec. 654.40(b), (e), and 
(f);
    (2) Be enrolled as a full-time student at an institution of higher 
education except as provided in paragraph (b) of this section; and
    (3) Maintain satisfactory progress as determined by the institution 
of higher education the scholar is attending, in accordance with the 
criteria established in 34 CFR 668.14(e) of the Student Assistance 
General Provisions regulations.
    (b) In order to be eligible for scholarship funds, a scholar must be 
enrolled full time for the first year of study. If after the first year 
of study, the SEA determines that unusual circumstances

[[Page 422]]

justify waiver of the full-time attendance requirement, the scholar may 
enroll part time and continue to receive a scholarship payment. The SEA 
shall prorate the payment according to the scholar's enrollment status 
for the academic period during which he or she continues to be enrolled 
on a part-time basis but remains otherwise eligible for the award. For 
example, if a scholar for whom the full-time enrollment requirement is 
waived by the SEA is enrolled as a half-time student for one semester, 
he or she is eligible to receive one-quarter of his or her scholarship 
during that semester.

(Authority: 20 U.S.C. 1070d-33, 1070d-36)



Sec. 654.52  What are the consequences of a scholar's failure to meet
the eligibility criteria?

    (a)(1) An SEA may permit a scholar to postpone or interrupt his or 
her enrollment at an institution of higher education without forfeiting 
his or her scholarship for up to 12 months, beginning on the date the 
scholar otherwise would have enrolled in the institution after the SEA 
awarded his or her scholarship or the date the scholar interrupts 
enrollment.
    (2) A scholar who postpones or interrupts his or her enrollment at 
an institution of higher education in accordance with standards 
established by the SEA is not eligible to receive scholarship funds 
during the period of postponement or interruption, but is eligible to 
receive scholarship payments on enrollment or re-enrollment at an 
institution of higher education.
    (3) A scholar's periods of postponement or interruption, taken in 
accordance with standards established by the SEA and not in excess of 12 
months, are not considered periods of suspension for the purposes of 
calculating the 12 months provided for suspension prior to termination 
under paragraph (b)(2) of this section.
    (b)(1) Except as provided in paragraph (a) of this section, if an 
SEA finds that a scholar fails to meet the requirements of Sec. 654.51 
within an award year, it shall suspend the scholar's eligibility to 
receive scholarship funds until the scholar is able to demonstrate to 
the satisfaction of the SEA that he or she meets these requirements.
    (2) Except as provided in paragraph (b)(3) of this section, a 
scholar's eligibility for a scholarship is terminated when the total of 
his or her suspension periods exceeds 12 months.
    (3) In exceptional circumstances, the SEA may extend the 12-month 
suspension period without terminating a scholar's eligibility under 
paragraph (b)(2) of this section, in accordance with standards 
established by the SEA.
    (c) A scholar who receives an award for a period for which the SEA 
subsequently determines the scholar was ineligible under the 
requirements in Sec. 654.40 or 654.51 shall repay to the SEA the total 
amount of the scholarship funds received for the period during which he 
or she was ineligible.

(Authority: 20 U.S.C. 1070d-35, 1070d-36 to 1070d-38)



         Subpart G_What Post-Award Conditions Must an SEA Meet?



Sec. 654.60  What requirements must an SEA meet in the administration
of this program?

    (a) To receive and continue to receive payments under this part, an 
SEA shall--
    (1) Comply with the criteria, procedures, and assurances in its 
approved participation agreement;
    (2) Disburse the scholarship funds in accordance with Sec. 654.50 to 
the scholar, the institution of higher education in which the scholar 
enrolls, or copayable to the scholar and the institution of higher 
education in which the scholar enrolls;
    (3) Collect any scholarship funds improperly disbursed under 
Sec. 654.50;
    (4) Make reports to the Secretary that the Secretary deems necessary 
to carry out the Secretary's functions under this part; and
    (5) Except as provided in paragraph (b) of this section, expend all 
funds received from the Secretary for scholarships during the award 
period specified by the Secretary for those funds.
    (b) After awarding all scholarship funds during an award year, as 
required by paragraph (a)(5) of this section, an SEA may retain any 
funds that are subsequently returned or collected for

[[Page 423]]

scholarship awards in the following award period.

(Approved by the Office of Management and Budget under control number 
1840-0612)

(Authority: 20 U.S.C. 1070d-33, 1070d-35)



PART 655_INTERNATIONAL EDUCATION PROGRAMS_GENERAL PROVISIONS
--Table of Contents



                            Subpart A_General

Sec.
655.1  Which programs do these regulations govern?
655.3  What regulations apply to the International Education Programs?
655.4  What definitions apply to the International Education Programs?

       Subpart B_What Kinds of Projects Does the Secretary Assist?

655.10  What kinds of projects does the Secretary assist?

Subpart C [Reserved]

             Subpart D_How Does the Secretary Make a Grant?

655.30  How does the Secretary evaluate an application?
655.31  What general selection criteria does the Secretary use?
655.32  What additional factors does the Secretary consider in making 
          grant awards?

    Authority: 20 U.S.C 1132-1132-7, unless otherwise noted.

    Source: 47 FR 14116, Apr. 1, 1982, unless otherwise noted.



                            Subpart A_General



Sec. 655.1  Which programs do these regulations govern?

    The regulations in this part govern the administration of the 
following programs in international education:
    (a) The National Resource Centers Program for Foreign Language and 
Area Studies or Foreign Language and International Studies (section 602 
of the Higher Education Act of 1965, as amended);
    (b) The Language Resource Centers Program (section 603);
    (c) The Undergraduate International Studies and Foreign Language 
Program (section 604);
    (d) The International Research and Studies Program (section 605); 
and
    (e) The Business and International Education Program (section 613).

(Authority: 20 U.S.C. 1121-1130b)

[47 FR 14116, Apr. 1, 1982, as amended at 58 FR 32575, June 10, 1993; 64 
FR 7739, Feb. 16, 1999]



Sec. 655.3  What regulations apply to the International Education 
Programs?

    The following regulations apply to the International Education 
Programs:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) [Reserved]
    (2) 34 CFR part 75 (Direct Grant Programs).
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities), except that part 79 does not apply 
to 34 CFR parts 660, 669, and 671.
    (5) 34 CFR part 82 (New Restrictions on Lobbying).
    (6)[Reserved]
    (7) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part 655; and
    (c) As appropriate, the regulations in--
    (1) 34 CFR part 656 (National Resource Centers Program for Foreign 
Language and Area Studies or Foreign Language and International 
Studies);
    (2) 34 CFR part 657 (Foreign Language and Area Studies Fellowships 
Program);
    (3) 34 CFR part 658 (Undergraduate International Studies and Foreign 
Language Program);
    (4) 34 CFR part 660 (International Research and Studies Program);
    (5) 34 CFR part 661 (Business and International Education Program); 
and
    (6) 34 CFR part 669 (Language Resource Centers Program).
    (d)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles,

[[Page 424]]

and Audit Requirements for Federal Awards), as adopted at 2 CFR part 
3474.

(Authority: 20 U.S.C. 1121-1127; 1221e-3)

[47 FR 14116, Apr. 1, 1982, as amended at 58 FR 32575, June 10, 1993; 64 
FR 7739, Feb. 16, 1999; 79 FR 76104, Dec. 19, 2014]



Sec. 655.4  What definitions apply to the International Education
Programs?

    (a) General definitions. The following terms used in this part and 
34 CFR parts 656, 657, 658, 660, 661, and 669 are defined in 2 CFR part 
200, subpart A, or 34 CFR 77.1:

Acquisition
Applicant
Application
Award
Budget
Contract
EDGAR
Equipment
Facilities
Fiscal year
Grant
Grantee
Grant period
Local educational agency
Nonprofit
Project
Project period
Private
Public
Secretary
State educational agency
Supplies


(Authority: 20 U.S.C. 1121-1127)

    (b) Definitions that apply to these programs: The following 
definitions apply to International Education Programs:
    Consortium of institutions of higher education means a group of 
institutions of higher education that have entered into a cooperative 
arrangement for the purpose of carrying out a common objective, or a 
public or private nonprofit agency, organization, or institution 
designated or created by a group of institutions of higher education for 
the purpose of carrying out a common objective on their behalf.
    Critical languages means each of the languages contained in the list 
of critical languages designated by the Secretary pursuant to section 
212(d) of the Education for Economic Security Act, except that, in the 
implementation of this definition, the Secretary may set priorities 
according to the purposes of title VI of the Higher Education Act of 
1965, as amended.
    Institution of higher education means, in addition to an institution 
that meets the definition of section 101(a) of the Higher Education Act 
of 1965, as amended, an institution that meets the requirements of 
section 101(a) except that (1) it is not located in the United States, 
and (2) it applies for assistance under title VI of the Higher Education 
Act of 1965, as amended, in consortia with institutions that meet the 
definitions in section 101(a).

(Authority: 20 U.S.C. 1121-1127, and 1141)

[47 FR 14116, Apr. 1, 1982, as amended at 58 FR 32575, June 10, 1993; 64 
FR 7739, Feb. 16, 1999; 74 FR 35072, July 17, 2009; 79 FR 76104, Dec. 
19, 2014]



       Subpart B_What Kinds of Projects Does the Secretary Assist?



Sec. 655.10  What kinds of projects does the Secretary assist?

    Subpart A of 34 CFR parts 656, 657, and 669 and subpart B of 34 CFR 
parts 658, 660, 661 describe the kinds of projects that the Secretary 
assists under the International Education Programs.

(Authority: 20 U.S.C. 1121-1127)

[74 FR 35072, July 17, 2009, as amended at 79 FR 76104, Dec. 19, 2014]

Subpart C [Reserved]



             Subpart D_How Does the Secretary Make a Grant?



Sec. 655.30  How does the Secretary evaluate an application?

    The Secretary evaluates an applications for International Education 
Programs on the basis of--
    (a) The general criteria in Sec. 655.31; and
    (b) The specific criteria in, as applicable, subpart D of 34 CFR 
parts 658, 660, 661, and 669.

(Authority: 20 U.S.C. 1121-1127)

[64 FR 7739, Feb. 16, 1999]



Sec. 655.31  What general selection criteria does the Secretary use?

    (a) Plan of operation. (1) The Secretary reviews each application 
for information that shows the quality of the plan of operation for the 
project.
    (2) The Secretary looks for information that shows--
    (i) High quality in the design of the project;
    (ii) An effective plan of management that ensures proper and 
efficient administration of the project;

[[Page 425]]

    (iii) A clear description of how the objectives of the project 
relate to the purpose of the program;
    (iv) The way the applicant plans to use its resources and personnel 
to achieve each objective; and
    (v) A clear description of how the applicant will provide equal 
access and treatment for eligible project participants who are members 
of groups that have been traditionally underrepresented, such as--
    (A) Members of racial or ethnic minority groups;
    (B) Women; and
    (C) Handicapped persons.
    (b) Quality of key personnel. (1) The Secretary reviews each 
application for information that shows the quality of the key personnel 
the applicant plans to use on the project.
    (2) The Secretary looks for information that shows--
    (i) The qualifications of the project director (if one is to be 
used);
    (ii) The qualifications of each of the other key personnel to be 
used in the project. In the case of faculty, the qualifications of the 
faculty and the degree to which that faculty is directly involved in the 
actual teaching and supervision of students; and
    (iii) The time that each person referred to in paragraphs (b)(2) (i) 
and (ii) of this section plans to commit to the project; and
    (iv) The extent to which the applicant, as part of its 
nondiscriminatory employment practices, encourages applications for 
employment from persons who are members of groups that have been 
traditionally underrepresented, such as members of racial or ethnic 
minority groups, women, handicapped persons, and the elderly.
    (3) To determine the qualifications of a person, the Secretary 
considers evidence of past experience and training, in fields related to 
the objectives of the project, as well as other information that the 
applicant provides.
    (c) Budget and cost effectiveness. (1) The Secretary reviews each 
application for information that shows that the project has an adequate 
budget and is cost effective.
    (2) The Secretary looks for information that shows--
    (i) The budget for the project is adequate to support the project 
activities; and
    (ii) Costs are reasonable in relation to the objectives of the 
project.
    (d) Evaluation plan. (1) The Secretary reviews each application for 
information that shows the quality of the evaluation plan for the 
project.
    (2) The Secretary looks for information that shows methods of 
evaluation that are appropriate for the project and, to the extent 
possible, are objective and produce data that are quantifiable.
    (e) Adequacy of resources. (1) The Secretary reviews each 
application for information that shows that the applicant plans to 
devote adequate resources to the project.
    (2) The Secretary looks for information that shows--
    (i) Other than library, facilities that the applicant plans to use 
are adequate (language laboratory, museums, etc.); and
    (ii) The equipment and supplies that the applicant plans to use are 
adequate.

(Authority: 20 U.S.C. 1121-1127)



Sec. 655.32  What additional factors does the Secretary consider in
making grant awards?

    Except for 34 CFR parts 656, 657, and 661, to the extent practicable 
and consistent with the criterion of excellence, the Secretary seeks to 
achieve an equitable distribution of funds throughout the Nation.

(Authority: 20 U.S.C. 1126(b)).

[58 FR 32575, June 10, 1993]



PART 656_NATIONAL RESOURCE CENTERS PROGRAM FOR FOREIGN LANGUAGE AND
AREA STUDIES OR FOREIGN LANGUAGE AND INTERNATIONAL STUDIES
--Table of Contents



                            Subpart A_General

Sec.
656.1  What is the National Resource Centers Program?
656.2  Who is eligible to receive a grant?
656.3  What activities define a comprehensive or undergraduate National 
          Resource Center?
656.4  What types of Centers receive grants?

[[Page 426]]

656.5  What activities may be carried out?
656.6  What regulations apply?
656.7  What definitions apply?

                Subpart B_How Does One Apply for a Grant?

656.10  What combined application may an institution submit?

             Subpart C_How Does the Secretary Make a Grant?

656.20  How does the Secretary evaluate an application?
656.21  What selection criteria does the Secretary use to evaluate an 
          application for a comprehensive Center?
656.22  What selection criteria does the Secretary use to evaluate an 
          application for an undergraduate Center?
656.23  What priorities may the Secretary establish?

           Subpart D_What Conditions Must Be Met by a Grantee?

656.30  What are allowable costs and limitations on allowable costs?

    Authority: 20 U.S.C. 1122, unless otherwise noted.

    Source: 61 FR 50193, Sept. 24, 1996, unless otherwise noted.



                            Subpart A_General



Sec. 656.1  What is the National Resource Centers Program?

    Under the National Resource Centers Program for Foreign Language and 
Areas Studies or Foreign Language and International Studies (National 
Resource Centers Program), the Secretary awards grants to institutions 
of higher education and consortia of institutions to establish, 
strengthen, and operate comprehensive and undergraduate Centers that 
will be national resources for--
    (a) Teaching of any modern foreign language;
    (b) Instruction in fields needed to provide full understanding of 
areas, regions, or countries in which the modern foreign language is 
commonly used;
    (c) Research and training in international studies and the 
international and foreign language aspects of professional and other 
fields of study; and
    (d) Instruction and research on issues in world affairs that concern 
one or more countries.

(Authority: 20 U.S.C. 1122)

[61 FR 50193, Sept. 24, 1996, as amended at 64 FR 7739, Feb. 16, 1999; 
74 FR 35072, July 17, 2009]



Sec. 656.2  Who is eligible to receive a grant?

    An institution of higher education or a consortium of institutions 
of higher education is eligible to receive a grant under this part.

(Authority: 20 U.S.C. 1122)

[61 FR 50193, Sept. 24, 1996, as amended at 74 FR 35072, July 17, 2009]



Sec. 656.3  What activities define a comprehensive or undergraduate
National Resource Center?

    A comprehensive or undergraduate National Resource Center--
    (a) Teaches at least one modern foreign language;
    (b) Provides--
    (1) Instruction in fields necessary to provide a full understanding 
of the areas, regions, or countries in which the modern foreign language 
taught is commonly used;
    (2) Resources for research and training in international studies, 
and the international and foreign language aspects of professional and 
other fields of study; or
    (3) Instruction and research on issues in world affairs that concern 
one or more countries;
    (c) Provides outreach and consultative services on a national, 
regional, and local basis;
    (d) Maintains linkages with overseas institutions of higher 
education and other organizations that may contribute to the teaching 
and research of the Center;
    (e) Maintains important library collections;
    (f) Employs faculty engaged in training and research that relates to 
the subject area of the Center;
    (g) Conducts projects in cooperation with other centers addressing 
themes of world, regional, cross-regional, international, or global 
importance;
    (h) Conducts summer institutes in the United States or abroad 
designed

[[Page 427]]

to provide language and area training in the Center's field or topic;
    (i) Supports instructors of the less commonly taught languages; and
    (j) Encourages projects that support students in the science, 
technology, engineering, and mathematics fields to achieve foreign 
language proficiency.

(Authority: 20 U.S.C. 1122)

[64 FR 7739, Feb. 16, 1999, as amended at 74 FR 35072, July 17, 2009]



Sec. 656.4  What types of Centers receive grants?

    The Secretary awards grants to Centers that--
    (a) Focus on--
    (1) A single country or on a world area (such as East Asia, Africa, 
or the Middle East) and offer instruction in the principal language or 
languages of that country or area and those disciplinary fields 
necessary to provide a full understanding of the country or area; or
    (2) International studies or the international aspects of 
contemporary issues or topics (such as international business or energy) 
while providing instruction in modern foreign languages; and
    (b) Provide training at the--
    (1) Graduate, professional, and undergraduate levels, as a 
comprehensive Center; or
    (2) Undergraduate level only, as an undergraduate Center.

(Authority: 20 U.S.C. 1122)



Sec. 656.5  What activities may be carried out?

    (a) A Center may carry out any of the activities described in 
Sec. 656.3 under a grant received under this part.
    (b) The Secretary may make an additional grant to a Center for any 
one or a combination of the following purposes:
    (1) Linkage or outreach between foreign language, area studies, and 
other international fields and professional schools and colleges.
    (2) Linkage or outreach with 2- and 4-year colleges and 
universities.
    (3) Linkage or outreach between or among--
    (i) Postsecondary programs or departments in foreign language, area 
studies, or other international fields; and
    (ii) State educational agencies or local educational agencies.
    (4) Partnerships or programs of linkage and outreach with 
departments or agencies of Federal and State governments, including 
Federal or State scholarship programs for students in related areas.
    (5) Linkage or outreach with the news media, business, professional, 
or trade associations.
    (6) Summer institutes in area studies, foreign Language, and other 
international fields designed to carry out the activities in paragraphs 
(b)(1) through (b)(5) of this section.

(Authority: 20 U.S.C. 1122)

[61 FR 50193, Sept. 24, 1996, as amended at 64 FR 7739, Feb. 16, 1999; 
74 FR 35072, July 17, 2009]



Sec. 656.6  What regulations apply?

    The following regulations apply to this program:
    (a) The regulations in 34 CFR part 655.
    (b) The regulations in this part 656.

(Authority: 20 U.S.C. 1122)



Sec. 656.7  What definitions apply?

    The following definitions apply to this part:
    (a) The definitions in 34 CFR part 655.
    (b) Area studies means a program of comprehensive study of the 
aspects of a world area's society or societies, including study of 
history, culture, economy, politics, international relations, and 
languages.
    (c) Center means an administrative unit of an institution of higher 
education that has direct access to highly qualified faculty and library 
resources, and coordinates a concentrated effort of educational 
resources, including language training and various academic disciplines, 
in the area and subject matters described in Sec. 656.3.
    (d) Comprehensive Center means a Center that--
    (1) Contributes significantly to the national interest in advanced 
research and scholarship;
    (2) Offers intensive language instruction;

[[Page 428]]

    (3) Maintains important library collections related to the area of 
its specialization;
    (4) Makes training available to a graduate, professional, and 
undergraduate clientele; and
    (5) Engages in curriculum development and community outreach.
    (e) For purposes of this section, intensive language instruction 
means instruction of at least five contact hours per week during the 
academic year or the equivalent of a full academic year of language 
instruction during the summer.
    (f) Undergraduate Center means an administrative unit of an 
institution of higher education that--
    (1) Contributes significantly to the national interest through the 
education of students who matriculate into advanced language and area 
studies programs or professional school programs;
    (2) Incorporates substantial international and foreign language 
content into baccalaureate degree program;
    (3) Makes training available predominantly to undergraduate 
students; and
    (4) Engages in research, curriculum development, and community 
outreach.

(Authority: 20 U.S.C. 1122)



                Subpart B_How Does One Apply for a Grant?



Sec. 656.10  What combined application may an institution submit?

    An institution that wishes to apply for a grant under this part and 
for an allocation of fellowships under 34 CFR part 657 may submit one 
application for both.

(Authority: 20 U.S.C. 1122)



             Subpart C_How Does the Secretary Make a Grant?



Sec. 656.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a comprehensive 
Center under the criteria contained in Sec. 656.21, and for an 
undergraduate Center under the criteria contained in Sec. 656.22.
    (b) The Secretary informs applicants of the maximum possible score 
for each criterion in the application package or in a notice published 
in the Federal Register.

(Authority: 20 U.S.C. 1122)

[61 FR 50193, Sept. 24, 1996, as amended at 70 FR 13375, Mar. 21, 2005]



Sec. 656.21  What selection criteria does the Secretary use to evaluate
an application for a comprehensive Center?

    The Secretary evaluates an application for a comprehensive Center on 
the basis of the criteria in this section.
    (a) Program planning and budget. The Secretary reviews each 
application to determine--
    (1) The extent to which the activities for which the applicant seeks 
funding are of high quality and directly related to the purpose of the 
National Resource Centers Program;
    (2) The extent to which the applicant provides a development plan or 
timeline demonstrating how the proposed activities will contribute to a 
strengthened program and whether the applicant uses its resources and 
personnel effectively to achieve the proposed objectives;
    (3) The extent to which the costs of the proposed activities are 
reasonable in relation to the objectives of the program; and
    (4) The long-term impact of the proposed activities on the 
institution's undergraduate, graduate, and professional training 
programs.
    (b) Quality of staff resources. The Secretary reviews each 
application to determine--
    (1) The extent to which teaching faculty and other staff are 
qualified for the current and proposed Center activities and training 
programs, are provided professional development opportunities (including 
overseas experience), and participate in teaching, supervising, and 
advising students;
    (2) The adequacy of Center staffing and oversight arrangements, 
including outreach and administration and the extent to which faculty 
from a variety of departments, professional schools, and the library are 
involved; and
    (3) The extent to which the applicant, as part of its 
nondiscriminatory employment practices, encourages applications for 
employment from persons

[[Page 429]]

who are members of groups that have been traditionally underrepresented, 
such as members of racial or ethnic minority groups, women, persons with 
disabilities, and the elderly.
    (c) Impact and evaluation. The Secretary reviews each application to 
determine--
    (1) The extent to which the Center's activities and training 
programs have a significant impact on the university, community, region, 
and the Nation as shown through indices such as enrollments, graduate 
placement data, participation rates for events, and usage of Center 
resources; and the extent to which the applicant supplies a clear 
description of how the applicant will provide equal access and treatment 
of eligible project participants who are members of groups that have 
been traditionally underrepresented, such as members of racial or ethnic 
minority groups, women, persons with disabilities, and the elderly;
    (2) The extent to which the applicant provides an evaluation plan 
that is comprehensive and objective and that will produce quantifiable, 
outcome-measure-oriented data; and the extent to which recent 
evaluations have been used to improve the applicant's program;
    (3) The degree to which activities of the Center address national 
needs, and generate information for and disseminate information to the 
public; and
    (4) The applicant's record of placing students into post-graduate 
employment, education, or training in areas of national need and the 
applicant's stated efforts to increase the number of such students that 
go into such placements.
    (d) Commitment to the subject area on which the Center focuses. The 
Secretary reviews each application to determine the extent to which the 
institution provides financial and other support to the operation of the 
Center, teaching staff for the Center's subject area, library resources, 
linkages with institutions abroad, outreach activities, and qualified 
students in fields related to the Center.
    (e) Strength of library. The Secretary reviews each application to 
determine--
    (1) The strength of the institution's library holdings (both print 
and non-print, English and foreign language) in the subject area and at 
the educational levels (graduate, professional, undergraduate) on which 
the Center focuses; and the extent to which the institution provides 
financial support for the acquisition of library materials and for 
library staff in the subject area of the Center; and
    (2) The extent to which research materials at other institutions are 
available to students through cooperative arrangements with other 
libraries or on-line databases and the extent to which teachers, 
students, and faculty from other institutions are able to access the 
library's holdings.
    (f) Quality of the Center's non-language instructional program. The 
Secretary reviews each application to determine--
    (1) The quality and extent of the Center's course offerings in a 
variety of disciplines, including the extent to which courses in the 
Center's subject matter are available in the institution's professional 
schools;
    (2) The extent to which the Center offers depth of specialized 
course coverage in one or more disciplines of the Center's subject area;
    (3) The extent to which the institution employs a sufficient number 
of teaching faculty to enable the Center to carry out its purposes and 
the extent to which instructional assistants are provided with pedagogy 
training; and
    (4) The extent to which interdisciplinary courses are offered for 
undergraduate and graduate students.
    (g) Quality of the Center's language instructional program. The 
Secretary reviews each application to determine--
    (1) The extent to which the Center provides instruction in the 
languages of the Center's subject area and the extent to which students 
enroll in the study of the languages of the subject area through 
programs or instruction offered by the Center or other providers;
    (2) The extent to which the Center provides three or more levels of 
language training and the extent to which courses in disciplines other 
than language, linguistics, and literature are

[[Page 430]]

offered in appropriate foreign languages;
    (3) Whether sufficient numbers of language faculty are available to 
teach the languages and levels of instruction described in the 
application and the extent to which language teaching staff (including 
faculty and instructional assistants) have been exposed to current 
language pedagogy training appropriate for performance-based teaching; 
and
    (4) The quality of the language program as measured by the 
performance-based instruction being used or developed, the adequacy of 
resources for language teaching and practice, and language proficiency 
requirements.
    (h) Quality of curriculum design. The Secretary reviews each 
application to determine--
    (1) The extent to which the Center's curriculum has incorporated 
undergraduate instruction in the applicant's area or topic of 
specialization into baccalaureate degree programs (for example, major, 
minor, or certificate programs) and the extent to which these programs 
and their requirements (including language requirements) are appropriate 
for a Center in this subject area and will result in an undergraduate 
training program of high quality;
    (2) The extent to which the Center's curriculum provides training 
options for graduate students from a variety of disciplines and 
professional fields and the extent to which these programs and their 
requirements (including language requirements) are appropriate for a 
Center in this subject area and result in graduate training programs of 
high quality; and
    (3) The extent to which the Center provides academic and career 
advising services for students; the extent to which the Center has 
established formal arrangements for students to conduct research or 
study abroad and the extent to which these arrangements are used; and 
the extent to which the institution facilitates student access to other 
institutions' study abroad and summer language programs.
    (i) Outreach activities. The Secretary reviews each application to 
determine the extent to which the Center demonstrates a significant and 
measurable regional and national impact of, and faculty and professional 
school involvement in, domestic outreach activities that involve--
    (1) Elementary and secondary schools;
    (2) Postsecondary institutions; and
    (3) Business, media, and the general public.
    (j) Degree to which priorities are served. If, under the provisions 
of Sec. 656.23, the Secretary establishes competitive priorities for 
Centers, the Secretary considers the degree to which those priorities 
are being served.

(Approved by the Office of Management and Budget under control number 
1840-0068)

(Authority: 20 U.S.C. 1122)

[61 FR 50193, Sept. 24, 1996, as amended at 70 FR 13375, Mar. 21, 2005; 
74 FR 35073, July 17, 2009]



Sec. 656.22  What selection criteria does the Secretary use to
evaluate an application for an undergraduate Center?

    The Secretary evaluates an application for an undergraduate Center 
on the basis of the criteria in this section.
    (a) Program planning and budget. The Secretary reviews each 
application to determine--
    (1) The extent to which the activities for which the applicant seeks 
funding are of high quality and directly related to the purpose of the 
National Resource Centers Program;
    (2) The extent to which the applicant provides a development plan or 
timeline demonstrating how the proposed activities will contribute to a 
strengthened program and whether the applicant uses its resources and 
personnel effectively to achieve the proposed objectives;
    (3) The extent to which the costs of the proposed activities are 
reasonable in relation to the objectives of the program; and
    (4) The long-term impact of the proposed activities on the 
institution's undergraduate training program.
    (b) Quality of staff resources. The Secretary reviews each 
application to determine--
    (1) The extent to which teaching faculty and other staff are 
qualified for

[[Page 431]]

the current and proposed Center activities and training programs, are 
provided professional development opportunities (including overseas 
experience), and participate in teaching, supervising, and advising 
students;
    (2) The adequacy of Center staffing and oversight arrangements, 
including outreach and administration and the extent to which faculty 
from a variety of departments, professional schools, and the library are 
involved; and
    (3) The extent to which the applicant, as part of its 
nondiscriminatory employment practices, encourages applications for 
employment from persons who are members of groups that have been 
traditionally underrepresented, such as members of racial or ethnic 
minority groups, women, persons with disabilities, and the elderly.
    (c) Impact and evaluation. The Secretary reviews each application to 
determine--
    (1) The extent to which the Center's activities and training 
programs have a significant impact on the university, community, region, 
and the Nation as shown through indices such as enrollments, graduate 
placement data, participation rates for events, and usage of Center 
resources; the extent to which students matriculate into advanced 
language and area or international studies programs or related 
professional programs; and the extent to which the applicant supplies a 
clear description of how the applicant will provide equal access and 
treatment of eligible project participants who are members of groups 
that have been traditionally underrepresented, such as members of racial 
or ethnic minority groups, women, persons with disabilities, and the 
elderly;
    (2) The extent to which the applicant provides an evaluation plan 
that is comprehensive and objective and that will produce quantifiable, 
outcome-measure-oriented data; and the extent to which recent 
evaluations have been used to improve the applicant's program;
    (3) The degree to which activities of the Center address national 
needs, and generate information for and disseminate information to the 
public; and
    (4) The applicant's record of placing students into post-graduate 
employment, education, or training in areas of national need and the 
applicant's stated efforts to increase the number of such students that 
go into such placements.
    (d) Commitment to the subject area on which the Center focuses. The 
Secretary reviews each application to determine the extent to which the 
institution provides financial and other support to the operation of the 
Center, teaching staff for the Center's subject area, library resources, 
linkages with institutions abroad, outreach activities, and qualified 
students in fields related to the Center.
    (e) Strength of library. The Secretary reviews each application to 
determine--
    (1) The strength of the institution's library holdings (both print 
and non-print, English and foreign language) in the subject area and at 
the educational levels (graduate, professional, undergraduate) on which 
the Center focuses; and the extent to which the institution provides 
financial support for the acquisition of library materials and for 
library staff in the subject area of the Center; and
    (2) The extent to which research materials at other institutions are 
available to students through cooperative arrangements with other 
libraries or on-line databases and the extent to which teachers, 
students, and faculty from other institutions are able to access the 
library's holdings.
    (f) Quality of the Center's non-language instructional program. The 
Secretary reviews each application to determine--
    (1) The quality and extent of the Center's course offerings in a 
variety of disciplines;
    (2) The extent to which the Center offers depth of specialized 
course coverage in one or more disciplines of the Center's subject area;
    (3) The extent to which the institution employs a sufficient number 
of teaching faculty to enable the Center to carry out its purposes and 
the extent to which instructional assistants are provided with pedagogy 
training; and
    (4) The extent to which interdisciplinary courses are offered for 
undergraduate students.

[[Page 432]]

    (g) Quality of the Center's language instructional program. The 
Secretary reviews each application to determine--
    (1) The extent to which the Center provides instruction in the 
languages of the Center's subject area and the extent to which students 
enroll in the study of the languages of the subject area through 
programs offered by the Center or other providers;
    (2) The extent to which the Center provides three or more levels of 
language training and the extent to which courses in disciplines other 
than language, linguistics, and literature are offered in appropriate 
foreign languages;
    (3) Whether sufficient numbers of language faculty are available to 
teach the languages and levels of instruction described in the 
application and the extent to which language teaching staff (including 
faculty and instructional assistants) have been exposed to current 
language pedagogy training appropriate for performance-based teaching; 
and
    (4) The quality of the language program as measured by the 
performance-based instruction being used or developed, the adequacy of 
resources for language teaching and practice, and language proficiency 
requirements.
    (h) Quality of curriculum design. The Secretary reviews each 
application to determine--
    (1) The extent to which the Center's curriculum has incorporated 
undergraduate instruction in the applicant's area or topic of 
specialization into baccalaureate degree programs (for example, major, 
minor, or certificate programs) and the extent to which these programs 
and their requirements (including language requirements) are appropriate 
for a Center in this subject area and will result in an undergraduate 
training program of high quality; and
    (2) The extent to which the Center provides academic and career 
advising services for students; the extent to which the Center has 
established formal arrangements for students to conduct research or 
study abroad and the extent to which these arrangements are used; and 
the extent to which the institution facilitates student access to other 
institutions' study abroad and summer language programs.
    (i) Outreach activities. The Secretary reviews each application to 
determine the extent to which the Center demonstrates a significant and 
measurable regional and national impact of, and faculty and professional 
school involvement in, domestic outreach activities that involve--
    (1) Elementary and secondary schools;
    (2) Postsecondary institutions; and
    (3) Business, media and the general public.
    (j) Degree to which priorities are served. If, under the provisions 
of Sec. 656.23, the Secretary establishes competitive priorities for 
Centers, the Secretary considers the degree to which those priorities 
are being served.

(Approved by the Office of Management and Budget under control number 
1840-0068)

(Authority: 20 U.S.C. 1122)

[61 FR 50193, Sept. 24, 1996, as amended at 70 FR 13375, Mar. 21, 2005; 
74 FR 35073, July 17, 2009]



Sec. 656.23  What priorities may the Secretary establish?

    (a) The Secretary may select one or more of the following funding 
priorities:
    (1) Specific countries or world areas, such as, for example, East 
Asia, Africa, or the Middle East.
    (2) Specific focus of a Center, such as, for example, a single world 
area; international studies; a particular issue or topic, e.g., 
business, development issues, or energy; or any combination.
    (3) Level or intensiveness of language instruction, such as 
intermediate or advanced language instruction, or instruction at an 
intensity of 10 contact hours or more per week.
    (4) Types of activities to be carried out, for example, cooperative 
summer intensive language programs, course development, or teacher 
training activities.
    (b) The Secretary may select one or more of the activities listed in 
Sec. 656.5 as a funding priority.
    (c) The Secretary announces any priorities in the application notice 
published in the Federal Register.

(Authority: 20 U.S.C. 1122)

[[Page 433]]



           Subpart D_What Conditions Must Be Met By a Grantee?



Sec. 656.30  What are allowable costs and limitations on allowable costs?

    (a) Allowable costs. Except as provided under paragraph (b) of this 
section, a grant awarded under this part may be used to pay all or part 
of the cost of establishing, strengthening, or operating a comprehensive 
or undergraduate Center including, but not limited to, the cost of--
    (1) Faculty and staff salaries and travel;
    (2) Library acquisitions;
    (3) Teaching and research materials;
    (4) Curriculum planning and development;
    (5) Bringing visiting scholars and faculty to the Center to teach, 
conduct research, or participate in conferences or workshops;
    (6) Training and improvement of staff;
    (7) Projects conducted in cooperation with other centers addressing 
themes of world, regional, cross-regional, international, or global 
importance; and
    (8) Summer institutes in the United States or abroad designed to 
provide language and area training in the Center's field or topic.
    (b) Limitations on allowable costs. The following are limitations on 
allowable costs:
    (1) Equipment costs exceeding 10 percent of the grant are not 
allowable.
    (2) Funds for undergraduate travel are allowable only in conjunction 
with a formal program of supervised study in the subject area on which 
the Center focuses.
    (3) Grant funds may not be used to supplant funds normally used by 
applicants for purposes of this part.

(Authority: 20 U.S.C. 1122)

[61 FR 50193, Sept. 24, 1996, as amended at 64 FR 7739, Feb. 16, 1999]



PART 657_FOREIGN LANGUAGE AND AREA STUDIES FELLOWSHIPS PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
657.1  What is the Foreign Language and Area Studies Fellowship Program?
657.2  Who is eligible to receive an allocation of fellowships?
657.3  Who is eligible to receive a fellowship?
657.4  What regulations apply?
657.5  What definitions apply?

  Subpart B_How Does an Institution or a Student Submit an Application?

657.10  What combined application may an institution submit?
657.11  How does a student apply for a fellowship?

Subpart C_How Does the Secretary Select an Institution for an Allocation 
                             of Fellowships?

657.20  How does the Secretary evaluate an institutional application for 
          an allocation of fellowships?
657.21  What criteria does the Secretary use in selecting institutions 
          for an allocation of fellowships?
657.22  What priorities may the Secretary establish?

    Subpart D_What Conditions Must Be Met By a Grantee and a Fellow?

657.30  What is the duration of and what are the limitations on 
          fellowships awarded to individuals by institutions?
657.31  What is the amount of a fellowship?
657.32  What is the payment procedure for fellowships?
657.33  What are the limitations on the use of funds for overseas 
          fellowships?
657.34  Under what circumstances must an institution terminate a 
          fellowship?

    Authority: 20 U.S.C. 1122, unless otherwise noted.

    Source: 61 FR 50202, Sept. 24, 1996, unless otherwise noted.



                            Subpart A_General



Sec. 657.1  What is the Foreign Language and Area Studies Fellowships
Program?

    Under the Foreign Language and Area Studies Fellowships Program, the 
Secretary awards fellowships, through institutions of higher education, 
to students who are--

[[Page 434]]

    (a) Enrolled for undergraduate or graduate training in a Center or 
program approved by the Secretary under this part; and
    (b) Undergoing performance-based modern foreign language training or 
training in a program for which performance-based modern foreign 
language instruction is being developed, in combination with area 
studies, international studies, or the international aspects of 
professional studies.

(Authority: 20 U.S.C. 1122)

[61 FR 50202, Sept. 24, 1996, as amended at 74 FR 35073, July 17, 2009]



Sec. 657.2  Who is eligible to receive an allocation of fellowships?

    (a) The Secretary awards an allocation of fellowships to an 
institution of higher education or to a consortium of institutions of 
higher education that--
    (1) Operates a Center or program approved by the Secretary under 
this part;
    (2) Teaches modern foreign languages under a program described in 
paragraph (b) of this section; and
    (3) In combination with the teaching described in paragraph (a)(2) 
of this section--
    (i) Provides instruction in the disciplines needed for a full 
understanding of the area, regions, or countries in which the foreign 
languages are commonly used; or
    (ii) Conducts training and research in international studies, the 
international aspects of professional and other fields of study, or 
issues in world affairs that concern one or more countries.
    (b) In teaching those modern foreign languages for which an 
allocation of fellowships is made available, the institution must be 
either using a program of performance-based training or developing a 
performance-based training program.
    (c) The Secretary uses the criteria in Sec. 657.21 both to approve 
Centers and programs for the purpose of receiving an allocation of 
fellowships and to evaluate applications for an allocation of 
fellowships.
    (d) An institution does not need to receive a grant under the 
National Resource Center Program (34 CFR part 656) to receive an 
allocation of fellowships under this part.

(Authority: 20 U.S.C. 1122)

[61 FR 50202, Sept. 24, 1996, as amended at 74 FR 35073, July 17, 2009]



Sec. 657.3  Who is eligible to receive a fellowship?

    A student is eligible to receive a fellowship if the student--
    (a)(1) Is a citizen or national of the United States; or
    (2) Is a permanent resident of the United States;
    (b) Is accepted for enrollment or is enrolled--
    (1) In an institution receiving an allocation of fellowships; and
    (2) In a program that combines modern foreign language training 
with--
    (i) Area or international studies; or
    (ii) Research and training in the international aspects of 
professional and other fields of study;
    (c) Shows potential for high academic achievement based on such 
indices as grade point average, class ranking, or similar measures that 
the institution may determine;
    (d) Is enrolled in a program of modern foreign language training in 
a language for which the institution has developed or is developing 
performance-based instruction;
    (e) In the case of an undergraduate student, is in the intermediate 
or advanced study of a less commonly taught language; or
    (f) In the case of a graduate student, is engaged in--
    (1) Predissertation level study;
    (2) Preparation for dissertation research;
    (3) Dissertation research abroad; or
    (4) Dissertation writing.

(Authority: 20 U.S.C. 1122)

[61 FR 50202, Sept. 24, 1996, as amended at 74 FR 35073, July 17, 2009]



Sec. 657.4  What regulations apply?

    The following regulations apply to this program:
    (a) The regulations in 34 CFR part 655.
    (b) The regulations in this part 657.

(Authority: 20 U.S.C. 1122)

[[Page 435]]



Sec. 657.5  What definitions apply?

    The following definitions apply to this part:
    (a) The definitions in 34 CFR 655.4.
    (b) Center means an administrative unit of an institution of higher 
education that has direct access to highly qualified faculty and library 
resources, and coordinates a concentrated effort of educational 
activities, including training in modern foreign languages and various 
academic disciplines, in its subject area.
    (c) Fellow means a person who receives a fellowship under this part.
    (d) Fellowship means the payment a fellow receives under this part.
    (e) Program means a concentration of educational resources and 
activities in modern foreign language training and related studies.

(Authority: 20 U.S.C. 1122)



  Subpart B_How Does an Institution or a Student Submit an Application?



Sec. 657.10  What combined application may an institution submit?

    An institution that wishes to apply for an allocation of fellowships 
and for a grant to operate a Center under 34 CFR part 656 may submit a 
combined application for both grants to the Secretary.

(Authority: 20 U.S.C. 1122)



Sec. 657.11  How does a student apply for a fellowship?

    (a) A student shall apply for a fellowship directly to an 
institution of higher education that has received an allocation of 
fellowships.
    (b) The applicant shall provide sufficient information to enable the 
institution to determine whether he or she is eligible to receive a 
fellowship and whether he or she should be selected to receive a 
fellowship.

(Authority: 20 U.S.C. 1122)



Subpart C_How Does the Secretary Select an Institution for an Allocation 
                             of Fellowships?



Sec. 657.20  How does the Secretary evaluate an institutional application
for an allocation of fellowships?

    (a) The Secretary evaluates an institutional application for an 
allocation of fellowships on the basis of the quality of the applicant's 
Center or program. The applicant's Center or program is evaluated and 
approved under the criteria in Sec. 657.21.
    (b) The Secretary informs applicants of the maximum possible score 
for each criterion in the application package or in a notice published 
in the Federal Register.

(Authority: 20 U.S.C. 1122)

[61 FR 50202, Sept. 24, 1996, as amended at 70 FR 13375, Mar. 21, 2005]



Sec. 657.21  What criteria does the Secretary use in selecting
institutions for an allocation of fellowships?

    The Secretary evaluates an institutional application for an 
allocation of fellowships on the basis of the criteria in this section.
    (a) Foreign language and area studies fellowships awardee selection 
procedures. The Secretary reviews each application to determine whether 
the selection plan is of high quality, showing how awards will be 
advertised, how students apply, what selection criteria are used, who 
selects the fellows, when each step will take place, and how the process 
will result in awards being made to correspond to any announced 
priorities.
    (b) Quality of staff resources. The Secretary reviews each 
application to determine--
    (1) The extent to which teaching faculty and other staff are 
qualified for the current and proposed activities and training programs, 
are provided professional development opportunities (including overseas 
experience), and participate in teaching, supervising, and advising 
students;
    (2) The adequacy of applicant staffing and oversight arrangements 
and the extent to which faculty from a variety of departments, 
professional schools, and the library are involved; and

[[Page 436]]

    (3) The extent to which the applicant, as part of its 
nondiscriminatory employment practices, encourages applications for 
employment from persons who are members of groups that have been 
traditionally underrepresented, such as members of racial or ethnic 
minority groups, women, persons with disabilities, and the elderly.
    (c) Impact and evaluation. The Secretary reviews each application to 
determine--
    (1) The extent to which the applicant's activities and training 
programs have contributed to an improved supply of specialists on the 
program's subject as shown through indices such as undergraduate and 
graduate enrollments and placement data; and the extent to which the 
applicant supplies a clear description of how the applicant will provide 
equal access and treatment of eligible project participants who are 
members of groups that have been traditionally underrepresented, such as 
members of racial or ethnic minority groups, women, persons with 
disabilities, and the elderly;
    (2) The extent to which the applicant provides an evaluation plan 
that is comprehensive and objective and that will produce quantifiable, 
outcome-measure-oriented data; and the extent to which recent 
evaluations have been used to improve the applicant's program;
    (3) The degree to which fellowships awarded by the applicant address 
national needs; and
    (4) The applicant's record of placing students into post-graduate 
employment, education, or training in areas of national need and the 
applicant's stated efforts to increase the number of such students that 
go into such placements.
    (d) Commitment to the subject area on which the applicant or program 
focuses. The Secretary reviews each application to determine--
    (1) The extent to which the institution provides financial and other 
support to the operation of the applicant, teaching staff for the 
applicant's subject area, library resources, and linkages with 
institutions abroad; and
    (2) The extent to which the institution provides financial support 
to students in fields related to the applicant's teaching program.
    (e) Strength of library. The Secretary reviews each application to 
determine--
    (1) The strength of the institution's library holdings (both print 
and non-print, English and foreign language) for students; and the 
extent to which the institution provides financial support for the 
acquisition of library materials and for library staff in the subject 
area of the applicant; and
    (2) The extent to which research materials at other institutions are 
available to students through cooperative arrangements with other 
libraries or on-line databases.
    (f) Quality of the applicant's non-language instructional program. 
The Secretary reviews each application to determine--
    (1) The quality and extent of the applicant's course offerings in a 
variety of disciplines, including the extent to which courses in the 
applicant's subject matter are available in the institution's 
professional schools;
    (2) The extent to which the applicant offers depth of specialized 
course coverage in one or more disciplines on the applicant's subject 
area;
    (3) The extent to which the institution employs a sufficient number 
of teaching faculty to enable the applicant to carry out its purposes 
and the extent to which instructional assistants are provided with 
pedagogy training; and
    (4) The extent to which interdisciplinary courses are offered for 
students.
    (g) Quality of the applicant's language instructional program. The 
Secretary reviews each application to determine--
    (1) The extent to which the applicant provides instruction in the 
languages of the applicant's subject area and the extent to which 
students enroll in the study of the languages of the subject area 
through programs or instruction offered by the applicant or other 
providers;
    (2) The extent to which the applicant provides three or more levels 
of language training and the extent to which courses in disciplines 
other than language, linguistics, and literature are offered in 
appropriate foreign languages;

[[Page 437]]

    (3) Whether sufficient numbers of language faculty are available to 
teach the languages and levels of instruction described in the 
application and the extent to which language teaching staff (including 
faculty and instructional assistants) have been exposed to current 
language pedagogy training appropriate for performance-based teaching; 
and
    (4) The quality of the language program as measured by the 
performance-based instruction being used or developed, the adequacy of 
resources for language teaching and practice, and language proficiency 
requirements.
    (h) Quality of curriculum design. The Secretary reviews each 
application to determine--
    (1) The extent to which the applicant's curriculum provides training 
options for students from a variety of disciplines and professional 
fields and the extent to which these programs and their requirements 
(including language requirements) are appropriate for an applicant in 
this subject area and result in graduate training programs of high 
quality;
    (2) The extent to which the applicant provides academic and career 
advising services for students; and
    (3) The extent to which the applicant has established formal 
arrangements for students to conduct research or study abroad and the 
extent to which these arrangements are used; and the extent to which the 
institution facilitates student access to other institutions' study 
abroad and summer language programs.
    (i) Priorities. If one or more competitive priorities have been 
established under Sec. 657.22, the Secretary reviews each application 
for information that shows the extent to which the Center or program 
meets these priorities.

(Approved by the Office of Management and Budget under control number 
1840-0068)

(Authority: 20 U.S.C. 1122)

[61 FR 50202, Sept. 24, 1996, as amended at 70 FR 13375, Mar. 21, 2005; 
74 FR 35073, July 17, 2009]



Sec. 657.22  What priorities may the Secretary establish?

    (a) The Secretary may establish one or more of the following 
priorities for the allocation of fellowships:
    (1) Specific world areas, or countries, such as East Asia or Mexico.
    (2) Languages, such as Chinese.
    (3) Levels of language offerings.
    (4) Academic disciplines, such as linguistics or sociology.
    (5) Professional studies, such as business, law, or education;
    (6) Particular subjects, such as population growth and planning, or 
international trade and business.
    (7) A combination of any of these categories.
    (b) The Secretary announces any priorities in the application notice 
published in the Federal Register.

(Authority: 20 U.S.C. 1122)



    Subpart D_What Conditions Must Be Met by a Grantee and a Fellow?



Sec. 657.30  What is the duration of and what are the limitations on
fellowships awarded to individuals by institutions?

    (a) Duration. An institution may award a fellowship to a student 
for--
    (1) One academic year; or
    (2) One summer session if the summer session provides the fellow 
with the equivalent of one academic year of modern foreign language 
study.
    (b) Vacancies. If a fellow vacates a fellowship before the end of an 
award period, the institution to which the fellowship is allocated may 
reaward the balance of the fellowship to another student if--
    (1) The student meets the eligibility requirements in Sec. 657.3; 
and
    (2) The remaining fellowship period comprises at least one full 
academic quarter, semester, trimester, or summer session as described in 
paragraph (a)(2) of this section.

(Authority: 20 U.S.C. 1122)



Sec. 657.31  What is the amount of a fellowship?

    (a)(1) An institution shall award a stipend to fellowship 
recipients.

[[Page 438]]

    (2) Each fellowship includes an institutional payment and a 
subsistence allowance to be determined by the Secretary.
    (3) If the institutional payment determined by the Secretary is 
greater than the tuition and fees charged by the institution, the 
institutional payment portion of the fellowship is limited to actual 
tuition and fees. The difference between actual tuition and fees and the 
Secretary's institutional payment shall be used to fund additional 
fellowships to the extent that funds are available for a full 
subsistence allowance.
    (4) If permitted by the Secretary, a stipend awarded to a graduate 
level recipient may include allowances for dependents and travel for 
research and study in the United States and abroad.
    (5) A stipend awarded to an undergraduate level recipient may 
include an allowance for educational programs in the United States or 
educational programs abroad that--
    (i) Are closely linked to the overall goals of the recipient's 
course of study; and
    (ii) Have the purpose of promoting foreign language fluency and 
knowledge of foreign cultures.
    (b) The Secretary announces in an application notice published in 
the Federal Register--
    (1) The amounts of the subsistence allowance and the institutional 
payment for an academic year and the subsistence allowance and the 
institutional payment for a summer session;
    (2) Whether travel and dependents' allowances will be permitted; and
    (3) The amount of travel and dependents' allowances.

(Authority: 20 U.S.C. 1122)

[61 FR 50202, Sept. 24, 1996, as amended at 74 FR 35073, July 17, 2009]



Sec. 657.32  What is the payment procedure for fellowships?

    (a) An institution shall pay a fellow his or her subsistence and any 
other allowance in installments during the term of the fellowship.
    (b) An institution shall make a payment only to a fellow who is in 
good standing and is making satisfactory progress.
    (c) The institution shall make appropriate adjustments of any 
overpayment or underpayment to a fellow.
    (d) Funds not used by one recipient for reasons of withdrawal are to 
be used for alternate recipients to the extent that funds are available 
for a full subsistence allowance.

(Authority: 20 U.S.C. 1122)



Sec. 657.33  What are the limitations on the use of funds for overseas 
fellowships?

    (a) Before awarding a fellowship for use outside the United States, 
an institution shall obtain the approval of the Secretary.
    (b) The Secretary may approve the use of a fellowship outside the 
United States if the student is--
    (1) Enrolled in an overseas foreign language program approved by the 
institution at which the student is enrolled in the United States for 
study at an intermediate or advanced level or at the beginning level if 
appropriate equivalent instruction is not available in the United 
States; or
    (2) Engaged during the academic year in research that cannot be done 
effectively in the United States and is affiliated with an institution 
of higher education or other appropriate organization in the host 
country.

(Authority: 20 U.S.C. 1122)



Sec. 657.34  Under what circumstances must an institution terminate
a fellowship?

    An institution shall terminate a fellowship if--
    (a) The fellow is not making satisfactory progress, is no longer 
enrolled, or is no longer in good standing at the institution; or
    (b) The fellow fails to follow the course of study, including modern 
foreign language study, for which he or she applied, unless a revised 
course of study is otherwise approvable under this part.

(Authority: 20 U.S.C. 1122)

[[Page 439]]



PART 658_UNDERGRADUATE INTERNATIONAL STUDIES AND FOREIGN LANGUAGE
PROGRAM--Table of Contents



                            Subpart A_General

Sec.
658.1  What is the Undergraduate International Studies and Foreign 
          Language Program?
658.2  Who is eligible to apply for assistance under this program?
658.3  What regulations apply?
658.4  What definitions apply to the Undergraduate International Studies 
          and Foreign Language Program?

 Subpart B_What Kinds of Projects Does the Secretary Assist Under This 
                                Program?

658.10  For what kinds of projects does the Secretary assist 
          institutions of higher education?
658.11  What projects and activities may a grantee conduct under this 
          program?
658.12  For what kinds of projects does the Secretary assist 
          associations and organizations?

Subpart C [Reserved]

             Subpart D_How Does the Secretary Make a Grant?

658.30  How does the Secretary evaluate an application?
658.31  What selection criteria does the Secretary use?
658.32  What additional criteria does the Secretary apply to 
          institutional applications?
658.33  What additional criterion does the Secretary apply to 
          applications from organizations and associations?
658.34  What additional factors does the Secretary consider in selecting 
          grant recipients?
658.35  What priority does the Secretary give?

           Subpart E_What Conditions Must Be Met by a Grantee?

658.40  What are the limitations on allowable costs?
658.41  What are the cost-sharing requirements?

    Authority: 20 U.S.C. 1124, unless otherwise noted.

    Source: 47 FR 14122, Apr. 1, 1982, unless otherwise noted.



                            Subpart A_General



Sec. 658.1  What is the Undergraduate International Studies and
Foreign Language Program?

    The Undergraduate International Studies and Foreign Language Program 
is designed to provide assistance to institutions of higher education, 
consortia of those institutions, or partnerships between nonprofit 
educational organizations and institutions of higher education, to 
assist those institutions, consortia, or partnerships in planning, 
developing, and carrying out programs to improve undergraduate 
instruction in international studies and foreign languages.

(Authority: 20 U.S.C. 1124)

[64 FR 7739, Feb. 16, 1999, as amended at 74 FR 35073, July 17, 2009]



Sec. 658.2  Who is eligible to apply for assistance under this program?

    The following are eligible to apply for assistance under this part:
    (a) Institutions of higher education.
    (b) Consortia of institutions of higher education.
    (c) Partnerships between nonprofit educational organizations and 
institutions of higher education.
    (d) Public and private nonprofit agencies and organizations, 
including professional and scholarly associations.

(Authority: 20 U.S.C. 1124)

[47 FR 14122, Apr. 1, 1982, as amended at 64 FR 7739, Feb. 16, 1999; 74 
FR 35073, July 17, 2009]



Sec. 658.3  What regulations apply?

    The following regulations apply to this program:
    (a) The regulations in 34 CFR part 655.
    (b) The regulations in this part 658.

(Authority: 20 U.S.C. 1121-1127)

[58 FR 32576, June 10, 1993]



Sec. 658.4  What definitions apply to the Undergraduate International
Studies and Foreign Language Program?

    The definitions in 34 CFR 655.4 apply to this program.

(Authority: 20 U.S.C. 1121-1127)

[[Page 440]]



 Subpart B_What Kinds of Projects Does the Secretary Assist Under This 
                                Program?



Sec. 658.10  For what kinds of projects does the Secretary assist
institutions of higher education?

    (a) The Secretary may provide assistance to an institution of higher 
education, a consortium of institutions of higher education, or a 
partnership between a nonprofit educational organization and an 
institution of higher education to plan, develop, and carry out a 
program to improve undergraduate instruction in international studies 
and foreign languages. Those grants must be awarded to institutions, 
consortia, or partnerships seeking to create new programs or to 
strengthen existing programs in foreign languages, area studies, and 
other international fields.
    (b) The Secretary gives consideration to an applicant that proposes 
a program that--
    (1) Initiates new or revised courses in international or area 
studies;
    (2) Makes instruction in foreign languages available to students in 
the program; and
    (3) Takes place primarily in the United States.
    (c) The program shall focus on--
    (1) International or global studies;
    (2) One or more world areas and their languages; or
    (3) Issues or topics, such as international environmental studies or 
international health.

(Authority: 20 U.S.C. 1124(a))

[47 FR 14122, Apr. 1, 1982, as amended at 52 FR 28422, July 29, 1987; 58 
FR 32576, June 10, 1993; 64 FR 7740, Feb. 16, 1999; 74 FR 35074, July 
17, 2009]



Sec. 658.11  What projects and activities may a grantee conduct under
this program?

    The Secretary awards grants under this part to assist in carrying 
out projects and activities that are an integral part of a program to 
improve undergraduate instruction in international studies and foreign 
languages. These include projects such as--
    (a) Planning for the development and expansion of undergraduate 
programs in international studies and foreign languages;
    (b) Teaching, research, curriculum development, faculty training in 
the United States or abroad, and other related activities, including--
    (1) Expanding library and teaching resources;
    (2) Conducting faculty workshops, conferences, and special lectures;
    (3) Developing and testing new curricular materials, including self-
instructional materials in foreign languages, or specialized language 
materials dealing with a particular subject (such as health or the 
environment);
    (4) Initiating new and revised courses in international studies or 
area studies and foreign languages; and
    (5) Conducting pre-service teacher training and in-service teacher 
professional development;
    (c) Expanding the opportunities for learning foreign languages, 
including less commonly taught languages;
    (d) Providing opportunities for which foreign faculty and scholars 
may visit institutions as visiting faculty;
    (e) Placing U.S. faculty members in internships with international 
associations or with governmental or nongovernmental organizations in 
the U.S. or abroad to improve their understanding of international 
affairs;
    (f) Developing international education programs designed to develop 
or enhance linkages between 2-and 4-year institutions of higher 
education, or baccalaureate and post-baccalaureate programs or 
institutions;
    (g) Developing undergraduate educational programs--
    (1) In locations abroad where those opportunities are not otherwise 
available or that serve students for whom those opportunities are not 
otherwise available; and
    (2) That provide courses that are closely related to on-campus 
foreign language and international curricula;
    (h) Integrating new and continuing education abroad opportunities 
for undergraduate students into curricula of specific degree programs;
    (i) Developing model programs to enrich or enhance the effectiveness 
of educational programs abroad, including pre-departure and post-return 
programs, and integrating educational programs abroad into the 
curriculum of the home institution;

[[Page 441]]

    (j) Providing grants for educational programs abroad that--
    (1) Are closely linked to the program's overall goals; and
    (2) Have the purpose of promoting foreign language fluency and 
knowledge of world regions;
    (k) Developing programs designed to integrate professional and 
technical education with foreign languages, area studies, and other 
international fields;
    (l) Establishing linkages overseas with institutions of higher 
education and organizations that contribute to the educational programs 
assisted under this part;
    (m) Developing partnerships between--
    (1) Institutions of higher education; and
    (2) The private sector, government, or elementary and secondary 
education institutions in order to enhance international knowledge and 
skills; and
    (n) Using innovative technology to increase access to international 
education programs.

(Authority: 20 U.S.C. 1124)

[64 FR 7740, Feb. 16, 1999, as amended at 74 FR 35074, July 17, 2009]



Sec. 658.12  For what kinds of projects does the Secretary assist
associations and organizations?

    The Secretary may award grants under this part to public and private 
nonprofit agencies and organizations including scholarly associations, 
that propose projects that will make an especially significant 
contribution to strengthening and improving undergraduate instruction in 
international studies and foreign languages at institutions of higher 
education.

(Authority: 20 U.S.C. 1124(b))

Subpart C [Reserved]



             Subpart D_How Does the Secretary Make a Grant?



Sec. 658.30  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application from an institution of 
higher education or a consortium of such institutions on the basis of 
the criteria in Secs. 658.31 and 658.32. The Secretary informs 
applicants of the maximum possible score for each criterion in the 
application package or in a notice published in the Federal Register.
    (b) The Secretary evaluates an application from an agency or 
organization or professional or scholarly association on the basis of 
the criteria in Secs. 658.31 and 658.33. The Secretary informs 
applicants of the maximum possible score for each criterion in the 
application package or in a notice published in the Federal Register.

(Authority: 20 U.S.C. 1124)

[70 FR 13375, Mar. 21, 2005, as amended at 74 FR 35074, July 17, 2009]



Sec. 658.31  What selection criteria does the Secretary use?

    The Secretary evaluates an application for a project under this 
program on the basis of the criteria in this section.
    (a) Plan of operation. (See 34 CFR 655. 31(a))
    (b) Quality of key personnel. (See 34 CFR 655.31(b))
    (c) Budget and cost effectiveness. (See 34 CFR 655.31(c))
    (d) Evaluation plan. (See 34 CFR 655.31(d))
    (e) Adequacy of resources. (See 34 CFR 655.31(e))

(Authority: 20 U.S.C. 1124)

[47 FR 14122, Apr. 1, 1982, as amended at 70 FR 13375, Mar. 21, 2005]



Sec. 658.32  What additional criteria does the Secretary apply to
institutional applications?

    In addition to the criteria referred to in Sec. 658.31, the 
Secretary evaluates an application submitted by an institution of higher 
education or a consortium of such institutions on the basis of the 
criteria in this section.
    (a) Commitment to international studies. (1) The Secretary reviews 
each application for information that shows the applicant's commitment 
to the international studies program.
    (2) The Secretary looks for information that shows--
    (i) The institution's current strength as measured by the number of 
international studies courses offered;
    (ii) The extent to which planning for the implementation of the 
proposed

[[Page 442]]

program has involved the applicant's faculty, as well as administrators;
    (iii) The institutional commitment to the establishment, operation, 
and continuation of the program as demonstrated by optimal use of 
available personnel and other resources; and
    (iv) The institutional commitment to the program as demonstrated by 
the use of institutional funds in support of the program's objectives.
    (b) Elements of the proposed international studies program. (1) The 
Secretary reviews each application for information that shows the nature 
of the applicant's proposed international studies program.
    (2) The Secretary looks for information that shows--
    (i) The extent to which the proposed activities will contribute to 
the implementation of a program in international studies and foreign 
languages at the applicant institution;
    (ii) The interdisciplinary aspects of the program;
    (iii) The number of new and revised courses with an international 
perspective that will be added to the institution's programs; and
    (iv) The applicant's plans to improve or expand language 
instruction.
    (c) Need for and prospective results of the proposed program. (1) 
The Secretary reviews each application for information that shows the 
need for and the prospective results of the applicant's proposed 
program.
    (2) The Secretary looks for information that shows--
    (i) The extent to which the proposed activities are needed at the 
applicant institution;
    (ii) The extent to which the proposed use of Federal funds will 
result in the implementation of a program in international studies and 
foreign languages at the applicant institution;
    (iii) The likelihood that the activities initiated with Federal 
funds will be continued after Federal assistance is terminated; and
    (iv) The adequacy of the provisions for sharing the materials and 
results of the program with other institutions of higher education.

(Authority: 20 U.S.C. 1124)

[47 FR 14122, Apr. 1, 1982, as amended at 52 FR 28422, July 29, 1987; 70 
FR 13375, Mar. 21, 2005; 74 FR 35074, July 17, 2009]



Sec. 658.33  What additional criterion does the Secretary apply to
applications from organizations and associations?

    In addition to the criteria referred to in Sec. 658.31, the 
Secretary evaluates an application submitted by an organization or 
association on the basis of the criterion in this section.
    (a) Need for and potential impact of the proposed project in 
improving international studies and the study of modern foreign language 
at the undergraduate level.
    (b) The Secretary reviews each application for information that 
shows the need for and the potential impact of the applicant's proposed 
projects in improving international studies and the study of modern 
foreign language at the undergraduate level.
    (1) The Secretary looks for information that shows--
    (i) The extent to which the applicant's proposed apportionment of 
Federal funds among the various budget categories for the proposed 
project will contribute to achieving results;
    (ii) The international nature and contemporary relevance of the 
proposed project;
    (iii) The extent to which the proposed project will make an 
especially significant contribution to the improvement of the teaching 
of international studies or modern foreign languages at the 
undergraduate level; and
    (iv) The adequacy of the applicant's provisions for sharing the 
materials and results of the proposed project with the higher education 
community.
    (2) [Reserved]

(Authority: 20 U.S.C. 1124(b))

[47 FR 14122, Apr. 1, 1982, as amended at 70 FR 13375, Mar. 21, 2005]



Sec. 658.34  What additional factors does the Secretary consider
in selecting grant recipients?

    In addition to applying the selection criteria in, as appropriate 
Secs. 658.31,

[[Page 443]]

658.32, and 658.33, the Secretary, to the extent practicable and 
consistent with the criterion of excellence, seeks to encourage 
diversity by ensuring that a variety of types of projects and 
institutions receive funding.

(Authority: 20 U.S.C. 1124 and 1126)

[58 FR 32576, June 10, 1993]



Sec. 658.35  What priority does the Secretary give?

    (a) The Secretary gives priority to applications from institutions 
of higher education or consortia of these institutions that require 
entering students to have successfully completed at least two years of 
secondary school foreign language instruction or that require each 
graduating student to earn two years of postsecondary credit in a 
foreign language (or have demonstrated equivalent competence in the 
foreign language) or, in the case of a 2-year degree granting 
institution, offer two years of postsecondary credit in a foreign 
language.
    (b) The Secretary announces the number of points to be awarded under 
this priority in the application notice published in the Federal 
Register.

(Authority: 20 U.S.C. 1124)

[58 FR 32576, June 10, 1993, as amended at 74 FR 35074, July 17, 2009]



           Subpart E_What Conditions Must Be Met by a Grantee?



Sec. 658.40  What are the limitations on allowable costs?

    (a) Equipment costs may not exceed five percent of the grant amount; 
and
    (b) No more than ten percent of the total amount of grant funds 
awarded to a grantee under this part may be used for the activity 
described in Sec. 658.11(j).

(Authority: 20 U.S.C. 1124)

[74 FR 35074, July 17, 2009]



Sec. 658.41  What are the cost-sharing requirements?

    (a) The grantee's share may be derived from cash contributions from 
private sector corporations or foundations in the amount of one-third of 
the total cost of the project.
    (b) The grantee's share may be derived from cash or in-kind 
contributions from institutional and noninstitutional funds, including 
State and private sector corporation or foundation contributions, equal 
to one-half of the total cost of the project.
    (c) In-kind contributions means property or services that benefit a 
grant-supported project or program and that are contributed by non-
Federal third parties without charge to the grantee.
    (d) The Secretary may waive or reduce the required non-Federal share 
for institutions that--
    (1) Are eligible to receive assistance under part A or B of title 
III or under title V of the Higher Education Act of 1965, as amended; 
and
    (2) Have submitted a grant application under this part that 
demonstrates a need for a waiver or reduction.

(Authority: 20 U.S.C. 1124 and 3474; OMB Circular A-110)

[58 FR 32577, June 10, 1993, as amended at 64 FR 7740, Feb. 16, 1999; 74 
FR 35074, July 17, 2009]



PART 660_THE INTERNATIONAL RESEARCH AND STUDIES PROGRAM--Table of Contents



                            Subpart A_General

Sec.
660.1  What is the International Research and Studies Program?
660.2  Who is eligible to apply for grants under this program?
660.3  What regulations apply?
660.4  What definitions apply to the International Research and Studies 
          Program?

 Subpart B_What Kinds of Projects Does the Secretary Assist Under This 
                                Program?

660.10  What activities does the Secretary assist?

Subpart C [Reserved]

             Subpart D_How Does the Secretary Make a Grant?

660.30  How does the Secretary evaluate an application?
660.31  What selection criteria does the Secretary use for all 
          applications for a grant?
660.32  What additional selection criteria does the Secretary use for an 
          application for a research project, a survey, or a study?
660.33  What additional selection criteria does the Secretary use for an 
          application

[[Page 444]]

          to develop specialized instructional materials?
660.34  What priorities may the Secretary establish?

           Subpart E_What Conditions Must Be Met by a Grantee?

660.40  What are the limitations on allowable costs?

    Authority: 20 U.S.C. 1125, unless otherwise noted.

    Source: 47 FR 14124, Apr. 1, 1982, unless otherwise noted.



                            Subpart A_General



Sec. 660.1  What is the International Research and Studies Program?

    The Secretary may, directly or through grants or contracts, conduct 
research and studies which contribute to the purposes of the 
International Education Program authorized by part A of title VI of the 
Higher Education Act of 1965, as amended (HEA). The research and studies 
may include, but are not limited to--
    (a) Studies and surveys to determine needs for increased or improved 
instruction in modern foreign languages, area studies, or other 
international fields, including the demand for foreign language, area, 
and other international specialists in government, education, and the 
private sector;
    (b) Research on more effective methods of providing instruction and 
achieving competency in foreign languages, area studies, or other 
international fields;
    (c) Research on applying performance tests and standards across all 
areas of foreign language instruction and classroom use;
    (d) Developing and publishing specialized materials for use in 
foreign language, area studies, and other international fields or for 
training foreign language, area, and other international specialists;
    (e) Studies and surveys to assess the use of graduates of programs 
supported under title VI of the HEA by governmental, educational, and 
private-sector organizations and other studies assessing the outcomes 
and effectiveness of supported programs;
    (f) Comparative studies of the effectiveness of strategies to 
provide international capabilities at institutions of higher education;
    (g) Evaluations of the extent to which programs assisted under title 
VI of the HEA that address national needs would not otherwise be 
offered;
    (h) Studies and surveys of the use of technologies in foreign 
language, area studies, and international studies programs;
    (i) Studies and evaluations of effective practices in the 
dissemination of international information, materials, research, 
teaching strategies, and testing techniques throughout the educational 
community, including elementary and secondary schools;
    (j) Evaluations of the extent to which programs assisted under title 
VI of the HEA reflect diverse perspectives and a wide range of views and 
generate debate on world regions and international affairs, as described 
in the grantee's application;
    (k) Systematic collection, analysis, and dissemination of data that 
contribute to achieving the purposes of title VI, part A of the HEA; and
    (l) Support for programs or activities to make data collected, 
analyzed, or disseminated under this part publicly available and easy to 
understand.

(Authority: 20 U.S.C. 1125)

[47 FR 14124, Apr. 1, 1982, as amended at 58 FR 32577, June 10, 1993; 64 
FR 7740, Feb. 16, 1999; 74 FR 35074, July 17, 2009]



Sec. 660.2  Who is eligible to apply for grants under this program?

    Public and private agencies, organizations, and institutions, and 
individuals are eligible to apply for grants under this part.

(Authority: 20 U.S.C. 1125)



Sec. 660.3  What regulations apply?

    The following regulations apply to this program:
    (a) The regulations in 34 CFR part 655.
    (b) The regulations in this part 660.

(Authority: 20 U.S.C. 1121-1125)

[58 FR 32577, June 10, 1993]

[[Page 445]]



Sec. 660.4  What definitions apply to the International Research
and Studies Program?

    The definitions in 34 CFR 655.4 apply to this program.

(Authority: U.S.C. 1121-1127)



 Subpart B_What Kinds of Projects Does the Secretary Assist Under This 
                                Program?



Sec. 660.10  What activities does the Secretary assist?

    An applicant may apply for funds to carry out any of the following 
types of activities:
    (a) Studies and surveys to determine the need for increased or 
improved instruction in--
    (1) Modern foreign languages; and
    (2) Area studies and other international fields needed to provide 
full understanding of the places in which those languages are commonly 
used.
    (b) Research and studies--
    (1) On more effective methods of instruction and achieving 
competency in modern foreign languages, area studies, or other 
international fields;
    (2) To evaluate competency in those foreign languages, area studies, 
or other international fields; or
    (3) On the application of performance tests and standards across all 
areas of foreign language instruction and classroom use.
    (c) The development and publication of specialized materials--
    (1) For use by students and teachers of modern foreign languages, 
area studies, and other international fields; and
    (2) For use in--
    (i) Providing such instruction and evaluation; or
    (ii) Training individuals to provide such instruction and 
evaluation.
    (d) Research, surveys, studies, or the development of instructional 
materials that serve to enhance international understanding.
    (e) Other research or material development projects that further the 
purposes of the International Education Program authorized by part A of 
title VI of the HEA.
    (f) Studies and surveys to assess the use of graduates of programs 
supported under title VI of the HEA by governmental, educational, and 
private-sector organizations, and other studies assessing the outcomes 
and effectiveness of supported programs.
    (g) Comparative studies of the effectiveness of strategies to 
provide international capabilities at institutions of higher education.
    (h) Evaluations of the extent to which programs assisted under title 
VI of the HEA that address national needs would not otherwise be 
offered.
    (i) Studies and surveys of the uses of technology in foreign 
language, area studies, and international studies programs.
    (j) Studies and evaluations of effective practices in the 
dissemination of international information, materials, research, 
teaching strategies, and testing techniques through the education 
community, including elementary and secondary schools.
    (k) Evaluations of the extent to which programs assisted under title 
VI of the HEA reflect diverse perspectives and a wide range of views and 
generate debate on world regions and international affairs, as described 
in the grantee's application.
    (l) Systematic collection, analysis, and dissemination of data that 
contribute to achieving the purposes of title VI, part A of the HEA.
    (m) Support for programs or activities to make data collected, 
analyzed, or disseminated under this part publicly available and easy to 
understand.

(Authority: 20 U.S.C. 1125)

[47 FR 14124, Apr. 1, 1982, as amended at 52 FR 28424, July 29, 1987; 58 
FR 32577, June 10, 1993; 64 FR 7740, Feb. 16, 1999; 74 FR 35074, July 
17, 2009]

Subpart C [Reserved]



             Subpart D_How Does the Secretary Make a Grant?



Sec. 660.30  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a research project, a 
study, or a survey on the basis of the criteria

[[Page 446]]

in Secs. 660.31 and 660.32. The Secretary informs applicants of the 
maximum possible score for each criterion in the application package or 
in a notice published in the Federal Register.
    (b) The Secretary evaluates an application for the development of 
specialized instructional materials on the basis of the criteria in 
Secs. 660.31 and 660.33. The Secretary informs applicants of the maximum 
possible score for each criterion in the application package or in a 
notice published in the Federal Register.

(Authority: 20 U.S.C. 1125)

[70 FR 13375, Mar. 21, 2005]



Sec. 660.31  What selection criteria does the Secretary use for all
applications for a grant?

    The Secretary evaluates an application for a project under this 
program on the basis of the criteria in this section. The Secretary 
informs applicants of the maximum possible score for each criterion in 
the application package or in a notice published in the Federal 
Register.
    (a) Plan of operation. (See 34 CFR 655.31(a))
    (b) Quality of key personnel. (See 34 CFR 655.31(b))
    (c) Budget and cost effectiveness. (See 34 CFR 655.31(c))
    (d) Evaluation plan. (See 34 CFR 655.31(d))
    (e) Adequacy of resources. (See 34 CFR 655.31(e))

(Authority: 20 U.S.C. 1125)

[47 FR 14124, Apr. 1, 1982, as amended at 58 FR 32577, June 10, 1993; 70 
FR 13376, Mar. 21, 2005]



Sec. 660.32  What additional selection criteria does the Secretary
use for an application for a research project, a survey, or a study?

    In addition to the criteria referred to in Sec. 660.31, the 
Secretary evaluates an application for a research project, study, or 
survey on the basis of the criteria in this section.
    (a) Need for the project. The Secretary reviews each application for 
information that shows--
    (1) A need for the proposed project in the field of study on which 
the project focuses; and
    (2) That the proposed project will provide information about the 
present and future needs of the United States for study in foreign 
language and other international fields.
    (b) Usefulness of expected results. The Secretary reviews each 
application for information that shows the extent to which the results 
of the proposed project are likely to be used by other research projects 
or programs with similar objectives.
    (c) Development of new knowledge. The Secretary reviews each 
application for information that shows that the extent to which the 
proposed project is likely to develop new knowledge that will contribute 
to the purposes of the International Education Program authorized by 
part A of title VI of the HEA.
    (d) Formulation of problems and knowledge of related research. The 
Secretary reviews each application for information that shows that 
problems, questions, or hypotheses to be dealt with by the applicant--
    (1) Are well formulated; and
    (2) Reflect adequate knowledge of related research.
    (e) Specificity of statement of procedures. The Secretary reviews 
each application for the specificity and completeness of the statement 
of procedures to be followed, including a discussion of such components 
as sampling techniques, controls, data to be gathered, and statistical 
and other analyses to be undertaken.
    (f) Adequacy of methodology and scope of project. The Secretary 
reviews each application for information that shows--
    (1) The adequacy of the proposed teaching, testing, and research 
methodology; and
    (2) The size, scope, and duration of the proposed project.

(Authority: 20 U.S.C. 1125)

[47 FR 14124, Apr. 1, 1982, as amended at 58 FR 32577, June 10, 1993; 70 
FR 13376, Mar. 21, 2005]



Sec. 660.33  What additional selection criteria does the Secretary
use for an application to develop specialized instructional materials?

    In addition to the criteria referred to in Sec. 660.31, the 
Secretary evaluates an

[[Page 447]]

application to develop specialized instructional materials on the basis 
of the criteria in this section.
    (a) Need for the project. The Secretary reviews each application for 
information that shows that--
    (1) The proposed materials are needed in the educational field of 
study on which the project focuses; and
    (2) The language or languages, the area, region, or country, or the 
issues or studies for which the materials are to be developed, are of 
sufficient priority and significance to the national interest to warrant 
financial support by the Federal Government.
    (b) Potential for the use of materials in other programs. The 
Secretary reviews each application for information that shows the extent 
to which the proposed materials may be used elsewhere in the United 
States.
    (c) Account of related materials. The Secretary reviews each 
application for information that shows that--
    (1) All existing related or similar materials have been accounted 
for and the critical commentary on their adequacy is appropriate and 
accurate; and
    (2) The proposed materials will not duplicate any existing adequate 
materials.
    (d) Likelihood of achieving results. The Secretary reviews each 
application for information that shows that the outlined methods and 
procedures for preparing the materials are practicable and can be 
expected to produce the anticipated results.
    (e) Expected contribution to other programs. The Secretary reviews 
each application for information that shows the extent to which the 
proposed work may contribute significantly to strengthening, expanding, 
or improving programs of foreign language studies, area studies, or 
international studies in the United States.
    (f) Description of final form of materials. The Secretary reviews 
each application for information that shows a high degree of specificity 
in the description of the contents and final form of the proposed 
materials.
    (g) Provisions for pretesting and revision. The Secretary reviews 
each application for information that shows that adequate provision has 
been made for--
    (1) Pretesting the proposed materials; and
    (2) If necessary, revising the proposed materials before 
publication.

(Authority: 20 U.S.C. 1125)

[47 FR 14124, Apr. 1, 1982, as amended at 58 FR 32577, June 10, 1993; 70 
FR 13376, Mar. 21, 2005]



Sec. 660.34  What priorities may the Secretary establish?

    (a) The Secretary may each year select for funding from among the 
following priorities:
    (1) Categories of eligible projects described in Sec. 660.10.
    (2) Specific languages or regions for study or materials 
development; for example, the Near or Middle East, South Asia, Southeast 
Asia, Eastern Europe, Inner Asia, the Far East, Africa or Latin America, 
or the languages of those regions.
    (3) Topics of research and studies; for example, language 
acquisition processes, methodology of foreign language instruction, 
foreign language performance testing, or assessments of resources and 
needs.
    (4) Levels of education; for example, elementary, secondary, 
postsecondary or university-level education, or teacher education.
    (b) The Secretary announces any priorities in the application notice 
published in the Federal Register.

(Authority: 20 U.S.C. 1126)

[47 FR 14124, Apr. 1, 1982, as amended at 58 FR 32577, June 10, 1993]



           Subpart E_What Conditions Must Be Met by a Grantee?



Sec. 660.40  What are the limitations on allowable costs?

    Funds awarded under this part may not be used for the training of 
students and teachers.

(Authority: 20 U.S.C. 1125)

[[Page 448]]



PART 661_BUSINESS AND INTERNATIONAL EDUCATION PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
661.1  What is the Business and International Education Program?
661.2  Who is eligible to apply for a grant under the Business and 
          International Education Program?
661.3  What regulations apply?
661.4  What definitions apply to the Business and International 
          Education Program?

Subpart B_What Kinds of Activities Does the Secretary Assist Under this 
                                Program?

661.10  What activities does the Secretary assist under this program?

                Subpart C_How Does One Apply for a Grant?

661.20  What must an application include?

             Subpart D_How Does the Secretary Make a Grant?

661.30  How does the Secretary evaluate an application?
661.31  What selection criteria does the Secretary use?
661.32  What priorities may the Secretary establish?

           Subpart E_What Conditions Must be Met by a Grantee?

661.40  What are the matching requirements?

    Authority: 20 U.S.C. 1130-1130b, unless otherwise noted.

    Source: 49 FR 24362, June 12, 1984, unless otherwise noted.



                            Subpart A_General



Sec. 661.1  What is the Business and International Education Program?

    The Business and International Education Program is designed to 
promote linkages between institutions of higher education and American 
businesses engaged in international economic activities. The purpose of 
each project assisted under this part is both to enhance the 
international academic programs of institutions of higher education, and 
to provide appropriate services to the business community that will 
enable it to expand its capacity to sell its goods and services outside 
the United States.

(Authority: 20 U.S.C. 1130)



Sec. 661.2  Who is eligible to apply for a grant under the Business
and International Education Program?

    Under this program the Secretary considers applications from 
institutions of higher education that have entered into agreements with 
business enterprises, trade organizations or associations engaged in 
international economic activity--or a combination or consortium of these 
enterprises, organizations or associations--for the purposes of pursuing 
the activities authorized under this program.

(Authority: 20 U.S.C. 1130a)



Sec. 661.3  What regulations apply?

    The following regulations apply to this program:
    (a) The regulations in 34 CFR part 655.
    (b) The regulations in this part 661.

(Authority: 20 U.S.C. 1130-1130b)

[58 FR 32577, June 10, 1993]



Sec. 661.4  What definitions apply to the Business and International
Education Program?

    (a) General definitions. The following terms used in this part are 
defined in 2 CFR part 200, subpart A, or 34 CFR 77.1:

Applicant
Application
Award
Budget
Contract
EDGAR
Equipment
Facilities
Fiscal Year
Grant
Grantee
Nonprofit
Profit
Private
Public
Secretary
Supplies

    (b) Definitions in 34 CFR part 655. The following terms used in this 
part are defined in 34 CFR part 655.4(b):

Combinations of institutions
Institution of higher education

(Authority: 20 U.S.C. 1130-1130a)

[49 FR 24362, June 12, 1984, as amended at 79 FR 76104, Dec. 19, 2014]

[[Page 449]]



Subpart B_What Kinds of Activities Does the Secretary Assist Under This 
                                Program?



Sec. 661.10  What activities does the Secretary assist under this program?

    The activities that the Secretary may assist institutions of higher 
education to conduct under this program, include but are not limited 
to--
    (a) Innovation and improvement of international education curricula 
to serve the needs of the business community, including the development 
of new programs for nontraditional, mid-career, or part-time students;
    (b) Development of programs to inform the public of increasing 
international economic interdependence and the role of American business 
within the international economic system;
    (c) Internationalization of curricula at junior and community 
colleges, and at undergraduate and graduate schools of business;
    (d) Development of area studies programs and interdisciplinary 
international programs;
    (e) Establishment of export education programs through cooperative 
arrangements with regional and world trade centers and councils, and 
with bilateral and multilateral trade associations;
    (f) Research for and development of teaching materials relating to 
international education, including language materials, and facilities 
appropriate to business-oriented students;
    (g) Establishment of student and faculty fellowships and internships 
for training and education in international business activities;
    (h) Development of opportunities for business and other professional 
school junior faculty to acquire or strengthen international skills and 
perspectives;
    (i) Development of research programs on issues of common interest to 
institutions of higher education and private sector organizations and 
associations engaged in or promoting international economic activity;
    (j) The establishment of internships overseas to enable foreign 
language students to develop their foreign language skills and their 
knowledge of foreign cultures and societies;
    (k) Establishing linkages overseas with institutions of higher 
education and organizations that contribute to the educational 
objectives of this program; and
    (l) Summer institutes in international business, foreign area, and 
other international studies designed to carry out the purposes of this 
program.

(Authority: 20 U.S.C. 1130-1130b)

[49 FR 24362, June 12, 1984, as amended at 52 FR 28426, July 29, 1987; 
58 FR 32577, June 10, 1993]



                Subpart C_How Does One Apply for a Grant



Sec. 661.20  What must an application include?

    An institution that applies for a grant under this program shall 
include the following in its application:
    (a)(1) A copy of the agreement between the applicant and the other 
party or parties described in Sec. 661.2 for the purpose of carrying out 
the activities for which the applicant seeks assistance.
    (2) The agreement must be signed by all parties and it must describe 
the manner in which the business enterprise, trade association, or 
organization will assist in carrying out the activities proposed in the 
application.
    (b) An assurance that the applicant will use the funds to supplement 
and not to supplant activities conducted by the applicant.
    (c) An assurance that, where applicable, the activities funded by 
the grant will reflect diverse perspectives and a wide range of views on 
world regions and international affairs.

(Authority: 20 U.S.C. 1130a)

[49 FR 24362, June 12, 1984, as amended at 74 FR 35074, July 17, 2009]



             Subpart D_How Does the Secretary Make a Grant?



Sec. 661.30  How does the Secretary evaluate an application?

    The Secretary evaluates an application for a grant under this 
program on the basis of the criteria in Sec. 661.31. The Secretary 
informs applicants of the

[[Page 450]]

maximum possible score for each criterion in the application package or 
in a notice published in the Federal Register.

(Authority: 20 U.S.C. 1130a)

[70 FR 13376, Mar. 21, 2005]



Sec. 661.31  What selection criteria does the Secretary use?

    The Secretary evaluates an application for a grant under this 
program on the basis of the criteria in this section.
    (a) Plan of operation. (See 34 CFR 655.31(a).)
    (b) Qualifications of the key personnel. (See 34 CFR 655.31(b).)
    (c) Budget and cost effectiveness. (See 34 CFR 655.31(c).)
    (d) Evaluation plan. (See 34 CFR 655.31(d).)
    (e) Adequacy of resources. (See 34 CFR 655.31(e).)
    (f) Need for the project.

The Secretary reviews each application for information that shows the 
need for the project, and the extent to which the proposed project will 
promote linkages between institutions of higher education and the 
business community involved in international economic activities.

(Authority: 20 U.S.C. 1130a)

[49 FR 24362, June 12, 1984, as amended at 70 FR 13376, Mar. 21, 2005]



Sec. 661.32  What priorities may the Secretary establish?

    (a) The Secretary may each year establish priorities for funding 
from the activities described in Sec. 661.10.
    (b) The Secretary announces any priorities in the application notice 
published in the Federal Register.

(Authority: 20 U.S.C. 1130a)



           Subpart E_What Conditions Must be Met by a Grantee?



Sec. 661.40  What are the matching requirements?

    A grantee shall pay a minimum of 50 percent of the cost of the 
project for each fiscal year.

(Authority: 20 U.S.C. 1130a)



PART 662_FULBRIGHT-HAYS DOCTORAL DISSERTATION RESEARCH ABROAD
FELLOWSHIP PROGRAM--Table of Contents



                            Subpart A_General

Sec.
662.1  What is the Fulbright-Hays Doctoral Dissertation Research Abroad 
          Fellowship Program?
662.2  Who is eligible to receive an institutional grant under this 
          program?
662.3  Who is eligible to receive a fellowship under this program?
662.4  What is the amount of a fellowship?
662.5  What is the duration of a fellowship?
662.6  What regulations apply to this program?
662.7  What definitions apply to this program?

                         Subpart B_Applications

662.10  How does an individual apply for a fellowship?
662.11  What is the role of the institution in the application process?

                     Subpart C_Selection of Fellows

662.20  How is a Fulbright-Hays Doctoral Dissertation Research Abroad 
          Fellow selected?
662.21  What criteria does the Secretary use to evaluate an application 
          for a fellowship?
662.22  How does the J. William Fulbright Foreign Scholarship Board 
          select fellows?

           Subpart D_Post-award Requirements for Institutions

662.30  What are an institution's responsibilities after the award of a 
          grant?

              Subpart E_Post-award Requirements for Fellows

662.41  What are a fellow's responsibilities after the award of a 
          fellowship?
662.42  How may a fellowship be revoked?

    Authority: Section 102(b)(6) of the Mutual Educational and Cultural 
Exchange Act of 1961 (Fulbright-Hays Act), 22 U.S.C. 2452(b)(6), unless 
otherwise noted.

    Source: 63 FR 46361, Aug. 31, 1998, unless otherwise noted.

[[Page 451]]



                            Subpart A_General



Sec. 662.1  What is the Fulbright-Hays Doctoral Dissertation Research
Abroad Fellowship Program?

    (a) The Fulbright-Hays Doctoral Dissertation Research Abroad 
Fellowship Program is designed to contribute to the development and 
improvement of the study of modern foreign languages and area studies in 
the United States by providing opportunities for scholars to conduct 
research abroad.
    (b) Under the program, the Secretary awards fellowships, through 
institutions of higher education, to doctoral candidates who propose to 
conduct dissertation research abroad in modern foreign languages and 
area studies.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 662.2  Who is eligible to receive an institutional grant under
this program?

    An institution of higher education is eligible to receive an 
institutional grant.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e)(1))



Sec. 662.3  Who is eligible to receive a fellowship under this program?

    An individual is eligible to receive a fellowship if the 
individual--
    (a)(1) Is a citizen or national of the United States; or
    (2) Is a permanent resident of the United States;
    (b)(1) Is a graduate student in good standing at an institution of 
higher education; and
    (2) When the fellowship period begins, is admitted to candidacy in a 
doctoral degree program in modern foreign languages and area studies at 
that institution;
    (c) Is planning a teaching career in the United States upon 
completion of his or her doctoral program; and
    (d) Possesses sufficient foreign language skills to carry out the 
dissertation research project.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e)(1))



Sec. 662.4  What is the amount of a fellowship?

    (a) The Secretary pays--
    (1) Travel expenses to and from the residence of the fellow and the 
country or countries of research;
    (2) A maintenance stipend for the fellow and his or her dependents 
related to cost of living in the host country or countries;
    (3) An allowance for research-related expenses overseas, such as 
books, copying, tuition and affiliation fees, local travel, and other 
incidental expenses; and
    (4) Health and accident insurance premiums.
    (b) In addition, the Secretary may pay--
    (1) Emergency medical expenses not covered by health and accident 
insurance; and
    (2) The costs of preparing and transporting the remains of a fellow 
or dependent who dies during the term of the fellowship to his or her 
former home.
    (c) The Secretary announces the amount of benefits expected to be 
available in an application notice published in the Federal Register.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e) (1) and (2))



Sec. 662.5  What is the duration of a fellowship?

    (a) A fellowship is for a period of not fewer than six nor more than 
twelve months.
    (b) A fellowship may not be renewed.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 662.6  What regulations apply to this program?

    The following regulations apply to this program:
    (a) The regulations in this part 662; and
    (b) The Education Department General Administrative Regulations 
(EDGAR) (34 CFR parts 75, 77, 81, 82, and 86).
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles,

[[Page 452]]

and Audit Requirements for Federal Awards), as adopted at 2 CFR part 
3474.

(Authority: 22 U.S.C. 2452(b)(6))

[63 FR 46361, Aug. 31, 1998, as amended at 79 FR 76104, Dec. 19, 2014]



Sec. 662.7  What definitions apply to this program?

    (a) Definitions of the following terms as used in this part are 
contained in 2 CFR part 200, subpart A, or 34 CFR part 77:

Applicant
Application
Award
EDGAR
Fiscal year
Grant
Secretary

    (b) The definition of institution of higher education as used in 
this part is contained in 34 CFR 600.4.
    (c) The following definitions of other terms used in this part apply 
to this program:
    Area studies means a program of comprehensive study of the aspects 
of a society or societies, including the study of their geography, 
history, culture, economy, politics, international relations, and 
languages.
    Binational commission means an educational and cultural commission 
established, through an agreement between the United States and either a 
foreign government or an international organization, to carry out 
functions in connection with the program covered by this part.
    Dependent means any of the following individuals who accompany the 
recipient of a fellowship under this program to his or her training site 
for the entire fellowship period if the individual receives more than 50 
percent of his or her support from the recipient during the fellowship 
period:
    (1) The recipient's spouse.
    (2) The recipient's or spouse's children who are unmarried and under 
age 21.
    J. William Fulbright Foreign Scholarship Board means the 
presidentially-appointed board that is responsible for supervision of 
the program covered by this part.

(Authority: 22 U.S.C. 2452(b)(6), 2456)

[63 FR 46361, Aug. 31, 1998, as amended at 79 FR 76104, Dec. 19, 2014]



                         Subpart B_Applications



Sec. 662.10  How does an individual apply for a fellowship?

    (a) An individual applies for a fellowship by submitting an 
application to the Secretary through the institution of higher education 
in which the individual is enrolled.
    (b) The applicant shall provide sufficient information concerning 
his or her personal and academic background and proposed research 
project to enable the Secretary to determine whether the applicant--
    (1) Is eligible to receive a fellowship under Sec. 662.3; and
    (2) Should be selected to receive a fellowship under subparts C and 
D of this part.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 662.11  What is the role of the institution in the application
process?

    An institution of higher education that participates in this program 
is responsible for--
    (a) Making fellowship application materials available to its 
students;
    (b) Accepting and screening applications in accordance with its own 
technical and academic criteria; and
    (c) Forwarding screened applications to the Secretary and requesting 
an institutional grant.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e)(1))



                     Subpart C_Selection of Fellows



Sec. 662.20  How is a Fulbright-Hays Doctoral Dissertation Research
Abroad Fellow selected?

    (a) The Secretary considers applications for fellowships under this 
program that have been screened and submitted by eligible institutions. 
The Secretary evaluates these applications on the basis of the criteria 
in Sec. 662.21.
    (b) The Secretary does not consider applications to carry out 
research in a country in which the United States has no diplomatic 
representation.
    (c) In evaluating applications, the Secretary obtains the advice of 
panels of United States academic specialists in modern foreign languages 
and area studies.

[[Page 453]]

    (d) The Secretary gives preference to applicants who have served in 
the armed services of the United States if their applications are 
equivalent to those of other applicants on the basis of the criteria in 
Sec. 662.21.
    (e) The Secretary considers information on budget, political 
sensitivity, and feasibility from binational commissions or United 
States diplomatic missions, or both, in the proposed country or 
countries of research.
    (f) The Secretary presents recommendations for recipients of 
fellowships to the J. William Fulbright Foreign Scholarship Board, which 
reviews the recommendations and approves recipients.

(Authority: 22 U.S.C. 2452(b)(6), 2456)



Sec. 662.21  What criteria does the Secretary use to evaluate an 
application for a fellowship?

    (a) General. The Secretary evaluates an application for a fellowship 
on the basis of the criteria in this section. The Secretary informs 
applicants of the maximum possible score for each criterion in the 
application package or in a notice published in the Federal Register.
    (b) Quality of proposed project. The Secretary reviews each 
application to determine the quality of the research project proposed by 
the applicant. The Secretary considers--
    (1) The statement of the major hypotheses to be tested or questions 
to be examined, and the description and justification of the research 
methods to be used;
    (2) The relationship of the research to the literature on the topic 
and to major theoretical issues in the field, and the project's 
originality and importance in terms of the concerns of the discipline;
    (3) The preliminary research already completed in the United States 
and overseas or plans for such research prior to going overseas, and the 
kinds, quality and availability of data for the research in the host 
country or countries;
    (4) The justification for overseas field research and preparations 
to establish appropriate and sufficient research contacts and 
affiliations abroad;
    (5) The applicant's plans to share the results of the research in 
progress and a copy of the dissertation with scholars and officials of 
the host country or countries; and
    (6) The guidance and supervision of the dissertation advisor or 
committee at all stages of the project, including guidance in developing 
the project, understanding research conditions abroad, and acquainting 
the applicant with research in the field.
    (c) Qualifications of the applicant. The Secretary reviews each 
application to determine the qualifications of the applicant. The 
Secretary considers--
    (1) The overall strength of the applicant's graduate academic 
record;
    (2) The extent to which the applicant's academic record demonstrates 
strength in area studies relevant to the proposed project;
    (3) The applicant's proficiency in one or more of the languages 
(other than English and the applicant's native language) of the country 
or countries of research, and the specific measures to be taken to 
overcome any anticipated language barriers; and
    (4) The applicant's ability to conduct research in a foreign 
cultural context, as evidenced by the applicant's references or previous 
overseas experience, or both.
    (d) Priorities. (1) The Secretary determines the extent to which the 
application responds to any priority that the Secretary establishes for 
the selection of fellows in any fiscal year. The Secretary announces any 
priorities in an application notice published in the Federal Register.
    (2) Priorities may relate to certain world areas, countries, 
academic disciplines, languages, topics, or combinations of any of these 
categories. For example, the Secretary may establish a priority for--
    (i) A specific geographic area or country, such as the Caribbean or 
Poland;
    (ii) An academic discipline, such as economics or political science;
    (iii) A language, such as Tajik or Indonesian; or

[[Page 454]]

    (iv) A topic, such as public health issues or the environment.

(Approved by the Office of Management and Budget under control number 
1840-0005)

(Authority: 22 U.S.C. 2452(b)(6), 2456(a)(2))

[63 FR 46361, Aug. 31, 1998, as amended at 70 FR 13376, Mar. 21, 2005]



Sec. 662.22  How does the J. William Fulbright Foreign Scholarship
Board select fellows?

    (a) The J. William Fulbright Foreign Scholarship Board selects 
fellows on the basis of the Secretary's recommendations and the 
information described in Sec. 662.20(e) from binational commissions or 
United States diplomatic missions.
    (b) No applicant for a fellowship may be awarded more than one 
graduate fellowship under the Fulbright-Hays Act from appropriations for 
a given fiscal year.

(Authority: 22 U.S.C. 2452(b)(6), 2456(a)(1))



           Subpart D_Post-award Requirements for Institutions



Sec. 662.30  What are an institution's responsibilities after the
award of a grant?

    (a) An institution to which the Secretary awards a grant under this 
part is responsible for administering the grant in accordance with the 
regulations described in Sec. 662.6.
    (b) The institution is responsible for processing individual 
applications for fellowships in accordance with procedures described in 
Sec. 662.11.
    (c) The institution is responsible for disbursing funds in 
accordance with procedures described in Sec. 662.4.
    (d) The Secretary awards the institution an administrative allowance 
of $100 for each fellowship listed in the grant award document.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e)(1))



              Subpart E_Post-award Requirements for Fellows



Sec. 662.41  What are a fellow's responsibilities after the award
of a fellowship?

    As a condition of retaining a fellowship, a fellow shall--
    (a) Maintain satisfactory progress in the conduct of his or her 
research;
    (b) Devote full time to research on the approved topic;
    (c) Not engage in unauthorized income-producing activities during 
the period of the fellowship; and
    (d) Remain a student in good standing with the grantee institution 
during the period of the fellowship.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 662.42  How may a fellowship be revoked?

    (a) The fellowship may be revoked only by the J. William Fulbright 
Foreign Scholarship Board upon the recommendation of the Secretary.
    (b) The Secretary may recommend a revocation of a fellowship on the 
basis of--
    (1) The fellow's failure to meet any of the conditions in 
Sec. 662.41; or
    (2) Any violation of the standards of conduct adopted by the J. 
William Fulbright Foreign Scholarship Board.

(Authority: 22 U.S.C. 2452(b)(6), 2456, and Policy Statements of the J. 
William Fulbright Foreign Scholarship Board, 1990)



PART 663_FULBRIGHT-HAYS FACULTY RESEARCH ABROAD FELLOWSHIP PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
663.1  What is the Fulbright-Hays Faculty Research Abroad Fellowship 
          Program?
663.2  Who is eligible to receive an institutional grant under this 
          program?
663.3  Who is eligible to receive a fellowship under this program?
663.4  What is the amount of a fellowship?
663.5  What is the duration of a fellowship?
663.6  What regulations apply to this program?
663.7  What definitions apply to this program?

                         Subpart B_Applications

663.10  How does an individual apply for a fellowship?
663.11  What is the role of the institution in the application process?

                     Subpart C_Selection of Fellows

663.20  How is a Fulbright-Hays Faculty Research Abroad Fellow selected?

[[Page 455]]

663.21  What criteria does the Secretary use to evaluate an application 
          for a fellowship?
663.22  How does the J. William Fulbright Foreign Scholarship Board 
          select fellows?

           Subpart D_Post-award Requirements for Institutions

663.30  What are an institution's responsibilities after the award of a 
          grant?

              Subpart E_Post-award Requirements for Fellows

663.41  What are a fellow's responsibilities after the award of a 
          fellowship?
663.42  How may a fellowship be revoked?

    Authority: Sec. 102(b)(6) of the Mutual Educational and Cultural 
Exchange Act of 1961 (Fulbright-Hays Act), 22 U.S.C. 2452(b)(6), unless 
otherwise noted.

    Source: 63 FR 46363, Aug. 31, 1998, unless otherwise noted.



                            Subpart A_General



Sec. 663.1  What is the Fulbright-Hays Faculty Research Abroad
Fellowship Program?

    (a) The Fulbright-Hays Faculty Research Abroad Program is designed 
to contribute to the development and improvement of modern foreign 
language and area studies in the United States by providing 
opportunities for scholars to conduct research abroad.
    (b) Under the program, the Secretary awards fellowships, through 
institutions of higher education, to faculty members who propose to 
conduct research abroad in modern foreign languages and area studies to 
improve their skill in languages and knowledge of the culture of the 
people of these countries.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 663.2  Who is eligible to receive an institutional grant
under this program?

    An institution of higher education is eligible to receive an 
institutional grant.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e)(1))



Sec. 663.3  Who is eligible to receive a fellowship under this 
program?

    An individual is eligible to receive a fellowship if the 
individual--
    (a)(1) Is a citizen or national of the United States; or
    (2) Is a permanent resident of the United States;
    (b) Is employed by an institution of higher education;
    (c) Has been engaged in teaching relevant to his or her foreign 
language or area studies specialization for the two years immediately 
preceding the date of the award;
    (d) Proposes research relevant to his or her modern foreign language 
or area specialization which is not dissertation research for a doctoral 
degree; and
    (e) Possesses sufficient foreign language skills to carry out the 
research project.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e)(1))



Sec. 663.4  What is the amount of a fellowship?

    (a) The Secretary pays--
    (1) Travel expenses to and from the residence of the fellow and the 
country or countries of research;
    (2) A maintenance stipend for the fellow related to his or her 
academic year salary; and
    (3) An allowance for research-related expenses overseas, such as 
books, copying, tuition and affiliation fees, local travel, and other 
incidental expenses.
    (b) The Secretary may pay--
    (1) Emergency medical expenses not covered by the faculty member's 
health and accident insurance; and
    (2) The costs of preparing and transporting the remains of a fellow 
or dependent who dies during the term of the fellowship to his or her 
former home.
    (c) The Secretary announces the amount of benefits expected to be 
available in an application notice published in the Federal Register.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e) (1) and (2))



Sec. 663.5  What is the duration of a fellowship?

    (a) A fellowship is for a period of not fewer than three nor more 
than twelve months.

[[Page 456]]

    (b) A fellowship may not be renewed.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 663.6  What regulations apply to this program?

    The following regulations apply to this program:
    (a) The regulations in this part 663; and
    (b) The Education Department General Administrative Regulations 
(EDGAR) (34 CFR parts 75, 77, 81, 82, and 86).
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 22 U.S.C. 2452(b)(6))

[63 FR 46363, Aug. 31, 1998, as amended at 79 FR 76104, Dec. 19, 2014]



Sec. 663.7  What definitions apply to this program?

    (a) Definitions of the following terms as used in this part are 
contained in 2 CFR part 200, subpart A, or 34 CFR part 77:

Applicant
Application
Award
EDGAR
Fiscal year
Grant
Secretary

    (b) The definition of institution of higher education as used in 
this part is contained in 34 CFR 600.4.
    (c) The following definitions of other terms used in this part apply 
to this program:
    Area studies means a program of comprehensive study of the aspects 
of a society or societies, including the study of their geography, 
history, culture, economy, politics, international relations, and 
languages.
    Binational commission means an educational and cultural commission 
established, through an agreement between the United States and either a 
foreign government or an international organization, to carry out 
functions in connection with the program covered by this part.
    Dependent means any of the following individuals who accompany the 
recipient of a fellowship under this program to his or her training site 
for the entire fellowship period if the individual receives more than 50 
percent of his or her support from the recipient during the fellowship 
period:
    (1) The recipient's spouse.
    (2) The recipient's or spouse's children who are unmarried and under 
age 21.
    J. William Fulbright Foreign Scholarship Board means the 
presidentially-appointed board that is responsible for supervision of 
the program covered by this part.

(Authority: 22 U.S.C. 2452(b)(6), 2456)

[63 FR 46363, Aug. 31, 1998, as amended at 79 FR 76104, Dec. 19, 2014]



                         Subpart B_Applications



Sec. 663.10  How does an individual apply for a fellowship?

    (a) An individual applies for a fellowship by submitting an 
application to the Secretary through the institution of higher education 
at which the individual is employed.
    (b) The applicant shall provide sufficient information concerning 
his or her personal and academic background and proposed research 
project to enable the Secretary to determine whether the applicant--
    (1) Is eligible to receive a fellowship under Sec. 663.3; and
    (2) Should be selected to receive a fellowship under subparts C and 
D of this part.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 663.11  What is the role of the institution in the application process?

    An institution of higher education that participates in this program 
is responsible for--
    (a) Making fellowship application materials available to its 
faculty;
    (b) Accepting and screening applications in accordance with its own 
technical and academic criteria; and
    (c) Forwarding screened applications to the Secretary through a 
request for an institutional grant.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e)(1))

[[Page 457]]



                     Subpart C_Selection of Fellows



Sec. 663.20  How is a Fulbright-Hays Faculty Research Abroad Fellow selected?

    (a) The Secretary considers applications for fellowships under this 
program that have been screened and submitted by eligible institutions. 
The Secretary evaluates these applications on the basis of the criteria 
in Sec. 663.21.
    (b) The Secretary does not consider applications to carry out 
research in a country in which the United States has no diplomatic 
representation.
    (c) In evaluating applications, the Secretary obtains the advice of 
panels of United States academic specialists in modern foreign languages 
and area studies.
    (d) The Secretary gives preference to applicants who have served in 
the armed services of the United States if their applications are 
equivalent to those of other applicants on the basis of the criteria in 
Sec. 663.21.
    (e) The Secretary considers information on budget, political 
sensitivity, and feasibility from binational commissions or United 
States diplomatic missions, or both, in the proposed country or 
countries of research.
    (f) The Secretary presents recommendations for recipients of 
fellowships to the J. William Fulbright Foreign Scholarship Board, which 
reviews the recommendations and approves recipients.

(Authority: 22 U.S.C. 2452(b)(6), 2456)



Sec. 663.21  What criteria does the Secretary use to evaluate an
application for a fellowship?

    (a) General. The Secretary evaluates an application for a fellowship 
on the basis of the criteria in this section. The Secretary informs 
applicants of the maximum possible score for each criterion in the 
application package or in a notice published in the Federal Register.
    (b) Quality of proposed project. The Secretary reviews each 
application to determine the quality of the research project proposed by 
the applicant. The Secretary considers--
    (1) The statement of the major hypotheses to be tested or questions 
to be examined, and the description and justification of the research 
methods to be used;
    (2) The relationship of the research to the literature on the topic 
and to major theoretical issues in the field, and the project's 
importance in terms of the concerns of the discipline;
    (3) The preliminary research already completed or plans for research 
prior to going overseas, and the kinds, quality and availability of data 
for the research in the host country or countries;
    (4) The justification for overseas field research, and preparations 
to establish appropriate and sufficient research contacts and 
affiliations abroad;
    (5) The applicant's plans to share the results of the research in 
progress with scholars and officials of the host country or countries 
and the American scholarly community; and
    (6) The objectives of the project regarding the sponsoring 
institution's plans for developing or strengthening, or both, curricula 
in modern foreign languages and area studies.
    (c) Qualifications of the applicant. The Secretary reviews each 
application to determine the qualifications of the applicant. The 
Secretary considers--
    (1) The overall strength of applicant's academic record (teaching, 
research, contributions, professional association activities);
    (2) The applicant's excellence as a teacher or researcher, or both, 
in his or her area or areas of specialization;
    (3) The applicant's proficiency in one or more of the languages 
(other than English and the applicant's native language), of the country 
or countries of research, and the specific measures to be taken to 
overcome any anticipated language barriers; and
    (4) The applicant's ability to conduct research in a foreign 
cultural context, as evidenced by the applicant's previous overseas 
experience, or documentation provided by the sponsoring institution, or 
both.
    (d) Priorities. (1) The Secretary determines the extent to which the 
application responds to any priority that the Secretary establishes for 
the selection of fellows in any fiscal year. The Secretary announces any 
priorities in an application notice published in the Federal Register.

[[Page 458]]

    (2) Priorities may relate to certain world areas, countries, 
academic disciplines, languages, topics, or combinations of any of these 
categories. For example, the Secretary may establish a priority for--
    (i) A specific geographic area or country, such as East Asia or 
Latvia;
    (ii) An academic discipline, such as history or political science;
    (iii) A language, such as Hausa or Telegu; or
    (iv) A topic, such as religious fundamentalism or migration.

(Approved by the Office of Management and Budget under control number 
1840-0005)

(Authority: 22 U.S.C. 2452(b)(6), 2456(a)(2))

[63 FR 46363, Aug. 31, 1998, as amended at 70 FR 13376, Mar. 21, 2005]



Sec. 663.22  How does the J. William Fulbright Foreign Scholarship
Board select fellows?

    The J. William Fulbright Foreign Scholarship Board selects fellows 
on the basis of the Secretary's recommendations and the information 
described in Sec. 663.20(e) from binational commissions or United States 
diplomatic missions.

(Authority: 22 U.S.C. 2452(b)(6), 2456(a)(1))



           Subpart D_Post-award Requirements for Institutions



Sec. 663.30  What are an institution's responsibilities after the 
award of a grant?

    (a) An institution to which the Secretary awards a grant under this 
part is responsible for administering the grant in accordance with the 
regulations described in Sec. 663.6.
    (b) The institution is responsible for processing individual 
applications for fellowships in accordance with procedures described in 
Sec. 663.11.
    (c) The institution is responsible for disbursing funds in 
accordance with procedures described in Sec. 663.4.
    (d) The Secretary awards the institution an administrative allowance 
of $100 for each fellowship listed in the grant award document.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e)(1))



              Subpart E_Post-award Requirements for Fellows



Sec. 663.41  What are a fellow's responsibilities after the award
of a fellowship?

    As a condition of retaining a fellowship, a fellow shall--
    (a) Maintain satisfactory progress in the conduct of his or her 
research;
    (b) Devote full time to research on the approved topic;
    (c) Not engage in unauthorized income-producing activities during 
the period of the fellowship; and
    (d) Remain employed by the grantee institution during the period of 
the fellowship.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 663.42  How may a fellowship be revoked?

    (a) The fellowship may be revoked only by the J. William Fulbright 
Foreign Scholarship Board upon the recommendation of the Secretary.
    (b) The Secretary may recommend a revocation of a fellowship on the 
basis of--
    (1) The fellow's failure to meet any of the conditions in 
Sec. 663.41; or
    (2) Any violation of the standards of conduct adopted by the J. 
William Fulbright Foreign Scholarship Board.

(Authority: 22 U.S.C. 2452(b)(6), 2456, and Policy Statements of the J. 
William Fulbright Foreign Scholarship Board, 1990)



PART 664_FULBRIGHT-HAYS GROUP PROJECTS ABROAD PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
664.1  What is the Fulbright-Hays Group Projects Abroad Program?
664.2  Who is eligible to apply for assistance under the Fulbright-Hays 
          Group Projects Abroad Program?
664.3  Who is eligible to participate in projects funded under the 
          Fulbright-Hays Group Projects Abroad Program?
664.4  What regulations apply to the Fulbright-Hays Group Projects 
          Abroad Program?
664.5  What definitions apply to the Fulbright-Hays Group Projects 
          Abroad Program?

[[Page 459]]

 Subpart B_What Kinds of Projects Does the Secretary Assist Under This 
                                Program?

664.10  What kinds of projects does the Secretary assist?
664.11  What is a short-term seminar project?
664.12  What is a curriculum development project?
664.13  What is a group research or study project?
664.14  What is an advanced overseas intensive language training 
          project?

             Subpart C_How Does the Secretary Make a Grant?

664.30  How does the Secretary evaluate an application?
664.31  What selection criteria does the Secretary use?
664.32  What priorities may the Secretary establish?
664.33  What costs does the Secretary pay?

           Subpart D_What Conditions Must Be Met by a Grantee?

664.40  Can participation in a Fulbright-Hays Group Projects Abroad be 
          terminated?

    Authority: 22 U.S.C. 2452(b)(6), unless otherwise noted.

    Source: 63 FR 46366, Aug. 31, 1998, unless otherwise noted.



                            Subpart A_General



Sec. 664.1  What is the Fulbright-Hays Group Projects Abroad Program?

    (a) The Fulbright-Hays Group Projects Abroad Program is designed to 
contribute to the development and improvement of the study of modern 
foreign languages and area studies in the United States by providing 
opportunities for teachers, students, and faculty to study in foreign 
countries.
    (b) Under the program, the Secretary awards grants to eligible 
institutions, departments, and organizations to conduct overseas group 
projects in research, training, and curriculum development.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 664.2  Who is eligible to apply for assistance under the
Fulbright-Hays Group Projects Abroad Program?

    The following are eligible to apply for assistance under this part:
    (a) Institutions of higher education;
    (b) State departments of education;
    (c) Private non-profit educational organizations; and
    (d) Consortia of institutions, departments, and organizations 
described in paragraphs (a), (b), or (c) of this section.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 664.3  Who is eligible to participate in projects funded
under the Fulbright-Hays Group Projects Abroad Program?

    An individual is eligible to participate in a Fulbright-Hays Group 
Projects Abroad, if the individual--(a)(1) Is a citizen or national of 
the United States; or
    (2) Is a permanent resident of the United States; and
    (b)(1) Is a faculty member who teaches modern foreign languages or 
area studies in an institution of higher education;
    (2) Is a teacher in an elementary or secondary school;
    (3) Is an experienced education administrator responsible for 
planning, conducting, or supervising programs in modern foreign 
languages or area studies at the elementary, secondary, or postsecondary 
level; or
    (4) Is a graduate student, or a junior or senior in an institution 
of higher education, who plans a teaching career in modern foreign 
languages or area studies.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 664.4  What regulations apply to the Fulbright-Hays Group
Projects Abroad Program?

    The following regulations apply to this program:
    (a) The regulations in this part 664; and
    (b) The Education Department General Administrative Regulations 
(EDGAR) (34 CFR parts 75, 77, 81, 82, and 86).
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles,

[[Page 460]]

and Audit Requirements for Federal Awards), as adopted at 2 CFR part 
3474.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e)(1), 2456(a)(2))

[63 FR 46366, Aug. 31, 1998, as amended at 79 FR 76104, Dec. 19, 2014]



Sec. 664.5  What definitions apply to the Fulbright-Hays Group
Projects Abroad Program?

    (a) General definitions. The following terms used in this part are 
defined in 2 CFR part 200, subpart A, or 34 CFR part 77:

Applicant
Application
Award
EDGAR
Equipment
Facilities
Grant
Grantee
Nonprofit
Project
Private
Public
Secretary
State
State educational agency
Supplies


(Authority: 22 U.S.C. 2452(b)(6))

    (b) Definitions that apply to this program: The following 
definitions apply to the Fulbright-Hays Group Projects Abroad Program:
    Area studies means a program of comprehensive study of the aspects 
of a society or societies, including the study of their geography, 
history, culture, economy, politics, international relations, and 
languages.
    Binational commission means an educational and cultural commission 
established, through an agreement between the United States and either a 
foreign government or an international organization, to carry out 
functions in connection with the program covered by this part.
    Institution of higher education means an educational institution in 
any State that--
    (1) Admits as regular students only persons having a certificate of 
graduation from a school providing secondary education, or the 
recognized equivalent of such a certificate;
    (2) Is legally authorized within such State to provide a program of 
education beyond secondary education;
    (3) Provides an educational program for which it awards a bachelor's 
degree or provides not less than a two-year program which is acceptable 
for full credit toward such a degree;
    (4) Is a public or other nonprofit institution; and
    (5) Is accredited by a nationally recognized accrediting agency or 
association.
    J. William Fulbright Foreign Scholarship Board means the 
presidentially appointed board that is responsible for supervision of 
the program covered by this part.

(Authority: 22 U.S.C. 2452(b)(6), 2456)

[63 FR 46366, Aug. 31, 1998, as amended at 79 FR 76104, Dec. 19, 2014]



 Subpart B_What Kinds of Projects Does the Secretary Assist Under This 
                                Program?



Sec. 664.10  What kinds of projects does the Secretary assist?

    The Secretary assists projects designed to develop or improve 
programs in modern foreign language or area studies at the elementary, 
secondary, or postsecondary level by supporting overseas projects in 
research, training, and curriculum development by groups of individuals 
engaged in a common endeavor. Projects may include, as described in 
Secs. 664.11 through 664.14, short-term seminars, curriculum development 
teams, group research or study, and advanced intensive language 
programs.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 664.11  What is a short-term seminar project?

    A short-term seminar project is--
    (a) Designed to help integrate international studies into an 
institution's or school system's general curriculum; and
    (b) Normally four to six weeks in length and focuses on a particular 
aspect of area study, such as, for example, the culture of the area or a 
portion of the culture.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 664.12  What is a curriculum development project?

    (a) A curriculum development project--

[[Page 461]]

    (1) Is designed to permit faculty and administrators in institutions 
of higher education and elementary and secondary schools, and 
administrators in State departments of education the opportunity to 
spend generally from four to eight weeks in a foreign country acquiring 
resource materials for curriculum development in modern foreign language 
and area studies; and
    (2) Must provide for the systematic use and dissemination in the 
United States of the acquired materials.
    (b) For the purpose of this section, resource materials include 
artifacts, books, documents, educational films, museum reproductions, 
recordings, and other instructional material.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 664.13  What is a group research or study project?

    (a)(1) A group research or study project is designed to permit a 
group of faculty of an institution of higher education and graduate and 
undergraduate students to undertake research or study in a foreign 
country.
    (2) The period of research or study in a foreign country is 
generally from three to twelve months.
    (b) As a prerequisite to participating in a research or training 
project, participants--
    (1) Must possess the requisite language proficiency to conduct the 
research or study, and disciplinary competence in their area of 
research; and
    (2) In a project of a semester or longer, shall have completed, at a 
minimum, one semester of intensive language training and one course in 
area studies relevant to the projects.

(Authority: 22 U.S.C. 2452(b)(6))



Sec. 664.14  What is an advanced overseas intensive language
training project?

    (a)(1) An advanced overseas intensive language project is designed 
to take advantage of the opportunities present in the foreign country 
that are not present in the United States when providing intensive 
advanced foreign language training.
    (2) Project activities may be carried out during a full year, an 
academic year, a semester, a trimester, a quarter, or a summer.
    (3) Generally, language training must be given at the advanced 
level, i.e., at the level equivalent to that provided to students who 
have successfully completed two academic years of language training.
    (4) The language to be studied must be indigenous to the host 
country and maximum use must be made of local institutions and 
personnel.
    (b) Generally, participants in projects under this program must have 
successfully completed at least two academic years of training in the 
language to be studied.

(Authority: 22 U.S.C. 2452(b)(6))



             Subpart C_How Does the Secretary Make a Grant?



Sec. 664.30  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a Group Project 
Abroad on the basis of the criteria in Sec. 664.31. The Secretary 
informs applicants of the maximum possible score for each criterion in 
the application package or in a notice published in the Federal 
Register.
    (b) All selections by the Secretary are subject to review and final 
approval by the J. William Fulbright Foreign Scholarship Board.
    (c) The Secretary does not recommend a project to the J. William 
Fulbright Foreign Scholarship Board if the applicant proposes to carry 
it out in a country in which the United States does not have diplomatic 
representation.

(Authority: 22 U.S.C. 2452(b)(6), 2456)

[63 FR 46366, Aug. 31, 1998, as amended at 70 FR 13376, Mar. 21, 2005]



Sec. 664.31  What selection criteria does the Secretary use?

    The Secretary uses the criteria in this section to evaluate 
applications for the purpose of recommending to the J. William Fulbright 
Foreign Scholarship Board Group Projects Abroad for funding under this 
part.

[[Page 462]]

    (a) Plan of operation. (1) The Secretary reviews each application 
for information to determine the quality of the plan of operation for 
the project.
    (2) The Secretary looks for information that shows--
    (i) High quality in the design of the project;
    (ii) An effective plan of management that insures proper and 
efficient administration of the project;
    (iii) A clear description of how the objectives of the project 
relate to the purpose of the program;
    (iv) The way the applicant plans to use its resources and personnel 
to achieve each objective; and
    (v) A clear description of how the applicant will ensure that 
project participants who are otherwise eligible to participate are 
selected without regard to race, color, national origin, gender, age, or 
handicapping condition.
    (b) Quality of key personnel. (1) The Secretary reviews each 
application for information to determine the quality of key personnel 
the applicant plans to use on the project.
    (2) The Secretary looks for information that shows--
    (i) The qualifications of the project director;
    (ii) The qualifications of each of the other key personnel to be 
used in the project;
    (iii) The time that each person referred to in paragraphs (b)(2)(i) 
and (ii) of this section will commit to the project; and
    (iv) The extent to which the applicant, as part of its 
nondiscriminatory employment practices, will ensure that its personnel 
are selected for employment without regard to race, color, national 
origin, gender, age, or handicapping condition.
    (3) To determine the qualifications of a person, the Secretary 
considers evidence of past experience and training in fields related to 
the objectives of the project as well as other information that the 
applicant provides.
    (c) Budget and cost effectiveness. (1) The Secretary reviews each 
application for information that shows that the project has an adequate 
budget and is cost effective.
    (2) The Secretary looks for information that shows--
    (i) The budget for the project is adequate to support the project 
activities; and
    (ii) Costs are reasonable in relation to the objectives of the 
project.
    (d) Evaluation plan. (1) The Secretary reviews each application for 
information that shows the quality of the evaluation plan for the 
project.
    (2) The Secretary looks for information that shows that the methods 
of evaluation are appropriate for the project and, to the extent 
possible, are objective and produce data that are quantifiable.
    (e) Adequacy of resources. (1) The Secretary reviews each 
application for information that shows that the applicant plans to 
devote adequate resources to the project.
    (2) The Secretary looks for information that shows that the 
facilities, equipment, and supplies that the applicant plans to use are 
adequate.
    (f) Specific program criteria. (1) In addition to the general 
selection criteria contained in this section, the Secretary reviews each 
application for information that shows that the project meets the 
specific program criteria.
    (2) The Secretary looks for information that shows--
    (i) The potential impact of the project on the development of the 
study of modern foreign languages and area studies in American 
education.
    (ii) The project's relevance to the applicant's educational goals 
and its relationship to its program development in modern foreign 
languages and area studies.
    (iii) The extent to which direct experience abroad is necessary to 
achieve the project's objectives and the effectiveness with which 
relevant host country resources will be utilized.
    (g) Priorities. The Secretary looks for information that shows the 
extent to which the project addresses program priorities in the field of 
modern foreign languages and area studies for that year.

(Approved by the Office of Management and Budget under control number 
1840-0068)

(Authority: 22 U.S.C. 2452(b)(6), 2456(a)(2))

[63 FR 46366, Aug. 31, 1998, as amended at 70 FR 13376, Mar. 21, 2005]

[[Page 463]]



Sec. 664.32  What priorities may the Secretary establish?

    (a) The Secretary may establish for each funding competition one or 
more of the following priorities:
    (1) Categories of projects described in Sec. 664.10.
    (2) Specific languages, topics, countries or geographic regions of 
the world; for example, Chinese and Arabic, Curriculum Development in 
Multicultural Education and Transitions from Planned Economies to Market 
Economies, Brazil and Nigeria, Middle East and South Asia.
    (3) Levels of education; for example, elementary and secondary, 
postsecondary, or postgraduate.
    (b) The Secretary announces any priorities in the application notice 
published in the Federal Register.

(Authority: 22 U.S.C. 2452(b)(6), 2456(a)(2))



Sec. 664.33  What costs does the Secretary pay?

    (a) The Secretary pays only part of the cost of a project funded 
under this part. Other than travel costs, the Secretary does not pay any 
of the costs for project-related expenses within the United States.
    (b) The Secretary pays the cost of the following--
    (1) A maintenance stipend related to the cost of living in the host 
country or countries;
    (2) Round-trip international travel;
    (3) A local travel allowance for necessary project-related 
transportation within the country of study, exclusive of the purchase of 
transportation equipment;
    (4) Purchase of project-related artifacts, books, and other teaching 
materials in the country of study;
    (5) Rent for instructional facilities in the country of study;
    (6) Clerical and professional services performed by resident 
instructional personnel in the country of study; and
    (7) Other expenses in the country of study, if necessary for the 
project's success and approved in advance by the Secretary.
    (c) The Secretary may pay--
    (1) Emergency medical expenses not covered by a participant's health 
and accident insurance; and
    (2) The costs of preparing and transporting the remains of a 
participant who dies during the term of a project to his or her former 
home.

(Authority: 22 U.S.C. 2452(b)(6), 2454(e)(1))



           Subpart D_What Conditions Must Be Met by a Grantee?



Sec. 664.40  Can participation in a Fulbright-Hays Group Projects
Abroad be terminated?

    (a) Participation may be terminated only by the J. William Fulbright 
Foreign Scholarship Board upon the recommendation of the Secretary.
    (b) The Secretary may recommend a termination of participation on 
the basis of failure by the grantee to ensure that participants adhere 
to the standards of conduct adopted by the J. William Fulbright Foreign 
Scholarship Board.

(Authority: 22 U.S.C. 2452(b)(6), 2456, and Policy Statements of the J. 
William Fulbright Foreign Scholarship Board, 1990)



PART 668_STUDENT ASSISTANCE GENERAL PROVISIONS--Table of Contents



                            Subpart A_General

Sec.
668.1  Scope.
668.2  General definitions.
668.3  Academic year.
668.4  Payment period.
668.5  Written arrangements to provide educational programs.
668.6  Reporting and disclosure requirements for programs that prepare 
          students for gainful employment in a recognized occupation.
668.7  [Reserved]
668.8  Eligible program.
668.9  Relationship between clock hours and semester, trimester, or 
          quarter hours in calculating Title IV, HEA program assistance.
668.10  Direct assessment programs.

     Subpart B_Standards for Participation in Title IV, HEA Programs

668.11  Scope.
668.12  [Reserved]
668.13  Certification procedures.
668.14  Program participation agreement.
668.15  Factors of financial responsibility.
668.16  Standards of administrative capability.
668.17  [Reserved]

[[Page 464]]

668.18  Readmission requirements for servicemembers.
668.19  Financial aid history.
668.20  Limitations on remedial coursework that is eligible for Title 
          IV, HEA program assistance.
668.21  Treatment of title IV grant and loan funds if the recipient does 
          not begin attendance at the institution.
668.22  Treatment of title IV funds when a student withdraws.
668.23  Compliance audits and audited financial statements.
668.24  Record retention and examinations.
668.25  Contracts between an institution and a third-party servicer.
668.26  End of an institution's participation in the Title IV, HEA 
          programs.
668.27  Waiver of annual audit submission requirement.
668.28  Non-title IV revenue (90/10).

Appendix A to Subpart B of Part 668--Standards for Audit of Governmental 
          Organizations, Programs, Activities, and Functions (GAO)
Appendix B to Subpart B of Part 668--Appendix I, Standards for Audit of 
          Governmental Organizations, Programs, Activities, and 
          Functions (GAO)
Appendix C to Subpart B of Part 668--90/10 Revenue Calculation

                      Subpart C_Student Eligibility

668.31  Scope.
668.32  Student eligibility - general.
668.33  Citizenship and residency requirements.
668.34  Satisfactory academic progress.
668.35  Student debts under the HEA and to the U.S.
668.36  Social security number.
668.37  Selective Service registration.
668.38  Enrollment in telecommunications and correspondence courses.
668.39  Study abroad programs.
668.40  Conviction for possession or sale of illegal drugs.

    Subpart D_Institutional and Financial Assistance Information for 
                                Students

668.41  Reporting and disclosure of information.
668.42  Financial assistance information.
668.43  Institutional information.
668.44  Availability of employees for information dissemination 
          purposes.
668.45  Information on completion or graduation rates.
668.46  Institutional security policies and crime statistics.
668.47  Report on athletic program participation rates and financial 
          support data.
668.48  Report on completion or graduation rates for student-athletes.
668.49  Institutional fire safety policies and fire statistics.
668.50  Institutional disclosures for distance or correspondence 
          programs.

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

     Subpart E_Verification and Updating of Student Aid Application 
                               Information

668.51  General.
668.52  Definitions.
668.53  Policies and procedures.
668.54  Selection of an applicant's FAFSA information for verification.
668.55  Updating information.
668.56  Information to be verified.
668.57  Acceptable documentation.
668.58  Interim disbursements.
668.59  Consequences of a change in an applicant's FAFSA information.
668.60  Deadlines for submitting documentation and the consequences of 
          failing to provide documentation.
668.61  Recovery of funds from interim disbursements.

                       Subpart F_Misrepresentation

668.71  Scope and special definitions.
668.72  Nature of educational program.
668.73  Nature of financial charges.
668.74  Employability of graduates.

   Subpart G_Fine, Limitation, Suspension and Termination Proceedings

668.81  Scope and special definitions.
668.82  Standard of conduct.
668.83  Emergency action.
668.84  Fine proceedings.
668.85  Suspension proceedings.
668.86  Limitation or termination proceedings.
668.87  Borrower defense and recovery proceedings.
668.88  Prehearing conference and motion practice.
668.89  Hearing.
668.90  Authority and responsibilities of the hearing official.
668.91  Initial and final decisions.
668.92  Filing of requests for hearings and appeals; confirmation of 
          mailing and receipt dates.
668.93  Fines.
668.94  Limitation.
668.95  Termination.
668.96  Reimbursements, refunds, and offsets.
668.97  Reinstatement after termination.
668.98  Removal of limitation.

[[Page 465]]

668.99  Interlocutory appeals to the Secretary from rulings of a hearing 
          official.

Subpart H_Appeal Procedures for Audit Determinations and Program Review 
                             Determinations

668.111  Scope and purpose.
668.112  Definitions.
668.113  Request for review.
668.114  Notification of hearing.
668.115  Prehearing conference.
668.116  Hearing.
668.117  Authority and responsibilities of the hearing official.
668.118  Decision of the hearing official.
668.119  Appeal to the Secretary.
668.120  Decision of the Secretary.
668.121  Final decision of the Department.
668.122  Determination of filing, receipt, and submission dates.
668.123  Collection.
668.124  Interlocutory appeals to the Secretary from rulings of a 
          hearing official.

                Subpart I_Immigration-Status Confirmation

668.130  General.
668.131  Definitions.
668.132  Institutional determinations of eligibility based on primary 
          confirmation.
668.133  Conditions under which an institution shall require 
          documentation and request secondary confirmation.
668.134  Institutional policies and procedures for requesting 
          documentation and receiving secondary confirmation.
668.135  Institutional procedures for completing secondary confirmation.
668.136  Institutional determinations of eligibility based on INS 
          responses to secondary confirmation requests.
668.137  Deadlines for submitting documentation and the consequences of 
          failure to submit documentation.
668.138  Liability.
668.139  Recovery of payments and loan disbursements to ineligible 
          students.

Subpart J_Approval of Independently Administered Tests; Specification of 
                Passing Score; Approval of State Process

668.141  Scope.
668.142  Special definitions.
668.143  [Reserved]
668.144  Application for test approval.
668.145  Test approval procedures.
668.146  Criteria for approving tests.
668.147  Passing scores.
668.148  Additional criteria for the approval of certain tests.
668.149  Special provisions for the approval of assessment procedures 
          for individuals with disabilities.
668.150  Agreement between the Secretary and a test publisher or a 
          State.
668.151  Administration of tests.
668.152  Administration of tests by assessment centers.
668.153  Administration of tests for individuals whose native language 
          is not English or for individuals with disabilities.
668.154  Institutional accountability.
668.155  [Reserved]
668.156  Approved State process.

                        Subpart K_Cash Management

668.161  Scope and institutional responsibility.
668.162  Requesting funds.
668.163  Maintaining and accounting for funds.
668.164  Disbursing funds.
668.165  Notices and authorizations.
668.166  Excess cash.
668.167  Severability.

                   Subpart L_Financial Responsibility

668.171  General.
668.172  Financial ratios.
668.173  Refund reserve standards.
668.174  Past performance.
668.175  Alternative standards and requirements.
668.176  Severability.

Appendix A to Subpart L of Part 668--Ratio Methodology for Proprietary 
          Institutions
Appendix B to Subpart L of Part 668--Ratio Methodology for Private Non-
          Profit Institutions
Appendix C to Subpart L of Part 668- Balance Sheet and Income Statement 
          Adjustments for Recalculating Composite Score

                 Subpart M_Two Year Cohort Default Rates

668.181  Purpose of this subpart.
668.182  Definitions of terms used in this subpart.
668.183  Calculating and applying cohort default rates.
668.184  Determining cohort default rates for institutions that have 
          undergone a change in status.
668.185  Draft cohort default rates and your ability to challenge before 
          official cohort default rates are issued.
668.186  Notice of your official cohort default rate.
668.187  Consequences of cohort default rates on your ability to 
          participate in Title IV, HEA programs.
668.188  Preventing evasion of the consequences of cohort default rates.
668.189  General requirements for adjusting official cohort default 
          rates and for appealing their consequences.
668.190  Uncorrected data adjustments.

[[Page 466]]

668.191  New data adjustments.
668.192  Erroneous data appeals.
668.193  Loan servicing appeals.
668.194  Economically disadvantaged appeals.
668.195  Participation rate index appeals.
668.196  Average rates appeals.
668.197  Thirty-or-fewer borrowers appeals.

                     Subpart N_Cohort Default Rates

668.200  Purpose of this subpart.
668.201  Definitions of terms used in this subpart.
668.202  Calculating and applying cohort default rates.
668.203  Determining cohort default rates for institutions that have 
          undergone a change in status.
668.204  Draft cohort default rates and your ability to challenge before 
          official cohort default rates are issued.
668.205  Notice of your official cohort default rate.
668.206  Consequences of cohort default rates on your ability to 
          participate in Title IV, HEA programs.
668.207  Preventing evasion of the consequences of cohort default rates.
668.208  General requirements for adjusting official cohort default 
          rates and for appealing their consequences.
668.209  Uncorrected data adjustments.
668.210  New data adjustments.
668.211  Erroneous data appeals.
668.212  Loan servicing appeals.
668.213  Economically disadvantaged appeals.
668.214  Participation rate index appeals.
668.215  Average rates appeals.
668.216  Thirty-or-fewer borrowers appeals.
668.217  Default prevention plans.

Appendix A to Subpart N of Part 668--Sample Default Prevention Plan

     Subpart O_Financial Assistance for Students With Intellectual 
                              Disabilities

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

Subpart P [Reserved]

               Subpart Q_Gainful Employment (GE) Programs

668.401  Scope and purpose.
668.402  Definitions.
668.403  Gainful employment framework.
668.404  Calculating D/E rates.
668.405  Issuing and challenging D/E rates.
668.406  D/E rates alternate earnings appeals.
668.407-668.408  [Reserved]
668.409  Final determination of the D/E rates measure.
668.410  Consequences of the D/E rates measure.
668.411  Reporting requirements for GE programs.
668.412  Disclosure requirements for GE programs.
668.413  Calculating, issuing, and challenging completion rates, 
          withdrawal rates, repayment rates, median loan debt, mean and 
          median earnings, and program cohort default rate.
668.414  Certification requirements for GE programs.
668.415  Severability.

                  Subpart R_Program Cohort Default Rate

668.500  Purpose of this subpart.
668.501  Definitions of terms used in this subpart.
668.502  Calculating and applying program cohort default rates.
668.503  Determining program cohort default rates for GE programs at 
          institutions that have undergone a change in status.
668.504  Draft program cohort default rates and your ability to 
          challenge before official program cohort default rates are 
          issued.
668.505  Notice of the official program cohort default rate of a GE 
          program.
668.506  [Reserved]
668.507  Preventing evasion of program cohort default rates.
668.508  General requirements for adjusting and appealing official 
          program cohort default rates.
668.509  Uncorrected data adjustments.
668.510  New data adjustments.
668.511  Erroneous data appeals.
668.512  Loan servicing appeals.
668.513-668.515  [Reserved]
668.516  Fewer-than-ten-borrowers determinations.

    Authority: 20 U.S.C. 1001-1003, 1070a, 1070g, 1085, 1087b, 1087d, 
1087e, 1088, 1091, 1092, 1094, 1099c, and 1099c-1, 1221e-3, and 3474; 
Pub. L. 111-256, 124 Stat. 2643; unless otherwise noted.



                            Subpart A_General



Sec. 668.1  Scope.

    (a) This part establishes general rules that apply to an institution 
that participates in any student financial assistance program authorized 
by Title IV of the Higher Education Act of 1965, as amended (Title IV, 
HEA program). To the extent that an institution contracts with a third-
party servicer to administer any aspect of the institution's 
participation in any Title IV, HEA program, the applicable rules in

[[Page 467]]

this part also apply to that servicer. An institution's use of a third-
party servicer does not alter the institution's responsibility for 
compliance with the rules in this part.
    (b) As used in this part, an ``institution'' includes--
    (1) An institution of higher education as defined in 34 CFR 600.4;
    (2) A proprietary institution of higher education as defined in 34 
CFR 600.5; and
    (3) A postsecondary vocational institution as defined in 34 CFR 
600.6.
    (c) The Title IV, HEA programs include--
    (1) The Federal Pell Grant Program (20 U.S.C. 1070a et seq.; 34 CFR 
part 690);
    (2) The Academic Competitiveness Grant (ACG) Program (20 U.S.C. 
1070a-1; 34 CFR part 691);
    (3) The Federal Supplemental Educational Opportunity Grant (FSEOG) 
Program (20 U.S.C. 1070b et seq.; 34 CFR parts 673 and 676);
    (4) The Leveraging Educational Assistance Partnership (LEAP) Program 
(20 U.S.C. 1070c et seq.; 34 CFR part 692);
    (5) The Federal Stafford Loan Program (20 U.S.C. 1071 et seq.; 34 
CFR part 682);
    (6) The Federal PLUS Program (20 U.S.C. 1078-2; 34 CFR part 682);
    (7) The Federal Consolidation Loan Program (20 U.S.C. 1078-3; 34 CFR 
part 682);
    (8) The Federal Work-Study (FWS) Program (42 U.S.C. 2751 et seq.; 34 
CFR parts 673 and 675);
    (9) The William D. Ford Federal Direct Loan (Direct Loan) Program 
(20 U.S.C. 1087a et seq.; 34 CFR part 685);
    (10) The Federal Perkins Loan Program (20 U.S.C. 1087aa et seq.; 34 
CFR parts 673 and 674);
    (11) The National Science and Mathematics Access to Retain Talent 
Grant (National SMART Grant) Program (20 U.S.C. 1070a-1; 34 CFR part 
691); and
    (12) The Teacher Education Assistance for College and Higher 
Education (TEACH) Grant program.

(Authority: 20 U.S.C. 1070 et seq.)

[52 FR 45724, Dec. 1, 1987, as amended at 56 FR 36696, July 31, 1991; 59 
FR 22418, Apr. 29, 1994; 61 FR 60396, Nov. 27, 1996; 63 FR 40623, July 
29, 1998; 65 FR 38729, June 22, 2000; 71 FR 38002, July 3, 2006; 73 FR 
35492, June 23, 2008]



Sec. 668.2  General definitions.

    (a) The following definitions are contained in the regulations for 
Institutional Eligibility under the Higher Education Act of 1965, as 
amended, 34 CFR part 600:

Accredited
Award year
Branch campus
Clock hour
Correspondence course
Credit hour
Educational program
Eligible institution
Federal Family Education Loan (FFEL) programs
Foreign institution
Incarcerated student
Institution of higher education
Legally authorized
Nationally recognized accrediting agency
Nonprofit institution
One-year training program
Postsecondary vocational institution
Preaccredited
Proprietary institution of higher education
Recognized equivalent of a high school diploma
Recognized occupation
Regular student
Secretary
State
Telecommunications course

    (b) The following definitions apply to all Title IV, HEA programs:
    Academic Competitiveness Grant (ACG) Program: A grant program 
authorized by Title IV-A-1 of the HEA under which grants are awarded 
during the first and second academic years of study to eligible 
financially needy undergraduate students who successfully complete 
rigorous secondary school programs of study.


(Authority: 20 U.S.C. 1070a-1)

    Campus-based programs: (1) The Federal Perkins Loan Program (34 CFR 
parts 673 and 674);
    (2) The Federal Work-Study (FWS) Program (34 CFR parts 673 and 675); 
and
    (3) The Federal Supplemental Educational Opportunity Grant (FSEOG) 
Program (34 CFR parts 673 and 676).
    Defense loan: A loan made before July 1, 1972, under Title II of the 
National Defense Education Act of 1958.


(Authority: 20 U.S.C. 421-429)


[[Page 468]]


    Dependent student: Any student who does not qualify as an 
independent student (see Independent student).
    Designated department official: An official of the Department of 
Education to whom the Secretary has delegated responsibilities indicated 
in this part.
    Direct Loan Program loan: A loan made under the William D. Ford 
Federal Direct Loan Program.


(Authority: 20 U.S.C. 1087a et seq.)

    Direct PLUS Loan: A loan made under the Federal Direct PLUS Program.


(Authority: 20 U.S.C. 1078-2 and 1087a et seq.)

    Direct Subsidized Loan: A loan made under the Federal Direct 
Stafford/Ford Loan Program.


(Authority: 20 U.S.C. 1071 and 1087a et seq.)

    Direct Unsubsidized Loan: A loan made under the Federal Direct 
Unsubsidized Stafford/Ford Loan Program.


(Authority: 20 U.S.C. 1087a et seq.)

    Enrolled: The status of a student who--
    (1) Has completed the registration requirements (except for the 
payment of tuition and fees) at the institution that he or she is 
attending; or
    (2) Has been admitted into an educational program offered 
predominantly by correspondence and has submitted one lesson, completed 
by him or her after acceptance for enrollment and without the help of a 
representative of the institution.


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

    Expected family contribution (EFC): The amount, as determined under 
title IV, part F of the HEA, an applicant and his or her spouse and 
family are expected to contribute toward the applicant's cost of 
attendance.
    Federal Consolidation Loan program: The loan program authorized by 
Title IV-B, section 428C, of the HEA that encourages the making of loans 
to borrowers for the purpose of consolidating their repayment 
obligations, with respect to loans received by those borrowers, under 
the Federal Insured Student Loan (FISL) Program as defined in 34 CFR 
part 682, the Federal Stafford Loan, Federal PLUS (as in effect before 
October 17, 1986), Federal Consolidation Loan, Federal SLS, ALAS (as in 
effect before October 17, 1986), Federal Direct Student Loan, and 
Federal Perkins Loan programs, and under the Health Professions Student 
Loan (HPSL) Program authorized by subpart II of part C of Title VII of 
the Public Health Service Act, for Federal PLUS borrowers whose loans 
were made after October 17, 1986, and for Higher Education Assistance 
Loans (HEAL) authorized by subpart I of part A of Title VII of the 
Public Health Services Act.


(Authority: 20 U.S.C. 1078-3)

    Federal Direct PLUS Program: A loan program authorized by title IV, 
Part D of the HEA that is one of the components of the Direct Loan 
Program. The Federal Direct PLUS Program provides loans to parents of 
dependent students attending schools that participate in the Direct Loan 
Program. The Federal Direct PLUS Program also provides loans to graduate 
or professional students attending schools that participate in the 
Direct Loan Program. The borrower is responsible for the interest that 
accrues during any period.


(Authority: 20 U.S.C. 10782 and 1087a et seq.)

    Federal Direct Stafford/Ford Loan Program: A loan program authorized 
by Title IV, Part D of the HEA that is one of the components of the 
Direct Loan Program. The Federal Direct Stafford/Ford Loan Program 
provides loans to undergraduate, graduate, and professional students 
attending schools that participate in the Direct Loan Program. The 
Secretary subsidizes the interest while the borrower is in an in-school, 
grace, or deferment period.


(Authority: 20 U.S.C. 1071 and 1087a et seq.)

    Federal Direct Unsubsidized Stafford/Ford Loan Program: A loan 
program authorized by Title IV, Part D of the HEA that is one of the 
components of the Direct Loan Program. The Federal Direct Unsubsidized 
Stafford/Ford Loan Program provides loans to undergraduate, graduate, 
and professional students attending schools that participate in the 
Direct Loan Program.

[[Page 469]]

The borrower is responsible for the interest that accrues during any 
period.


(Authority: 20 U.S.C. 1087a et seq.)

    Federal Pell Grant Program: A grant program authorized by Title IV-
A-1 of the HEA under which grants are awarded to help financially needy 
students meet the cost of their postsecondary education.


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

    Federal Perkins loan: A loan made under Title IV-E of the HEA to 
cover the cost of attendance for a period of enrollment beginning on or 
after July 1, 1987, to an individual who on July 1, 1987, had no 
outstanding balance of principal or interest owing on any loan 
previously made under Title IV-E of the HEA.


(Authority: 20 U.S.C. 1087aa et seq.)

    Federal Perkins Loan program: The student loan program authorized by 
Title IV-E of the HEA after October 16, 1986. Unless otherwise noted, as 
used in this part, the Federal Perkins Loan Program includes the 
National Direct Student Loan Program and the National Defense Student 
Loan Program.


(Authority: 20 U.S.C. 1087aa-1087ii)

    Federal PLUS loan: A loan made under the Federal PLUS Program.


(Authority: 20 U.S.C. 1078-2)

    Federal PLUS program: The loan program authorized by Title IV-B, 
section 428B, of the HEA, that encourages the making of loans to parents 
of dependent undergraduate students. Before October 17, 1986, the PLUS 
Program also provided for making loans to graduate, professional, and 
independent undergraduate students. Before July 1, 1993, the PLUS 
Program also provided for making loans to parents of dependent graduate 
students. Beginning July 1, 2006, the PLUS Program provides for making 
loans to graduate and professional students.


(Authority: 20 U.S.C. 1078-2)

    Federal SLS loan: A loan made under the Federal SLS Program.


(Authority: 20 U.S.C. 1078-1)

    Federal Stafford loan: A loan made under the Federal Stafford Loan 
Program.


(Authority: 20 U.S.C. 1071 et seq.)

    Federal Stafford Loan program: The loan program authorized by Title 
IV-B (exclusive of sections 428A, 428B, and 428C) that encourages the 
making of subsidized Federal Stafford and unsubsidized Federal Stafford 
loans as defined in 34 CFR part 682 to undergraduate, graduate, and 
professional students.


(Authority: 20 U.S.C. 1071 et seq.)

    Federal Supplemental Educational Opportunity Grant (FSEOG) program: 
The grant program authorized by Title IV-A-2 of the HEA.


(Authority: 20 U.S.C. 1070b et seq.)

    Federal Supplemental Loans for Students (Federal SLS) Program: The 
loan program authorized by Title IV-B, section 428A of the HEA, as in 
effect for periods of enrollment that began before July 1, 1994. The 
Federal SLS Program encourages the making of loans to graduate, 
professional, independent undergraduate, and certain dependent 
undergraduate students.

(Authority: 20 U.S.C. 1078-1)

    Federal Work Study (FWS) program: The part-time employment program 
for students authorized by Title IV-C of the HEA.


(Authority: 42 U.S.C. 2751-2756b)

    FFELP loan: A loan made under the FFEL programs.


(Authority: 20 U.S.C. 1071 et seq.)

    Free application for Federal student aid (FAFSA): The student aid 
application provided for under section 483 of the HEA, which is used to 
determine an applicant's eligibility for the title IV, HEA programs.
    Full-time student: An enrolled student who is carrying a full-time 
academic

[[Page 470]]

workload, as determined by the institution, under a standard applicable 
to all students enrolled in a particular educational program. The 
student's workload may include any combination of courses, work, 
research, or special studies that the institution considers sufficient 
to classify the student as a full-time student. For a term-based 
program, the student's workload may include repeating any coursework 
previously taken in the program but may not include more than one 
repetition of a previously passed course. However, for an undergraduate 
student, an institution's minimum standard must equal or exceed one of 
the following minimum requirements:
    (1) For a program that measures progress in credit hours and uses 
standard terms (semesters, trimesters, or quarters), 12 semester hours 
or 12 quarter hours per academic term.
    (2) For a program that measures progress in credit hours and does 
not use terms, 24 semester hours or 36 quarter hours over the weeks of 
instructional time in the academic year, or the prorated equivalent if 
the program is less than one academic year.
    (3) For a program that measures progress in credit hours and uses 
nonstandard terms (terms other than semesters, trimesters, or quarters) 
the number of credits determined by--
    (i) Dividing the number of weeks of instructional time in the term 
by the number of weeks of instructional time in the program's academic 
year; and
    (ii) Multiplying the fraction determined under paragraph (3)(i) of 
this definition by the number of credit hours in the program's academic 
year.
    (4) For a program that measures progress in clock hours, 24 clock 
hours per week.
    (5) A series of courses or seminars that equals 12 semester hours or 
12 quarter hours in a maximum of 18 weeks.
    (6) The work portion of a cooperative education program in which the 
amount of work performed is equivalent to the academic workload of a 
full-time student.
    (7) For correspondence coursework, a full-time course load must be--
    (i) Commensurate with the full-time definitions listed in paragraphs 
(1) through (6) of this definition; and
    (ii) At least one-half of the coursework must be made up of non-
correspondence coursework that meets one-half of the institution's 
requirement for full-time students.

(Authority: 20 U.S.C. 1082 and 1088)

    Graduate or professional student: A student who--
    (1) Is not receiving title IV aid as an undergraduate student for 
the same period of enrollment;
    (2) Is enrolled in a program or course above the baccalaureate level 
or is enrolled in a program leading to a professional degree; and
    (3) Has completed the equivalent of at least three years of full-
time study either prior to entrance into the program or as part of the 
program itself.

(Authority: 20 U.S.C. 1082 and 1088)

    Half-time student: (1) Except as provided in paragraph (2) of this 
definition, an enrolled student who is carrying a half-time academic 
workload, as determined by the institution, that amounts to at least 
half of the workload of the applicable minimum requirement outlined in 
the definition of a full-time student.
    (2) A student enrolled solely in a program of study by 
correspondence who is carrying a workload of at least 12 hours of work 
per week, or is earning at least six credit hours per semester, 
trimester, or quarter. However, regardless of the work, no student 
enrolled solely in correspondence study is considered more than a half-
time student.

(Authority: 20 U.S.C. 1082 and 1088)

    Independent student: A student who qualifies as an independent 
student under section 480(d) of the HEA.


(Authority: 20 U.S.C. 1087vv)

    Initiating official: The designated department official authorized 
to begin an emergency action under 34 CFR 668.83.
    Institutional student information record (ISIR): An electronic 
record that the Secretary transmits to an institution that includes an 
applicant's--
    (1) FAFSA information; and

[[Page 471]]

    (2) EFC.
    Leveraging Educational Assistance Partnership (LEAP) Program: The 
grant program authorized by Title IV-A-4 of the HEA.
    National Defense Student Loan program: The student loan program 
authorized by Title II of the National Defense Education Act of 1958.


(Authority: 20 U.S.C. 421-429)

    National Direct Student Loan (NDSL) program: The student loan 
program authorized by Title IV-E of the HEA between July 1, 1972, and 
October 16, 1986.


(Authority: 20 U.S.C. 1087aa-1087ii)

    National Early Intervention Scholarship and Partnership (NEISP) 
program: The scholarship program authorized by Chapter 2 of subpart 1 of 
Title IV-A of the HEA.


(Authority: 20 U.S.C. 1070a-21 et seq.)

    National Science and Mathematics Access to Retain Talent Grant 
(National SMART Grant) Program: A grant program authorized by Title IV-
A-1 of the HEA under which grants are awarded during the third and 
fourth academic years of study to eligible financially needy 
undergraduate students pursuing eligible majors in the physical, life, 
or computer sciences, mathematics, technology, or engineering, or 
foreign languages determined to be critical to the national security of 
the United States.


(Authority: 20 U.S.C. 1070a-1)

    One-third of an academic year: A period that is at least one-third 
of an academic year as determined by an institution. At a minimum, one-
third of an academic year must be a period that begins on the first day 
of classes and ends on the last day of classes or examinations and is a 
minimum of 10 weeks of instructional time during which, for an 
undergraduate educational program, a full-time student is expected to 
complete at least 8 semester or trimester hours or 12 quarter hours in 
an educational program whose length is measured in credit hours or 300 
clock hours in an educational program whose length is measured in clock 
hours. For an institution whose academic year has been reduced under 
Sec. 668.3, one-third of an academic year is the pro-rated equivalent, 
as measured in weeks and credit or clock hours, of at least one-third of 
the institution's academic year.


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

    Output document: The Student Aid Report (SAR), Electronic Student 
Aid Report (ESAR), or other document or automated data generated by the 
Department of Education's central processing system or Multiple Data 
Entry processing system as the result of the processing of data provided 
in a Free Application for Federal Student Aid (FAFSA).
    Parent: A student's biological or adoptive mother or father or the 
student's stepparent, if the biological parent or adoptive mother or 
father has remarried at the time of application.
    Participating institution: An eligible institution that meets the 
standards for participation in Title IV, HEA programs in subpart B and 
has a current program participation agreement with the Secretary.
    Professional degree: A degree that signifies both completion of the 
academic requirements for beginning practice in a given profession and a 
level of professional skill beyond that normally required for a 
bachelor's degree. Professional licensure is also generally required. 
Examples of a professional degree include but are not limited to 
Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), Veterinary Medicine 
(D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B. or J.D.), Medicine 
(M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M., 
D.P., or Pod.D.), and Theology (M.Div., or M.H.L.).

(Authority: 20 U.S.C. 1082 and 1088)

    Show-cause official: The designated department official authorized 
to conduct a show-cause proceeding for an emergency action under 34 CFR 
668.83.


(Authority: 20 U.S.C. 1070c et seq.)

    Student aid report (SAR): A report provided to an applicant by the 
Secretary showing his or her FAFSA information and the amount of his or 
her EFC.
    Teacher Education Assistance for College and Higher Education 
(TEACH)

[[Page 472]]

Grant Program: A grant program authorized by title IV of the HEA under 
which grants are awarded by an institution to students who are 
completing, or intend to complete, coursework to begin a career in 
teaching and who agree to serve for not less than four years as a full-
time, highly-qualified teacher in a high-need field in a low-income 
school. If the recipient of a TEACH Grant does not complete four years 
of qualified teaching service within eight years of completing the 
course of study for which the TEACH Grant was received or otherwise 
fails to meet the requirements of 34 CFR 686.12, the amount of the TEACH 
Grant converts into a Federal Direct Unsubsidized Loan.


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

    TEACH Grant: A grant authorized under title IV-A-9 of the HEA and 
awarded to students in exchange for prospective teaching service.


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

    Third-party servicer: (1) An individual or a State, or a private, 
profit or nonprofit organization that enters into a contract with an 
eligible institution to administer, through either manual or automated 
processing, any aspect of the institution's participation in any Title 
IV, HEA program. The Secretary considers administration of participation 
in a Title IV, HEA program to--
    (i) Include performing any function required by any statutory 
provision of or applicable to Title IV of the HEA, any regulatory 
provision prescribed under that statutory authority, or any applicable 
special arrangement, agreement, or limitation entered into under the 
authority of statutes applicable to Title IV of the HEA, such as, but 
not restricted to--
    (A) Processing student financial aid applications;
    (B) Performing need analysis;
    (C) Determining student eligibility and related activities;
    (D) Certifying loan applications;
    (E) Processing output documents for payment to students;
    (F) Receiving, disbursing, or delivering Title IV, HEA program 
funds, excluding lock-box processing of loan payments and normal bank 
electronic fund transfers;
    (G) Conducting activities required by the provisions governing 
student consumer information services in subpart D of this part;
    (H) Preparing and certifying requests for advance or reimbursement 
funding;
    (I) Loan servicing and collection;
    (J) Preparing and submitting notices and applications required under 
34 CFR part 600 and subpart B of this part; and
    (K) Preparing a Fiscal Operations Report and Application to 
Participate (FISAP);
    (ii) Exclude the following functions--
    (A) Publishing ability-to-benefit tests;
    (B) Performing functions as a Multiple Data Entry Processor (MDE);
    (C) Financial and compliance auditing;
    (D) Mailing of documents prepared by the institution;
    (E) Warehousing of records; and
    (F) Providing computer services or software; and
    (iii) Notwithstanding the exclusions referred to in paragraph 
(1)(ii) of this definition, include any activity comprised of any 
function described in paragraph (1)(i) of this definition.
    (2) For purposes of this definition, an employee of an institution 
is not a third-party servicer. The Secretary considers an individual to 
be an employee if the individual--
    (i) Works on a full-time, part-time, or temporary basis;
    (ii) Performs all duties on site at the institution under the 
supervision of the institution;
    (iii) Is paid directly by the institution;
    (iv) Is not employed by or associated with a third-party servicer; 
and
    (v) Is not a third-party servicer for any other institution.


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

    Three-quarter time student: An enrolled student who is carrying a 
three-quarter-time academic workload, as determined by the institution, 
that amounts to at least three quarters of the work of the applicable 
minimum requirement outlined in the definition of a full-time student.

(Authority: 20 U.S.C. 1082 and 1088)


[[Page 473]]


    Two-thirds of an academic year: A period that is at least two-thirds 
of an academic year as determined by an institution. At a minimum, two-
thirds of an academic year must be a period that begins on the first day 
of classes and ends on the last day of classes or examinations and is a 
minimum of 20 weeks of instructional time during which, for an 
undergraduate educational program, a full-time student is expected to 
complete at least 16 semester or trimester hours or 24 quarter hours in 
an educational program whose length is measured in credit hours or 600 
clock hours in an educational program whose length is measured in clock 
hours. For an institution whose academic year has been reduced under 
Sec. 668.3, two-thirds of an academic year is the pro-rated equivalent, 
as measured in weeks and credit or clock hours, of at least two-thirds 
of the institution's academic year.


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

    Undergraduate student: (1) A student who is enrolled in an 
undergraduate course of study that usually does not exceed four years, 
or is enrolled in a longer program designed to lead to a degree at the 
baccalaureate level. For purposes of 34 CFR 690.6(c)(5) students who 
have completed a baccalaureate program of study and who are subsequently 
completing a State-required teacher certification program are treated as 
undergraduates.
    (2) In addition to meeting the definition in paragraph (1) of this 
definition, a student is only considered an undergraduate for purposes 
of the Federal Supplemental Educational Opportunity Grant (FSEOG) 
Program, the Federal Pell Grant Program, the Academic Competitiveness 
Grant (ACG) Program, National Science and Mathematics Access to Retain 
Talent (SMART) Grant Program, and TEACH Grant program if the student has 
not yet earned a baccalaureate or professional degree. However, for 
purposes of 34 CFR 690.6(c)(5) and 686.3(a) students who have completed 
a baccalaureate program of study and who are subsequently completing a 
State-required teacher certification program are treated as 
undergraduates.
    (3) For purposes of dual degree programs that allow individuals to 
complete a bachelor's degree and either a graduate or professional 
degree within the same program, a student is considered an undergraduate 
student for at least the first three years of that program.
    (4) A student enrolled in a four to five year program designed to 
lead to an undergraduate degree. A student enrolled in a program of any 
other, longer length is considered an undergraduate student for only the 
first four years of that program.


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

    U.S. citizen or national: (1) A citizen of the United States; or
    (2) A person defined in the Immigration and Nationality Act, 8 
U.S.C. 1101(a)(22), who, though not a citizen of the United States, owes 
permanent allegiance to the United States.


(Authority: 8 U.S.C. 1101)

    Valid institutional student information record (valid ISIR): An ISIR 
on which all the information reported on a student's FAFSA is accurate 
and complete as of the date the application is signed.
    Valid student aid report (valid SAR): A student aid report on which 
all of the information reported on a student's FAFSA is accurate and 
complete as of the date the application is signed.


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

    William D. Ford Federal Direct Loan (Direct Loan) Program: The loan 
program authorized by Title IV, Part D of the HEA.


(Authority: 20 U.S.C. 1087a et seq.)

[59 FR 22418, Apr. 29, 1994]

    Editorial Note: For Federal Register citations affecting Sec. 668.2, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and at www.fdsys.gov.

    Effective Date Note: At 81 FR 92262, Dec. 19, 2016, Sec. 668.2 was 
amended in paragraph (a) by adding to the list of definitions, in 
alphabetical order, ``Distance education'', effective July 1, 2020.

[[Page 474]]



Sec. 668.3  Academic year.

    (a) General. Except as provided in paragraph (c) of this section, an 
academic year for a program of study must include--
    (1)(i) For a program offered in credit hours, a minimum of 30 weeks 
of instructional time; or
    (ii) For a program offered in clock hours, a minimum of 26 weeks of 
instructional time; and
    (2) For an undergraduate educational program, an amount of 
instructional time whereby a full-time student is expected to complete 
at least--
    (i) Twenty-four semester or trimester credit hours or 36 quarter 
credit hours for a program measured in credit hours; or
    (ii) 900 clock hours for a program measured in clock hours.
    (b) Definitions. For purposes of paragraph (a) of this section--
    (1) A week is a consecutive seven-day period;
    (2) A week of instructional time is any week in which at least one 
day of regularly scheduled instruction or examinations occurs or, after 
the last scheduled day of classes for a term or payment period, at least 
one day of study for final examinations occurs; and
    (3) Instructional time does not include any vacation periods, 
homework, or periods of orientation or counseling.
    (c) Reduction in the length of an academic year. (1) Upon the 
written request of an institution, the Secretary may approve, for good 
cause, an academic year of 26 through 29 weeks of instructional time for 
educational programs offered by the institution if the institution 
offers a two-year program leading to an associate degree or a four-year 
program leading to a baccalaureate degree.
    (2) An institution's written request must--
    (i) Identify each educational program for which the institution 
requests a reduction, and the requested number of weeks of instructional 
time for that program;
    (ii) Demonstrate good cause for the requested reductions; and
    (iii) Include any other information that the Secretary may require 
to determine whether to grant the request.
    (3)(i) The Secretary approves the request of an eligible institution 
for a reduction in the length of its academic year if the institution 
has demonstrated good cause for granting the request and the 
institution's accrediting agency and State licensing agency have 
approved the request.
    (ii) If the Secretary approves the request, the approval terminates 
when the institution's program participation agreement expires. The 
institution may request an extension of that approval as part of the 
recertification process.

(Approved by the Office of Management and Budget under control number 
1845-0022)

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

[67 FR 67071, Nov. 1, 2002, as amended at 71 FR 45693, Aug. 9, 2006]



Sec. 668.4  Payment period.

    (a) Payment periods for an eligible program that measures progress 
in credit hours and uses standard terms or nonstandard terms that are 
substantially equal in length. For a student enrolled in an eligible 
program that measures progress in credit hours and uses standard terms 
(semesters, trimesters, or quarters), or for a student enrolled in an 
eligible program that measures progress in credit hours and uses 
nonstandard terms that are substantially equal in length, the payment 
period is the academic term.
    (b) Payment periods for an eligible program that measures progress 
in credit hours and uses nonstandard terms that are not substantially 
equal in length. For a student enrolled in an eligible program that 
measures progress in credit hours and uses nonstandard terms that are 
not substantially equal in length--
    (1) For Pell Grant, ACG, National SMART Grant, FSEOG, Perkins Loan, 
and TEACH Grant program funds, the payment period is the academic term;
    (2) For FFEL and Direct Loan program funds--
    (i) For a student enrolled in an eligible program that is one 
academic year or less in length--
    (A) The first payment period is the period of time in which the 
student successfully completes half of the number of credit hours in the 
program and

[[Page 475]]

half of the number of weeks of instructional time in the program; and
    (B) The second payment period is the period of time in which the 
student successfully completes the program; and
    (ii) For a student enrolled in an eligible program that is more than 
one academic year in length--
    (A) For the first academic year and any subsequent full academic 
year--
    (1) The first payment period is the period of time in which the 
student successfully completes half of the number of credit hours in the 
academic year and half of the number of weeks of instructional time in 
the academic year; and
    (2) The second payment period is the period of time in which the 
student successfully completes the academic year;
    (B) For any remaining portion of an eligible program that is more 
than half an academic year but less than a full academic year in 
length--
    (1) The first payment period is the period of time in which the 
student successfully completes half of the number of credit hours in the 
remaining portion of the program and half of the number of weeks of 
instructional time remaining in the program; and
    (2) The second payment period is the period of time in which the 
student successfully completes the remainder of the program; and
    (C) For any remaining portion of an eligible program that is not 
more than half an academic year, the payment period is the remainder of 
the program.
    (c) Payment periods for an eligible program that measures progress 
in credit hours and does not have academic terms or for a program that 
measures progress in clock hours. (1) For a student enrolled in an 
eligible program that is one academic year or less in length--
    (i) The first payment period is the period of time in which the 
student successfully completes half of the number of credit hours or 
clock hours, as applicable, in the program and half of the number of 
weeks of instructional time in the program; and
    (ii) The second payment period is the period of time in which the 
student successfully completes the program or the remainder of the 
program.
    (2) For a student enrolled in an eligible program that is more than 
one academic year in length--
    (i) For the first academic year and any subsequent full academic 
year--
    (A) The first payment period is the period of time in which the 
student successfully completes half of the number of credit hours or 
clock hours, as applicable, in the academic year and half of the number 
of weeks of instructional time in the academic year; and
    (B) The second payment period is the period of time in which the 
student successfully completes the academic year;
    (ii) For any remaining portion of an eligible program that is more 
than half an academic year but less than a full academic year in 
length--
    (A) The first payment period is the period of time in which the 
student successfully completes half of the number of credit hours or 
clock hours, as applicable, in the remaining portion of the program and 
half of the number of weeks of instructional time remaining in the 
program; and
    (B) The second payment period is the period of time in which the 
student successfully completes the remainder of the program; and
    (iii) For any remaining portion of an eligible program that is not 
more than half an academic year, the payment period is the remainder of 
the program.
    (3) For purposes of paragraphs (c)(1) and (c)(2) of this section, if 
an institution is unable to determine when a student has successfully 
completed half of the credit hours or clock hours in a program, academic 
year, or remainder of a program, the student is considered to begin the 
second payment period of the program, academic year, or remainder of a 
program at the later of the date, as determined by the institution, on 
which the student has successfully completed--
    (i) Half of the academic coursework in the program, academic year, 
or remainder of the program; or
    (ii) Half of the number of weeks of instructional time in the 
program, academic year, or remainder of the program.
    (d) Application of the cohort default rate exemption. 
Notwithstanding paragraphs (a), (b), and (c) of this section, if

[[Page 476]]

34 CFR 682.604(c)(10) or 34 CFR 685.301(b)(8) applies to an eligible 
program that measures progress in credit hours and uses nonstandard 
terms, an eligible program that measures progress in credit hours and 
does not have academic terms, or an eligible program that measures 
progress in clock hours, the payment period for purposes of FFEL and 
Direct Loan funds is the loan period for those portions of the program 
to which 34 CFR 682.604(c)(10) or 34 CFR 685.301(b)(8) applies.
    (e) Excused absences. For purposes of this section, in determining 
whether a student successfully completes the clock hours in a payment 
period, an institution may include clock hours for which the student has 
an excused absence (i.e., an absence that a student does not have to 
make up) if--
    (1) The institution has a written policy that permits excused 
absences; and
    (2) The number of excused absences under the written policy for 
purposes of this paragraph (e) does not exceed the lesser of--
    (i) The policy on excused absences of the institution's accrediting 
agency or, if the institution has more than one accrediting agency, the 
agency designated under 34 CFR 600.11(b);
    (ii) The policy on excused absences of any State agency that 
licenses the institution or otherwise legally authorizes the institution 
to operate in the State; or
    (iii) Ten percent of the clock hours in the payment period.
    (f) Re-entry within 180 days. If a student withdraws from a program 
described in paragraph (c) of this section during a payment period and 
then reenters the same program within 180 days, the student remains in 
that same payment period when he or she returns and, subject to 
conditions established by the Secretary or by the FFEL lender or 
guaranty agency, is eligible to receive any title IV, HEA program funds 
for which he or she was eligible prior to withdrawal, including funds 
that were returned by the institution or student under the provisions of 
Sec. 668.22.
    (g) Re-entry after 180 days or transfer. (1) Except as provided in 
paragraph (g)(3) of this section, and subject to the conditions of 
paragraph (g)(2) of this section, an institution calculates new payment 
periods for the remainder of a student's program based on paragraph (c) 
of this section, for a student who withdraws from a program described in 
paragraph (c) of this section, and--
    (i) Reenters that program after 180 days;
    (ii) Transfers into another program at the same institution within 
any time period; or
    (iii) Transfers into a program at another institution within any 
time period.
    (2) For a student described in paragraph (g)(1) of this section--
    (i) For the purpose of calculating payment periods only, the length 
of the program is the number of credit hours and the number of weeks of 
instructional time, or the number of clock hours and the number of weeks 
of instructional time, that the student has remaining in the program he 
or she enters or reenters; and
    (ii) If the remaining hours and weeks constitute half of an academic 
year or less, the remaining hours constitute one payment period.
    (3) Notwithstanding the provisions of paragraph (g)(1) of this 
section, an institution may consider a student who transfers into 
another program at the same institution to remain in the same payment 
period if--
    (i) The student is continuously enrolled at the institution;
    (ii) The coursework in the payment period the student is 
transferring out of is substantially similar to the coursework the 
student will be taking when he or she first transfers into the new 
program;
    (iii) The payment periods are substantially equal in length in weeks 
of instructional time and credit hours or clock hours, as applicable;
    (iv) There are little or no changes in institutional charges 
associated with the payment period to the student; and
    (v) The credits from the payment period the student is transferring 
out of are accepted toward the new program.
    (h) Definitions. For purposes of this section--
    (1) Terms are substantially equal in length if no term in the 
program is more than two weeks of instructional

[[Page 477]]

time longer than any other term in that program; and
    (2) A student successfully completes credit hours or clock hours if 
the institution considers the student to have passed the coursework 
associated with those hours.

(Authority: 20 U.S.C. 1070 et seq.)

[72 FR 62025, Nov. 1, 2007, as amended at 73 FR 35492, June 23, 2008]



Sec. 668.5  Written arrangements to provide educational programs.

    (a) Written arrangements between eligible institutions. (1) Except 
as provided in paragraph (a)(2) of this section, if an eligible 
institution enters into a written arrangement with another eligible 
institution, or with a consortium of eligible institutions, under which 
the other eligible institution or consortium provides part of the 
educational program to students enrolled in the first institution, the 
Secretary considers that educational program to be an eligible program 
if the educational program offered by the institution that grants the 
degree or certificate otherwise satisfies the requirements of 
Sec. 668.8.
    (2) If the written arrangement is between two or more eligible 
institutions that are owned or controlled by the same individual, 
partnership, or corporation, the Secretary considers the educational 
program to be an eligible program if--
    (i) The educational program offered by the institution that grants 
the degree or certificate otherwise satisfies the requirements of 
Sec. 668.8; and
    (ii) The institution that grants the degree or certificate provides 
more than 50 percent of the educational program.
    (b) Written arrangements for study-abroad. Under a study abroad 
program, if an eligible institution enters into a written arrangement 
under which an institution in another country, or an organization acting 
on behalf of an institution in another country, provides part of the 
educational program of students enrolled in the eligible institution, 
the Secretary considers that educational program to be an eligible 
program if it otherwise satisfies the requirements of paragraphs (c)(1) 
through (c)(3) of this section.
    (c) Written arrangements between an eligible institution and an 
ineligible institution or organization. If an eligible institution 
enters into a written arrangement with an institution or organization 
that is not an eligible institution under which the ineligible 
institution or organization provides part of the educational program of 
students enrolled in the eligible institution, the Secretary considers 
that educational program to be an eligible program if--
    (1) The ineligible institution or organization has not--
    (i) Had its eligibility to participate in the title IV, HEA programs 
terminated by the Secretary;
    (ii) Voluntarily withdrawn from participation in the title IV, HEA 
programs under a termination, show-cause, suspension, or similar type 
proceeding initiated by the institution's State licensing agency, 
accrediting agency, guarantor, or by the Secretary;
    (iii) Had its certification to participate in the title IV, HEA 
programs revoked by the Secretary;
    (iv) Had its application for re-certification to participate in the 
title IV, HEA programs denied by the Secretary; or
    (v) Had its application for certification to participate in the 
title IV, HEA programs denied by the Secretary;
    (2) The educational program offered by the institution that grants 
the degree or certificate otherwise satisfies the requirements of 
Sec. 668.8; and
    (3)(i) The ineligible institution or organization provides 25 
percent or less of the educational program; or
    (ii)(A) The ineligible institution or organization provides more 
than 25 percent but less than 50 percent of the educational program;
    (B) The eligible institution and the ineligible institution or 
organization are not owned or controlled by the same individual, 
partnership, or corporation; and
    (C) The eligible institution's accrediting agency, or if the 
institution is a public postsecondary vocational educational 
institution, the State agency listed in the Federal Register in 
accordance with 34 CFR part 603, has specifically determined that the 
institution's arrangement meets the agency's

[[Page 478]]

standards for the contracting out of educational services.
    (d) Administration of title IV, HEA programs. (1) If an institution 
enters into a written arrangement as described in paragraph (a), (b), or 
(c) of this section, except as provided in paragraph (d)(2) of this 
section, the institution at which the student is enrolled as a regular 
student must determine the student's eligibility for title IV, HEA 
program funds, and must calculate and disburse those funds to that 
student.
    (2) In the case of a written arrangement between eligible 
institutions, the institutions may agree in writing to have any eligible 
institution in the written arrangement make those calculations and 
disbursements, and the Secretary does not consider that institution to 
be a third-party servicer for that arrangement.
    (3) The institution that calculates and disburses a student's title 
IV, HEA program assistance under paragraph (d)(1) or (d)(2) of this 
section must--
    (i) Take into account all the hours in which the student enrolls at 
each institution that apply to the student's degree or certificate when 
determining the student's enrollment status and cost of attendance; and 
(ii) Maintain all records regarding the student's eligibility for and 
receipt of title IV, HEA program funds.
    (e) Information made available to students. If an institution enters 
into a written arrangement described in paragraph (a), (b), or (c) of 
this section, the institution must provide the information described in 
Sec. 668.43(a)(12) to enrolled and prospective students.

(Authority: 20 U.S.C. 1094)

[65 FR 65674, Nov. 1, 2000, as amended at 75 FR 66948, Oct. 29, 2010; 75 
FR 67198, Nov. 1, 2010]



Sec. 668.6  Reporting and disclosure requirements for programs that
prepare students for gainful employment in a recognized occupation.

    (a) [Reserved]
    (b) Disclosures. (1) For each program offered by an institution 
under this section, the institution must provide prospective students 
with--
    (i) The occupations (by names and SOC codes) that the program 
prepares students to enter, along with links to occupational profiles on 
O*NET or its successor site. If the number of occupations related to the 
program, as identified by entering the program's full six digit CIP code 
on the O*NET crosswalk at http://online.onetcenter.org/crosswalk/ is 
more than ten, the institution may provide Web links to a representative 
sample of the identified occupations (by name and SOC code) for which 
its graduates typically find employment within a few years after 
completing the program;
    (ii) The on-time graduation rate for students completing the 
program, as provided under paragraph (c) of this section;
    (iii) The tuition and fees it charges a student for completing the 
program within normal time as defined in Sec. 668.41(a), the typical 
costs for books and supplies (unless those costs are included as part of 
tuition and fees), and the cost of room and board, if applicable. The 
institution may include information on other costs, such as 
transportation and living expenses, but it must provide a Web link, or 
access, to the program cost information the institutions makes available 
under Sec. 668.43(a);
    (iv) The placement rate for students completing the program, as 
determined under a methodology developed by the National Center for 
Education Statistics (NCES) when that rate is available. In the 
meantime, beginning on July 1, 2011, if the institution is required by 
its accrediting agency or State to calculate a placement rate on a 
program basis, it must disclose the rate under this section and identify 
the accrediting agency or State agency under whose requirements the rate 
was calculated. If the accrediting agency or State requires an 
institution to calculate a placement rate at the institutional level or 
other than a program basis, the institution must use the accrediting 
agency or State methodology to calculate a placement rate for the 
program and disclose that rate; and
    (v) The median loan debt incurred by students who completed the 
program as provided by the Secretary, as well as any other information 
the Secretary provided to the institution about that program. The 
institution must identify separately the median loan debt from

[[Page 479]]

title IV, HEA program loans, and the median loan debt from private 
educational loans and institutional financing plans.
    (2) For each program, the institution must--
    (i) Include the information required under paragraph (b)(1) of this 
section in promotional materials it makes available to prospective 
students and post this information on its Web site;
    (ii) Prominently provide the information required under paragraph 
(b)(1) of this section in a simple and meaningful manner on the home 
page of its program Web site, and provide a prominent and direct link on 
any other Web page containing general, academic, or admissions 
information about the program, to the single Web page that contains all 
the required information;
    (iii) Display the information required under paragraph (b)(1) of 
this section on the institution's Web site in an open format that can be 
retrieved, downloaded, indexed, and searched by commonly used Web search 
applications. An open format is one that is platform-independent, is 
machine-readable, and is made available to the public without 
restrictions that would impede the reuse of that information; and
    (iv) Use the disclosure form issued by the Secretary to provide the 
information in paragraph (b)(1), and other information, when that form 
is available.
    (c) On-time completion rate. An institution calculates an on-time 
completion rate for each program subject to this section by--
    (1) Determining the number of students who completed the program 
during the most recently completed award year;
    (2) Determining the number of students in paragraph (c)(1) of this 
section who completed the program within normal time, as defined under 
Sec. 668.41(a), regardless of whether the students transferred into the 
program or changed programs at the institution. For example, the normal 
time to complete an associate degree is two years and this timeframe 
applies to all students in the program. If a student transfers into the 
program, regardless of the number of credits the institution accepts 
from the student's attendance at the prior institution, those transfer 
credits have no bearing on the two-year timeframe. The student would 
still have two years to complete from the date he or she began attending 
the two-year program. To be counted as completing on time, a student who 
changes programs at the institution and begins attending the two-year 
program must complete within the two-year timeframe beginning from the 
date the student began attending the prior program; and
    (3) Dividing the number of students who completed the program within 
normal time, as determined under paragraph (c)(2) of this section, by 
the total number of students who completed the program, as determined 
under paragraph (c)(1) of this section, and multiplying the result by 
100.
    (d) Sunset provisions. Institutions must comply with the 
requirements of this section through December 31, 2016.

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

(Authority: 20 U.S.C. 1001, 1002, 1088)

[75 FR 66948, Oct. 29, 2010, as amended at 79 FR 65006, Oct. 31, 2014]



Sec. 668.7  [Reserved]



Sec. 668.8  Eligible program.

    (a) General. An eligible program is an educational program that--
    (1) Is provided by a participating institution; and
    (2) Satisfies the other relevant requirements contained in this 
section.
    (b) Definitions. For purposes of this section--
    (1) The Secretary considers the ``equivalent of an associate 
degree'' to be--
    (i) An associate degree; or
    (ii) The successful completion of at least a two-year program that 
is acceptable for full credit toward a bachelor's degree and qualifies a 
student for admission into the third year of a bachelor's degree 
program;
    (2) A week is a consecutive seven-day period; and
    (3)(i) The Secretary considers that an institution provides one week 
of instructional time in an academic program during any week the 
institution provides at least one day of regularly scheduled instruction 
or examinations, or, after the last scheduled day of

[[Page 480]]

classes for a term or a payment period, at least one day of study for 
final examinations.
    (ii) Instructional time does not include any vacation periods, 
homework, or periods of orientation or counseling.
    (c) Institution of higher education. An eligible program provided by 
an institution of higher education must--
    (1) Lead to an associate, bachelor's, professional, or graduate 
degree;
    (2) Be at least a two-academic-year program that is acceptable for 
full credit toward a bachelor's degree; or
    (3) Be at least a one-academic-year training program that leads to a 
certificate, or other nondegree recognized credential, and prepares 
students for gainful employment in a recognized occupation.
    (d) Proprietary institution of higher education and postsecondary 
vocational institution. An eligible program provided by a proprietary 
institution of higher education or postsecondary vocational 
institution--
    (1)(i) Must require a minimum of 15 weeks of instruction, beginning 
on the first day of classes and ending on the last day of classes or 
examinations;
    (ii) Must be at least 600 clock hours, 16 semester or trimester 
hours, or 24 quarter hours;
    (iii) Must provide undergraduate training that prepares a student 
for gainful employment in a recognized occupation; and
    (iv) May admit as regular students persons who have not completed 
the equivalent of an associate degree;
    (2) Must--
    (i) Require a minimum of 10 weeks of instruction, beginning on the 
first day of classes and ending on the last day of classes or 
examinations;
    (ii) Be at least 300 clock hours, 8 semester or trimester hours, or 
12 quarter hours;
    (iii) Provide training that prepares a student for gainful 
employment in a recognized occupation as provided under subpart Q of 
this part; and
    (iv)(A) Be a graduate or professional program; or
    (B) Admit as regular students only persons who have completed the 
equivalent of an associate degree;
    (3) For purposes of the FFEL and Direct Loan programs only, must--
    (i) Require a minimum of 10 weeks of instruction, beginning on the 
first day of classes and ending on the last day of classes or 
examinations;
    (ii) Be at least 300 clock hours but less than 600 clock hours;
    (iii) Provide undergraduate training that prepares a student for 
gainful employment in a recognized occupation as provided under subpart 
Q of this part;
    (iv) Admit as regular students some persons who have not completed 
the equivalent of an associate degree; and
    (v) Satisfy the requirements of paragraph (e) of this section; or
    (4) For purposes of a proprietary institution of higher education 
only, is a program leading to a baccalaureate degree in liberal arts, as 
defined in 34 CFR 600.5(e), that--
    (i) Is provided by an institution that is accredited by a recognized 
regional accrediting agency or association, and has continuously held 
such accreditation since October 1, 2007, or earlier; and
    (ii) The institution has provided continuously since January 1, 
2009.
    (e) Qualitative factors. (1) An educational program that satisfies 
the requirements of paragraphs (d)(3)(i) through (iv) of this section 
qualifies as an eligible program only if--
    (i) The program has a substantiated completion rate of at least 70 
percent, as calculated under paragraph (f) of this section;
    (ii) The program has a substantiated placement rate of at least 70 
percent, as calculated under paragraph (g) of this section;
    (iii) The number of clock hours provided in the program does not 
exceed by more than 50 percent the minimum number of clock hours 
required for training in the recognized occupation for which the program 
prepares students, as established by the State in which the program is 
offered, if the State has established such a requirement, or as 
established by any Federal agency; and
    (iv) The program has been in existence for at least one year. The 
Secretary considers an educational program to have been in existence for 
at least one year only if an institution has been legally authorized to 
provide,

[[Page 481]]

and has continuously provided, the program during the 12 months (except 
for normal vacation periods and, at the discretion of the Secretary, 
periods when the institution closes due to a natural disaster that 
directly affects the institution or the institution's students) 
preceding the date on which the institution applied for eligibility for 
that program.
    (2) An institution shall substantiate the calculation of its 
completion and placement rates by having the certified public accountant 
who prepares its audit report required under Sec. 668.23 report on the 
institution's calculation based on performing an attestation engagement 
in accordance with the Statements on Standards for Attestation 
Engagements of the American Institute of Certified Public Accountants 
(AICPA).
    (f) Calculation of completion rate. An institution shall calculate 
its completion rate for an educational program for any award year as 
follows:
    (1) Determine the number of regular students who were enrolled in 
the program during the award year.
    (2) Subtract from the number of students determined under paragraph 
(f)(1) of this section, the number of regular students who, during that 
award year, withdrew from, dropped out of, or were expelled from the 
program and were entitled to and actually received, in a timely manner a 
refund of 100 percent of their tuition and fees.
    (3) Subtract from the total obtained under paragraph (f)(2) of this 
section the number of students who were enrolled in the program at the 
end of that award year.
    (4) Determine the number of regular students who, during that award 
year, received within 150 percent of the published length of the 
educational program the degree, certificate, or other recognized 
educational credential awarded for successfully completing the program.
    (5) Divide the number determined under paragraph (f)(4) of this 
section by the total obtained under paragraph (f)(3) of this section.
    (g) Calculation of placement rate. (1) An institution shall 
calculate its placement rate for an educational program for any award 
year as follows:
    (i) Determine the number of students who, during the award year, 
received the degree, certificate, or other recognized educational 
credential awarded for successfully completing the program.
    (ii) Of the total obtained under paragraph (g)(1)(i) of this 
section, determine the number of students who, within 180 days of the 
day they received their degree, certificate, or other recognized 
educational credential, obtained gainful employment in the recognized 
occupation for which they were trained or in a related comparable 
recognized occupation and, on the date of this calculation, are 
employed, or have been employed, for at least 13 weeks following receipt 
of the credential from the institution.
    (iii) Divide the number of students determined under paragraph 
(g)(1)(ii) of this section by the total obtained under paragraph 
(g)(1)(i) of this section.
    (2) An institution shall document that each student described in 
paragraph (g)(1)(ii) of this section obtained gainful employment in the 
recognized occupation for which he or she was trained or in a related 
comparable recognized occupation. Examples of satisfactory documentation 
of a student's gainful employment include, but are not limited to--
    (i) A written statement from the student's employer;
    (ii) Signed copies of State or Federal income tax forms; and
    (iii) Written evidence of payments of Social Security taxes.
    (h) Eligibility for Federal Pell Grant, ACG, National SMART Grant, 
TEACH Grant, and FSEOG Programs. In addition to satisfying other 
relevant provisions of the section--
    (1) An educational program qualifies as an eligible program for 
purposes of the Federal Pell Grant Program only if the educational 
program is an undergraduate program or a postbaccalaureate teacher 
certificate or licensing program as described in 34 CFR 690.6(c);
    (2) An educational program qualifies as an eligible program for 
purposes of the ACG, National SMART Grant, and

[[Page 482]]

FSEOG programs only if the educational program is an undergraduate 
program; and
    (3) An educational program qualifies as an eligible program for 
purposes of the TEACH Grant program if it satisfies the requirements of 
the definition of TEACH Grant-eligible program in 34 CFR 686.2(d).
    (i) Flight training. In addition to satisfying other relevant 
provisions of this section, for a program of flight training to be an 
eligible program, it must have a current valid certification from the 
Federal Aviation Administration.
    (j) English as a second language (ESL). (1) In addition to 
satisfying the relevant provisions of this section, an educational 
program that consists solely of instruction in ESL qualifies as an 
eligible program if--
    (i) The institution admits to the program only students who the 
institution determines need the ESL instruction to use already existing 
knowledge, training, or skills; and
    (ii) The program leads to a degree, certificate, or other recognized 
educational credential.
    (2) An institution shall document its determination that ESL 
instruction is necessary to enable each student enrolled in its ESL 
program to use already existing knowledge, training, or skills with 
regard to the students that it admits to its ESL program under paragraph 
(j)(1)(i) of this section.
    (3) An ESL program that qualifies as an eligible program under this 
paragraph is eligible for purposes of the Federal Pell Grant Program 
only.
    (k) Undergraduate educational program in credit hours. If an 
institution offers an undergraduate educational program in credit hours, 
the institution must use the formula contained in paragraph (l) of this 
section to determine whether that program satisfies the requirements 
contained in paragraph (c)(3) or (d) of this section, and the number of 
credit hours in that educational program for purposes of the title IV, 
HEA programs, unless--
    (1) The program is at least two academic years in length and 
provides an associate degree, a bachelor's degree, a professional 
degree, or an equivalent degree as determined by the Secretary; or
    (2) Each course within the program is acceptable for full credit 
toward that institution's associate degree, bachelor's degree, 
professional degree, or equivalent degree as determined by the Secretary 
provided that--
    (i) The institution's degree requires at least two academic years of 
study; and
    (ii) The institution demonstrates that students enroll in, and 
graduate from, the degree program.
    (l) Formula. (1) Except as provided in paragraph (l)(2) of this 
section, for purposes of determining whether a program described in 
paragraph (k) of this section satisfies the requirements contained in 
paragraph (c)(3) or (d) of this section, and determining the number of 
credit hours in that educational program with regard to the title IV, 
HEA programs--
    (i) A semester hour must include at least 37.5 clock hours of 
instruction;
    (ii) A trimester hour must include at least 37.5 clock hours of 
instruction; and
    (iii) A quarter hour must include at least 25 clock hours of 
instruction.
    (2) The institution's conversions to establish a minimum number of 
clock hours of instruction per credit may be less than those specified 
in paragraph (l)(1) of this section if the institution's designated 
accrediting agency, or recognized State agency for the approval of 
public postsecondary vocational institutions for participation in the 
title IV, HEA programs, has not identified any deficiencies with the 
institution's policies and procedures, or their implementation, for 
determining the credit hours that the institution awards for programs 
and courses, in accordance with 34 CFR 602.24(f) or, if applicable, 34 
CFR 603.24(c), so long as--
    (i) The institution's student work outside of class combined with 
the clock hours of instruction meet or exceed the numeric requirements 
in paragraph (l)(1) of this section; and
    (ii)(A) A semester hour must include at least 30 clock hours of 
instruction;
    (B) A trimester hour must include at least 30 clock hours of 
instruction; and
    (C) A quarter hour must include at least 20 hours of instruction.

[[Page 483]]

    (m) An otherwise eligible program that is offered in whole or in 
part through telecommunications is eligible for title IV, HEA program 
purposes if the program is offered by an institution, other than a 
foreign institution, that has been evaluated and is accredited for its 
effective delivery of distance education programs by an accrediting 
agency or association that--
    (1) Is recognized by the Secretary under subpart 2 of part H of the 
HEA; and
    (2) Has accreditation of distance education within the scope of its 
recognition.
    (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.

(Authority: 20 U.S.C. 1070a, 1070a-1, 1070b, 1070c-1, 1070c-2, 1070g, 
1085, 1087aa-1087hh, 1088, 1091; 42 U.S.C. 2753)

[59 FR 22421, Apr. 29, 1994]

    Editorial Note: For Federal Register citations affecting Sec. 668.8, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and at www.fdsys.gov.



Sec. 668.9  Relationship between clock hours and semester, trimester,
or quarter hours in calculating Title IV, HEA program assistance.

    (a) In determining the amount of Title IV, HEA program assistance 
that a student who is enrolled in a program described in Sec. 668.8(k) 
is eligible to receive, the institution shall apply the formula 
contained in Sec. 668.8(l) to determine the number of semester, 
trimester, or quarter hours in that program, if the institution measures 
academic progress in that program in semester, trimester, or quarter 
hours.
    (b) Notwithstanding paragraph (a) of this section, a public or 
private nonprofit hospital-based school of nursing that awards a diploma 
at the completion of the school's program of education is not required 
to apply the formula contained in Sec. 668.8(l) to determine the number 
of semester, trimester, or quarter hours in that program for purposes of 
calculating Title IV, HEA program assistance.

(Authority: 20 U.S.C. 1082, 1085, 1088, 1091, 1141)

[59 FR 61179, Nov. 29, 1994]



Sec. 668.10  Direct assessment programs.

    (a)(1) A direct assessment program is an instructional program that, 
in lieu of credit hours or clock hours as a measure of student learning, 
utilizes direct assessment of student learning, or recognizes the direct 
assessment of student learning by others. The assessment must be 
consistent with the accreditation of the institution or program 
utilizing the results of the assessment.
    (2) Direct assessment of student learning means a measure by the 
institution of what a student knows and can do in terms of the body of 
knowledge making up the educational program. These measures provide 
evidence that a student has command of a specific subject, content area, 
or skill or that the student demonstrates a specific quality such as 
creativity, analysis or synthesis associated with the subject matter of 
the program. Examples of direct measures include projects, papers, 
examinations, presentations, performances, and portfolios.
    (3) All regulatory requirements in this chapter that refer to credit 
or clock hours as a measurement apply to direct assessment programs. 
Because a direct assessment program does not utilize credit or clock 
hours as a measure of student learning, an institution must establish a 
methodology to reasonably equate the direct assessment program (or the 
direct assessment portion of any program, as applicable) to credit or 
clock hours for the purpose of complying with applicable regulatory 
requirements. The institution must provide a factual basis satisfactory 
to the Secretary for its claim that the program or portion of the 
program is equivalent to a specific number of credit or clock hours.
    (i) An academic year in a direct assessment program is a period of 
instructional time that consists of a minimum of 30 weeks of 
instructional time during which, for an undergraduate

[[Page 484]]

educational program, a full-time student is expected to complete the 
equivalent of at least 24 semester or trimester credit hours, 36 quarter 
credit hours or 900 clock hours.
    (ii) A payment period in a direct assessment program for which 
equivalence in credit hours has been established must be determined 
under the requirements in Sec. 668.4(a), (b), or (c), as applicable, 
using the academic year determined in accordance with paragraph 
(a)(3)(i) of this section (or the portion of that academic year 
comprising or remaining in the program). A payment period in a direct 
assessment program for which equivalence in clock hours has been 
established must be determined under the requirements in Sec. 668.4(c), 
using the academic year determined in accordance with paragraph 
(a)(3)(i) of this section (or the portion of that academic year 
comprising or remaining in the program).
    (iii) A week of instructional time in a direct assessment program is 
any seven-day period in which at least one day of educational activity 
occurs. Educational activity in a direct assessment program includes 
regularly scheduled learning sessions, faculty-guided independent study, 
consultations with a faculty mentor, development of an academic action 
plan addressed to the competencies identified by the institution, or, in 
combination with any of the foregoing, assessments. It does not include 
credit for life experience. For purposes of direct assessment programs, 
independent study occurs when a student follows a course of study with 
predefined objectives but works with a faculty member to decide how the 
student is going to meet those objectives. The student and faculty 
member agree on what the student will do (e.g., required readings, 
research, and work products), how the student's work will be evaluated, 
and on what the relative timeframe for completion of the work will be. 
The student must interact with the faculty member on a regular and 
substantive basis to assure progress within the course or program.
    (iv) A full-time student in a direct assessment program is an 
enrolled student who is carrying a full-time academic workload as 
determined by the institution under a standard applicable to all 
students enrolled in the program. However, for an undergraduate student, 
the institution's minimum standard must equal or exceed the minimum 
full-time requirements specified in the definition of full-time student 
in Sec. 668.2 based on the credit or clock hour equivalency established 
by the institution for the direct assessment program.
    (b) An institution that offers a direct assessment program must 
apply to the Secretary to have that program determined to be an eligible 
program for title IV, HEA program purposes. The institution's 
application must provide information satisfactory to the Secretary that 
includes--
    (1) A description of the educational program, including the 
educational credential offered (degree level or certificate) and the 
field of study;
    (2) A description of how the assessment of student learning is done;
    (3) A description of how the direct assessment program is 
structured, including information about how and when the institution 
determines on an individual basis what each student enrolled in the 
program needs to learn;
    (4) A description of how the institution assists students in gaining 
the knowledge needed to pass the assessments;
    (5) The number of semester or quarter credit hours, or clock hours, 
that are equivalent to the amount of student learning being directly 
assessed for the certificate or degree, as required by paragraph (b)(3) 
of this section;
    (6) The methodology the institution uses to determine the number of 
credit or clock hours to which the program is equivalent;
    (7) The methodology the institution uses to determine the number of 
credit or clock hours to which the portion of a program an individual 
student will need to complete is equivalent;
    (8) Documentation from the institution's accrediting agency 
indicating that the agency has evaluated the institution's offering of 
direct assessment program(s) and has included the program(s) in the 
institution's grant of accreditation;
    (9) Documentation from the accrediting agency or relevant state 
licensing

[[Page 485]]

body indicating agreement with the institution's claim of the direct 
assessment program's equivalence in terms of credit or clock hours; and
    (10) Any other information the Secretary may require to determine 
whether to approve the institution's application.
    (c) To be an eligible program, a direct assessment program must meet 
the requirements in Sec. 668.8 including, if applicable, minimum program 
length and qualitative factors.
    (d) Notwithstanding paragraphs (a) through (c) of this section, no 
program offered by a foreign institution that involves direct assessment 
will be considered to be an eligible program under Sec. 668.8.
    (e) A direct assessment program may use learning resources (e.g., 
courses or portions of courses) that are provided by entities other than 
the institution providing the direct assessment program without regard 
to the limitations on contracting for part of an educational program in 
Sec. 668.5(c)(3).
    (f) Title IV, HEA program funds may be used only for learning that 
results from instruction provided, or overseen, by the institution, not 
for the portion of the program that the student has demonstrated mastery 
of prior to enrollment in the program or tests of learning that are not 
associated with educational activities overseen by the institution.
    (g) Title IV, HEA program eligibility with respect to direct 
assessment programs is limited to direct assessment programs approved by 
the Secretary. Title IV, HEA program funds may not be used for--
    (1) the course of study described in Sec. 668.32(a)(1)(ii) and (iii) 
if offered by direct assessment, or
    (2) remedial coursework described in Sec. 668.20 offered by direct 
assessment. However, remedial instruction that is offered in credit or 
clock hours in conjunction with a direct assessment program is eligible 
for title IV, HEA program funds.
    (h) The Secretary's approval of a direct assessment program expires 
on the date that the institution changes one or more aspects of the 
program described in the institution's application submitted under 
paragraph (b) of this section. To maintain program eligibility, the 
institution must obtain prior approval from the Secretary through 
reapplication under paragraph (b) of this section that sets forth the 
revisions proposed.

[71 FR 45693, Aug. 9, 2006, as amended at 71 FR 64397, Nov. 1, 2006; 72 
FR 62026, Nov. 1, 2007]



     Subpart B_Standards for Participation in Title IV, HEA Programs

    Source: 52 FR 45727, Dec. 1, 1987, unless otherwise noted.



Sec. 668.11  Scope.

    (a) This subpart establishes standards that an institution must meet 
in order to participate in any Title IV, HEA program.
    (b) Noncompliance with these standards by an institution already 
participating in any Title IV, HEA program or with applicable standards 
in this subpart by a third-party servicer that contracts with the 
institution may subject the institution or servicer, or both, to 
proceedings under subpart G of this part. These proceedings may lead to 
any of the following actions:
    (1) An emergency action.
    (2) The imposition of a fine.
    (3) The limitation, suspension, or termination of the participation 
of the institution in a Title IV, HEA program.
    (4) The limitation, suspension, or termination of the eligibility of 
the servicer to contract with any institution to administer any aspect 
of the institution's participation in a Title IV, HEA program.

(Authority: 20 U.S.C. 1094)

[59 FR 22423, Apr. 29, 1994]



Sec. 668.12  [Reserved]



Sec. 668.13  Certification procedures.

    (a) Requirements for certification. (1) The Secretary certifies an 
institution to participate in the title IV, HEA programs if the 
institution qualifies as an eligible institution under 34 CFR part 600, 
meets the standards of this subpart and 34 CFR part 668, subpart L, and 
satisfies the requirements of paragraph (a)(2) of this section.

[[Page 486]]

    (2) Except as provided in paragraph (a)(3) of this section, if an 
institution wishes to participate for the first time in the title IV, 
HEA programs or has undergone a change in ownership that results in a 
change in control as described in 34 CFR 600.31, the institution must 
require the following individuals to complete title IV, HEA program 
training provided or approved by the Secretary no later than 12 months 
after the institution executes its program participation agreement under 
Sec. 668.14:
    (i) The individual the institution designates under 
Sec. 668.16(b)(1) as its title IV, HEA program administrator.
    (ii) The institution's chief administrator or a high level 
institutional official the chief administrator designates.
    (3)(i) An institution may request the Secretary to waive the 
training requirement for any individual described in paragraph (a)(2) of 
this section.
    (ii) When the Secretary receives a waiver request under paragraph 
(a)(3)(i) of this section, the Secretary may grant or deny the waiver, 
require another institutional official to take the training, or require 
alternative training.
    (b) Period of participation. (1) If the Secretary certifies that an 
institution meets the standards of this subpart, the Secretary also 
specifies the period for which the institution may participate in a 
title IV, HEA program. An institution's period of participation expires 
no more than six years after the date that the Secretary certifies that 
the institution meets the standards of this subpart, except that--
    (i) The period of participation for a private, for profit foreign 
institution expires three years after the date of the Secretary's 
certification; and
    (ii) The Secretary may specify a shorter period.
    (2) Provided that an institution has submitted an application for a 
renewal of certification that is materially complete at least 90 days 
prior to the expiration of its current period of participation, the 
institution's existing certification will be extended on a month to 
month basis following the expiration of the institution's period of 
participation until the end of the month in which the Secretary issues a 
decision on the application for recertification.
    (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 and subpart L of this part 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 at the start of a fiscal year after it did not derive at 
least 10 percent of its revenue for its preceding fiscal year from 
sources other than Title IV, HEA program funds, as required under 
Sec. 668.14(b)(16).
    (2) If the Secretary provisionally certifies an institution, the 
Secretary also specifies the period for which the institution may 
participate in a Title IV, HEA program. Except as provided in paragraphs 
(c) (3) and (4) of this section, a provisionally certified institution's 
period of participation expires--
    (i) Not later than the end of the first complete award year 
following the date

[[Page 487]]

on which the Secretary provisionally certified the institution under 
paragraph (c)(1)(i) of this section;
    (ii) Not later than the end of the third complete award year 
following the date on which the Secretary provisionally certified the 
institution under paragraphs (c)(1)(ii), (iii), (iv) or (e)(2) of this 
section; and
    (iii) If the Secretary provisionally certified the institution under 
paragraph (c)(1)(v) of this section, not later than 18 months after the 
date that the Secretary withdrew recognition from the institutions 
nationally recognized accrediting agency.
    (3) Notwithstanding the maximum periods of participation provided 
for in paragraph (c)(2) of this section, if the Secretary provisionally 
certifies an institution, the Secretary may specify a shorter period of 
participation for that institution.
    (4) For the purposes of this section, ``provisional certification'' 
means that the Secretary certifies that an institution has demonstrated 
to the Secretary's satisfaction that the institution--
    (i) Is capable of meeting the standards of this subpart within a 
specified period; and
    (ii) Is able to meet the institution's responsibilities under its 
program participation agreement, including compliance with any 
additional conditions specified in the institution's program 
participation agreement that the Secretary requires the institution to 
meet in order for the institution to participate under provisional 
certification.
    (d) Revocation of provisional certification. (1) If, before the 
expiration of a provisionally certified institution's period of 
participation in a Title IV, HEA program, the Secretary determines that 
the institution is unable to meet its responsibilities under its program 
participation agreement, the Secretary may revoke the institution's 
provisional certification for participation in that program.
    (2)(i) If the Secretary revokes the provisional certification of an 
institution under paragraph (d)(1) of this section, the Secretary sends 
the institution a notice by certified mail, return receipt requested. 
The Secretary also may transmit the notice by other, more expeditious 
means, if practical.
    (ii) The revocation takes effect on the date that the Secretary 
mails the notice to the institution.
    (iii) The notice states the basis for the revocation, the 
consequences of the revocation to the institution, and that the 
institution may request the Secretary to reconsider the revocation. The 
consequences of a revocation are described in Sec. 668.26.
    (3)(i) An institution may request reconsideration of a revocation 
under this section by submitting to the Secretary, within 20 days of the 
institution's receipt of the Secretary's notice, written evidence that 
the revocation is unwarranted. The institution must file the request 
with the Secretary by hand-delivery, mail, or facsimile transmission.
    (ii) The filing date of the request is the date on which the request 
is--
    (A) Hand-delivered;
    (B) Mailed; or
    (C) Sent by facsimile transmission.
    (iii) Documents filed by facsimile transmission must be transmitted 
to the Secretary in accordance with instructions provided by the 
Secretary in the notice of revocation. An institution filing by 
facsimile transmission is responsible for confirming that a complete and 
legible copy of the document was received by the Secretary.
    (iv) The Secretary discourages the use of facsimile transmission for 
documents longer than five pages.
    (4)(i) The designated department official making the decision 
concerning an institution's request for reconsideration of a revocation 
is different from, and not subject to supervision by, the official who 
initiated the revocation of the institution's provisional certification. 
The deciding official promptly considers an institution's request for 
reconsideration of a revocation and notifies the institution, by 
certified mail, return receipt requested, of the final decision. The 
Secretary also may transmit the notice by other, more expeditious means, 
if practical.
    (ii) If the Secretary determines that the revocation is warranted, 
the Secretary's notice informs the institution

[[Page 488]]

that the institution may apply for reinstatement of participation only 
after the later of the expiration of--
    (A) Eighteen months after the effective date of the revocation; or
    (B) A debarment or suspension of the institution under Executive 
Order (E.O.) 12549 (3 CFR, 1986 comp., p. 189) or the Federal 
Acquisition Regulations, 48 CFR part 9, subpart 9.4.
    (iii) If the Secretary determines that the revocation of the 
institution's provisional certification is unwarranted, the Secretary's 
notice informs the institution that the institution's provisional 
certification is reinstated, effective on the date that the Secretary's 
original revocation notice was mailed, for a specified period of time.
    (5)(i) The mailing date of a notice of revocation or a request for 
reconsideration of a revocation is the date evidenced on the original 
receipt of mailing from the U.S. Postal Service.
    (ii) The date on which a request for reconsideration of a revocation 
is submitted is--
    (A) If the request was sent by a delivery service other than the 
U.S. Postal Service, the date evidenced on the original receipt by that 
service; and
    (B) If the request was sent by facsimile transmission, the date that 
the document is recorded as received by facsimile equipment that 
receives the transmission.

(Approved by the Office of Management and Budget under control number 
1845-0537)

(Authority: 20 U.S.C. 1099c and E.O. 12549 (3 CFR, 1989 Comp., p. 189) 
and E.O. 12689 (3 CFR, 1989 Comp., p. 235))

[59 FR 22424, Apr. 29, 1994, as amended at 59 FR 34964, July 7, 1994; 60 
FR 34431, June 30, 1995; 62 FR 62876, Nov. 25, 1997; 63 FR 40623, July 
29, 1998; 64 FR 58617, Oct. 29, 1999; 65 FR 65675, Nov. 1, 2000; 74 FR 
55934, Oct. 29, 2009; 75 FR 67198, Nov. 1, 2010]



Sec. 668.14  Program participation agreement.

    (a)(1) An institution may participate in any Title IV, HEA program, 
other than the LEAP and NEISP programs, only if the institution enters 
into a written program participation agreement with the Secretary, on a 
form approved by the Secretary. A program participation agreement 
conditions the initial and continued participation of an eligible 
institution in any Title IV, HEA program upon compliance with the 
provisions of this part, the individual program regulations, and any 
additional conditions specified in the program participation agreement 
that the Secretary requires the institution to meet.
    (2) An institution's program participation agreement applies to each 
branch campus and other location of the institution that meets the 
applicable requirements of this part unless otherwise specified by the 
Secretary.
    (b) By entering into a program participation agreement, an 
institution agrees that--
    (1) It will comply with all statutory provisions of or applicable to 
Title IV of the HEA, all applicable regulatory provisions prescribed 
under that statutory authority, and all applicable special arrangements, 
agreements, and limitations entered into under the authority of statutes 
applicable to Title IV of the HEA, including the requirement that the 
institution will use funds it receives under any Title IV, HEA program 
and any interest or other earnings thereon, solely for the purposes 
specified in and in accordance with that program;
    (2) As a fiduciary responsible for administering Federal funds, if 
the institution is permitted to request funds under a Title IV, HEA 
program advance payment method, the institution will time its requests 
for funds under the program to meet the institution's immediate Title 
IV, HEA program needs;
    (3) It will not request from or charge any student a fee for 
processing or handling any application, form, or data required to 
determine a student's eligibility for, and amount of, Title IV, HEA 
program assistance;
    (4) It will establish and maintain such administrative and fiscal 
procedures and records as may be necessary to ensure proper and 
efficient administration of funds received from the Secretary or from 
students under the Title IV, HEA programs, together with assurances that 
the institution will provide, upon request and in a timely manner, 
information relating to the administrative capability and financial 
responsibility of the institution to--

[[Page 489]]

    (i) The Secretary;
    (ii) A guaranty agency, as defined in 34 CFR part 682, that 
guarantees loans made under the Federal Stafford Loan and Federal PLUS 
programs for attendance at the institution or any of the institution's 
branch campuses or other locations;
    (iii) The nationally recognized accrediting agency that accredits or 
preaccredits the institution or any of the institution's branch 
campuses, other locations, or educational programs;
    (iv) The State agency that legally authorizes the institution and 
any branch campus or other location of the institution to provide 
postsecondary education; and
    (v) In the case of a public postsecondary vocational educational 
institution that is approved by a State agency recognized for the 
approval of public postsecondary vocational education, that State 
agency;
    (5) It will comply with the provisions of Sec. 668.15 relating to 
factors of financial responsibility;
    (6) It will comply with the provisions of Sec. 668.16 relating to 
standards of administrative capability;
    (7) It will submit reports to the Secretary and, in the case of an 
institution participating in the Federal Stafford Loan, Federal PLUS, or 
the Federal Perkins Loan Program, to holders of loans made to the 
institution's students under that program at such times and containing 
such information as the Secretary may reasonably require to carry out 
the purpose of the Title IV, HEA programs;
    (8) It will not provide any statement to any student or 
certification to any lender in the case of an FFEL Program loan, or 
origination record to the Secretary in the case of a Direct Loan Program 
loan that qualifies the student or parent for a loan or loans in excess 
of the amount that the student or parent is eligible to borrow in 
accordance with sections 425(a), 428(a)(2), 428(b)(1)(A) and (B), 428B, 
428H, and 455(a) of the HEA;
    (9) It will comply with the requirements of subpart D of this part 
concerning institutional and financial assistance information for 
students and prospective students;
    (10) In the case of an institution that advertises job placement 
rates as a means of attracting students to enroll in the institution, it 
will make available to prospective students, at or before the time that 
those students apply for enrollment--
    (i) The most recent available data concerning employment statistics, 
graduation statistics, and any other information necessary to 
substantiate the truthfulness of the advertisements; and
    (ii) Relevant State licensing requirements of the State in which the 
institution is located for any job for which an educational program 
offered by the institution is designed to prepare those prospective 
students;
    (11) In the case of an institution participating in the FFEL 
program, the institution will inform all eligible borrowers, as defined 
in 34 CFR part 682, enrolled in the institution about the availability 
and eligibility of those borrowers for State grant assistance from the 
State in which the institution is located, and will inform borrowers 
from another State of the source of further information concerning State 
grant assistance from that State;
    (12) It will provide the certifications described in paragraph (c) 
of this section;
    (13) In the case of an institution whose students receive financial 
assistance pursuant to section 484(d) of the HEA, the institution will 
make available to those students a program proven successful in 
assisting students in obtaining the recognized equivalent of a high 
school diploma;
    (14) It will not deny any form of Federal financial aid to any 
eligible student solely on the grounds that the student is participating 
in a program of study abroad approved for credit by the institution;
    (15)(i) Except as provided under paragraph (b)(15)(ii) of this 
section, the institution will use a default management plan approved by 
the Secretary with regard to its administration of the FFEL or Direct 
Loan programs, or both for at least the first two years of its 
participation in those programs, if the institution--

[[Page 490]]

    (A) Is participating in the FFEL or Direct Loan programs for the 
first time; or
    (B) Is an institution that has undergone a change of ownership that 
results in a change in control and is participating in the FFEL or 
Direct Loan programs.
    (ii) The institution does not have to use an approved default 
management plan if--
    (A) The institution, including its main campus and any branch 
campus, does not have a cohort default rate in excess of 10 percent; and
    (B) The owner of the institution does not own and has not owned any 
other institution that had a cohort default rate in excess of 10 percent 
while that owner owned the institution.
    (16) For a proprietary institution, the institution will derive at 
least 10 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);
    (17) The Secretary, guaranty agencies and lenders as defined in 34 
CFR part 682, nationally recognized accrediting agencies, the Secretary 
of Veterans Affairs, State agencies recognized under 34 CFR part 603 for 
the approval of public postsecondary vocational education, and State 
agencies that legally authorize institutions and branch campuses or 
other locations of institutions to provide postsecondary education, have 
the authority to share with each other any information pertaining to the 
institution's eligibility for or participation in the Title IV, HEA 
programs or any information on fraud and abuse;
    (18) It will not knowingly--
    (i) Employ in a capacity that involves the administration of the 
Title IV, HEA programs or the receipt of funds under those programs, an 
individual who has been convicted of, or has pled nolo contendere or 
guilty to, a crime involving the acquisition, use, or expenditure of 
Federal, State, or local government funds, or has been administratively 
or judicially determined to have committed fraud or any other material 
violation of law involving Federal, State, or local government funds;
    (ii) Contract with an institution or third-party servicer that has 
been terminated under section 432 of the HEA for a reason involving the 
acquisition, use, or expenditure of Federal, State, or local government 
funds, or that has been administratively or judicially determined to 
have committed fraud or any other material violation of law involving 
Federal, State, or local government funds; or
    (iii) Contract with or employ any individual, agency, or 
organization that has been, or whose officers or employees have been--
    (A) Convicted of, or pled nolo contendere or guilty to, a crime 
involving the acquisition, use, or expenditure of Federal, State, or 
local government funds; or
    (B) Administratively or judicially determined to have committed 
fraud or any other material violation of law involving Federal, State, 
or local government funds;
    (19) It will complete, in a timely manner and to the satisfaction of 
the Secretary, surveys conducted as a part of the Integrated 
Postsecondary Education Data System (IPEDS) or any other Federal 
collection effort, as designated by the Secretary, regarding data on 
postsecondary institutions;
    (20) In the case of an institution that is co-educational and has an 
intercollegiate athletic program, it will comply with the provisions of 
Sec. 668.48;
    (21) It will not impose any penalty, including, but not limited to, 
the assessment of late fees, the denial of access to classes, libraries, 
or other institutional facilities, or the requirement that the student 
borrow additional funds for which interest or other charges are 
assessed, on any student because of the student's inability to meet his 
or her financial obligations to the institution as a result of the 
delayed disbursement of the proceeds of a Title IV, HEA program loan due 
to compliance with statutory and regulatory requirements of or 
applicable to the Title IV, HEA programs, or delays attributable to the 
institution;
    (22)(i) It will not provide any commission, bonus, or other 
incentive payment based in any part, directly or indirectly, upon 
success in securing enrollments or the award of financial aid,

[[Page 491]]

to any person or entity who is engaged in any student recruitment or 
admission activity, or in making decisions regarding the award of title 
IV, HEA program funds.
    (A) The restrictions in paragraph (b)(22) of this section do not 
apply to the recruitment of foreign students residing in foreign 
countries who are not eligible to receive Federal student assistance.
    (B) For the purpose of paragraph (b)(22) of this section, an 
employee who receives multiple adjustments to compensation in a calendar 
year and is engaged in any student enrollment or admission activity or 
in making decisions regarding the award of title IV, HEA program funds 
is considered to have received such adjustments based upon success in 
securing enrollments or the award of financial aid if those adjustments 
create compensation that is based in any part, directly or indirectly, 
upon success in securing enrollments or the award of financial aid.
    (ii) Notwithstanding paragraph (b)(22)(i) of this section, eligible 
institutions, organizations that are contractors to eligible 
institutions, and other entities may make--
    (A) Merit-based adjustments to employee compensation provided that 
such adjustments are not based in any part, directly or indirectly, upon 
success in securing enrollments or the award of financial aid; and
    (B) Profit-sharing payments so long as such payments are not 
provided to any person or entity engaged in student recruitment or 
admission activity or in making decisions regarding the award of title 
IV, HEA program funds.
    (iii) As used in paragraph (b)(22) of this section,
    (A) Commission, bonus, or other incentive payment means a sum of 
money or something of value, other than a fixed salary or wages, paid to 
or given to a person or an entity for services rendered.
    (B) Securing enrollments or the award of financial aid means 
activities that a person or entity engages in at any point in time 
through completion of an educational program for the purpose of the 
admission or matriculation of students for any period of time or the 
award of financial aid to students.
    (1) These activities include contact in any form with a prospective 
student, such as, but not limited to--contact through preadmission or 
advising activities, scheduling an appointment to visit the enrollment 
office or any other office of the institution, attendance at such an 
appointment, or involvement in a prospective student's signing of an 
enrollment agreement or financial aid application.
    (2) These activities do not include making a payment to a third 
party for the provision of student contact information for prospective 
students provided that such payment is not based on--
    (i) Any additional conduct or action by the third party or the 
prospective students, such as participation in preadmission or advising 
activities, scheduling an appointment to visit the enrollment office or 
any other office of the institution or attendance at such an 
appointment, or the signing, or being involved in the signing, of a 
prospective student's enrollment agreement or financial aid application; 
or
    (ii) The number of students (calculated at any point in time of an 
educational program) who apply for enrollment, are awarded financial 
aid, or are enrolled for any period of time, including through 
completion of an educational program.
    (C) Entity or person engaged in any student recruitment or admission 
activity or in making decisions about the award of financial aid means--
    (1) With respect to an entity engaged in any student recruitment or 
admission activity or in making decisions about the award of financial 
aid, any institution or organization that undertakes the recruiting or 
the admitting of students or that makes decisions about and awards title 
IV, HEA program funds; and
    (2) With respect to a person engaged in any student recruitment or 
admission activity or in making decisions about the award of financial 
aid, any employee who undertakes recruiting or admitting of students or 
who makes decisions about and awards title IV, HEA program funds, and 
any higher level employee with responsibility for recruitment or 
admission of students,

[[Page 492]]

or making decisions about awarding title IV, HEA program funds.
    (D) Enrollment means the admission or matriculation of a student 
into an eligible institution.
    (23) It will meet the requirements established pursuant to part H of 
Title IV of the HEA by the Secretary and nationally recognized 
accrediting agencies;
    (24) It will comply with the requirements of Sec. 668.22;
    (25) It is liable for all--
    (i) Improperly spent or unspent funds received under the Title IV, 
HEA programs, including any funds administered by a third-party 
servicer; and
    (ii) Returns of title IV, HEA program funds that the institution or 
its servicer may be required to make;
    (26) If an educational program offered by the institution is 
required to prepare a student for gainful employment in a recognized 
occupation, the institution must--
    (i) Demonstrate a reasonable relationship between the length of the 
program and entry level requirements for the recognized occupation for 
which the program prepares the student. The Secretary considers the 
relationship to be reasonable if the number of clock hours provided in 
the program does not exceed by more than 50 percent the minimum number 
of clock hours required for training in the recognized occupation for 
which the program prepares the student, as established by the State in 
which the institution is located, if the State has established such a 
requirement, or as established by any Federal agency;
    (ii) Establish the need for the training for the student to obtain 
employment in the recognized occupation for which the program prepares 
the student; and
    (iii) Provide for that program the certification required in 
Sec. 668.414.
    (27) In the case of an institution participating in a Title IV, HEA 
loan program, the institution--
    (i) Will develop, publish, administer, and enforce a code of conduct 
with respect to loans made, insured or guaranteed under the Title IV, 
HEA loan programs in accordance with 34 CFR 601.21; and
    (ii) Must inform its officers, employees, and agents with 
responsibilities with respect to loans made, insured or guaranteed under 
the Title IV, HEA loan programs annually of the provisions of the code 
required under paragraph (b)(27) of this section;
    (28) For any year in which the institution has a preferred lender 
arrangement (as defined in 34 CFR 601.2(b)), it will at least annually 
compile, maintain, and make available for students attending the 
institution, and the families of such students, a list in print or other 
medium, of the specific lenders for loans made, insured, or guaranteed 
under title IV of the HEA or private education loans that the 
institution recommends, promotes, or endorses in accordance with such 
preferred lender arrangement. In making such a list, the institution 
must comply with the requirements in 34 CFR 682.212(h) and 34 CFR 
601.10;
    (29)(i) It will, upon the request of an enrolled or admitted student 
who is an applicant for a private education loan (as defined in 34 CFR 
601.2(b)), provide to the applicant the self-certification form required 
under 34 CFR 601.11(d) and the information required to complete the 
form, to the extent the institution possesses such information, 
including--
    (A) The applicant's cost of attendance at the institution, as 
determined by the institution under part F of title IV of the HEA;
    (B) The applicant's estimated financial assistance, including 
amounts of financial assistance used to replace the expected family 
contribution as determined by the institution in accordance with title 
IV, for students who have completed the Free Application for Federal 
Student Aid; and
    (C) The difference between the amounts under paragraphs 
(b)(29)(i)(A) and (29)(i)(B) of this section, as applicable.
    (ii) It will, upon the request of the applicant, discuss with the 
applicant the availability of Federal, State, and institutional student 
financial aid;
    (30) The institution--
    (i) Has developed and implemented written plans to effectively 
combat the

[[Page 493]]

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.
    (c) In order to participate in any Title IV, HEA program (other than 
the LEAP and NEISP programs), the institution must certify that it--
    (1) Has in operation a drug abuse prevention program that the 
institution has determined to be accessible to any officer, employee, or 
student at the institution; and
    (2)(i) Has established a campus security policy in accordance with 
section 485(f) of the HEA; and
    (ii) Has complied with the disclosure requirements of Sec. 668.47 as 
required by section 485(f) of the HEA.
    (d)(1) The institution, if located in a State to which section 4(b) 
of the National Voter Registration Act (42 U.S.C. 1973gg-2(b)) does not 
apply, will make a good faith effort to distribute a mail voter 
registration form, requested and received from the State, to each 
student enrolled in a degree or certificate program and physically in 
attendance at the institution, and to make those forms widely available 
to students at the institution.
    (2) The institution must request the forms from the State 120 days 
prior to the deadline for registering to vote within the State. If an 
institution has not received a sufficient quantity of forms to fulfill 
this section from the State within 60 days prior to the deadline for 
registering to vote in the State, the institution is not liable for not 
meeting the requirements of this section during that election year.
    (3) This paragraph applies to elections as defined in section 301(1) 
of the Federal Election Campaign Act of 1971 (2 U.S.C. 431(1)), and 
includes the election for Governor or other chief executive within such 
State.

[[Page 494]]

    (e)(1) A program participation agreement becomes effective on the 
date that the Secretary signs the agreement.
    (2) A new program participation agreement supersedes any prior 
program participation agreement between the Secretary and the 
institution.
    (f)(1) Except as provided in paragraphs (g) and (h) of this section, 
the Secretary terminates a program participation agreement through the 
proceedings in subpart G of this part.
    (2) An institution may terminate a program participation agreement.
    (3) If the Secretary or the institution terminates a program 
participation agreement under paragraph (f) of this section, the 
Secretary establishes the termination date.
    (g) An institution's program participation agreement automatically 
expires on the date that--
    (1) The institution changes ownership that results in a change in 
control as determined by the Secretary under 34 CFR part 600; or
    (2) The institution's participation ends under the provisions of 
Sec. 668.26(a) (1), (2), (4), or (7).
    (h) An institution's program participation agreement no longer 
applies to or covers a location of the institution as of the date on 
which that location ceases to be a part of the participating 
institution.

(Approved by the Office of Management and Budget under control number 
1845-0022)

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

[59 FR 22425, Apr. 29, 1994, as amended at 59 FR 34964, July 7, 1994; 63 
FR 40623, July 29, 1998; 64 FR 58617, Oct. 29, 1999; 64 FR 59038, Nov. 
1, 1999; 65 FR 38729, June 22, 2000; 65 FR 65637, Nov. 1, 2000; 67 FR 
67072, Nov. 1, 2002; 73 FR 35492, June 23, 2008; 74 FR 55648, Oct. 28, 
2009; 74 FR 55934, Oct. 29, 2009; 76 FR 66950, Oct. 29, 2010; 76 FR 
20536, Apr. 13, 2011; 79 FR 65007, Oct. 31, 2014]

    Effective Date Note: At 81 FR 76070, Nov. 1, 2016, Sec. 668.14 was 
amended in paragraph (b)(30)(ii)(C), by removing the word ``and'' and in 
paragraph (b)(31)(v), by removing the period and adding in its place ``; 
and'' and by adding paragraph (b)(32), effective July 1, 2019. For the 
convenience of the user, the added text is set forth as follows:



Sec. 668.14  Program participation agreement.

                                * * * * *

    (b) * * *
    (32) The institution will provide all enrolled students with a 
closed school discharge application and a written disclosure, describing 
the benefits and consequences of a closed school discharge as an 
alternative to completing their educational program through a teach-out 
agreement, as defined in 34 CFR 602.3, immediately upon submitting a 
teach-out plan after the occurrence of any of the following events:
    (i) The initiation by the Secretary of an action under 34 CFR 600.41 
or subpart G of this part or the initiation of an emergency action under 
Sec. 668.83, to terminate the participation of an institution in any 
title IV, HEA program.
    (ii) The occurrence of any of the events in paragraph (b)(31)(ii) 
through (v) of this section.



Sec. 668.15  Factors of financial responsibility.

    (a) General. To begin and to continue to participate in any Title 
IV, HEA program, an institution must demonstrate to the Secretary that 
the institution is financially responsible under the requirements 
established in this section.
    (b) General standards of financial responsibility. In general, the 
Secretary considers an institution to be financially responsible only if 
it--
    (1) Is providing the services described in its official publications 
and statements;
    (2) Is providing the administrative resources necessary to comply 
with the requirements of this subpart;
    (3) Is meeting all of its financial obligations, including but not 
limited to--
    (i) Refunds that it is required to make; and
    (ii) Repayments to the Secretary for liabilities and debts incurred 
in programs administered by the Secretary;
    (4) Is current in its debt payments. The institution is not 
considered current in its debt payments if--
    (i) The institution is in violation of any existing loan agreement 
at its fiscal year end, as disclosed in a note to its audited financial 
statement; or
    (ii) the institution fails to make a payment in accordance with 
existing debt obligations for more than 120

[[Page 495]]

days, and at least one creditor has filed suit to recover those funds;
    (5) Except as provided in paragraph (d) of this section, in 
accordance with procedures established by the Secretary, submits to the 
Secretary an irrevocable letter of credit, acceptable and payable to the 
Secretary equal to 25 percent of the total dollar amount of Title IV, 
HEA program refunds paid by the institution in the previous fiscal year;
    (6) Has not had, as part of the audit report for the institution's 
most recently completed fiscal year--
    (i) A statement by the accountant expressing substantial doubt about 
the institution's ability to continue as a going concern; or
    (ii) A disclaimed or adverse opinion by the accountant;
    (7) For a for-profit institution--
    (i)(A) Demonstrates at the end of its latest fiscal year, an acid 
test ratio of at least 1:1. For purposes of this section, the acid test 
ratio shall be calculated by adding cash and cash equivalents to current 
accounts receivable and dividing the sum by total current liabilities. 
The calculation of the acid test ratio shall exclude all unsecured or 
uncollateralized related party receivables;
    (B) Has not had operating losses in either or both of its two latest 
fiscal years that in sum result in a decrease in tangible net worth in 
excess of 10 percent of the institution's tangible net worth at the 
beginning of the first year of the two-year period. The Secretary may 
calculate an operating loss for an institution by excluding from net 
income: extraordinary gains or losses; income or losses from 
discontinued operations; prior period adjustment; and, the cumulative 
effect of changes in accounting principle. For purposes of this section, 
the calculation of tangible net worth shall exclude all assets defined 
as intangible in accordance with generally accepted accounting 
principles; and
    (C) Had, for its latest fiscal year, a positive tangible net worth. 
In applying this standard, a positive tangible net worth occurs when the 
institution's tangible assets exceed its liabilities. The calculation of 
tangible net worth shall exclude all assets classified as intangible in 
accordance with the generally accepted accounting principles; or
    (ii) Demonstrates to the satisfaction of the Secretary that it has 
currently issued and outstanding debt obligations that are (without 
insurance, guarantee, or credit enhancement) listed at or above the 
second highest rating level of credit quality given by a nationally 
recognized statistical rating organization;
    (8) For a nonprofit institution--
    (i)(A) Prepares a classified statement of financial position in 
accordance with generally accepted accounting principles or provides the 
required information in notes to the audited financial statements;
    (B) Demonstrates at the end of its latest fiscal year, an acid test 
ratio of at least 1:1. For purposes of this section, the acid test ratio 
shall be calculated by adding cash and cash equivalents to current 
accounts receivable and dividing the sum by total current liabilities. 
The calculation of the acid test ratio shall exclude all unsecured or 
uncollateralized related party receivables.
    (C)(1) Has, at the end of its latest fiscal year, a positive 
unrestricted current fund balance or positive unrestricted net assets. 
In calculating the unrestricted current fund balance or the unrestricted 
net assets for an institution, the Secretary may include funds that are 
temporarily restricted in use by the institution's governing body that 
can be transferred to the current unrestricted fund or added to net 
unrestricted assets at the discretion of the governing body; or
    (2) Has not had, an excess of current fund expenditures over current 
fund revenues over both of its 2 latest fiscal years that results in a 
decrease exceeding 10 percent in either the unrestricted current fund 
balance or the unrestricted net assets at the beginning of the first 
year of the 2-year period. The Secretary may exclude from net changes in 
fund balances for the operating loss calculation: Extraordinary gains or 
losses; income or losses from discontinued operations; prior period 
adjustment; and the cumulative effect of changes in accounting 
principle. In calculating the institution's

[[Page 496]]

unrestricted current fund balance or the unrestricted net assets, the 
Secretary may include funds that are temporarily restricted in use by 
the institution's governing body that can be transferred to the current 
unrestricted fund or added to net unrestricted assets at the discretion 
of the governing body; or
    (ii) Demonstrates to the satisfaction of the Secretary that it has 
currently issued and outstanding debt obligations which are (without 
insurance, guarantee, or credit enhancement) listed at or above the 
second highest rating level of credit quality given by a nationally 
recognized statistical rating organization.
    (9) For a public institution--
    (i) Has its liabilities backed by the full faith and credit of a 
State, or by an equivalent governmental entity;
    (ii) Has a positive current unrestricted fund balance if reporting 
under the Single Audit Act;
    (iii) Has a positive unrestricted current fund in the State's Higher 
Education Fund, as presented in the general purpose financial 
statements;
    (iv) Submits to the Secretary, a statement from the State Auditor 
General that the institution has, during the past year, met all of its 
financial obligations, and that the institution continues to have 
sufficient resources to meet all of its financial obligations; or
    (v) Demonstrates to the satisfaction of the Secretary that it has 
currently issued and outstanding debt obligations which are (without 
insurance, guarantee, or credit enhancement) listed at or above the 
second highest rating level of credit quality given by a nationally 
recognized statistical rating organization.
    (c) Past performance of an institution or persons affiliated with an 
institution. An institution is not financially responsible if--
    (1) A person who exercises substantial control over the institution 
or any member or members of the person's family alone or together--
    (i)(A) Exercises or exercised substantial control over another 
institution or a third-party servicer that owes a liability for a 
violation of a Title IV, HEA program requirement; or
    (B) Owes a liability for a violation of a Title IV, HEA program 
requirement; and
    (ii) That person, family member, institution, or servicer does not 
demonstrate that the liability is being repaid in accordance with an 
agreement with the Secretary; or
    (2) The institution has--
    (i) Been limited, suspended, terminated, or entered into a 
settlement agreement to resolve a limitation, suspension, or termination 
action initiated by the Secretary or a guaranty agency (as defined in 34 
CFR part 682) within the preceding five years;
    (ii) Had--
    (A) An audit finding, during its two most recent audits of its 
conduct of the Title IV, HEA programs, that resulted in the 
institution's being required to repay an amount greater than five 
percent of the funds that the institution received under the Title IV, 
HEA programs for any award year covered by the audit; or
    (B) A program review finding, during its two most recent program 
reviews, of its conduct of the Title IV, HEA programs that resulted in 
the institution's being required to repay an amount greater than five 
percent of the funds that the institution received under the Title IV, 
HEA programs for any award year covered by the program review;
    (iii) Been cited during the preceding five years for failure to 
submit acceptable audit reports required under this part or individual 
Title IV, HEA program regulations in a timely fashion; or
    (iv) Failed to resolve satisfactorily any compliance problems 
identified in program review or audit reports based upon a final 
decision of the Secretary issued pursuant to subpart G or subpart H of 
this part.
    (d) Exceptions to the general standards of financial responsibility. 
(1)(i) An institution is not required to meet the standard in paragraph 
(b)(5) of this section if the Secretary determines that the 
institution--
    (A)(1) Is located in, and is legally authorized to operate within, a 
State that has a tuition recovery fund that is acceptable to the 
Secretary and ensures that the institution is able to pay all required 
refunds; and

[[Page 497]]

    (2) Contributes to that tuition recovery fund.
    (B) Has its liabilities backed by the full faith and credit of the 
State, or by an equivalent governmental entity; or
    (C) As determined under paragraph (g) of this section, demonstrates, 
to the satisfaction of the Secretary, that for each of the institution's 
two most recently completed fiscal years, it has made timely refunds to 
students in accordance with Sec. 668.22(j), and that it has met or 
exceeded all of the financial responsibility standards in this section 
that were in effect for the corresponding periods during the two-year 
period.
    (ii) In evaluating an application to approve a State tuition 
recovery fund to exempt its participating schools from the Federal cash 
reserve requirements, the Secretary will consider the extent to which 
the State tuition recovery fund:
    (A) Provides refunds to both in-state and out-of-state students;
    (B) Allocates all refunds in accordance with the order delineated in 
Sec. 668.22(i); and
    (C) Provides a reliable mechanism for the State to replenish the 
fund should any claims arise that deplete the funds assets.
    (2) The Secretary considers an institution to be financially 
responsible, even if the institution is not otherwise financially 
responsible under paragraphs (b)(1) through (4) and (b)(6) through (9) 
of this section, if the institution--
    (i) Submits to the Secretary an irrevocable letter of credit that is 
acceptable and payable to the Secretary equal to not less than one-half 
of the Title IV, HEA program funds received by the institution during 
the last complete award year for which figures are available; or
    (ii) Establishes to the satisfaction of the Secretary, with the 
support of a financial statement submitted in accordance with paragraph 
(e) of this section, that the institution has sufficient resources to 
ensure against its precipitous closure, including the ability to meet 
all of its financial obligations (including refunds of institutional 
charges and repayments to the Secretary for liabilities and debts 
incurred in programs administered by the Secretary). The Secretary 
considers the institution to have sufficient resources to ensure against 
precipitous closure only if--
    (A) The institution formerly demonstrated financial responsibility 
under the standards of financial responsibility in its preceding audited 
financial statement (or, if no prior audited financial statement was 
requested by the Secretary, demonstrates in conjunction with its current 
audit that it would have satisfied this requirement), and that its most 
recent audited financial statement indicates that--
    (1) All taxes owed by the institution are current;
    (2) The institution's net income, or a change in total net assets, 
before extraordinary items and discontinued operations, has not 
decreased by more than 10 percent from the prior fiscal year, unless the 
institution demonstrates that the decreased net income shown on the 
current financial statement is a result of downsizing pursuant to a 
management-approved business plan;
    (3) Loans and other advances to related parties have not increased 
from the prior fiscal year unless such increases were secured and 
collateralized, and do not exceed 10 percent of the prior fiscal year's 
working capital of the institution;
    (4) The equity of a for-profit institution, or the total net assets 
of a non-profit institution, have not decreased by more than 10 percent 
of the prior year's total equity;
    (5) Compensation for owners or other related parties (including 
bonuses, fringe benefits, employee stock option allowances, 401k 
contributions, deferred compensation allowances) has not increased from 
the prior year at a rate higher than for all other employees;
    (6) The institution has not materially leveraged its assets or 
income by becoming a guarantor on any new loan or obligation on behalf 
of any related party;
    (7) All obligations owed to the institution by related parties are 
current, and that the institution has demanded and is receiving payment 
of all funds

[[Page 498]]

owed from related parties that are payable upon demand. For purposes of 
this section, a person does not become a related party by attending an 
institution as a student;
    (B) There have been no material findings in the institution's latest 
compliance audit of its administration of the Title IV HEA programs; and
    (C) There are no pending administrative or legal actions being taken 
against the institution by the Secretary, any other Federal agency, the 
institution's nationally recognized accrediting agency, or any State 
entity.
    (3) An institution is not required to meet the acid test ratio in 
paragraph (b)(7)(i)(A) or (b)(8)(i)(B) of this section if the 
institution is an institution that provides a 2-year or 4-year 
educational program for which the institution awards an associate or 
baccalaureate degree that demonstrates to the satisfaction of the 
Secretary that--
    (i) There is no reasonable doubt as to its continued solvency and 
ability to deliver quality educational services;
    (ii) It is current in its payment of all current liabilities, 
including student refunds, repayments to the Secretary, payroll, and 
payment of trade creditors and withholding taxes; and
    (iii) It has substantial equity in institution-occupied facilities, 
the acquisition of which was the direct cause of its failure to meet the 
acid test ratio requirement.
    (4) The Secretary may determine an institution to be financially 
responsible even if the institution is not otherwise financially 
responsible under paragraph (c)(1) of this section if--
    (i) The institution notifies the Secretary, in accordance with 34 
CFR 600.30, that the person referenced in paragraph (c)(1) of this 
section exercises substantial control over the institution; and
    (ii)(A) The person repaid to the Secretary a portion of the 
applicable liability, and the portion repaid equals or exceeds the 
greater of--
    (1) The total percentage of the ownership interest held in the 
institution or third-party servicer that owes the liability by that 
person or any member or members of that person's family, either alone or 
in combination with one another;
    (2) The total percentage of the ownership interest held in the 
institution or servicer that owes the liability that the person or any 
member or members of the person's family, either alone or in combination 
with one another, represents or represented under a voting trust, power 
of attorney, proxy, or similar agreement; or
    (3) Twenty-five percent, if the person or any member of the person's 
family is or was a member of the board of directors, chief executive 
officer, or other executive officer of the institution or servicer that 
owes the liability, or of an entity holding at least a 25 percent 
ownership interest in the institution that owes the liability;
    (B) The applicable liability described in paragraph (c)(1) of this 
section is currently being repaid in accordance with a written agreement 
with the Secretary; or
    (C) The institution demonstrates why--
    (1) The person who exercises substantial control over the 
institution should nevertheless be considered to lack that control; or
    (2) The person who exercises substantial control over the 
institution and each member of that person's family nevertheless does 
not or did not exercise substantial control over the institution or 
servicer that owes the liability.
    (e) [Reserved]
    (f) Definitions and terms. For the purposes of this section--
    (1)(i) An ``ownership interest'' is a share of the legal or 
beneficial ownership or control of, or a right to share in the proceeds 
of the operation of, an institution, institution's parent corporation, a 
third-party servicer, or a third-party servicer's parent corporation.
    (ii) The term ``ownership interest'' includes, but is not limited 
to--
    (A) An interest as tenant in common, joint tenant, or tenant by the 
entireties;
    (B) A partnership; and
    (C) An interest in a trust.
    (iii) The term ``ownership interest'' does not include any share of 
the ownership or control of, or any right to share in the proceeds of 
the operation of--

[[Page 499]]

    (A) A mutual fund that is regularly and publicly traded;
    (B) An institutional investor; or
    (C) A profit-sharing plan, provided that all employees are covered 
by the plan;
    (2) The Secretary generally considers a person to exercise 
substantial control over an institution or third-party servicer, if the 
person--
    (i) Directly or indirectly holds at least a 25 percent ownership 
interest in the institution or servicer;
    (ii) Holds, together with other members of his or her family, at 
least a 25 percent ownership interest in the institution or servicer;
    (iii) Represents, either alone or together with other persons, under 
a voting trust, power of attorney, proxy, or similar agreement one or 
more persons who hold, either individually or in combination with the 
other persons represented or the person representing them, at least a 25 
percent ownership in the institution or servicer; or
    (iv) Is a member of the board of directors, the chief executive 
officer, or other executive officer of--
    (A) The institution or servicer; or
    (B) An entity that holds at least a 25 percent ownership interest in 
the institution or servicer; and
    (3) The Secretary considers a member of a person's family to be a 
parent, sibling, spouse, child, spouse's parent or sibling, or sibling's 
or child's spouse.
    (g) Two-year performance requirement. (1) The Secretary considers an 
institution to have satisfied the requirements in paragraph (d)(1)(C) of 
this section if the independent certified public accountant, or 
government auditor who conducted the institution's compliance audits for 
the institution's two most recently completed fiscal years, or the 
Secretary or a State or guaranty agency that conducted a review of the 
institution covering those fiscal years--
    (i)(A) For either of those fiscal years, did not find in the sample 
of student records audited or reviewed that the institution made late 
refunds to 5 percent or more of the students in that sample. For 
purposes of determining the percentage of late refunds under this 
paragraph, the auditor or reviewer must include in the sample only those 
title IV, HEA program recipients who received or should have received a 
refund under Sec. 668.22; or
    (B) The Secretary considers the institution to have satisfied the 
conditions in paragraph (g)(1)(i)(A) of this section if the auditor or 
reviewer finds in the sample of student records audited or reviewed that 
the institution made only one late refund to a student in that sample; 
and
    (ii) For either of those fiscal years, did not note a material 
weakness or a reportable condition in the institution's report on 
internal controls that is related to refunds.
    (2) If the Secretary or a State or guaranty agency finds during a 
review conducted of the institution that the institution no longer 
qualifies for an exemption under paragraph (d)(1)(C) of this section, 
the institution must--
    (i) Submit to the Secretary the irrevocable letter of credit 
required in paragraph (b)(5) of this section no later than 30 days after 
the Secretary or State or guaranty agency notifies the institution of 
that finding; and
    (ii) Notify the Secretary of the guaranty agency or State that 
conducted the review.
    (3) If the auditor who conducted the institution's compliance audit 
finds that the institution no longer qualifies for an exemption under 
paragraph (d)(1)(C) of this section, the institution must submit to the 
Secretary the irrevocable letter of credit required in paragraph (b)(5) 
of this section no later than 30 days after the date the institution's 
compliance audit must be submitted to the Secretary.
    (h) Foreign institutions. The Secretary makes a determination of the 
financial responsibility for a foreign institution on the basis of 
financial statements submitted under Sec. 668.23(h).

(Approved by the Office of Management and Budget under control number 
1840-0537)

(Authority: 20 U.S.C. 1094 and 1099c and Section 4 of Pub. L. 95-452, 92 
Stat. 1101-1109)

[59 FR 22428, Apr. 29, 1994, as amended at 59 FR 34964, July 7, 1994; 59 
FR 61179, Nov. 29, 1994; 60 FR 34431, June 30, 1995; 60 FR 42408, Aug. 
15, 1995; 61 FR 29901, June 12, 1996; 61 FR 60569, Nov. 29, 1996; 62 FR 
27128, May 16, 1997; 71 FR 45694, Aug. 9, 2006; 75 FR 67198, Nov. 1, 
2010]

[[Page 500]]



Sec. 668.16  Standards of administrative capability.

    To begin and to continue to participate in any Title IV, HEA 
program, an institution shall demonstrate to the Secretary that the 
institution is capable of adequately administering that program under 
each of the standards established in this section. The Secretary 
considers an institution to have that administrative capability if the 
institution--
    (a) Administers the Title IV, HEA programs in accordance with all 
statutory provisions of or applicable to Title IV of the HEA, all 
applicable regulatory provisions prescribed under that statutory 
authority, and all applicable special arrangements, agreements, and 
limitations entered into under the authority of statutes applicable to 
Title IV of the HEA;
    (b)(1) Designates a capable individual to be responsible for 
administering all the Title IV, HEA programs in which it participates 
and for coordinating those programs with the institution's other Federal 
and non-Federal programs of student financial assistance. The Secretary 
considers an individual to be ``capable'' under this paragraph if the 
individual is certified by the State in which the institution is 
located, if the State requires certification of financial aid 
administrators. The Secretary may consider other factors in determining 
whether an individual is capable, including, but not limited to, the 
individual's successful completion of Title IV, HEA program training 
provided or approved by the Secretary, and previous experience and 
documented success in administering the Title IV, HEA programs properly;
    (2) Uses an adequate number of qualified persons to administer the 
Title IV, HEA programs in which the institution participates. The 
Secretary considers the following factors to determine whether an 
institution uses an adequate number of qualified persons--
    (i) The number and types of programs in which the institution 
participates;
    (ii) The number of applications evaluated;
    (iii) The number of students who receive any student financial 
assistance at the institution and the amount of funds administered;
    (iv) The financial aid delivery system used by the institution;
    (v) The degree of office automation used by the institution in the 
administration of the Title IV, HEA programs;
    (vi) The number and distribution of financial aid staff; and
    (vii) The use of third-party servicers to aid in the administration 
of the Title IV, HEA programs;
    (3) Communicates to the individual designated to be responsible for 
administering Title IV, HEA programs, all the information received by 
any institutional office that bears on a student's eligibility for Title 
IV, HEA program assistance; and
    (4) Has written procedures for or written information indicating the 
responsibilities of the various offices with respect to the approval, 
disbursement, and delivery of Title IV, HEA program assistance and the 
preparation and submission of reports to the Secretary;
    (c)(1) Administers Title IV, HEA programs with adequate checks and 
balances in its system of internal controls; and
    (2) Divides the functions of authorizing payments and disbursing or 
delivering funds so that no office has responsibility for both functions 
with respect to any particular student aided under the programs. For 
example, the functions of authorizing payments and disbursing or 
delivering funds must be divided so that for any particular student 
aided under the programs, the two functions are carried out by at least 
two organizationally independent individuals who are not members of the 
same family, as defined in Sec. 668.15, or who do not together exercise 
substantial control, as defined in Sec. 668.15, over the institution;
    (d)(1) Establishes and maintains records required under this part 
and the individual Title IV, HEA program regulations; and
    (2)(i) Reports annually to the Secretary on any reasonable 
reimbursements paid or provided by a private education lender or group 
of lenders as described under section 140(d) of the Truth in Lending Act 
(15 U.S.C. 1631(d)) to any employee who is employed in

[[Page 501]]

the financial aid office of the institution or who otherwise has 
responsibilities with respect to education loans, including 
responsibilities involving the selection of lenders, or other financial 
aid of the institution, including--
    (A) The amount for each specific instance of reasonable expenses 
paid or provided;
    (B) The name of the financial aid official, other employee, or agent 
to whom the expenses were paid or provided;
    (C) The dates of the activity for which the expenses were paid or 
provided; and
    (D) A brief description of the activity for which the expenses were 
paid or provided.
    (ii) Expenses are considered to be reasonable if the expenses--
    (A) Meet the standards of and are paid in accordance with a State 
government reimbursement policy applicable to the entity; or
    (B) Meet the standards of and are paid in accordance with the 
applicable Federal cost principles for reimbursement, if no State policy 
that is applicable to the entity exists.
    (iii) The policy must be consistently applied to an institution's 
employees reimbursed under this paragraph;
    (e) For purposes of determining student eligibility for assistance 
under a title IV, HEA program, establishes, publishes, and applies 
reasonable standards for measuring whether an otherwise eligible student 
is maintaining satisfactory academic progress in his or her educational 
program. The Secretary considers an institution's standards to be 
reasonable if the standards are in accordance with the provisions 
specified in Sec. 668.34.
    (f) Develops and applies an adequate system to identify and resolve 
discrepancies in the information that the institution receives from 
different sources with respect to a student's application for financial 
aid under Title IV, HEA programs. In determining whether the 
institution's system is adequate, the Secretary considers whether the 
institution obtains and reviews--
    (1) All student aid applications, need analysis documents, 
Statements of Educational Purpose, Statements of Registration Status, 
and eligibility notification documents presented by or on behalf of each 
applicant;
    (2) Any documents, including any copies of State and Federal income 
tax returns, that are normally collected by the institution to verify 
information received from the student or other sources; and
    (3) Any other information normally available to the institution 
regarding a student's citizenship, previous educational experience, 
documentation of the student's social security number, or other factors 
relating to the student's eligibility for funds under the Title IV, HEA 
programs;
    (g) Refers to the Office of Inspector General of the Department of 
Education for investigation--
    (1) After conducting the review of an application provided for under 
paragraph (f) of this section, any credible information indicating that 
an applicant for Title IV, HEA program assistance may have engaged in 
fraud or other criminal misconduct in connection with his or her 
application. The type of information that an institution must refer is 
that which is relevant to the eligibility of the applicant for Title IV, 
HEA program assistance, or the amount of the assistance. Examples of 
this type of information are--
    (i) False claims of independent student status;
    (ii) False claims of citizenship;
    (iii) Use of false identities;
    (iv) Forgery of signatures or certifications; and
    (v) False statements of income; and
    (2) Any credible information indicating that any employee, third-
party servicer, or other agent of the institution that acts in a 
capacity that involves the administration of the Title IV, HEA programs, 
or the receipt of funds under those programs, may have engaged in fraud, 
misrepresentation, conversion or breach of fiduciary responsibility, or 
other illegal conduct involving the Title IV, HEA programs. The type of 
information that an institution must refer is that which is relevant to 
the eligibility and funding of the institution and its students through 
the Title IV, HEA programs;
    (h) Provides adequate financial aid counseling to eligible students 
who

[[Page 502]]

apply for Title IV, HEA program assistance. In determining whether an 
institution provides adequate counseling, the Secretary considers 
whether its counseling includes information regarding--
    (1) The source and amount of each type of aid offered;
    (2) The method by which aid is determined and disbursed, delivered, 
or applied to a student's account; and
    (3) The rights and responsibilities of the student with respect to 
enrollment at the institution and receipt of financial aid. This 
information includes the institution's refund policy, the requirements 
for the treatment of title IV, HEA program funds when a student 
withdraws under Sec. 668.22, its standards of satisfactory progress, and 
other conditions that may alter the student's aid package;
    (i) Has provided all program and fiscal reports and financial 
statements required for compliance with the provisions of this part and 
the individual program regulations in a timely manner;
    (j) Shows no evidence of significant problems that affect, as 
determined by the Secretary, the institution's ability to administer a 
Title IV, HEA program and that are identified in--
    (1) Reviews of the institution conducted by the Secretary, the 
Department of Education's Office of Inspector General, nationally 
recognized accrediting agencies, guaranty agencies as defined in 34 CFR 
part 682, the State agency or official by whose authority the 
institution is legally authorized to provide postsecondary education, or 
any other law enforcement agency; or
    (2) Any findings made in any criminal, civil, or administrative 
proceeding;
    (k) Is not, and does not have any principal or affiliate of the 
institution (as those terms are defined in 2 CFR parts 180 and 3485) 
that is--
    (1) Debarred or suspended under Executive Order 12549 (3 CFR, 1986 
Comp., p. 189) or the Federal Acquisition Regulations (FAR), 48 CFR part 
9, subpart 9.4; or
    (2) Engaging in any activity that is a cause under 2 CFR 180.700 or 
180.800, as adopted at 2 CFR 3485.12, for debarment or suspension under 
E.O. 12549 (3 CFR, 1986 Comp., p. 189) or the FAR, 48 CFR part 9, 
subpart 9.4;
    (l) For an institution that seeks initial participation in a Title 
IV, HEA program, does not have more than 33 percent of its undergraduate 
regular students withdraw from the institution during the institution's 
latest completed award year. The institution must count all regular 
students who are enrolled during the latest completed award year, except 
those students who, during that period--
    (1) Withdrew from, dropped out of, or were expelled from the 
institution;
    (2) Were entitled to and actually received in a timely manner, a 
refund of 100 percent of their tuition and fees;
    (m)(1) Has a cohort default rate--
    (i) That is less than 25 percent for each of the three most recent 
fiscal years during which rates have been issued, to the extent those 
rates are calculated under subpart M of this part;
    (ii) On or after 2014, that is less than 30 percent for at least two 
of the three most recent fiscal years during which the Secretary has 
issued rates for the institution under subpart N of this part; and
    (iii) As defined in 34 CFR 674.5, on loans made under the Federal 
Perkins Loan Program to students for attendance at that institution that 
does not exceed 15 percent.
    (2)(i) However, if the Secretary determines that an institution's 
administrative capability is impaired solely because the institution 
fails to comply with paragraph (m)(1) of this section, and the 
institution is not subject to a loss of eligibility under 
Secs. 668.187(a) or 668.206(a), the Secretary allows the institution to 
continue to participate in the Title IV, HEA programs. In such a case, 
the Secretary may provisionally certify the institution in accordance 
with Sec. 668.13(c) except as provided in paragraphs (m)(2)(ii), 
(m)(2)(iii), (m)(2)(iv), and (m)(2)(v) of this section.
    (ii) An institution that fails to meet the standard of 
administrative capability under paragraph (m)(1)(ii) based on two cohort 
default rates that are greater than or equal to 30 percent but less than 
or equal to 40 percent is not placed on provisional certification

[[Page 503]]

under paragraph (m)(2)(i) of this section--
    (A) If it has timely filed a request for adjustment or appeal under 
Secs. 668.209, 668.210, or 668.212 with respect to the second such rate, 
and the request for adjustment or appeal is either pending or succeeds 
in reducing the rate below 30 percent; or
    (B) If it has timely filed an appeal under Sec. 668.213 after 
receiving the second such rate, and the appeal is either pending or 
successful; or
    (C)(1) If it has timely filed a participation rate index challenge 
or appeal under Sec. 668.204(c) or Sec. 668.214 from either or both of 
the two rates, and the challenge or appeal is either pending or 
successful; or
    (2) If the second rate is the most recent draft rate, and the 
institution has timely filed a participation rate challenge to that 
draft rate that is either pending or successful.
    (iii) The institution may appeal the loss of full participation in a 
Title IV, HEA program under paragraph (m)(2)(i) of this section by 
submitting an erroneous data appeal in writing to the Secretary in 
accordance with and on the grounds specified in Secs. 668.192 or 668.211 
as applicable;
    (iv) If the institution has 30 or fewer borrowers in the three most 
recent cohorts of borrowers used to calculate its cohort default rate 
under subpart N of this part, we will not provisionally certify it 
solely based on cohort default rates;
    (v) If a rate that would otherwise potentially subject the 
institution to provisional certification under paragraphs (m)(1)(ii) and 
(m)(2)(i) of this section is calculated as an average rate, we will not 
provisionally certify it solely based on cohort default rates;
    (n) Does not otherwise appear to lack the ability to administer the 
Title IV, HEA programs competently;
    (o) Participates in the electronic processes that the Secretary--
    (1) Provides at no substantial charge to the institution; and
    (2) Identifies through a notice published in the Federal Register; 
and
    (p) Develops and follows procedures to evaluate the validity of a 
student's high school completion if the institution or the Secretary has 
reason to believe that the high school diploma is not valid or was not 
obtained from an entity that provides secondary school education.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1092, 1094, and 1099c)

[59 FR 22431, Apr. 29, 1994, as amended at 59 FR 34964, July 7, 1994; 59 
FR 61180, Nov. 29, 1994; 60 FR 34431, June 30, 1995; 60 FR 42408, Aug. 
15, 1995; 61 FR 60603, Nov. 29, 1996; 62 FR 27128, May 16, 1997; 63 FR 
40624, July 29, 1998; 64 FR 59038, Nov. 1, 1999; 65 FR 65637, Nov. 1, 
2000; 74 FR 55648, Oct. 28, 2009; 75 FR 66951, Oct. 29, 2010; 76 FR 
52272, Aug. 22, 2011; 77 FR 18679, Mar. 28, 2012; 80 FR 67235, Oct. 30, 
2015]



Sec. 668.17  [Reserved]



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--

[[Page 504]]

    (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; and
    (E)(1) If the student is readmitted to the same program, for the 
first academic year in which the student returns, assessing--
    (i) The tuition and fee charges that the student was or would have 
been assessed for the academic year during which the student left the 
institution; or
    (ii) Up to the amount of tuition and fee charges that other students 
in the program are assessed for that academic year, if veterans' 
education benefits, as defined in section 480(c) of the HEA, or other 
servicemember education benefits, will pay the amount in excess of the 
tuition and fee charges assessed for the academic year in 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 tuition and fee charges that other students 
in the program are assessed for that academic year.
    (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 at no extra cost 
to the student 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 to the student and allowing the 
student to retake a pretest at no extra cost to the student.
    (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 when considered in light of the overall financial 
resources of the institution and the impact otherwise of such action on 
the operation of the institution.
    (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 for the period 
of enrollment during which the

[[Page 505]]

student resumes attendance, and continuing so long as the institution is 
unable to comply with such requirements through other means.
    (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, not later than 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--

[[Page 506]]

    (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 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.

[[Page 507]]

    (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.)

[74 FR 55934, Oct. 29, 2009]



Sec. 668.19  Financial aid history.

    (a) Before an institution may disburse title IV, HEA program funds 
to a student who previously attended another eligible institution, the 
institution must use information it obtains from the Secretary, through 
the National Student Loan Data System (NSLDS) or its successor system, 
to determine--
    (1) Whether the student is in default on any title IV, HEA program 
loan;
    (2) Whether the student owes an overpayment on any title IV, HEA 
program grant or Federal Perkins Loan;
    (3) For the award year for which a Federal Pell Grant, an ACG, a 
National SMART Grant, or a TEACH Grant is requested, the student's 
Scheduled Federal Pell Grant, ACG, National SMART Grant, or a TEACH 
Grant Award and the amount of Federal Pell Grant, ACG, National SMART 
Grant, or a TEACH Grant funds disbursed to the student;
    (4) The outstanding principal balance of loans made to the student 
under each of the title IV, HEA loan programs; and
    (5) For the academic year for which title IV, HEA aid is requested, 
the amount of, and period of enrollment for, loans made to the student 
under each of the title IV, HEA loan programs.
    (b)(1) If a student transfers from one institution to another 
institution during the same award year, the institution to which the 
student transfers must request from the Secretary, through NSLDS, 
updated information about that student so it can make the determinations 
required under paragraph (a) of this section; and
    (2) The institution may not make a disbursement to that student for 
seven days following its request, unless it receives the information 
from NSLDS in response to its request or obtains that information 
directly by accessing NSLDS, and the information it receives allows it 
to make that disbursement.

(Approved by the Office of Management and Budget under control number 
1845-0537)

(Authority: 20 U.S.C. 1070g, 1091, 1094)

[65 FR 65675, Nov. 1, 2000, as amended at 71 FR 38002, July 3, 2006; 73 
FR 35492, June 23, 2008]

[[Page 508]]



Sec. 668.20  Limitations on remedial coursework that is eligible for 
Title IV, HEA program assistance.

    (a) A noncredit or reduced credit remedial course is a course of 
study designed to increase the ability of a student to pursue a course 
of study leading to a certificate or degree.
    (1) A noncredit remedial course is one for which no credit is given 
toward a certificate or degree; and
    (2) A reduced credit remedial course is one for which reduced credit 
is given toward a certificate or degree.
    (b) Except as provided in paragraphs (c) and (d) of this section, in 
determining a student's enrollment status and cost of attendance, an 
institution shall include any noncredit or reduced credit remedial 
course in which the student is enrolled. The institution shall attribute 
the number of credit or clock hours to a noncredit or reduced credit 
remedial course by--
    (1) Calculating the number of classroom and homework hours required 
for that course;
    (2) Comparing those hours with the hours required for nonremedial 
courses in a similar subject; and
    (3) Giving the remedial course the same number of credit or clock 
hours it gives the nonremedial course with the most comparable classroom 
and homework requirements.
    (c) In determining a student's enrollment status under the Title IV, 
HEA programs or a student's cost of attendance under the campus-based, 
FFEL, and Direct Loan programs, an institution may not take into account 
any noncredit or reduced credit remedial course if--
    (1) That course is part of a program of instruction leading to a 
high school diploma or the recognized equivalent of a high school 
diploma, even if the course is necessary to enable the student to 
complete a degree or certificate program;
    (2) The educational level of instruction provided in the noncredit 
or reduced credit remedial course is below the level needed to pursue 
successfully the degree or certificate program offered by that 
institution after one year in that remedial course; or
    (3) Except for a course in English as a second language, the 
educational level of instruction provided in that course is below the 
secondary level. For purposes of this section, the Secretary considers a 
course to be below the secondary level if any of the following entities 
determine that course to be below the secondary level:
    (i) The State agency that legally authorized the institution to 
provide postsecondary education.
    (ii) In the case of an accredited or preaccredited institution, the 
nationally recognized accrediting agency or association that accredits 
or preaccredits the institution.
    (iii) In the case of a public postsecondary vocational institution 
that is approved by a State agency recognized for the approval of public 
postsecondary vocational education, the State agency recognized for the 
approval of public postsecondary vocational education that approves the 
institution.
    (iv) The institution.
    (d) Except as set forth in paragraph (f) of this section, an 
institution may not take into account more than one academic year's 
worth of noncredit or reduced credit remedial coursework in 
determining--
    (1) A student's enrollment status under the title IV, HEA programs; 
and
    (2) A student's cost of attendance under the campus-based, FFEL, and 
Direct Loan programs.
    (e) One academic year's worth of noncredit or reduced credit 
remedial coursework is equivalent to--
    (1) Thirty semester or 45 quarter hours; or
    (2) Nine hundred clock hours.
    (f) Courses in English as a second language do not count against the 
one-year academic limitation contained in paragraph (d) of this section.

(Authority: 20 U.S.C. 1094)

[52 FR 45724, Dec. 1, 1987, as amended at 56 FR 36698, July 31, 1991; 58 
FR 32202, June 8, 1993; 63 FR 40624, July 29, 1998]



Sec. 668.21  Treatment of title IV grant and loan funds if the recipient
does not begin attendance at the institution.

    (a) If a student does not begin attendance in a payment period or 
period of enrollment--
    (1) The institution must return all title IV, HEA program funds that 
were

[[Page 509]]

credited to the student's account at the institution or disbursed 
directly to the student for that payment period or period of enrollment, 
for Federal Perkins Loan, FSEOG TEACH Grant, Federal Pell Grant, ACG, 
and National SMART Grant program funds; and
    (2) For FFEL and Direct Loan funds--
    (i)(A) The institution must return all FFEL and Direct Loan funds 
that were credited to the student's account at the institution for that 
payment period or period of enrollment; and
    (B) The institution must return the amount of payments made directly 
by or on behalf of the student to the institution for that payment 
period or period of enrollment, up to the total amount of the loan funds 
disbursed;
    (ii) For remaining amounts of FFEL or Direct Loan funds disbursed 
directly to the student for that payment period or period of enrollment, 
including funds that are disbursed directly to the student by the lender 
for a study-abroad program in accordance with 
Sec. 682.207(b)(1)(v)(C)(1) or for a student enrolled in a foreign 
school in accordance with Sec. 682.207(b)(1)(v)(D), the institution is 
not responsible for returning the funds, but must immediately notify the 
lender or the Secretary, as appropriate, when it becomes aware that the 
student will not or has not begun attendance so that the lender or 
Secretary will issue a final demand letter to the borrower in accordance 
with 34 CFR 682.412 or 34 CFR 685.211, as appropriate; and
    (iii) Notwithstanding paragraph (a)(2)(ii) of this section, if an 
institution knew that a student would not begin attendance prior to 
disbursing FFEL or Direct Loan funds directly to the student for that 
payment period or period of enrollment (e.g., the student notified the 
institution that he or she would not attend, or the institution expelled 
the student), the institution must return those funds.
    (b) The institution must return those funds for which it is 
responsible under paragraph (a) of this section to the respective title 
IV, HEA program as soon as possible, but no later than 30 days after the 
date that the institution becomes aware that the student will not or has 
not begun attendance.
    (c) For purposes of this section, the Secretary considers that a 
student has not begun attendance in a payment period or period of 
enrollment if the institution is unable to document the student's 
attendance at any class during the payment period or period of 
enrollment.
    (d) In accordance with procedures established by the Secretary or 
FFEL Program lender, an institution returns title IV, HEA funds timely 
if--
    (1) The institution deposits or transfers the funds into the bank 
account it maintains under Sec. 668.163 as soon as possible, but no 
later than 30 days after the date that the institution becomes aware 
that the student will not or has not begun attendance;
    (2) The institution initiates an electronic funds transfer (EFT) as 
soon as possible, but no later than 30 days after the date that the 
institution becomes aware that the student will not or has not begun 
attendance;
    (3) The institution initiates an electronic transaction, as soon as 
possible, but no later than 30 days after the date that the institution 
becomes aware that the student will not or has not begun attendance, 
that informs an FFEL lender to adjust the borrower's loan account for 
the amount returned; or
    (4) The institution issues a check as soon as possible, but no later 
than 30 days after the date that the institution becomes aware that the 
student will not or has not begun attendance. An institution does not 
satisfy this requirement if--
    (i) The institution's records show that the check was issued more 
than 30 days after the date that the institution becomes aware that the 
student will not or has not begun attendance; or
    (ii) The date on the cancelled check shows that the bank used by the 
Secretary or FFEL Program lender endorsed that check more than 45 days 
after the date that the institution becomes aware that the student will 
not or has not begun attendance.

(Authority: 20 U.S.C. 1070g, 1094)

[72 FR 62027, Nov. 1, 2007, as amended at 73 FR 35493, June 23, 2008]

[[Page 510]]



Sec. 668.22  Treatment of title IV funds when a student withdraws.

    (a) General. (1) When a recipient of title IV grant or loan 
assistance withdraws from an institution during a payment period or 
period of enrollment in which the recipient began attendance, the 
institution must determine the amount of title IV grant or loan 
assistance that the student earned as of the student's withdrawal date 
in accordance with paragraph (e) of this section.
    (2)(i) Except as provided in paragraphs (a)(2)(ii) and (a)(2)(iii) 
of this section, a student is considered to have withdrawn from a 
payment period or period of enrollment if--
    (A) In the case of a program that is measured in credit hours, the 
student does not complete all the days in the payment period or period 
of enrollment that the student was scheduled to complete;
    (B) In the case of a program that is measured in clock hours, the 
student does not complete all of the clock hours and weeks of 
instructional time in the payment period or period of enrollment that 
the student was scheduled to complete; or
    (C) For a student in a nonterm or nonstandard-term program, the 
student is not scheduled to begin another course within a payment period 
or period of enrollment for more than 45 calendar days after the end of 
the module the student ceased attending, unless the student is on an 
approved leave of absence, as defined in paragraph (d) of this section.
    (ii)(A) Notwithstanding paragraph (a)(2)(i)(A) and (a)(2)(i)(B) of 
this section, for a payment period or period of enrollment in which 
courses in the program are offered in modules--
    (1) A student is not considered to have withdrawn if the institution 
obtains written confirmation from the student at the time that would 
have been a withdrawal of the date that he or she will attend a module 
that begins later in the same payment period or period of enrollment; 
and
    (2) For nonterm and nonstandard-term programs, that module begins no 
later than 45 calendar days after the end of the module the student 
ceased attending.
    (B) If an institution has obtained the written confirmation of 
future attendance in accordance with paragraph (a)(2)(ii)(A) of this 
section--
    (1) A student may change the date of return to a module that begins 
later in the same payment period or period of enrollment, provided that 
the student does so in writing prior to the return date that he or she 
had previously confirmed; and
    (2) For nonterm and nonstandard-term programs, the later module that 
he or she will attend begins no later than 45 calendar days after the 
end of module the student ceased attending.
    (C) If an institution obtains written confirmation of future 
attendance in accordance with paragraph (a)(2)(ii)(A) and, if 
applicable, (a)(2)(ii)(B) of this section, but the student does not 
return as scheduled--
    (1) The student is considered to have withdrawn from the payment 
period or period of enrollment; and
    (2) The student's withdrawal date and the total number of calendar 
days in the payment period or period of enrollment would be the 
withdrawal date and total number of calendar days that would have 
applied if the student had not provided written confirmation of a future 
date of attendance in accordance with paragraph (a)(2)(ii)(A) of this 
section.
    (iii)(A) If a student withdraws from a term-based credit-hour 
program offered in modules during a payment period or period of 
enrollment and reenters the same program prior to the end of the period, 
subject to conditions established by the Secretary, the student is 
eligible to receive any title IV, HEA program funds for which he or she 
was eligible prior to withdrawal, including funds that were returned by 
the institution or student under the provisions of this section, 
provided the student's enrollment status continues to support the full 
amount of those funds.
    (B) In accordance with Sec. 668.4(f), if a student withdraws from a 
clock-hour or nonterm credit hour program during a payment period or 
period of enrollment and then reenters the same program within 180 
calendar days, the student remains in that same period when he or she 
returns and, subject to conditions established by the Secretary, is

[[Page 511]]

eligible to receive any title IV, HEA program funds for which he or she 
was eligible prior to withdrawal, including funds that were returned by 
the institution or student under the provisions of this section.
    (3) For purposes of this section, ``title IV grant or loan 
assistance'' includes only assistance from the Federal Perkins Loan, 
Direct Loan, FFEL, Federal Pell Grant, Academic Competitiveness Grant, 
National SMART Grant, TEACH Grant, and FSEOG programs, not including the 
non-Federal share of FSEOG awards if an institution meets its FSEOG 
matching share by the individual recipient method or the aggregate 
method.
    (4) If the total amount of title IV grant or loan assistance, or 
both, that the student earned as calculated under paragraph (e)(1) of 
this section is less than the amount of title IV grant or loan 
assistance that was disbursed to the student or on behalf of the student 
in the case of a PLUS loan, as of the date of the institution's 
determination that the student withdrew--
    (i) The difference between these amounts must be returned to the 
title IV programs in accordance with paragraphs (g) and (h) of this 
section in the order specified in paragraph (i) of this section; and
    (ii) No additional disbursements may be made to the student for the 
payment period or period of enrollment.
    (5) If the total amount of title IV grant or loan assistance, or 
both, that the student earned as calculated under paragraph (e)(1) of 
this section is greater than the total amount of title IV grant or loan 
assistance, or both, that was disbursed to the student or on behalf of 
the student in the case of a PLUS loan, as of the date of the 
institution's determination that the student withdrew, the difference 
between these amounts must be treated as a post-withdrawal disbursement 
in accordance with paragraph (a)(6) of this section and Sec. 668.164(g).
    (6)(i) A post-withdrawal disbursement must be made from available 
grant funds before available loan funds.
    (ii)(A) If outstanding charges exist on the student's account, the 
institution may credit the student's account up to the amount of 
outstanding charges with all or a portion of any--
    (1) Grant funds that make up the post-withdrawal disbursement in 
accordance with Sec. 668.164(d)(1) and (d)(2); and
    (2) Loan funds that make up the post-withdrawal disbursement in 
accordance with Sec. 668.164(d)(1), (d)(2), and (d)(3) only after 
obtaining confirmation from the student or parent in the case of a 
parent PLUS loan, that they still wish to have the loan funds disbursed 
in accordance with paragraph (a)(6)(iii) of this section.
    (B)(1) The institution must disburse directly to a student any 
amount of a post-withdrawal disbursement of grant funds that is not 
credited to the student's account. The institution must make the 
disbursement as soon as possible, but no later than 45 days after the 
date of the institution's determination that the student withdrew, as 
defined in paragraph (l)(3) of this section.
    (2) The institution must offer to disburse directly to a student, or 
parent in the case of a parent PLUS loan, any amount of a post-
withdrawal disbursement of loan funds that is not credited to the 
student's account, in accordance with paragraph (a)(6)(iii) of this 
section.
    (3) The institution must make a direct disbursement of any loan 
funds that make up the post-withdrawal disbursement only after obtaining 
the student's, or parent's in the case of a parent PLUS loan, 
confirmation that the student or parent still wishes to have the loan 
funds disbursed in accordance with paragraph (a)(6)(iii) of this 
section.
    (iii)(A) The institution must provide within 30 days of the date of 
the institution's determination that the student withdrew, as defined in 
paragraph (l)(3) of this section, a written notification to the student, 
or parent in the case of parent PLUS loan, that--
    (1) Requests confirmation of any post-withdrawal disbursement of 
loan funds that the institution wishes to credit to the student's 
account in accordance with paragraph (a)(6)(ii)(A)(2) of this section, 
identifying the type and amount of those loan funds and explaining that 
a student, or parent in the case of a parent PLUS loan, may

[[Page 512]]

accept or decline some or all of those funds;
    (2) Requests confirmation of any post-withdrawal disbursement of 
loan funds that the student, or parent in the case of a parent PLUS 
loan, can receive as a direct disbursement, identifying the type and 
amount of these title IV funds and explaining that the student, or 
parent in the case of a parent PLUS loan, may accept or decline some or 
all of those funds;
    (3) Explains that a student, or parent in the case of a parent PLUS 
loan, who does not confirm that a post-withdrawal disbursement of loan 
funds may be credited to the student's account may not receive any of 
those loan funds as a direct disbursement unless the institution 
concurs;
    (4) Explains the obligation of the student, or parent in the case of 
a parent PLUS loan, to repay any loan funds he or she chooses to have 
disbursed; and
    (5) Advises the student, or parent in the case of a parent PLUS 
loan, that no post-withdrawal disbursement of loan funds will be made, 
unless the institution chooses to make a post-withdrawal disbursement 
based on a late response in accordance with paragraph (a)(6)(iii)(C) of 
this section, if the student or parent in the case of a parent PLUS 
loan, does not respond within 14 days of the date that the institution 
sent the notification, or a later deadline set by the institution.
    (B) The deadline for a student, or parent in the case of a parent 
PLUS loan, to accept a post-withdrawal disbursement under paragraph 
(a)(6)(iii)(A) of this section must be the same for both a confirmation 
of a direct disbursement of the post-withdrawal disbursement of loan 
funds and a confirmation of a post-withdrawal disbursement of loan funds 
to be credited to the student's account.
    (C) If the student, or parent in the case of a parent PLUS loan, 
submits a timely response that confirms that they wish to receive all or 
a portion of a direct disbursement of the post-withdrawal disbursement 
of loan funds, or confirms that a post-withdrawal disbursement of loan 
funds may be credited to the student's account, the institution must 
disburse the funds in the manner specified by the student, or parent in 
the case of a parent PLUS loan, as soon as possible, but no later than 
180 days after the date of the institution's determination that the 
student withdrew, as defined in paragraph (l)(3) of this section.
    (D) If a student, or parent in the case of a parent PLUS loan, 
submits a late response to the institution's notice requesting 
confirmation, the institution may make the post-withdrawal disbursement 
of loan funds as instructed by the student, or parent in the case of a 
parent PLUS loan (provided the institution disburses all the funds 
accepted by the student, or parent in the case of a parent PLUS loan), 
or decline to do so.
    (E) If a student, or parent in the case of a parent PLUS loan, 
submits a late response to the institution and the institution does not 
choose to make the post-withdrawal disbursement of loan funds, the 
institution must inform the student, or parent in the case of a parent 
PLUS loan, in writing of the outcome of the post-withdrawal disbursement 
request.
    (F) If the student, or parent in the case of a parent PLUS loan, 
does not respond to the institution's notice, no portion of the post-
withdrawal disbursement of loan funds that the institution wishes to 
credit to the student's account, nor any portion of loan funds that 
would be disbursed directly to the student, or parent in the case of a 
parent PLUS loan, may be disbursed.
    (iv) An institution must document in the student's file the result 
of any notification made in accordance with paragraph (a)(6)(iii) of 
this section of the student's right to cancel all or a portion of loan 
funds or of the student's right to accept or decline loan funds, and the 
final determination made concerning the disbursement.
    (b) Withdrawal date for a student who withdraws from an institution 
that is required to take attendance. (1) For purposes of this section, 
for a student who ceases attendance at an institution that is required 
to take attendance, including a student who does not return from an 
approved leave of absence, as defined in paragraph (d) of this section, 
or a student who takes a leave of absence that does not meet the 
requirements of paragraph (d) of this section,

[[Page 513]]

the student's withdrawal date is the last date of academic attendance as 
determined by the institution from its attendance records.
    (2) An institution must document a student's withdrawal date 
determined in accordance with paragraph (b)(1) of this section and 
maintain the documentation as of the date of the institution's 
determination that the student withdrew, as defined in paragraph (l)(3) 
of this section.
    (3)(i) An institution is required to take attendance if--
    (A) An outside entity (such as the institution's accrediting agency 
or a State agency) has a requirement that the institution take 
attendance;
    (B) The institution itself has a requirement that its instructors 
take attendance; or
    (C) The institution or an outside entity has a requirement that can 
only be met by taking attendance or a comparable process, including, but 
not limited to, requiring that students in a program demonstrate 
attendance in the classes of that program, or a portion of that program.
    (ii) If, in accordance with paragraph (b)(3)(i) of this section, an 
institution is required to take attendance or requires that attendance 
be taken for only some students, the institution must use its attendance 
records to determine a withdrawal date in accordance with paragraph 
(b)(1) of this section for those students.
    (iii)(A) If, in accordance with paragraph (b)(3)(i) of this section, 
an institution is required to take attendance, or requires that 
attendance be taken, for a limited period, the institution must use its 
attendance records to determine a withdrawal date in accordance with 
paragraph (b)(3)(i) of this section for that limited period.
    (B) A student in attendance the last time attendance is required to 
be taken during the limited period identified in paragraph 
(b)(3)(iii)(A) of this section who subsequently stops attending during 
the payment period will be treated as a student for whom the institution 
was not required to take attendance.
    (iv) If an institution is required to take attendance or requires 
that attendance be taken, on only one specified day to meet a census 
reporting requirement, the institution is not considered to take 
attendance.
    (c) Withdrawal date for a student who withdraws from an institution 
that is not required to take attendance. (1) For purposes of this 
section, for a student who ceases attendance at an institution that is 
not required to take attendance, the student's withdrawal date is--
    (i) The date, as determined by the institution, that the student 
began the withdrawal process prescribed by the institution;
    (ii) The date, as determined by the institution, that the student 
otherwise provided official notification to the institution, in writing 
or orally, of his or her intent to withdraw;
    (iii) If the student ceases attendance without providing official 
notification to the institution of his or her withdrawal in accordance 
with paragraph (c)(1)(i) or (c)(1)(ii) of this section, the mid-point of 
the payment period (or period of enrollment, if applicable);
    (iv) If the institution determines that a student did not begin the 
institution's withdrawal process or otherwise provide official 
notification (including notice from an individual acting on the 
student's behalf) to the institution of his or her intent to withdraw 
because of illness, accident, grievous personal loss, or other such 
circumstances beyond the student's control, the date that the 
institution determines is related to that circumstance;
    (v) If a student does not return from an approved leave of absence 
as defined in paragraph (d) of this section, the date that the 
institution determines the student began the leave of absence; or
    (vi) If a student takes a leave of absence that does not meet the 
requirements of paragraph (d) of this section, the date that the student 
began the leave of absence.
    (2)(i)(A) An institution may allow a student to rescind his or her 
official notification to withdraw under paragraph (c)(1)(i) or (ii) of 
this section by filing a written statement that he or she is continuing 
to participate in academically-related activities and intends to 
complete the payment period or period of enrollment.

[[Page 514]]

    (B) If the student subsequently ceases to attend the institution 
prior to the end of the payment period or period of enrollment, the 
student's rescission is negated and the withdrawal date is the student's 
original date under paragraph (c)(1)(i) or (ii) of this section, unless 
a later date is determined under paragraph (c)(3) of this section.
    (ii) If a student both begins the withdrawal process prescribed by 
the institution and otherwise provides official notification of his or 
her intent to withdraw in accordance with paragraphs (c)(1)(i) and 
(c)(1)(ii) of this section respectively, the student's withdrawal date 
is the earlier date unless a later date is determined under paragraph 
(c)(3) of this section.
    (3) Notwithstanding paragraphs (c)(1) and (2) of this section, an 
institution that is not required to take attendance may use as the 
student's withdrawal date a student's last date of attendance at an 
academically-related activity provided that the institution documents 
that the activity is academically related and documents the student's 
attendance at the activity.
    (4) An institution must document a student's withdrawal date 
determined in accordance with paragraphs (c)(1), (2), and (3) of this 
section and maintain the documentation as of the date of the 
institution's determination that the student withdrew, as defined in 
paragraph (l)(3) of this section.
    (5)(i) ``Official notification to the institution'' is a notice of 
intent to withdraw that a student provides to an office designated by 
the institution.
    (ii) An institution must designate one or more offices at the 
institution that a student may readily contact to provide official 
notification of withdrawal.
    (d) Approved leave of absence. (1) For purposes of this section 
(and, for a title IV, HEA program loan borrower, for purposes of 
terminating the student's in-school status), an institution does not 
have to treat a leave of absence as a withdrawal if it is an approved 
leave of absence. A leave of absence is an approved leave of absence 
if--
    (i) The institution has a formal policy regarding leaves of absence;
    (ii) The student followed the institution's policy in requesting the 
leave of absence;
    (iii) The institution determines that there is a reasonable 
expectation that the student will return to the school;
    (iv) The institution approved the student's request in accordance 
with the institution's policy;
    (v) The leave of absence does not involve additional charges by the 
institution;
    (vi) The number of days in the approved leave of absence, when added 
to the number of days in all other approved leaves of absence, does not 
exceed 180 days in any 12-month period;
    (vii) Except for a clock hour or nonterm credit hour program, upon 
the student's return from the leave of absence, the student is permitted 
to complete the coursework he or she began prior to the leave of 
absence; and
    (viii) If the student is a title IV, HEA program loan recipient, the 
institution explains to the student, prior to granting the leave of 
absence, the effects that the student's failure to return from a leave 
of absence may have on the student's loan repayment terms, including the 
exhaustion of some or all of the student's grace period.
    (2) If a student does not resume attendance at the institution at or 
before the end of a leave of absence that meets the requirements of this 
section, the institution must treat the student as a withdrawal in 
accordance with the requirements of this section.
    (3) For purposes of this paragraph--
    (i) The number of days in a leave of absence is counted beginning 
with the first day of the student's initial leave of absence in a 12-
month period.
    (ii) A ``12-month period'' begins on the first day of the student's 
initial leave of absence.
    (iii) An institution's leave of absence policy is a ``formal 
policy'' if the policy--
    (A) Is in writing and publicized to students; and
    (B) Requires students to provide a written, signed, and dated 
request, that includes the reason for the request, for a leave of 
absence prior to the leave of absence. However, if unforeseen 
circumstances prevent a student from providing a prior written request, 
the

[[Page 515]]

institution may grant the student's request for a leave of absence, if 
the institution documents its decision and collects the written request 
at a later date.
    (e) Calculation of the amount of title IV assistance earned by the 
student--(1) General. The amount of title IV grant or loan assistance 
that is earned by the student is calculated by--
    (i) Determining the percentage of title IV grant or loan assistance 
that has been earned by the student, as described in paragraph (e)(2) of 
this section; and
    (ii) Applying this percentage to the total amount of title IV grant 
or loan assistance that was disbursed (and that could have been 
disbursed, as defined in paragraph (l)(1) of this section) to the 
student, or on the student's behalf, for the payment period or period of 
enrollment as of the student's withdrawal date.
    (2) Percentage earned. The percentage of title IV grant or loan 
assistance that has been earned by the student is--
    (i) Equal to the percentage of the payment period or period of 
enrollment that the student completed (as determined in accordance with 
paragraph (f) of this section) as of the student's withdrawal date, if 
this date occurs on or before--
    (A) Completion of 60 percent of the payment period or period of 
enrollment for a program that is measured in credit hours; or
    (B) Sixty percent of the clock hours scheduled to be completed for 
the payment period or period of enrollment for a program that is 
measured in clock hours; or
    (ii) 100 percent, if the student's withdrawal date occurs after--
    (A) Completion of 60 percent of the payment period or period of 
enrollment for a program that is measured in credit hours; or
    (B) Sixty percent of the clock hours scheduled to be completed for 
the payment period or period of enrollment for a program measured in 
clock hours.
    (3) Percentage unearned. The percentage of title IV grant or loan 
assistance that has not been earned by the student is calculated by 
determining the complement of the percentage of title IV grant or loan 
assistance earned by the student as described in paragraph (e)(2) of 
this section.
    (4) Total amount of unearned title IV assistance to be returned. The 
unearned amount of title IV assistance to be returned is calculated by 
subtracting the amount of title IV assistance earned by the student as 
calculated under paragraph (e)(1) of this section from the amount of 
title IV aid that was disbursed to the student as of the date of the 
institution's determination that the student withdrew.
    (5) Use of payment period or period of enrollment. (i) The treatment 
of title IV grant or loan funds if a student withdraws must be 
determined on a payment period basis for a student who attended a 
standard term-based (semester, trimester, or quarter) educational 
program.
    (ii)(A) The treatment of title IV grant or loan funds if a student 
withdraws may be determined on either a payment period basis or a period 
of enrollment basis for a student who attended a non-term based 
educational program or a nonstandard term-based educational program.
    (B) An institution must consistently use either a payment period or 
period of enrollment for all purposes of this section for each of the 
following categories of students who withdraw from the same non-term 
based or nonstandard term-based educational program:
    (1) Students who have attended an educational program at the 
institution from the beginning of the payment period or period of 
enrollment.
    (2) Students who re-enter the institution during a payment period or 
period of enrollment.
    (3) Students who transfer into the institution during a payment 
period or period of enrollment.
    (iii) For a program that measures progress in credit hours and uses 
nonstandard terms that are not substantially equal in length, if the 
institution uses the payment period to determine the treatment of title 
IV grant or loan funds for a category of students found in paragraph 
(e)(5)(ii)(B) of this section, the institution must--
    (A)(1) For students in the category who are disbursed or could have 
been disbursed aid using both the payment

[[Page 516]]

period definition in Sec. 668.4(b)(1) and the payment period definition 
in Sec. 668.4(b)(2), use the payment period during which the student 
withdrew that ends later; and
    (2) If in the payment period that ends later there are funds that 
have been or could have been disbursed from overlapping payment periods, 
the institution must include in the return calculation any funds that 
can be attributed to the payment period that ends later; and
    (B) For students in the category who are disbursed or could have 
been disbursed aid using only the payment period definition in 
Sec. 668.4(b)(1) or the payment period definition in Sec. 668.4(b)(2), 
use the payment period definition for which title IV, HEA program funds 
were disbursed for a student's calculation under this section.
    (f) Percentage of payment period or period of enrollment completed. 
(1) For purposes of paragraph (e)(2)(i) of this section, the percentage 
of the payment period or period of enrollment completed is determined--
    (i) In the case of a program that is measured in credit hours, by 
dividing the total number of calendar days in the payment period or 
period of enrollment into the number of calendar days completed in that 
period as of the student's withdrawal date; and
    (ii)(A) In the case of a program that is measured in clock hours, by 
dividing the total number of clock hours in the payment period or period 
of enrollment into the number of clock hours scheduled to be completed 
as of the student's withdrawal date.
    (B) The scheduled clock hours used must be those established by the 
institution prior to the student's beginning class date for the payment 
period or period of enrollment and must be consistent with the published 
materials describing the institution's programs, unless the schedule was 
modified prior to the student's withdrawal.
    (C) The schedule must have been established in accordance with 
requirements of the accrediting agency and the State licensing agency, 
if such standards exist.
    (2)(i) The total number of calendar days in a payment period or 
period of enrollment includes all days within the period that the 
student was scheduled to complete, except that scheduled breaks of at 
least five consecutive days are excluded from the total number of 
calendar days in a payment period or period of enrollment and the number 
of calendar days completed in that period.
    (ii) The total number of calendar days in a payment period or period 
of enrollment does not include--
    (A) Days in which the student was on an approved leave of absence; 
or
    (B) For a payment period or period of enrollment in which any 
courses in the program are offered in modules, any scheduled breaks of 
at least five consecutive days when the student is not scheduled to 
attend a module or other course offered during that period of time.
    (g) Return of unearned aid, responsibility of the institution. (1) 
The institution must return, in the order specified in paragraph (i) of 
this section, the lesser of--
    (i) The total amount of unearned title IV assistance to be returned 
as calculated under paragraph (e)(4) of this section; or
    (ii) An amount equal to the total institutional charges incurred by 
the student for the payment period or period of enrollment multiplied by 
the percentage of title IV grant or loan assistance that has not been 
earned by the student, as described in paragraph (e)(3) of this section.
    (2) For purposes of this section, ``institutional charges'' are 
tuition, fees, room and board (if the student contracts with the 
institution for the room and board) and other educationally-related 
expenses assessed by the institution.
    (3) If, for a non-term program an institution chooses to calculate 
the treatment of title IV assistance on a payment period basis, but the 
institution charges for a period that is longer than the payment period, 
``total institutional charges incurred by the student for the payment 
period'' is the greater of--
    (i) The prorated amount of institutional charges for the longer 
period; or
    (ii) The amount of title IV assistance retained for institutional 
charges as of the student's withdrawal date.

[[Page 517]]

    (h) Return of unearned aid, responsibility of the student. (1) After 
the institution has allocated the unearned funds for which it is 
responsible in accordance with paragraph (g) of this section, the 
student must return assistance for which the student is responsible in 
the order specified in paragraph (i) of this section.
    (2) The amount of assistance that the student is responsible for 
returning is calculated by subtracting the amount of unearned aid that 
the institution is required to return under paragraph (g) of this 
section from the total amount of unearned title IV assistance to be 
returned under paragraph (e)(4) of this section.
    (3) The student (or parent in the case of funds due to a parent PLUS 
Loan) must return or repay, as appropriate, the amount determined under 
paragraph (h)(1) of this section to--
    (i) Any title IV loan program in accordance with the terms of the 
loan; and
    (ii) Any title IV grant program as an overpayment of the grant; 
however, a student is not required to return the following--
    (A) The portion of a grant overpayment amount that is equal to or 
less than 50 percent of the total grant assistance that was disbursed 
(and that could have been disbursed, as defined in paragraph (l)(1) of 
this section) to the student for the payment period or period of 
enrollment.
    (B) With respect to any grant program, a grant overpayment amount, 
as determined after application of paragraph (h)(3)(ii)(A) of this 
section, of 50 dollars or less that is not a remaining balance.
    (4)(i) A student who owes an overpayment under this section remains 
eligible for title IV, HEA program funds through and beyond the earlier 
of 45 days from the date the institution sends a notification to the 
student of the overpayment, or 45 days from the date the institution was 
required to notify the student of the overpayment if, during those 45 
days the student--
    (A) Repays the overpayment in full to the institution;
    (B) Enters into a repayment agreement with the institution in 
accordance with repayment arrangements satisfactory to the institution; 
or
    (C) Signs a repayment agreement with the Secretary, which will 
include terms that permit a student to repay the overpayment while 
maintaining his or her eligibility for title IV, HEA program funds.
    (ii) Within 30 days of the date of the institution's determination 
that the student withdrew, an institution must send a notice to any 
student who owes a title IV, HEA grant overpayment as a result of the 
student's withdrawal from the institution in order to recover the 
overpayment in accordance with paragraph (h)(4)(i) of this section.
    (iii) If an institution chooses to enter into a repayment agreement 
in accordance with paragraph (h)(4)(i)(B) of this section with a student 
who owes an overpayment of title IV, HEA grant funds, it must--
    (A) Provide the student with terms that permit the student to repay 
the overpayment while maintaining his or her eligibility for title IV, 
HEA program funds; and
    (B) Require repayment of the full amount of the overpayment within 
two years of the date of the institution's determination that the 
student withdrew.
    (iv) An institution must refer to the Secretary, in accordance with 
procedures required by the Secretary, an overpayment of title IV, HEA 
grant funds owed by a student as a result of the student's withdrawal 
from the institution if--
    (A) The student does not repay the overpayment in full to the 
institution, or enter a repayment agreement with the institution or the 
Secretary in accordance with paragraph (h)(4)(i) of this section within 
the earlier of 45 days from the date the institution sends a 
notification to the student of the overpayment, or 45 days from the date 
the institution was required to notify the student of the overpayment;
    (B) At any time the student fails to meet the terms of the repayment 
agreement with the institution entered into in accordance with paragraph 
(h)(4)(i)(B) of this section; or
    (C) The student chooses to enter into a repayment agreement with the 
Secretary.

[[Page 518]]

    (v) A student who owes an overpayment is ineligible for title IV, 
HEA program funds--
    (A) If the student does not meet the requirements in paragraph 
(h)(4)(i) of this section, on the day following the 45-day period in 
that paragraph; or
    (B) As of the date the student fails to meet the terms of the 
repayment agreement with the institution or the Secretary entered into 
in accordance with paragraph (h)(4)(i) of this section.
    (vi) A student who is ineligible under paragaraph (h)(4)(v) of this 
section regains eligibility if the student and the Secretary enter into 
a repayment agreement.
    (5) The Secretary may waive grant overpayment amounts that students 
are required to return under this section if the withdrawals on which 
the returns are based are withdrawals by students--
    (i) Who were residing in, employed in, or attending an institution 
of higher education that is located in an area in which the President 
has declared that a major disaster exists, in accordance with section 
401 of the Robert T. Stafford Disaster Relief and Emergency Assistance 
Act (42 U.S.C. 5170);
    (ii) Whose attendance was interrupted because of the impact of the 
disaster on the student or institution; and
    (iii) Whose withdrawal occurred within the award year during which 
the designation occurred or during the next succeeding award year.
    (i) Order of return of title IV funds--(1) Loans. Unearned funds 
returned by the institution or the student, as appropriate, in 
accordance with paragraph (g) or (h) of this section respectively, must 
be credited to outstanding balances on title IV loans made to the 
student or on behalf of the student for the payment period or period of 
enrollment for which a return of funds is required. Those funds must be 
credited to outstanding balances for the payment period or period of 
enrollment for which a return of funds is required in the following 
order:
    (i) Unsubsidized Federal Stafford loans.
    (ii) Subsidized Federal Stafford loans.
    (iii) Unsubsidized Federal Direct Stafford loans.
    (iv) Subsidized Federal Direct Stafford loans.
    (v) Federal Perkins loans.
    (vi) Federal PLUS loans received on behalf of the student.
    (vii) Federal Direct PLUS received on behalf of the student.
    (2) Remaining funds. If unearned funds remain to be returned after 
repayment of all outstanding loan amounts, the remaining excess must be 
credited to any amount awarded for the payment period or period of 
enrollment for which a return of funds is required in the following 
order:
    (i) Federal Pell Grants.
    (ii) Academic Competitiveness Grants.
    (iii) National SMART Grants.
    (iv) FSEOG Program aid.
    (v) TEACH Grants.
    (j) Timeframe for the return of title IV funds. (1) An institution 
must return the amount of title IV funds for which it is responsible 
under paragraph (g) of this section as soon as possible but no later 
than 45 days after the date of the institution's determination that the 
student withdrew as defined in paragraph (l)(3) of this section. The 
timeframe for returning funds is further described in Sec. 668.173(b).
    (2) For an institution that is not required to take attendance, an 
institution must determine the withdrawal date for a student who 
withdraws without providing notification to the institution no later 
than 30 days after the end of the earlier of the--
    (i) Payment period or period of enrollment, as appropriate, in 
accordance with paragraph (e)(5) of this section;
    (ii) Academic year in which the student withdrew; or
    (iii) Educational program from which the student withdrew.
    (k) Consumer information. An institution must provide students with 
information about the requirements of this section in accordance with 
Sec. 668.43.
    (l) Definitions. For purposes of this section--
    (1) Title IV grant or loan funds that ``could have been disbursed'' 
are determined in accordance with the late disbursement provisions in 
Sec. 668.164(g).
    (2) A ``period of enrollment'' is the academic period established by 
the institution for which institutional

[[Page 519]]

charges are generally assessed (i.e. length of the student's program or 
academic year).
    (3) The ``date of the institution's determination that the student 
withdrew''for an institution that is not required to take attendance 
is--
    (i) For a student who provides notification to the institution of 
his or her withdrawal, the student's withdrawal date as determined under 
paragraph (c) of this section or the date of notification of withdrawal, 
whichever is later;
    (ii) For a student who did not provide notification of his of her 
withdrawal to the institution, the date that the institution becomes 
aware that the student ceased attendance;
    (iii) For a student who does not return from an approved leave of 
absence, the earlier of the date of the end of the leave of absence or 
the date the student notifies the institution that he or she will not be 
returning to the institution; or
    (iv) For a student whose rescission is negated under paragraph 
(c)(2)(i)(B) of this section, the date the institution becomes aware 
that the student did not, or will not, complete the payment period or 
period of enrollment.
    (v) For a student who takes a leave of absence that is not approved 
in accordance with paragraph (d) of this section, the date that the 
student begins the leave of absence.
    (4) A ``recipient of title IV grant or loan assistance'' is a 
student for whom the requirements of Sec. 668.164(g)(2) have been met.
    (5) Terms are ``substantially equal in length'' if no term in the 
program is more than two weeks of instructional time longer than any 
other term in that program.
    (6) A program is ``offered in modules'' if a course or courses in 
the program do not span the entire length of the payment period or 
period of enrollment.
    (7)(i) ``Academic attendance'' and ``attendance at an academically-
related activity''--
    (A) Include, but are not limited to--
    (1) Physically attending a class where there is an opportunity for 
direct interaction between the instructor and students;
    (2) Submitting an academic assignment;
    (3) Taking an exam, an interactive tutorial, or computer-assisted 
instruction;
    (4) Attending a study group that is assigned by the institution;
    (5) Participating in an online discussion about academic matters; 
and
    (6) Initiating contact with a faculty member to ask a question about 
the academic subject studied in the course; and
    (B) Do not include activities where a student may be present, but 
not academically engaged, such as--
    (1) Living in institutional housing;
    (2) Participating in the institution's meal plan;
    (3) Logging into an online class without active participation; or
    (4) Participating in academic counseling or advisement.
    (ii) A determination of ``academic attendance'' or ``attendance at 
an academically-related activity'' must be made by the institution; a 
student's certification of attendance that is not supported by 
institutional documentation is not acceptable.
    (8) A program is a nonstandard-term program if the program is a 
term-based program that does not qualify under 34 CFR 690.63(a)(1) or 
(a)(2) to calculate Federal Pell Grant payments under 34 CFR 690.63(b) 
or (c).

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1070g, 1091b)

[64 FR 59038, Nov. 1, 1999, as amended at 67 FR 67073, Nov. 1, 2002; 71 
FR 45694, Aug. 9, 2006; 71 FR 64397, Nov. 1, 2006; 72 FR 62027, Nov. 1, 
2007; 73 FR 35493, June 23, 2008; 75 FR 66951, Oct. 29, 2010]



Sec. 668.23  Compliance audits and audited financial statements.

    (a) General--(1) Independent auditor. For purposes of this section, 
the term ``independent auditor'' refers to an independent certified 
public accountant or a government auditor. To conduct an audit under 
this section, a government auditor must meet the Government Auditing 
Standards qualification and independence standards, including standards 
related to organizational independence.
    (2) Institutions. An institution that participates in any title IV, 
HEA program must at least annually have an

[[Page 520]]

independent auditor conduct a compliance audit of its administration of 
that program and an audit of the institution's general purpose financial 
statements.
    (3) Third-party servicers. Except as provided under this part or 34 
CFR part 682, with regard to complying with the provisions under this 
section a third-party servicer must follow the procedures contained in 
the audit guides developed by and available from the Department of 
Education's Office of Inspector General. A third-party servicer is 
defined under Sec. 668.2 and 34 CFR 682.200.
    (4) Submission deadline. Except as provided by the Single Audit Act, 
Chapter 75 of title 31, United States Code, an institution must submit 
annually to the Secretary its compliance audit and its audited financial 
statements no later than six months after the last day of the 
institution's fiscal year.
    (5) Audit submission requirements. In general, the Secretary 
considers the compliance audit and audited financial statement 
submission requirements of this section to be satisfied by an audit 
conducted in accordance with the Office of Management and Budget 
Circular A-133, Audits of States, Local Governments, and Non-Profit 
Organizations, or the audit guides developed by and available from the 
Department of Education's Inspector General, whichever is applicable to 
the entity, and provided that the Federal student aid functions 
performed by that entity are covered in the submission. (Both OMB 
circulars are available by calling OMB's Publication Office at (202) 
395-7332, or they can be obtained in electronic form on the OMB Home 
Page (http://www.whitehouse.gov).
    (b) Compliance audits for institutions. (1) An institution's 
compliance audit must cover, on a fiscal year basis, all title IV, HEA 
program transactions, and must cover all of those transactions that have 
occurred since the period covered by the institution's last compliance 
audit.
    (2) The compliance audit required under this section must be 
conducted in accordance with--
    (i) The general standards and the standards for compliance audits 
contained in the U.S. General Accounting Office's (GAO's) Government 
Auditing Standards. (This publication is available from the 
Superintendent of Documents, U.S. Government Printing Office, 
Washington, DC 20402); and
    (ii) Procedures for audits contained in audit guides developed by, 
and available from, the Department of Education's Office of Inspector 
General.
    (3) The Secretary may require an institution to provide a copy of 
its compliance audit report to guaranty agencies or eligible lenders 
under the FFEL programs, State agencies, the Secretary of Veterans 
Affairs, or nationally recognized accrediting agencies.
    (c) Compliance audits for third-party servicers. (1) A third-party 
servicer that administers title IV, HEA programs for institutions does 
not have to have a compliance audit performed if--
    (i) The servicer contracts with only one institution; and
    (ii) The audit of that institution's administration of the title IV, 
HEA programs involves every aspect of the servicer's administration of 
that program for that institution.
    (2) A third-party servicer that contracts with more than one 
participating institution may submit a compliance audit report that 
covers the servicer's administration of the title IV, HEA programs for 
all institutions with which the servicer contracts.
    (3) A third-party servicer must submit annually to the Secretary its 
compliance audit no later than six months after the last day of the 
servicer's fiscal year.
    (4) The Secretary may require a third-party servicer to provide a 
copy of its compliance audit report to guaranty agencies or eligible 
lenders under the FFEL programs, State agencies, the Secretary of 
Veterans Affairs, or nationally recognized accrediting agencies.
    (d) Audited financial statements--(1) General. To enable the 
Secretary to make a determination of financial responsibility, an 
institution must, to the extent requested by the Secretary, submit to 
the Secretary a set of financial statements for its latest complete 
fiscal year, as well as any other documentation the Secretary deems 
necessary to make that determination. Financial statements submitted to 
the

[[Page 521]]

Secretary must be prepared on an accrual basis in accordance with 
generally accepted accounting principles, and audited by an independent 
auditor in accordance with generally accepted government auditing 
standards, issued by the Comptroller General of the United States and 
other guidance contained in the Office of Management and Budget Circular 
A-133, Audits of States, Local Governments, and Non-Profit 
Organizations; or in audit guides developed by, and available from, the 
Department of Education's Office of Inspector General , whichever is 
applicable. As part of these financial statements, the institution must 
include a detailed description of related entities based on the 
definition of a related entity as set forth in the Statement of 
Financial Accounting Standards (SFAS) 57. The disclosure requirements 
under this provision extend beyond those of SFAS 57 to include all 
related parties and a level of detail that would enable to Secretary to 
readily identify the related party. Such information may include, but is 
not limited to, the name, location and a description of the related 
entity including the nature and amount of any transactions between the 
related party and the institution, financial or otherwise, regardless of 
when they occurred.
    (2) Submission of additional financial statements. To the extent 
requested by the Secretary in determining whether an institution is 
financially responsible, the Secretary may also require the submission 
of audited consolidated financial statements, audited full consolidating 
financial statements, audited combined financial statements or the 
audited financial statements of one or more related parties that have 
the ability, either individually or collectively, to significantly 
influence or control the institution, as determined by the Secretary.
    (3) 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 dollar 
amount of the numerator and denominator of its 90/10 ratio as well as 
the individual revenue amounts identified in section 2 of appendix C to 
subpart B of part 668.
    (4) Audited financial statements for third-party servicers. A third-
party servicer that enters into a contract with a lender or guaranty 
agency to administer any aspect of the lender's or guaranty agency's 
programs, as provided under 34 CFR part 682, must submit annually an 
audited financial statement. This financial statement must be prepared 
on an accrual basis in accordance with generally accepted accounting 
principles, and audited by an independent auditor in accordance with 
generally accepted government auditing standards and other guidance 
contained in audit guides issued by the Department of Education's Office 
of Inspector General.
    (e) Access to records. (1) An institution or a third-party servicer 
that has a compliance or financial statement audit conducted under this 
section must--
    (i) Give the Secretary and the Inspector General access to records 
or other documents necessary to review that audit, including the right 
to obtain copies of those records or documents; and
    (ii) Require an individual or firm conducting the audit to give the 
Secretary and the Inspector General access to records, audit work 
papers, or other documents necessary to review that audit, including the 
right to obtain copies of those records, work papers, or documents.
    (2) An institution must give the Secretary and the Inspector General 
access to records or other documents necessary to review a third-party 
servicer's compliance or financial statement audit, including the right 
to obtain copies of those records or documents.
    (f) Determination of liabilities. (1) Based on the audit finding and 
the institution's or third-party servicer's response, the Secretary 
determines the amount of liability, if any, owed by the institution or 
servicer and instructs the institution or servicer as to the manner of 
repayment.

[[Page 522]]

    (2) If the Secretary determines that a third-party servicer owes a 
liability for its administration of an institution's title IV, HEA 
programs, the servicer must notify each institution under whose contract 
the servicer owes a liability of that determination. The servicer must 
also notify every institution that contracts with the servicer for the 
same service that the Secretary determined that a liability was owed.
    (g) Repayments. (1) An institution or third-party servicer that must 
repay funds under the procedures in this section shall repay those funds 
at the direction of the Secretary within 45 days of the date of the 
Secretary's notification, unless--
    (i) The institution or servicer files an appeal under the procedures 
established in subpart H of this part; or
    (ii) The Secretary permits a longer repayment period.
    (2) Notwithstanding paragraphs (f) and (g)(1) of this section--
    (i) If an institution or third-party servicer has posted surety or 
has provided a third-party guarantee and the Secretary questions 
expenditures or compliance with applicable requirements and identifies 
liabilities, then the Secretary may determine that deferring recourse to 
the surety or guarantee is not appropriate because--
    (A) The need to provide relief to students or borrowers affected by 
the act or omission giving rise to the liability outweighs the 
importance of deferring collection action until completion of available 
appeal proceedings; or
    (B) The terms of the surety or guarantee do not provide complete 
assurance that recourse to that protection will be fully available 
through the completion of available appeal proceedings; or
    (ii) The Secretary may use administrative offset pursuant to 34 CFR 
part 30 to collect the funds owed under the procedures of this section.
    (3) If, under the proceedings in subpart H, liabilities asserted in 
the Secretary's notification, under paragraph (e)(1) of this section, to 
the institution or third-party servicer are upheld, the institution or 
third-party servicer must repay those funds at the direction of the 
Secretary within 30 days of the final decision under subpart H of this 
part unless--
    (i) The Secretary permits a longer repayment period; or
    (ii) The Secretary determines that earlier collection action is 
appropriate pursuant to paragraph (g)(2) of this section.
    (4) An institution is held responsible for any liability owed by the 
institution's third-party servicer for a violation incurred in servicing 
any aspect of that institution's participation in the title IV, HEA 
programs and remains responsible for that amount until that amount is 
repaid in full.
    (h) Audit submission requirements for foreign institutions. (1) 
Audited financial statements. (i) The Secretary waives for that fiscal 
year the submission of audited financial statements if the institution 
is a foreign public or nonprofit institution that received less than 
$500,000 in U.S. title IV program funds during its most recently 
completed fiscal year, unless that foreign public or nonprofit 
institution is in its initial provisional period of participation, and 
received title IV program funds during that fiscal year, in which case 
the institution must submit, in English, audited financial statements 
prepared in accordance with generally accepted accounting principles of 
the institution's home country.
    (ii) Except as provided in paragraph (h)(1)(iii) of this section, a 
foreign institution that received $500,000 or more in U.S. title IV 
program funds during its most recently completed fiscal year must 
submit, in English, for each most recently completed fiscal year in 
which it received title IV program funds, audited financial statements 
prepared in accordance with generally accepted accounting principles of 
the institution's home country along with corresponding audited 
financial statements that meet the requirements of paragraph (d) of this 
section.
    (iii) In lieu of making the submission required by paragraph 
(h)(1)(ii) of this section, a public or private nonprofit institution 
that received--
    (A) $500,000 or more in U.S. title IV program funds, but less than 
$3,000,000 in U.S. title IV program funds during its most recently 
completed fiscal year, may submit for that year, in

[[Page 523]]

English, audited financial statements prepared in accordance with the 
generally accepted accounting principles of the institution's home 
country, and is not required to submit the corresponding audited 
financial statements that meet the requirements of paragraph (d) of this 
section;
    (B) At least $3,000,000, but less than $10,000,000 in U.S. title IV, 
program funds during its most recently completed fiscal year, must 
submit in English, for each most recently completed fiscal year, audited 
financial statements prepared in accordance with the generally accepted 
accounting principles of the institution's home country along with 
corresponding audited financial statements that meet the requirements of 
paragraph (d) of this section, except that an institution that continues 
to receive at least $3,000,000 but less than $10,000,000, in U.S. title 
IV funds during its most recently completed fiscal year may omit the 
audited financial statements that meet the requirements of paragraph (d) 
of this section for up to two consecutive years following the submission 
of audited financial statements that meet the requirements of paragraph 
(d) of this section.
    (2) Compliance audits. A foreign institution's compliance audit must 
cover, on a fiscal year basis, all title IV, HEA program transactions, 
and must cover all of those transactions that have occurred since the 
period covered by the institution's last compliance audit. A compliance 
audit that is due under this paragraph must be submitted no later than 
six months after the last day of the institution's fiscal year, and must 
meet the following requirements:
    (i) If the foreign institution received $500,000 or more in U.S. 
dollars in title IV, HEA program funds during its most recently 
completed fiscal year, it must submit a standard compliance audit for 
that prior fiscal year that is performed in accordance with audit guides 
developed by, and available from, the Department of Education's Office 
of Inspector General, together with an alternative compliance audit or 
audits prepared in accordance with paragraph (h)(2)(ii) of this section 
for any preceding fiscal year or years in which the foreign institution 
received less than $500,000 in U.S. dollars in title IV, HEA program 
funds and for which a compliance audit has not already been submitted;
    (ii) If the foreign institution received less than $500,000 U.S. in 
title IV, HEA program funds for its most recently completed fiscal year, 
it must submit an alternative compliance audit for that prior fiscal 
year that is performed in accordance with audit guides developed by, and 
available from, the Department of Education's Office of Inspector 
General, except as noted in paragraph (h)(2)(iii) of this section.
    (iii) If so notified by the Secretary, a foreign institution may 
submit an alternative compliance audit performed in accordance with 
audit guides developed by, and available from, the Department of 
Education's Office of Inspector General, that covers a period not to 
exceed three of the institution's consecutive fiscal years if such audit 
is submitted either no later than six months after the last day of the 
most recent fiscal year, or contemporaneously with a standard compliance 
audit timely submitted under paragraph (h)(2)(i) or (h)(3)(ii) of this 
section for the most recently completed fiscal year, and if the 
following conditions are met:
    (A) The institution received less than $500,000 in title IV, HEA 
program funds for its most recently completed fiscal year.
    (B) The institution has timely submitted acceptable compliance 
audits for two consecutive fiscal years, and following such submission, 
has no history of late submission since then.
    (C) The institution is fully certified.
    (3)(i) Exceptions. Notwithstanding the provisions of paragraphs 
(h)(1)(i) and (h)(1)(iii) of this section, the Secretary may issue a 
letter to a foreign institution that identifies problems with its 
financial condition or financial reporting and requires the submission 
of audited financial statements in the manner specified by the 
Secretary.
    (ii) Notwithstanding the provisions of paragraphs (h)(2)(ii) and 
(h)(2)(iii) of this section, the Secretary may issue to a foreign 
institution a letter that

[[Page 524]]

identifies problems with its administrative capability or compliance 
reporting that may require the compliance audit to be performed at a 
higher level of engagement, and may require the compliance audit to be 
submitted annually.

(Approved by the Office of Management and Budget under control number 
1840-0697)

(Authority: 20 U.S.C. 1088, 1094, 1099c, 1141, and section 4 of Pub. L. 
95-452, 92 Stat. 1101-1109)

[61 FR 60569, Nov. 29, 1996, as amended at 62 FR 27128, May 16, 1997; 62 
FR 62876, Nov. 25, 1997; 74 FR 55936, Oct. 29, 2009; 75 FR 67198, Nov. 
1, 2010]



Sec. 668.24  Record retention and examinations.

    (a) Program records. An institution shall establish and maintain, on 
a current basis, any application for title IV, HEA program funds and 
program records that document--
    (1) Its eligibility to participate in the title IV, HEA programs;
    (2) The eligibility of its educational programs for title IV, HEA 
program funds;
    (3) Its administration of the title IV, HEA programs in accordance 
with all applicable requirements;
    (4) Its financial responsibility, as specified in this part;
    (5) Information included in any application for title IV, HEA 
program funds; and
    (6) Its disbursement and delivery of title IV, HEA program funds.
    (b) Fiscal records. (1) An institution shall account for the receipt 
and expenditure of title IV, HEA program funds in accordance with 
generally accepted accounting principles.
    (2) An institution shall establish and maintain on a current basis--
    (i) Financial records that reflect each HEA, title IV program 
transaction; and
    (ii) General ledger control accounts and related subsidiary accounts 
that identify each title IV, HEA program transaction and separate those 
transactions from all other institutional financial activity.
    (c) Required records. (1) The records that an institution must 
maintain in order to comply with the provisions of this section include 
but are not limited to--
    (i) The Student Aid Report (SAR) or Institutional Student 
Information Record (ISIR) used to determine eligibility for title IV, 
HEA program funds;
    (ii) Application data submitted to the Secretary, lender, or 
guaranty agency by the institution on behalf of the student or parent;
    (iii) Documentation of each student's or parent borrower's 
eligibility for title IV, HEA program funds;
    (iv) Documentation relating to each student's or parent borrower's 
receipt of title IV, HEA program funds, including but not limited to 
documentation of--
    (A) The amount of the grant, loan, or FWS award; its payment period; 
its loan period, if appropriate; and the calculations used to determine 
the amount of the grant, loan, or FWS award;
    (B) The date and amount of each disbursement or delivery of grant or 
loan funds, and the date and amount of each payment of FWS wages;
    (C) The amount, date, and basis of the institution's calculation of 
any refunds or overpayments due to or on behalf of the student, or the 
treatment of title IV, HEA program funds when a student withdraws; and
    (D) The payment of any overpayment or the return of any title IV, 
HEA program funds to the title IV, HEA program fund, a lender, or the 
Secretary, as appropriate;
    (v) Documentation of and information collected at any initial or 
exit loan counseling required by applicable program regulations;
    (vi) Reports and forms used by the institution in its participation 
in a title IV, HEA program, and any records needed to verify data that 
appear in those reports and forms; and
    (vii) Documentation supporting the institution's calculations of its 
completion or graduation rates under Secs. 668.46 and 668.49.
    (2) In addition to the records required under this part--
    (i) Participants in the Federal Perkins Loan Program shall follow 
procedures established in 34 CFR 674.19 for documentation of repayment 
history for that program;
    (ii) Participants in the FWS Program shall follow procedures 
established in

[[Page 525]]

34 CFR 675.19 for documentation of work, earnings, and payroll 
transactions for that program; and
    (iii) Participants in the FFEL Program shall follow procedures 
established in 34 CFR 682.610 for documentation of additional loan 
record requirements for that program.
    (d) General. (1) An institution shall maintain required records in a 
systematically organized manner.
    (2) An institution shall make its records readily available for 
review by the Secretary or the Secretary's authorized representative at 
an institutional location designated by the Secretary or the Secretary's 
authorized representative.
    (3) An institution may keep required records in hard copy or in 
microform, computer file, optical disk, CD-ROM, or other media formats, 
provided that--
    (i) Except for the records described in paragraph (d)(3)(ii) of this 
section, all record information must be retrievable in a coherent hard 
copy format or in other media formats acceptable to the Secretary;
    (ii) An institution shall maintain the Student Aid Report (SAR) or 
Institutional Student Information Record (ISIR) used to determine 
eligibility for title IV, HEA program funds in the format in which it 
was received by the institution, except that the SAR may be maintained 
in an imaged media format;
    (iii) Any imaged media format used to maintain required records must 
be capable of reproducing an accurate, legible, and complete copy of the 
original document, and, when printed, this copy must be approximately 
the same size as the original document;
    (iv) Any document that contains a signature, seal, certification, or 
any other image or mark required to validate the authenticity of its 
information must be maintained in its original hard copy or in an imaged 
media format; and
    (v) Participants in the Federal Perkins Loan Program shall follow 
procedures established in 34 CFR 674.19 for maintaining the original 
promissory notes and repayment schedules for that program.
    (4) If an institution closes, stops providing educational programs, 
is terminated or suspended from the title IV, HEA programs, or undergoes 
a change of ownership that results in a change of control as described 
in 34 CFR 600.31, it shall provide for--
    (i) The retention of required records; and
    (ii) Access to those records, for inspection and copying, by the 
Secretary or the Secretary's authorized representative, and, for a 
school participating in the FFEL Program, the appropriate guaranty 
agency.
    (e) Record retention. Unless otherwise directed by the Secretary--
    (1) An institution shall keep records relating to its administration 
of the Federal Perkins Loan, FWS, FSEOG, Federal Pell Grant, ACG, 
National SMART Grant, or TEACH Grant Program for three years after the 
end of the award year for which the aid was awarded and disbursed under 
those programs, provided that an institution shall keep--
    (i) The Fiscal Operations Report and Application to Participate in 
the Federal Perkins Loan, FSEOG, and FWS Programs (FISAP), and any 
records necessary to support the data contained in the FISAP, including 
``income grid information,'' for three years after the end of the award 
year in which the FISAP is submitted; and
    (ii) Repayment records for a Federal Perkins loan, including records 
relating to cancellation and deferment requests, in accordance with the 
provisions of 34 CFR 674.19;
    (2)(i) An institution shall keep records relating to a student or 
parent borrower's eligibility and participation in the FFEL or Direct 
Loan Program for three years after the end of the award year in which 
the student last attended the institution; and
    (ii) An institution shall keep all other records relating to its 
participation in the FFEL or Direct Loan Program, including records of 
any other reports or forms, for three years after the end of the award 
year in which the records are submitted; and
    (3) An institution shall keep all records involved in any loan, 
claim, or expenditure questioned by a title IV, HEA program audit, 
program review,

[[Page 526]]

investigation, or other review until the later of--
    (i) The resolution of that questioned loan, claim, or expenditure; 
or
    (ii) The end of the retention period applicable to the record.
    (f) Examination of records. (1) An institution that participates in 
any title IV, HEA program and the institution's third-party servicer, if 
any, shall cooperate with an independent auditor, the Secretary, the 
Department of Education's Inspector General, the Comptroller General of 
the United States, or their authorized representatives, a guaranty 
agency in whose program the institution participates, and the 
institution's accrediting agency, in the conduct of audits, 
investigations, program reviews, or other reviews authorized by law.
    (2) The institution and servicer must cooperate by--
    (i) Providing timely access, for examination and copying, to 
requested records, including but not limited to computerized records and 
records reflecting transactions with any financial institution with 
which the institution or servicer deposits or has deposited any title 
IV, HEA program funds, and to any pertinent books, documents, papers, or 
computer programs; and
    (ii) Providing reasonable access to personnel associated with the 
institution's or servicer's administration of the title IV, HEA programs 
for the purpose of obtaining relevant information.
    (3) The Secretary considers that an institution or servicer has 
failed to provide reasonable access to personnel under paragraph 
(f)(2)(ii) of this section if the institution or servicer--
    (i) Refuses to allow those personnel to supply all relevant 
information;
    (ii) Permits interviews with those personnel only if the 
institution's or servicer's management is present; or
    (iii) Permits interviews with those personnel only if the interviews 
are tape recorded by the institution or servicer.
    (4) Upon request of the Secretary, or a lender or guaranty agency in 
the case of a borrower under the FFEL Program, an institution or 
servicer promptly shall provide the requester with any information the 
institution or servicer has respecting the last known address, full 
name, telephone number, enrollment information, employer, and employer 
address of a recipient of title IV funds who attends or attended the 
institution.

(Approved by the Office of Management and Budget under control number 
1840-0697)

(Authority: 20 U.S.C. 1070a, 1070a-1, 1070b, 1070g, 1078, 1078-1, 1078-
2, 1078-3, 1082, 1087, 1087a, et seq. , 1087cc, 1087hh, 1088, 1094, 
1099c, 1141, 1232f; 42 U.S.C. 2753; section 4 of Pub. L. 95-452, 92 
Stat. 1101-1109)

[61 FR 60491, Nov. 27, 1996, as amended at 62 FR 27128, May 16, 1997; 64 
FR 59042, Nov. 1, 1999; 71 FR 38002, July 3, 2006; 73 FR 35493, June 23, 
2008]



Sec. 668.25  Contracts between an institution and a third-party servicer.

    (a) An institution may enter into a written contract with a third-
party servicer for the administration of any aspect of the institution's 
participation in any Title IV, HEA program only to the extent that the 
servicer's eligibility to contract with the institution has not been 
limited, suspended, or terminated under the proceedings of subpart G of 
this part.
    (b) Subject to the provisions of paragraph (d) of this section, a 
third-party servicer is eligible to enter into a written contract with 
an institution for the administration of any aspect of the institution's 
participation in any Title IV, HEA program only to the extent that the 
servicer's eligibility to contract with the institution has not been 
limited, suspended, or terminated under the proceedings of subpart G of 
this part.
    (c) In a contract with an institution, a third-party servicer shall 
agree to--
    (1) Comply with all statutory provisions of or applicable to Title 
IV of the HEA, all regulatory provisions prescribed under that statutory 
authority, and all special arrangements, agreements, limitations, 
suspensions, and terminations entered into under the authority of 
statutes applicable to Title IV of the HEA, including the requirement to 
use any funds that the servicer administers under any Title IV, HEA 
program and any interest or other earnings thereon solely for the 
purposes specified in and in accordance with that program;

[[Page 527]]

    (2) Refer to the Office of Inspector General of the Department of 
Education for investigation any information indicating there is 
reasonable cause to believe that the institution might have engaged in 
fraud or other criminal misconduct in connection with the institution's 
administration of any Title IV, HEA program or an applicant for Title 
IV, HEA program assistance might have engaged in fraud or other criminal 
misconduct in connection with his or her application. Examples of the 
type of information that must be referred are--
    (i) False claims by the institution for Title IV, HEA program 
assistance;
    (ii) False claims of independent student status;
    (iii) False claims of citizenship;
    (iv) Use of false identities;
    (v) Forgery of signatures or certifications;
    (vi) False statements of income; and
    (vii) Payment of any commission, bonus, or other incentive payment 
based in any part, directly or indirectly, upon success in securing 
enrollments or the award of financial aid to any person or entity 
engaged in any student recruitment or admission activity or in making 
decisions regarding the award of title IV, HEA program funds.
    (3) Be jointly and severally liable with the institution to the 
Secretary for any violation by the servicer of any statutory provision 
of or applicable to Title IV of the HEA, any regulatory provision 
prescribed under that statutory authority, and any applicable special 
arrangement, agreement, or limitation entered into under the authority 
of statutes applicable to Title IV of the HEA;
    (4) In the case of a third-party servicer that disburses funds 
(including funds received under the Title IV, HEA programs) or delivers 
Federal Stafford Loan Program proceeds to a student--
    (i) Confirm the eligibility of the student before making that 
disbursement or delivering those proceeds. This confirmation must 
include, but is not limited to, any applicable information contained in 
the records required under Sec. 668.24; and
    (ii) Calculate and return any unearned title IV, HEA program funds 
to the title IV, HEA program accounts and the student's lender, as 
appropriate, in accordance with the provisions of Secs. 668.21 and 
668.22, and applicable program regulations; and
    (5) If the servicer or institution terminates the contract, or if 
the servicer stops providing services for the administration of a Title 
IV, HEA program, goes out of business, or files a petition under the 
Bankruptcy Code, return to the institution all--
    (i) Records in the servicer's possession pertaining to the 
institution's participation in the program or programs for which 
services are no longer provided; and
    (ii) Funds, including Title IV, HEA program funds, received from or 
on behalf of the institution or the institution's students, for the 
purposes of the program or programs for which services are no longer 
provided.
    (d) A third-party servicer may not enter into a written contract 
with an institution for the administration of any aspect of the 
institution's participation in any Title IV, HEA program, if--
    (1)(i) The servicer has been limited, suspended, or terminated by 
the Secretary within the preceding five years;
    (ii) The servicer has had, during the servicer's two most recent 
audits of the servicer's administration of the Title IV, HEA programs, 
an audit finding that resulted in the servicer's being required to repay 
an amount greater than five percent of the funds that the servicer 
administered under the Title IV, HEA programs for any award year; or
    (iii) The servicer has been cited during the preceding five years 
for failure to submit audit reports required under Title IV of the HEA 
in a timely fashion; and
    (2)(i) In the case of a third-party servicer that has been subjected 
to a termination action by the Secretary, either the servicer, or one or 
more persons or entities that the Secretary determines (under the 
provisions of Sec. 668.15) exercise substantial control over the 
servicer, or both, have not submitted to the Secretary financial 
guarantees in an amount determined by the Secretary to be sufficient to 
satisfy the servicer's potential liabilities

[[Page 528]]

arising from the servicer's administration of the Title IV, HEA 
programs; and
    (ii) One or more persons or entities that the Secretary determines 
(under the provisions of Sec. 668.15) exercise substantial control over 
the servicer have not agreed to be jointly or severally liable for any 
liabilities arising from the servicer's administration of the Title IV, 
HEA programs and civil and criminal monetary penalties authorized under 
Title IV of the HEA.
    (e)(1)(i) An institution that participates in a Title IV, HEA 
program shall notify the Secretary within 10 days of the date that--
    (A) The institution enters into a new contract or significantly 
modifies an existing contract with a third-party servicer to administer 
any aspect of that program;
    (B) The institution or a third-party servicer terminates a contract 
for the servicer to administer any aspect of that program; or
    (C) A third-party servicer that administers any aspect of the 
institution's participation in that program stops providing services for 
the administration of that program, goes out of business, or files a 
petition under the Bankruptcy Code.
    (ii) The institution's notification must include the name and 
address of the servicer.
    (2) An institution that contracts with a third-party servicer to 
administer any aspect of the institution's participation in a Title IV, 
HEA program shall provide to the Secretary, upon request, a copy of the 
contract, including any modifications, and provide information 
pertaining to the contract or to the servicer's administration of the 
institution's participation in any Title IV, HEA program.

(Approved by the Office of Management and Budget under control number 
1840-0537)

(Authority: 20 U.S.C. 1094)

[59 FR 22441, Apr. 29, 1994, as amended at 59 FR 34964, July 7, 1994; 61 
FR 60492, Nov. 27, 1996; 63 FR 40624, July 29, 1998; 64 FR 59042, Nov. 
1, 1999; 75 FR 66952, Oct. 29, 2010]



Sec. 668.26  End of an institution's participation in the Title IV,
HEA programs.

    (a) An institution's participation in a Title IV, HEA program ends 
on the date that--
    (1) The institution closes or stops providing 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 institution loses its institutional eligibility under 34 CFR 
part 600;
    (3) The institution's participation is terminated under the 
proceedings in subpart G of this part;
    (4) The institution's period of participation, as specified under 
Sec. 668.13, expires, or the institution's provisional certification is 
revoked under Sec. 668.13;
    (5) The institution's program participation agreement is terminated 
or expires under Sec. 668.14;
    (6) The institution's participation ends under subpart M of this 
part; or
    (7) The Secretary receives a notice from the appropriate State 
postsecondary review entity designated under 34 CFR part 667 that the 
institution's participation should be withdrawn.
    (b) If an institution's participation in a Title IV, HEA program 
ends, the institution shall--
    (1) Immediately notify the Secretary of that fact;
    (2) Submit to the Secretary within 45 days after the date that the 
participation ends--
    (i) All financial, performance, and other reports required by 
appropriate Title IV, HEA program regulations; and
    (ii) A letter of engagement for an independent audit of all funds 
that the institution received under that program, the report of which 
shall be submitted to the Secretary within 45 days after the date of the 
engagement letter;
    (3) Inform the Secretary of the arrangements that the institution 
has made for the proper retention and storage for a minimum of three 
years of all records concerning the administration of that program;
    (4) If the institution's participation in the Federal Perkins Loan 
Program ended, inform the Secretary of how the

[[Page 529]]

institution will provide for the collection of any outstanding loans 
made under that program;
    (5) If the institution's participation in the LEAP Program ended--
    (i) Inform immediately the State in which the institution is located 
of that fact; and
    (ii) Notwithstanding paragraphs (c) through (e) of this section, 
follow the instructions of that State concerning the end of that 
participation;
    (6) If the institution's participation in all the Title IV, HEA 
programs ended, inform the Secretary of how the institution will provide 
for the collection of any outstanding loans made under the National 
Defense/Direct Student Loan programs; and
    (7) Continue to comply with the requirements of Sec. 668.22 for the 
treatment of title IV, HEA program funds when a student withdraws.
    (c) If an institution closes or stops providing 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, the 
institution shall--
    (1) Return to the Secretary, or otherwise dispose of under 
instructions from the Secretary, any unexpended funds that the 
institution has received under the Title IV, HEA programs for attendance 
at the institution, less the institution's administrative allowance, if 
applicable; and
    (2) Return to the appropriate lenders any Federal Stafford Loan 
program proceeds that the institution has received but not delivered to, 
or credited to the accounts of, students attending the institution.
    (d)(1) An institution may use funds that it has received under the 
Federal Pell Grant, ACG, National SMART Grant, or TEACH Grant Program or 
a campus-based program or request additional funds from the Secretary, 
under conditions specified by the Secretary, if the institution does not 
possess sufficient funds, to satisfy any unpaid commitment made to a 
student under that Title IV, HEA program only if--
    (i) The institution's participation in that Title IV, HEA program 
ends during a payment period;
    (ii) The institution continues to provide, from the date that the 
participation ends until the scheduled completion date of that payment 
period, educational programs to otherwise eligible students enrolled in 
the formerly eligible programs of the institution;
    (iii) The commitment was made prior to the end of the participation; 
and
    (iv) The commitment was made for attendance during that payment 
period or a previously completed payment period.
    (2) An institution may credit to a student's account or deliver to 
the student the proceeds of a disbursement of a Federal Family Education 
Loan Programs loan to satisfy any unpaid commitment made to the student 
under the Federal Family Education Loan Programs Loan Program only if--
    (i) The institution's participation in that Title IV, HEA program 
ends during a period of enrollment;
    (ii) The institution continues to provide, from the date that the 
participation ends until the scheduled completion date of that period of 
enrollment, educational programs to otherwise eligible students enrolled 
in the formerly eligible programs of the institution;
    (iii) The loan was made for attendance during that period of 
enrollment.
    (iv) The proceeds of the first disbursement of the loan were 
delivered to the student or credited to the student's account prior to 
the end of the participation.
    (3) An institution may use funds that it has received under the 
Direct Loan Program or request additional funds from the Secretary, 
under conditions specified by the Secretary, if the institution does not 
possess sufficient funds, to credit to a student's account or disburse 
to the student the proceeds of a Direct Loan Program loan only if--
    (i) The institution's participation in the Direct Loan Program ends 
during a period of enrollment;
    (ii) The institution continues to provide, from the date that the 
participation ends until the scheduled completion date of that period of 
enrollment, educational programs to otherwise eligible students enrolled 
in the formerly eligible programs of the institution;

[[Page 530]]

    (iii) The loan was made for attendance during that period of 
enrollment; and
    (iv) The proceeds of the first disbursement of the loan were 
delivered to the student or credited to the student's account prior to 
the end of the participation.
    (e) For the purposes of this section--
    (1) A commitment under the Federal Pell Grant, ACG, National SMART 
Grant, and TEACH Grant programs occurs when a student is enrolled and 
attending the institution and has submitted a valid Student Aid Report 
to the institution or when an institution has received a valid 
institutional student information report; and
    (2) A commitment under the campus-based programs occurs when a 
student is enrolled and attending the institution and has received a 
notice from the institution of the amount that he or she can expect to 
receive and how and when that amount will be paid.

(Approved by the Office of Management and Budget under control number 
1840-0537)

(Authority: 20 U.S.C. 1070g, 1094, 1099a-3)

[59 FR 22442, Apr. 29, 1994, as amended at 59 FR 34964, July 7, 1994; 61 
FR 60492, Nov. 27, 1996; 63 FR 40624, July 29, 1998; 64 FR 59042, Nov. 
1, 1999; 65 FR 38729, June 22, 2000; 65 FR 65637, Nov. 1, 2000; 69 FR 
12276, Mar. 16, 2004; 71 FR 38002, July 3, 2006; 73 FR 35493, June 23, 
2008]



Sec. 668.27  Waiver of annual audit submission requirement.

    (a) General. (1) At the request of an institution, the Secretary may 
waive the annual audit submission requirement for the period of time 
contained in paragraph (b) of this section if the institution satisfies 
the requirements contained in paragraph (c) of this section and posts a 
letter of credit in the amount determined in paragraph (d) of this 
section.
    (2) An institution requesting a waiver must submit an application to 
the Secretary at such time and in such manner as the Secretary 
prescribes.
    (3) The first fiscal year for which an institution may request a 
waiver is the fiscal year in which it submits its waiver request to the 
Secretary.
    (b) Waiver period. (1) If the Secretary grants the waiver, the 
institution need not submit its compliance or audited financial 
statement until six months after--
    (i) The end of the third fiscal year following the fiscal year for 
which the institution last submitted a compliance audit and audited 
financial statement; or
    (ii) The end of the second fiscal year following the fiscal year for 
which the institution last submitted compliance and financial statement 
audits if the award year in which the institution will apply for 
recertification is part of the third fiscal year.
    (2) The Secretary does not grant a waiver if the award year in which 
the institution will apply for recertification is part of the second 
fiscal year following the fiscal year for which the institution last 
submitted compliance and financial statement audits.
    (3) When an institution must submit its next compliance and 
financial statement audits under paragraph (b)(1) of this section--
    (i) The institution must submit a compliance audit that covers the 
institution's administration of the title IV, HEA programs for the 
period for each fiscal year for which an audit did not have to be 
submitted as a result of the waiver, and an audited financial statement 
for its last fiscal year; and
    (ii) The auditor who conducts the audit must audit the institution's 
annual determinations for the period subject to the waiver that it 
satisfied the 90/10 rule in Sec. 600.5 and the other conditions of 
institutional eligibility in Sec. 600.7 and Sec. 668.8(e)(2), and 
disclose the results of the audit of the 90/10 rule for each year in 
accordance with Sec. 668.23(d)(4).
    (c) Criteria for granting the waiver. The Secretary grants a waiver 
to an institution if the institution--
    (1) Is not a foreign institution;
    (2) Did not disburse $200,000 or more of title IV, HEA program funds 
during each of the two completed award years preceding the institution's 
waiver request;
    (3) Agrees to keep records relating to each award year in the 
unaudited period for two years after the end of the record retention 
period in Sec. 668.24(e) for that award year;

[[Page 531]]

    (4) Has participated in the title IV, HEA programs under the same 
ownership for at least three award years preceding the institution's 
waiver request;
    (5) Is financially responsible under Sec. 668.171, and does not rely 
on the alternative standards of Sec. 668.175 to participate in the title 
IV, HEA programs;
    (6) Is not on the reimbursement or cash monitoring system of 
payment;
    (7) Has not been the subject of a limitation, suspension, fine, or 
termination proceeding, or emergency action initiated by the Department 
or a guarantee agency in the three years preceding the institution's 
waiver request;
    (8) Has submitted its compliance audits and audited financial 
statements for the previous two fiscal years in accordance with and 
subject to Sec. 668.23, and no individual audit disclosed liabilities in 
excess of $10,000; and
    (9) Submits a letter of credit in the amount determined in paragraph 
(d) of this section, which must remain in effect until the Secretary has 
resolved the audit covering the award years subject to the waiver.
    (d) Letter of credit amount. For purposes of this section, the 
letter of credit amount equals 10 percent of the amount of title IV, HEA 
program funds the institution disbursed to or on behalf of its students 
during the award year preceding the institution's waiver request.
    (e) Rescission of the waiver. (1) The Secretary rescinds the waiver 
if the institution--
    (i) Disburses $200,000 or more of title IV, HEA program funds for an 
award year;
    (ii) Undergoes a change in ownership that results in a change of 
control; or
    (iii) Becomes the subject of an emergency action or a limitation, 
suspension, fine, or termination action initiated by the Department or a 
guarantee agency.
    (2) If the Secretary rescinds a waiver, the rescission is effective 
on the last day of the fiscal year in which the rescission takes place.
    (f) Renewal. An institution may request a renewal of its waiver when 
it submits its audits under paragraph (b) of this section. The Secretary 
grants the waiver if the audits and other information available to the 
Secretary show that the institution continues to satisfy the criteria 
for receiving that waiver.

(Authority: 20 U.S.C. 1094)

[64 FR 58618, Oct. 29, 1999]



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

    (a) General --(1) Calculating the revenue percentage. A proprietary 
institution meets 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;

[[Page 532]]

    (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 special tax treatment under the Internal Revenue Code of 
1986; or
    (iv) Institutional scholarships that meet the requirements in 
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 and credited in full to the students' 
accounts at the institution 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 and deemed to be 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 other 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;

[[Page 533]]

    (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. If any funds from the loan disbursement used in the 
return calculation under Sec. 668.22 were counted as non-title IV 
revenue under paragraph (a)(6) of this section, the amount of Title IV, 
HEA program funds refunded or returned under Sec. 668.22 is considered 
to consist of pre-ECASLA loan amounts and loan amounts in excess of the 
loan limits prior to ECASLA in the same proportion to the loan 
disbursement; 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)

[74 FR 55937, Oct. 29, 2009]

[[Page 534]]



    Sec. Appendix A to Subpart B of Part 668--Standards for Audit of 
  Governmental Organizations, Programs, Activities, and Functions (GAO)

                    Part III Chapter 3--Independence

    (a) The Third general standard for governmental auditing is: In 
matters relating to the audit work, the audit organization and the 
individual auditors shall maintain an independent attitude.
    (b) This standard places upon the auditor and the audit organization 
the responsibility for maintaining sufficient independence so that their 
opinions, conclusions, judgments, and recommendations will be impartial. 
If the auditor is not sufficiently independent to produce unbiased 
opinions, conclusions, and judgments, he should state in a prominent 
place in the audit report his relationship with the organization or 
officials being audited. \1\
---------------------------------------------------------------------------

    \1\ If the auditor is not fully independent because he or she is an 
employee of the audited entity, it will be adequate disclosure to so 
indicate. If the auditor is a practicing certified public accountant, 
his or her conduct should be governed by the AICPA ``Statements on 
Auditing Procedure.''
---------------------------------------------------------------------------

    (c) The auditor should consider not only whether his or her own 
attitude and beliefs permit him or her to be independent but also 
whether there is anything about his or her situation which would lead 
others to question his or her independence. Both situations deserve 
consideration since it is important not only that the auditor be, in 
fact, independent and impartial but also that other persons will 
consider him or her so.
    (d) There are three general classes of impairments that the auditor 
needs to consider; these are personal, external, and organizational 
impairments. If one or more of these are of such significance as to 
affect the auditor's ability to perform his or her work and report its 
results impartially, he or she should decline to perform the audit or 
indicate in the report that he or she was not fully independent.

                          Personal Impairments

    There are some circumstances in which an auditor cannot be impartial 
because of his or her views or his or her personal situation. These 
circumstances might include:
    1. Relationships of an official, professional, and/or personal 
nature that might cause the auditor to limit the extent or character of 
the inquiry, to limit disclosure, or to weaken his or her findings in 
any way.
    2. Preconceived ideas about the objectives or quality of a 
particular operation or personal likes or dislikes of individuals, 
groups, or objectives of a particular program.
    3. Previous involvement in a decisionmaking or management capacity 
in the operations of the governmental entity or program being audited.
    4. Biases and prejudices, including those induced by political or 
social convictions, which result from employment in or loyalty to a 
particular group, entity, or level of government.
    5. Actual or potential restrictive influence when the auditor 
performs preaudit work and subsequently performs a post audit.
    6. Financial interest, direct or indirect, in an organization or 
facility which is benefiting from the audited programs.

                          External Impairments

    External factors can restrict the audit or impinge on the auditor's 
ability to form independent and objective opinions and conclusions. For 
example, under the following conditions either the audit itself could be 
adversely affected or the auditor would not have complete freedom to 
make an independent judgment. \2\
---------------------------------------------------------------------------

    \2\ Some of these situations may constitute justifiable limitations 
on the scope of the work. In such cases the limitation should be 
identified in the auditor's report.
---------------------------------------------------------------------------

    1. Interference or other influence that improperly or imprudently 
eliminates, restricts, or modifies the scope or character of the audit.
    2. Interference with the selection or application of audit 
procedures of the selection of activities to be examined.
    3. Denial of access to such sources of information as books, 
records, and supporting documents or denial or opportunity to obtain 
explanations by officials and employees of the governmental 
organization, program, or activity under audit.
    4. Interference in the assignment of personnel to the audit task.
    5. Retaliatory restrictions placed on funds or other resources 
dedicated to the audit operation.
    6. Activity to overrule or significantly influence the auditors 
judgment as to the appropriate content of the audit report.
    7. Influences that place the auditor's continued employment in 
jeopardy for reasons other than competency or the need for audit 
services.
    8. Unreasonable restriction on the time allowed to competently 
complete an audit assignment.

                       Organizational Impairments

    (a) The auditor's independence can be affected by his or her place 
within the organizational structure of governments. Auditors

[[Page 535]]

employed by Federal, State, or local government units may be subject to 
policy direction from superiors who are involved either directly or 
indirectly in the government management process. To achieve maximum 
independence such auditors and the audit organization itself not only 
should report to the highest practicable echelon within their government 
but should be organizationally located outside the line-management 
function of the entity under audit.
    (b) These auditors should also be sufficiently removed from 
political pressures to ensure that they can conduct their auditing 
objectively and can report their conclusions completely without fear of 
censure. Whenever feasible they should be under a system which will 
place decisions on compensation, training, job tenure, and advancement 
on a merit basis.
    (c) When independent public accountants or other independent 
professionals are engaged to perform work that includes inquiries into 
compliance with applicable laws and regulations, efficiency and economy 
of operations, or achievement of program results, they should be engaged 
by someone other than the officials responsible for the direction of the 
effort being audited. This practice removes the pressure that may result 
if the auditor must criticize the performance of those by whom he or she 
was engaged. To remove this obstacle to independence, governments should 
arrange to have auditors engaged by officials not directly involved in 
operations to be audited.

[51 FR 41921, Nov. 19, 1986. Redesignated at 65 FR 65650, Nov. 1, 2000]



  Sec. Appendix B to Subpart B of Part 668--Appendix I, Standards for 
Audit of Governmental Organizations, Programs, Activities, and Functions 
                                  (GAO)

     Qualifications of Independent Auditors Engaged by Governmental 
                              Organizations

    (a) When outside auditors are engaged for assignments requiring the 
expression of an opinion on financial reports of governmental 
organizations, only fully qualified public accountants should be 
employed. The type of qualifications, as stated by the Comptroller 
General, deemed necessary for financial audits of governmental 
organizations and programs is quoted below:
    ``Such audits shall be conducted * * * by independent certified 
public accountants or by independent licensed public accountants, 
licensed on or before December 31, 1970, who are certified or licensed 
by a regulatory authority of a State or other political subdivision of 
the United States: Except that independent public accountants licensed 
to practice by such regulatory authority after December 31, 1970, and 
persons who although not so certified or licensed, meet, in the opinion 
of the Secretary, standards of education and experience representative 
of the highest prescribed by the licensing authorities of the several 
States which provide for the continuing licensing of public accountants 
and which are prescribed by the Secretary in appropriate regulations may 
perform such audits until December 31, 1975; Provided, That if the 
Secretary deems it necessary in the public interest, he may prescribe by 
regulations higher standard than those required for the practice of 
public accountancy by the regulatory authorities of the States.'' \1\
---------------------------------------------------------------------------

    \1\ Letter (B-148144, September 15, 1970) from the Comptroller 
General to the heads of Federal departments and agencies. The reference 
to ``Secretary'' means the head of the department or agency.
---------------------------------------------------------------------------

    (b) The standards for examination and evaluation require 
consideration of applicable laws and regulations in the auditor's 
examination. The standards for reporting require a statement in the 
auditor's report regarding any significant instances of noncompliance 
disclosed by his or her examination and evaluation work. What is to be 
included in this statement requires judgment. Significant instances of 
noncompliance, even those not resulting in legal liability to the 
audited entity, should be included. Minor procedural noncompliance need 
not be disclosed.
    (c) Although the reporting standard is generally on an exception 
basis--that only noncompliance need be reported--it should be recognized 
that governmental entities often want positive statements regarding 
whether or not the auditor's tests disclosed instances of noncompliance. 
This is particularly true in grant programs where authorizing agencies 
frequently want assurance in the auditor's report that this matter has 
been considered. For such audits, auditors should obtain an 
understanding with the authorizing agency as to the extent to which such 
positive comments on compliance are desired. When coordinated audits are 
involved, the audit program should specify the extent of comments that 
the auditor is to make regarding compliance.
    (d) When noncompliance is reported, the auditor should place the 
findings in proper perspective. The extent of instances of noncompliance 
should be related to the number of cases examined to provide the reader 
with a basis for judging the prevalence of noncompliance.

[45 FR 86856, Dec. 31, 1980. Redesignated at 65 FR 65650, Nov. 1, 2000]

[[Page 536]]



   Sec. Appendix C to Subpart B of Part 668--90/10 Revenue Calculation
[GRAPHIC] [TIFF OMITTED] TR29OC09.006


[[Page 537]]


[GRAPHIC] [TIFF OMITTED] TR29OC09.007


[[Page 538]]


[GRAPHIC] [TIFF OMITTED] TR29OC09.008


[[Page 539]]


[GRAPHIC] [TIFF OMITTED] TR29OC09.009


[74 FR 55938, Oct. 29, 2009]



                      Subpart C_Student Eligibility

    Source: 60 FR 61810, Dec. 1, 1995, unless otherwise noted.



Sec. 668.31  Scope.

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

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



Sec. 668.32  Student 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:
    (a)(1) (i) Is a regular student enrolled, or accepted for 
enrollment, in an eligible program at an eligible institution;
    (ii) For purposes of the FFEL and Direct Loan programs, is enrolled 
for no longer than one twelve-month period in

[[Page 540]]

a course of study necessary for enrollment in an eligible program; or
    (iii) For purposes of the Federal Perkins Loan, FWS, FFEL, and 
Direct Loan programs, is enrolled or accepted for enrollment as at least 
a half-time student at an eligible institution in a program necessary 
for a professional credential or certification from a State that is 
required for employment as a teacher in an elementary or secondary 
school in that State; and
    (2) For purposes of the ACG, National SMART Grant, FFEL, and Direct 
Loan programs, is at least a half-time student.
    (b) Is not enrolled in either an elementary or secondary school.
    (c)(1) For purposes of the ACG, National SMART Grant, and FSEOG 
programs, does not have a baccalaureate or first professional degree;
    (2) For purposes of the Federal Pell Grant Program--
    (i)(A) Does not have a baccalaureate or first professional degree; 
or
    (B) Is enrolled in a postbaccalaureate teacher certificate or 
licensing program as described in 34 CFR 690.6(c); and
    (ii) Is not incarcerated in a Federal or State penal institution;
    (3) For purposes of the Federal Perkins Loan, FFEL, and Direct Loan 
programs, is not incarcerated; and
    (4) For the purposes of the TEACH Grant program--
    (i) For an undergraduate student other than a student enrolled in a 
post-baccalaureate program, has not completed the requirements for a 
first baccalaureate degree; or
    (ii) For the purposes of a student in a first post-baccalaureate 
program, has not completed the requirements for a post-baccalaureate 
program as described in 34 CFR 686.2(d).
    (d) Satisfies the citizenship and residency requirements contained 
in Sec. 668.33 and subpart I of this part.
    (e)(1) Has a high school diploma or its recognized equivalent;
    (2) Has obtained a passing score specified by the Secretary on an 
independently administered test in accordance with subpart J of this 
part;
    (3) Is enrolled in an eligible institution that participates in a 
State ``process'' approved by the Secretary under subpart J of this 
part;
    (4) Was home-schooled, and either--
    (i) Obtained a secondary school completion credential for home 
school (other than a high school diploma or its recognized equivalent) 
provided for under State law; or
    (ii) If State law does not require a home-schooled student to obtain 
the credential described in paragraph (e)(4)(i) of this section, has 
completed a secondary school education in a home school setting that 
qualifies as an exemption from compulsory attendance requirements under 
State law; or
    (5) Has been determined by the institution to have the ability to 
benefit from the education or training offered by the institution based 
on the satisfactory completion of 6 semester hours, 6 trimester hours, 6 
quarter hours, or 225 clock hours that are applicable toward a degree or 
certificate offered by the institution.
    (f) Maintains satisfactory academic progress in his or her course of 
study according to the institution's published standards of satisfactory 
academic progress that meet the requirements of Sec. 668.34.
    (g) Except as provided in Sec. 668.35--
    (1) Is not in default, and certifies that he or she is not in 
default, on a loan made under any title IV, HEA loan program;
    (2) Has not obtained loan amounts that exceed annual or aggregate 
loan limits made under any title IV, HEA loan program;
    (3) Does not have property subject to a judgment lien for a debt 
owed to the United States; and
    (4) Is not liable for a grant or Federal Perkins loan overpayment. A 
student receives a grant or Federal Perkins loan overpayment if the 
student received grant or Federal Perkins loan payments that exceeded 
the amount he or she was eligible to receive; or if the student 
withdraws, that exceeded the amount he or she was entitled to receive 
for non-institutional charges.
    (h) Files a Statement of Educational Purpose in accordance with the 
instructions of the Secretary.
    (i) Has a correct social security number as determined under 
Sec. 668.36, except that this requirement does not apply to

[[Page 541]]

students who are residents of the Federated States of Micronesia, 
Republic of the Marshall Islands, or the Republic of Palau.
    (j) Satisfies the Selective Service registration requirements 
contained in Sec. 668.37, and, if applicable, satisfies the requirements 
of Sec. 668.38 and Sec. 668.39 involving enrollment in telecommunication 
and correspondence courses and a study abroad program, respectively.
    (k) Satisfies the program specific requirements contained in--
    (1) 34 CFR 674.9 for the Federal Perkins Loan program;
    (2) 34 CFR 675.9 for the FWS program;
    (3) 34 CFR 676.9 for the FSEOG program;
    (4) 34 CFR 682.201 for the FFEL programs;
    (5) 34 CFR 685.200 for the William D. Ford Federal Direct Loan 
programs;
    (6) 34 CFR 690.75 for the Federal Pell Grant program;
    (7) 34 CFR 691.75 for the ACG and National SMART Grant programs;
    (8) 34 CFR 692.40 for the LEAP program; and
    (9) 34 CFR 686.11 for the TEACH Grant program.
    (l) Is not ineligible under Sec. 668.40.
    (m) In the case of a student who has been convicted of, or has pled 
nolo contendere or guilty to, a crime involving fraud in obtaining title 
IV, HEA program assistance, has completed the repayment of such 
assistance to:
    (1) The Secretary; or
    (2) The holder, in the case of a title IV, HEA program loan.
    (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.

(Authority: 20 U.S.C. 1070g, 1091; 28 U.S.C. 3201(e))

[60 FR 61810, Dec. 1, 1995, as amended at 63 FR 40624, July 29, 1998; 64 
FR 57358, Oct. 22, 1999; 64 FR 58291, Oct. 28, 1999; 67 FR 67073, Nov. 
1, 2002; 71 FR 38002, July 3, 2006; 71 FR 45696, Aug. 9, 2006; 73 FR 
35493, June 23, 2008; 74 FR 20221, May 1, 2009; 74 FR 55942, Oct. 29, 
2009; 75 FR 66952, Oct. 29, 2010]



Sec. 668.33  Citizenship and residency requirements.

    (a) Except as provided in paragraph (b) of this section, to be 
eligible to receive title IV, HEA program assistance, a student must--
    (1) Be a citizen or national of the United States; or
    (2) Provide evidence from the U.S. Immigration and Naturalization 
Service that he or she--
    (i) Is a permanent resident of the United States; or
    (ii) Is in the United States for other than a temporary purpose with 
the intention of becoming a citizen or permanent resident;
    (b)(1) A citizen of the Federated States of Micronesia, Republic of 
the Marshall Islands, or the Republic of Palau is eligible to receive 
funds under the FWS, FSEOG, and Federal Pell Grant programs if the 
student attends an eligible institution in a State, or a public or 
nonprofit private eligible institution of higher education in those 
jurisdictions.
    (2) A student who satisfies the requirements of paragraph (a) of 
this section is eligible to receive funds under the FWS, FSEOG, and 
Federal Pell Grant programs if the student attends a public or nonprofit 
private eligible institution of higher education in the Federated States 
of Micronesia, Republic of the Marshall Islands, or the Republic of 
Palau.
    (c)(1) If a student asserts that he or she is a citizen of the 
United States on the Free Application for Federal Student Aid (FAFSA), 
the Secretary attempts to confirm that assertion under a data match with 
the Social Security Administration. If the Social Security 
Administration confirms the student's citizenship, the Secretary reports 
that confirmation to the institution and the student.
    (2) If the Social Security Administration does not confirm the 
student's citizenship assertion under the data match with the Secretary, 
the student can establish U.S. citizenship by submitting documentary 
evidence of that status to the institution. Before denying title IV, HEA 
assistance to a student for failing to establish citizenship, an 
institution must give a student at

[[Page 542]]

least 30 days notice to produce evidence of U.S. citizenship.

(Authority: 20 U.S.C. 1091, 5 U.S.C. 552a)

[52 FR 45727, Dec. 1, 1987, as amended at 71 FR 38002, July 3, 2006; 74 
FR 20221, May 1, 2009]



Sec. 668.34  Satisfactory academic progress.

    (a) Satisfactory academic progress policy. An institution must 
establish a reasonable satisfactory academic progress policy for 
determining whether an otherwise eligible student is making satisfactory 
academic progress in his or her educational program and may receive 
assistance under the title IV, HEA programs. The Secretary considers the 
institution's policy to be reasonable if--
    (1) The policy is at least as strict as the policy the institution 
applies to a student who is not receiving assistance under the title IV, 
HEA programs;
    (2) The policy provides for consistent application of standards to 
all students within categories of students, e.g., full-time, part-time, 
undergraduate, and graduate students, and educational programs 
established by the institution;
    (3) The policy provides that a student's academic progress is 
evaluated--
    (i) At the end of each payment period if the educational program is 
either one academic year in length or shorter than an academic year; or
    (ii) For all other educational programs, at the end of each payment 
period or at least annually to correspond with the end of a payment 
period;
    (4)(i) The policy specifies the grade point average (GPA) that a 
student must achieve at each evaluation, or if a GPA is not an 
appropriate qualitative measure, a comparable assessment measured 
against a norm; and
    (ii) If a student is enrolled in an educational program of more than 
two academic years, the policy specifies that at the end of the second 
academic year, the student must have a GPA of at least a ``C'' or its 
equivalent, or have academic standing consistent with the institution's 
requirements for graduation;
    (5)(i) The policy specifies the pace at which a student must 
progress through his or her educational program to ensure that the 
student will complete the program within the maximum timeframe, as 
defined in paragraph (b) of this section, and provides for measurement 
of the student's progress at each evaluation; and
    (ii) An institution calculates the pace at which the student is 
progressing by dividing the cumulative number of hours the student has 
successfully completed by the cumulative number of hours the student has 
attempted. In making this calculation, the institution is not required 
to include remedial courses;
    (6) The policy describes how a student's GPA and pace of completion 
are affected by course incompletes, withdrawals, or repetitions, or 
transfers of credit from other institutions. Credit hours from another 
institution that are accepted toward the student's educational program 
must count as both attempted and completed hours;
    (7) Except as provided in paragraphs (c) and (d) of this section, 
the policy provides that, at the time of each evaluation, a student who 
has not achieved the required GPA, or who is not successfully completing 
his or her educational program at the required pace, is no longer 
eligible to receive assistance under the title IV, HEA programs;
    (8) If the institution places students on financial aid warning, or 
on financial aid probation, as defined in paragraph (b) of this section, 
the policy describes these statuses and that--
    (i) A student on financial aid warning may continue to receive 
assistance under the title IV, HEA programs for one payment period 
despite a determination that the student is not making satisfactory 
academic progress. Financial aid warning status may be assigned without 
an appeal or other action by the student; and
    (ii) A student on financial aid probation may receive title IV, HEA 
program funds for one payment period. While a student is on financial 
aid probation, the institution may require the student to fulfill 
specific terms and conditions such as taking a reduced course load or 
enrolling in specific courses. At the end of one payment period on 
financial aid probation, the student must meet the institution's 
satisfactory academic progress standards or

[[Page 543]]

meet the requirements of the academic plan developed by the institution 
and the student to qualify for further title IV, HEA program funds;
    (9) If the institution permits a student to appeal a determination 
by the institution that he or she is not making satisfactory academic 
progress, the policy describes--
    (i) How the student may reestablish his or her eligibility to 
receive assistance under the title IV, HEA programs;
    (ii) The basis on which a student may file an appeal: The death of a 
relative, an injury or illness of the student, or other special 
circumstances; and
    (iii) Information the student must submit regarding why the student 
failed to make satisfactory academic progress, and what has changed in 
the student's situation that will allow the student to demonstrate 
satisfactory academic progress at the next evaluation;
    (10) If the institution does not permit a student to appeal a 
determination by the institution that he or she is not making 
satisfactory academic progress, the policy must describe how the student 
may reestablish his or her eligibility to receive assistance under the 
title IV, HEA programs; and
    (11) The policy provides for notification to students of the results 
of an evaluation that impacts the student's eligibility for title IV, 
HEA program funds.
    (b) Definitions. The following definitions apply to the terms used 
in this section:
    Appeal. Appeal means a process by which a student who is not meeting 
the institution's satisfactory academic progress standards petitions the 
institution for reconsideration of the student's eligibility for title 
IV, HEA program assistance.
    Financial aid probation. Financial aid probation means a status 
assigned by an institution to a student who fails to make satisfactory 
academic progress and who has appealed and has had eligibility for aid 
reinstated.
    Financial aid warning. Financial aid warning means a status assigned 
to a student who fails to make satisfactory academic progress at an 
institution that evaluates academic progress at the end of each payment 
period.
    Maximum timeframe. Maximum timeframe means--
    (1) For an undergraduate program measured in credit hours, a period 
that is no longer than 150 percent of the published length of the 
educational program, as measured in credit hours;
    (2) For an undergraduate program measured in clock hours, a period 
that is no longer than 150 percent of the published length of the 
educational program, as measured by the cumulative number of clock hours 
the student is required to complete and expressed in calendar time; and
    (3) For a graduate program, a period defined by the institution that 
is based on the length of the educational program.
    (c) Institutions that evaluate satisfactory academic progress at the 
end of each payment period. (1) An institution that evaluates 
satisfactory academic progress at the end of each payment period and 
determines that a student is not making progress under its policy may 
nevertheless disburse title IV, HEA program funds to the student under 
the provisions of paragraph (c)(2), (c)(3), or (c)(4) of this section.
    (2) For the payment period following the payment period in which the 
student did not make satisfactory academic progress, the institution 
may--
    (i) Place the student on financial aid warning, and disburse title 
IV, HEA program funds to the student; or
    (ii) Place a student directly on financial aid probation, following 
the procedures outlined in paragraph (d)(2) of this section and disburse 
title IV, HEA program funds to the student.
    (3) For the payment period following a payment period during which a 
student was on financial aid warning, the institution may place the 
student on financial aid probation, and disburse title IV, HEA program 
funds to the student if--
    (i) The institution evaluates the student's progress and determines 
that student did not make satisfactory academic progress during the 
payment period the student was on financial aid warning;
    (ii) The student appeals the determination; and
    (iii)(A) The institution determines that the student should be able 
to meet

[[Page 544]]

the institution's satisfactory academic progress standards by the end of 
the subsequent payment period; or
    (B) The institution develops an academic plan for the student that, 
if followed, will ensure that the student is able to meet the 
institution's satisfactory academic progress standards by a specific 
point in time.
    (4) A student on financial aid probation for a payment period may 
not receive title IV, HEA program funds for the subsequent payment 
period unless the student makes satisfactory academic progress or the 
institution determines that the student met the requirements specified 
by the institution in the academic plan for the student.
    (d) Institutions that evaluate satisfactory academic progress 
annually or less frequently than at the end of each payment period. (1) 
An institution that evaluates satisfactory academic progress annually or 
less frequently than at the end of each payment period and determines 
that a student is not making progress under its policy may nevertheless 
disburse title IV, HEA program funds to the student under the provisions 
of paragraph (d)(2) or (d)(3) of this section.
    (2) The institution may place the student on financial aid probation 
and may disburse title IV, HEA program funds to the student for the 
subsequent payment period if--
    (i) The institution evaluates the student and determines that the 
student is not making satisfactory academic progress;
    (ii) The student appeals the determination; and
    (iii)(A) The institution determines that the student should be able 
to be make satisfactory academic progress during the subsequent payment 
period and meet the institution's satisfactory academic progress 
standards at the end of that payment period; or
    (B) The institution develops an academic plan for the student that, 
if followed, will ensure that the student is able to meet the 
institution's satisfactory academic progress standards by a specific 
point in time.
    (3) A student on financial aid probation for a payment period may 
not receive title IV, HEA program funds for the subsequent payment 
period unless the student makes satisfactory academic progress or the 
institution determines that the student met the requirements specified 
by the institution in the academic plan for the student.

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

[75 FR 66953, Oct. 29, 2010]



Sec. 668.35  Student debts under the HEA and to the U.S.

    (a) A student who is in default on a loan made under a title IV, HEA 
loan program may nevertheless be eligible to receive title IV, HEA 
program assistance if the student--
    (1) Repays the loan in full; or
    (2) Except as limited by paragraph (c) of this section--
    (i) Makes arrangements, that are satisfactory to the holder of the 
loan and in accordance with the individual title IV, HEA loan program 
regulations, to repay the loan balance; and
    (ii) Makes at least six consecutive monthly payments under those 
arrangements.
    (b) A student who is subject to a judgment for failure to repay a 
loan made under a title IV, HEA loan program may nevertheless be 
eligible to receive title IV, HEA program assistance if the student--
    (1) Repays the debt in full; or
    (2) Except as limited by paragraph (c) of this section--
    (i) Makes repayment arrangements that are satisfactory to the holder 
of the debt; and
    (ii) Makes at least six consecutive, voluntary monthly payments 
under those arrangements. Voluntary payments are those payments made 
directly by the borrower, and do not include payments obtained by 
Federal offset, garnishment, or income or asset execution.
    (c) A student who reestablishes eligibility under either paragraph 
(a)(2) of this section or paragraph (b)(2) of this section may not 
reestablish eligibility again under either of those paragraphs.
    (d) A student who is not in default on a loan made under a title IV, 
HEA loan program, but has inadvertently obtained loan funds under a 
title IV, HEA

[[Page 545]]

loan program in an amount that exceeds the annual or aggregate loan 
limits under that program, may nevertheless be eligible to receive title 
IV, HEA program assistance if the student--
    (1) Repays in full the excess loan amount; or
    (2) Makes arrangements, satisfactory to the holder of the loan, to 
repay that excess loan amount.
    (e) Except as provided in 34 CFR 668.22(h), a student who receives 
an overpayment under the Federal Perkins Loan Program, or under a title 
IV, HEA grant program, may nevertheless be eligible to receive title IV, 
HEA program assistance if--
    (1) The student pays the overpayment in full;
    (2) The student makes arrangements satisfactory to the holder of the 
overpayment debt to pay the overpayment;
    (3) The overpayment amount is less than $25 and is neither a 
remaining balance nor a result of the application of the overaward 
threshold in 34 CFR 673.5(d); or
    (4) The overpayment is an amount that a student is not required to 
return under the requirements of Sec. 668.22(h)(3)(ii)(B).
    (f) A student who has property subject to a judgement lien for a 
debt owed to the United States may nevertheless be eligible to receive 
title IV, HEA program assistance if the student-
    (1) Pays the debt in full; or
    (2) Makes arrangements, satisfactory to the United States, to pay 
the debt.
    (g) (1) A student is not liable for a Federal Pell Grant overpayment 
received in an award year if the institution can eliminate that 
overpayment by adjusting subsequent Federal Pell Grant payments in that 
same award year.
    (2) A student is not liable for an ACG overpayment received in an 
award year if--
    (i) The institution can eliminate that overpayment by adjusting 
subsequent title IV, HEA program (other than Federal Pell Grant, ACG, or 
National SMART Grant) payments in that same award year; or
    (ii) The institution cannot eliminate the overpayment under 
paragraph (g)(2)(i) of this section but can eliminate that overpayment 
by adjusting subsequent ACG payments in that same award year.
    (3) A student is not liable for a National SMART Grant overpayment 
received in an award year if--
    (i) The institution can eliminate that overpayment by adjusting 
subsequent title IV, HEA program (other than Federal Pell Grant, ACG, or 
National SMART Grant) payments in that same award year; or
    (ii) The institution cannot eliminate the overpayment under 
paragraph (g)(3)(i) of this section but can eliminate that overpayment 
by adjusting subsequent National SMART Grant payments in that same award 
year.
    (4) A student is not liable for a TEACH Grant overpayment received 
in an award year if--
    (i) The institution can eliminate that overpayment by adjusting 
subsequent title IV, HEA program (other than Federal Pell Grant, ACG, 
National SMART Grant, or TEACH Grant) payments in that same award year; 
or
    (ii) The institution cannot eliminate the overpayment under 
paragraph (g)(4)(i) of this section but can eliminate that overpayment 
by adjusting subsequent TEACH Grant payments in that same award year.
    (5) A student is not liable for a FSEOG or LEAP overpayment or 
Federal Perkins loan overpayment received in an award year if the 
institution can eliminate that overpayment by adjusting subsequent title 
IV, HEA program (other than Federal Pell Grant) payments in that same 
award year.
    (h) A student who otherwise is in default on a loan made under a 
title IV, HEA loan program, or who otherwise owes an overpayment on a 
title IV, HEA program grant or Federal Perkins loan, is not considered 
to be in default or owe an overpayment if the student--
    (1) Obtains a judicial determination that the debt has been 
discharged or is dischargeable in bankruptcy; or
    (2) Demonstrates to the satisfaction of the holder of the debt 
that--
    (i) When the student filed the petition for bankruptcy relief, the 
loan, or demand for the payment of the overpayment, had been outstanding 
for the period required under 11 U.S.C.

[[Page 546]]

523(a)(8)(A), exclusive of applicable suspensions of the repayment 
period for either debt of the kind defined in 34 CFR 682.402(m); and
    (ii) The debt otherwise qualifies for discharge under applicable 
bankruptcy law; and
    (i) In the case of a student who has been convicted of, or has pled 
nolo contendere or guilty to a crime involving fraud in obtaining title 
IV, HEA program assistance, has completed the repayment of such 
assistance to:
    (1) The Secretary; or
    (2) The holder, in the case of a title IV, HEA program loan.

(Authority: 20 U.S.C. 1070g, 1091; 11 U.S.C. 523, 525)

[60 FR 61810, Dec. 1, 1995, as amended at 65 FR 38729, June 22, 2000; 67 
FR 67073, Nov. 1, 2002; 71 FR 38003, July 3, 2006; 71 FR 45696, Aug. 9, 
2006; 71 FR 64397, Nov. 1, 2006; 73 FR 35493, June 23, 2008]



Sec. 668.36  Social security number.

    (a)(1) Except for residents of the Federated States of Micronesia, 
the Republic of the Marshall Islands, and the Republic of Palau, the 
Secretary attempts to confirm the social security number a student 
provides on the Free Application for Federal Student Aid (FAFSA) under a 
data match with the Social Security Administration. If the Social 
Security Administration confirms that number, the Secretary notifies the 
institution and the student of that confirmation.
    (2) If the student's verified social security number is the same 
number as the one he or she provided on the FAFSA, and the institution 
has no reason to believe that the verified social security number is 
inaccurate, the institution may consider the number to be accurate.
    (3) If the Social Security Administration does not verify the 
student's social security number on the FAFSA, or the institution has 
reason to believe that the verified social security number is 
inaccurate, the student can provide evidence to the institution, such as 
the student's social security card, indicating the accuracy of the 
student's social security number. An institution must give a student at 
least 30 days, or until the end of the award year, whichever is later, 
to produce that evidence.
    (4) An institution may not deny, reduce, delay, or terminate a 
student's eligibility for assistance under the title IV, HEA programs 
because verification of that student's social security number is 
pending.
    (b)(1) An institution may not disburse any title IV, HEA program 
funds to a student until the institution is satisfied that the student's 
reported social security number is accurate.
    (2) The institution shall ensure that the Secretary is notified of 
the student's accurate social security number if the student 
demonstrates the accuracy of a social security number that is not the 
number the student included on the FAFSA.
    (c) If the Secretary determines that the social security number 
provided to an institution by a student is incorrect, and that student 
has not provided evidence under paragraph (a)(3) of this section 
indicating the accuracy of the social security number, and a loan has 
been guaranteed for the student under the FFEL program, the institution 
shall notify and instruct the lender and guaranty agency making and 
guaranteeing the loan, respectively, to cease further disbursements of 
the loan, until the Secretary or the institution determines that the 
social security number provided by the student is correct, but the 
guaranty may not be voided or otherwise nullified before the date that 
the lender and the guaranty agency receive the notice.
    (d) Nothing in this section permits the Secretary to take any 
compliance, disallowance, penalty or other regulatory action against--
    (1) Any institution of higher education with respect to any error in 
a social security number, unless the error was the result of fraud on 
the part of the institution; or
    (2) Any student with respect to any error in a social security 
number, unless the error was the result of fraud on the part of the 
student.

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



Sec. 668.37  Selective Service registration.

    (a)(1) To be eligible to receive title IV, HEA program funds, a male 
student who is subject to registration with the

[[Page 547]]

Selective Service must register with the Selective Service.
    (2) A male student does not have to register with the Selective 
Service if the student--
    (i) Is below the age of 18, or was born before January 1, 1960;
    (ii) Is enrolled in an officer procurement program the curriculum of 
which has been approved by the Secretary of Defense at the following 
institutions:
    (A) The Citadel, Charleston, South Carolina;
    (B) North Georgia College, Dahlonega, Georgia;
    (C) Norwich University, Northfield, Vermont; or
    (D) Virginia Military Institute, Lexington, Virginia; or
    (iii) Is a commissioned officer of the Public Health Service or a 
member of the Reserve of the Public Health Service who is on active duty 
as provided in section 6(a)(2) of the Military Selective Service Act.
    (b)(1) When the Secretary processes a male student's FAFSA, the 
Secretary determines whether the student is registered with the 
Selective Service under a data match with the Selective Service.
    (2) Under the data match, Selective Service reports to the Secretary 
whether its records indicate that the student is registered, and the 
Secretary reports the results of the data match to the student and the 
institution the student is attending.
    (c)(1) If the Selective Service does not confirm through the data 
match, that the student is registered, the student can establish that 
he--
    (i) Is registered;
    (ii) Is not, or was not required to be, registered;
    (iii) Has registered since the submission of the FAFSA; or
    (iv) Meets the conditions of paragraph (d) of this section.
    (2) An institution must give a student at least 30 days, or until 
the end of the award year, whichever is later, to provide evidence to 
establish the condition described in paragraph (c)(1) of this section.
    (d) An institution may determine that a student, who was required 
to, but did not register with the Selective Service, is not ineligible 
to receive title IV, HEA assistance for that reason, if the student can 
demonstrate by submitting clear and unambiguous evidence to the 
institution that--
    (1) He was unable to present himself for registration for reasons 
beyond his control such as hospitalization, incarceration, or 
institutionalization; or
    (2) He is over 26 and when he was between 18 and 26 and required to 
register--
    (i) He did not knowingly and willfully fail to register with the 
Selective Service; or
    (ii) He served as a member of one of the U.S. Armed Forces on active 
duty and received a DD Form 214, ``Certificate of Release or Discharge 
from Active Duty,'' showing military service with other than the reserve 
forces and National Guard.
    (e) For purposes of paragraph (d)(2)(i) of this section, an 
institution may consider that a student did not knowingly and willfully 
fail to register with the Selective Service only if--
    (1) The student submits to the institution an advisory opinion from 
the Selective Service System that does not dispute the student's claim 
that he did not knowingly and willfully fail to register; and
    (2) The institution does not have uncontroverted evidence that the 
student knowingly and willfully failed to register.
    (f)(1) A student who is required to register with the Selective 
Service and has been denied title IV, HEA program assistance because he 
has not proven to the institution that he has registered with Selective 
Service may seek a hearing from the Secretary by filing a request in 
writing with the Secretary. The student must submit with that request--
    (i) A statement that he is in compliance with registration 
requirements;
    (ii) A concise statement of the reasons why he has not been able to 
prove that he is in compliance with those requirements; and
    (iii) Copies of all material that he has already supplied to the 
institution to verify his compliance.
    (2) The Secretary provides an opportunity for a hearing to a student 
who--
    (i) Asserts that he is in compliance with registration requirements; 
and

[[Page 548]]

    (ii) Files a written request for a hearing in accordance with 
paragraph (f)(1) of this section within the award year for which he was 
denied title IV, HEA program assistance or within 30 days following the 
end of the payment period, whichever is later.
    (3) An official designated by the Secretary shall conduct any 
hearing held under paragraph (f)(2) of this section. The sole purpose of 
this hearing is the determination of compliance with registration 
requirements. At this hearing, the student retains the burden of proving 
compliance, by credible evidence, with the requirements of the Military 
Selective Service Act. The designated official shall not consider 
challenges based on constitutional or other grounds to the requirements 
that a student state and verify, if required, compliance with 
registration requirements, or to those registration requirements 
themselves.
    (g) Any determination of compliance made under this section is final 
unless reopened by the Secretary and revised on the basis of additional 
evidence.
    (h) Any determination of compliance made under this section is 
binding only for purposes of determining eligibility for title IV, HEA 
program assistance.

(Authority: 20 U.S.C. 1091 and 50 App. 462)

[60 FR 61812, Dec. 1, 1995, as amended at 61 FR 3776, Feb. 1, 1996]



Sec. 668.38  Enrollment in telecommunications and correspondence courses.

    (a) If a student is enrolled in correspondence courses, the student 
is eligible to receive title IV, HEA program assistance only if the 
correspondence courses are part of a program that leads to an associate, 
bachelor's, or graduate degree.
    (b)(1) For purposes of this section, a student enrolled in a 
telecommunications course at an institution of higher education is not 
enrolled in a correspondence course.
    (2) For purposes of paragraph (b)(1) of this section, an institution 
of higher education is one that is not an institute or school described 
in section 3(3)(C) of the Carl D. Perkins Vocational and Applied 
Technology Act of 1995.

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

[60 FR 61810, Dec. 1, 1995, as amended at 64 FR 57358, Oct. 22, 1999; 71 
FR 45696, Aug. 9, 2006]



Sec. 668.39  Study abroad programs.

    A student enrolled in a program of study abroad is eligible to 
receive title IV, HEA program assistance if--
    (a) The student remains enrolled as a regular student in an eligible 
program at an eligible institution during his or her program of study 
abroad; and
    (b) The eligible institution approves the program of study abroad 
for academic credit. However, the study abroad program need not be 
required as part of the student's eligible degree program.

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



Sec. 668.40  Conviction for possession or sale of illegal drugs.

    (a)(1) A student is ineligible to receive title IV, HEA program 
funds, for the period described in paragraph (b) of this section, if the 
student has been convicted of an offense under any Federal or State law 
involving the possession or sale of illegal drugs for conduct that 
occurred during a period of enrollment for which the student was 
receiving title IV, HEA program funds. However, the student may regain 
eligibility before that time period expires under the conditions 
described in paragraph (c) of this section.
    (2) For purposes of this section, a conviction means only a 
conviction that is on a student's record. A conviction that was 
reversed, set aside, or removed from the student's record is not 
relevant for purposes of this section, nor is a determination or 
adjudication arising out of a juvenile proceeding.
    (3) For purposes of this section, an illegal drug is a controlled 
substance as defined by section 102(6) of the Controlled Substances Act 
(21 U.S.C. 801(6)), and does not include alcohol or tobacco.
    (b)(1) Possession. Except as provided in paragraph (c) of this 
section, if a student has been convicted--
    (i) Only one time for possession of illegal drugs, the student is 
ineligible to

[[Page 549]]

receive title IV, HEA program funds for one year after the date of 
conviction;
    (ii) Two times for possession of illegal drugs, the student is 
ineligible to receive title IV, HEA program funds for two years after 
the date of the second conviction; or
    (iii) Three or more times for possession of illegal drugs, the 
student is ineligible to receive title IV, HEA program funds for an 
indefinite period after the date of the third conviction.
    (2) Sale. Except as provided in paragraph (c) of this section, if a 
student has been convicted--
    (i) Only one time for sale of illegal drugs, the student is 
ineligible to receive title IV, HEA program funds for two years after 
the date of conviction; or
    (ii) Two or more times for sale of illegal drugs, the student is 
ineligible to receive Title IV, HEA program funds for an indefinite 
period after the date of the second conviction.
    (c) If a student successfully completes a drug rehabilitation 
program described in paragraph (d) of this section after the student's 
most recent drug conviction, the student regains eligibility on the date 
the student successfully completes the program.
    (d) A drug rehabilitation program referred to in paragraph (c) of 
this section is one which--
    (1) Includes at least two unannounced drug tests; and
    (2)(i) Has received or is qualified to receive funds directly or 
indirectly under a Federal, State, or local government program;
    (ii) Is administered or recognized by a Federal, State, or local 
government agency or court;
    (iii) Has received or is qualified to receive payment directly or 
indirectly from a Federally- or State-licensed insurance company; or
    (iv) Is administered or recognized by a Federally- or State-licensed 
hospital, health clinic or medical doctor.

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

[64 FR 57358, Oct. 22, 1999, as amended at 71 FR 45696, Aug. 9, 2006]



    Subpart D_Institutional and Financial Assistance Information for 
                                Students

    Source: 51 FR 43323, Dec. 1, 1986, unless otherwise noted.



Sec. 668.41  Reporting and disclosure of information.

    (a) Definitions. The following definitions apply to this subpart:
    Athletically related student aid means any scholarship, grant, or 
other form of financial assistance, offered by an institution, the terms 
of which require the recipient to participate in a program of 
intercollegiate athletics at the institution. Other student aid, of 
which a student-athlete simply happens to be the recipient, is not 
athletically related student aid.
    Certificate or degree-seeking student means a student enrolled in a 
course of credit who is recognized by the institution as seeking a 
degree or certificate.
    First-time undergraduate student means an entering undergraduate who 
has never attended any institution of higher education. It includes a 
student enrolled in the fall term who attended a postsecondary 
institution for the first time in the prior summer term, and a student 
who entered with advanced standing (college credit earned before 
graduation from high school).
    Normal time is the amount of time necessary for a student to 
complete all requirements for a degree or certificate according to the 
institution's catalog. This is typically four years for a bachelor's 
degree in a standard term-based institution, two years for an associate 
degree in a standard term-based institution, and the various scheduled 
times for certificate programs.
    Notice means a notification of the availability of information an 
institution is required by this subpart to disclose, provided to an 
individual on a one-to-one basis through an appropriate mailing or 
publication, including direct mailing through the U.S. Postal Service, 
campus mail, or electronic mail. Posting on an Internet website or an 
Intranet website does not constitute a notice.
    Official fall reporting date means that date (in the fall) on which 
an institution must report fall enrollment data

[[Page 550]]

to either the State, its board of trustees or governing board, or some 
other external governing body.
    On-campus student housing facility: A dormitory or other residential 
facility for students that is located on an institution's campus, as 
defined in Sec. 668.46(a).
    Prospective employee means an individual who has contacted an 
eligible institution for the purpose of requesting information 
concerning employment with that institution.
    Prospective student means an individual who has contacted an 
eligible institution requesting information concerning admission to that 
institution.
    Undergraduate students, for purposes of Secs. 668.45 and 668.48 
only, means students enrolled in a bachelor's degree program, an 
associate degree program, or a vocational or technical program below the 
baccalaureate.
    (b) Disclosure through Internet or Intranet websites. Subject to 
paragraphs (c)(2), (e)(2) through (4), or (g)(1)(ii) of this section, as 
appropriate, an institution may satisfy any requirement to disclose 
information under paragraph (d), (e), or (g) of this section for--
    (1) Enrolled students or current employees by posting the 
information on an Internet website or an Intranet website that is 
reasonably accessible to the individuals to whom the information must be 
disclosed; and
    (2) Prospective students or prospective employees by posting the 
information on an Internet website.
    (c) Notice to enrolled students. (1) An institution annually must 
distribute to all enrolled students a notice of the availability of the 
information required to be disclosed pursuant to paragraphs (d), (e), 
and (g) of this section, and pursuant to 34 CFR 99.7 (Sec. 99.7 sets 
forth the notification requirements of the Family Educational Rights and 
Privacy Act of 1974). The notice must list and briefly describe the 
information and tell the student how to obtain the information.
    (2) An institution that discloses information to enrolled students 
as required under paragraph (d), (e), or (g) of this section by posting 
the information on an Internet website or an Intranet website must 
include in the notice described in paragraph (c)(1) of this section--
    (i) The exact electronic address at which the information is posted; 
and
    (ii) A statement that the institution will provide a paper copy of 
the information on request.
    (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

[[Page 551]]

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 
Secs. 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.
    (f) Prospective student-athletes and their parents, high school 
coach and guidance counselor--report on completion or graduation rates 
for student-athletes. (1)(i) Except under the circumstances described in 
paragraph (f)(1)(ii) of this section, when an institution offers a 
prospective student-athlete athletically related student aid, it must 
provide to the prospective student-athlete,

[[Page 552]]

and his or her parents, high school coach, and guidance counselor, the 
report produced pursuant to Sec. 668.48(a).
    (ii) An institution's responsibility under paragraph (f)(1)(i) of 
this section with reference to a prospective student athlete's high 
school coach and guidance counselor is satisfied if--
    (A) The institution is a member of a national collegiate athletic 
association;
    (B) The association compiles data on behalf of its member 
institutions, which data the Secretary determines are substantially 
comparable to those required by Sec. 668.48(a); and
    (C) The association distributes the compilation to all secondary 
schools in the United States.
    (2) By July 1 of each year, an institution must submit to the 
Secretary the report produced pursuant to Sec. 668.48.
    (g) Enrolled students, prospective students, and the public--report 
on athletic program participation rates and financial support data. 
(1)(i) An institution of higher education subject to Sec. 668.47 must, 
not later than October 15 of each year, make available to enrolled 
students, prospective students, and the public, the report produced 
pursuant to Sec. 668.47(c). The institution must make the report easily 
accessible to students, prospective students, and the public and must 
provide the report promptly to anyone who requests it.
    (ii) The institution must provide notice to all enrolled students, 
pursuant to paragraph (c)(1) of this section, and prospective students 
of their right to request the report described in paragraph (g)(1) of 
this section. If the institution chooses to make the report available by 
posting the disclosure on an Internet website or an Intranet website, it 
must provide in the notice 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 on request. 
For prospective students, the institution may not use an Intranet 
website for this purpose.
    (2) An institution must submit the report described in paragraph 
(g)(1)(i) of this section to the Secretary within 15 days of making it 
available to students, prospective students, and the public.

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

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

[64 FR 59066, Nov. 1, 1999, as amended at 74 FR 55942, Oct. 29, 2009]

    Effective Date Note: At 81 FR 76070, Nov. 1, 2016, Sec. 668.41 was 
amended by adding paragraphs (h) and (i) and revising the authority 
citation, effective July 1, 2019. For the convenience of the user, the 
added and revised text is set forth as follows:



Sec. 668.41  Reporting and disclosure of information.

                                * * * * *

    (h) Loan repayment warning for proprietary institutions--(1) 
Calculation of loan repayment rate. For each award year, the Secretary 
calculates a proprietary institution's loan repayment rate, for the 
cohort of borrowers who entered repayment on their FFEL or Direct Loans 
at any time during the two-year cohort period, using the methodology in 
Sec. 668.413(b)(3), provided that, for the purpose of this paragraph 
(h)--
    (i) The reference to ``program'' in Sec. 668.413(b)(3)(vi) is read 
to refer to ``institution'';
    (ii) ``Award year'' means the 12-month period that begins on July 1 
of one year and ends on June 30 of the following year;
    (iii) ``Borrower'' means a student who received a FFEL or Direct 
Loan for enrolling in a gainful employment program at the institution; 
and
    (iv) ``Two-year cohort period'' is defined as set forth in 
Sec. 668.402.
    (2) Issuing and appealing loan repayment rates. (i) For each award 
year, the Secretary notifies an institution of its final loan repayment 
rate.
    (ii) If an institution's final loan repayment rate shows that the 
median borrower has not either fully repaid all FFEL or Direct Loans 
received for enrollment in the institution or made loan payments 
sufficient to reduce by at least one dollar the outstanding balance of 
each of the borrower's FFEL or Direct Loans received for enrollment in 
the institution--
    (A) Using the calculation described in paragraph (h)(4)(ii) of this 
section, the institution may submit an appeal to the Secretary within 15 
days of receiving notification of its final loan repayment rate; and
    (B) The Secretary will notify the institution if the appeal is--
    (1) Granted and the institution qualifies for an exemption from the 
warning requirement under paragraph (h)(4) of this section; or

[[Page 553]]

    (2) Not granted, and the institution must comply with the warning 
requirement under paragraph (h)(3) of this section.
    (3) Loan repayment warning--(i) Promotional materials. (A) Except as 
provided in paragraph (h)(4) of this section, for any award year in 
which the institution's loan repayment rate shows that the median 
borrower has not either fully repaid, or made loan payments sufficient 
to reduce by at least one dollar the outstanding balance of, each of the 
borrower's FFEL or Direct Loans received for enrollment in the 
institution, the institution must, in all promotional materials that are 
made available to prospective or enrolled students by or on behalf of 
the institution, include a loan repayment warning in a form, place, and 
manner prescribed by the Secretary in a notice published in the Federal 
Register. The warning language must read: ``U.S. Department of Education 
Warning: A majority of recent student loan borrowers at this school are 
not paying down their loans,'' unless stated otherwise by the Secretary 
in a notice published in the Federal Register. Before publishing that 
notice, the Secretary may conduct consumer testing to help ensure that 
the warning is meaningful and helpful to students.
    (B) Promotional materials include, but are not limited to, an 
institution's Web site, catalogs, invitations, flyers, billboards, and 
advertising on or through radio, television, video, print media, social 
media, or the Internet.
    (C) The institution must ensure that all promotional materials, 
including printed materials, about the institution are accurate and 
current at the time they are published, approved by a State agency, or 
broadcast.
    (ii) Clarity of warning. The institution must ensure that the 
warning is prominent, clear, and conspicuous. The warning is not 
prominent, clear, and conspicuous if it is difficult to read or hear, or 
placed where it can be easily overlooked. In written materials, 
including email, Internet advertising and promotional materials, print 
media, and other advertising or hard-copy promotional materials, the 
warning must be included on the cover page or home page and any other 
pages with information on a program of study and any pages with 
information on costs and financial aid. For television and video 
materials, the warning must be both spoken and written simultaneously. 
The Secretary may require the institution to modify its promotional 
materials, including its Web site, if the warning is not prominent, 
clear, and conspicuous.
    (4) Exemptions. An institution is not required to provide a warning 
under paragraph (h)(3) of this section based on a final loan repayment 
rate for that award year if--
    (i) That rate is based on fewer than 10 borrowers in the cohort 
described in paragraph (h)(1) of this section; or
    (ii) The institution demonstrates to the Secretary's satisfaction 
that not all of its programs constitute GE programs and that if the 
borrowers in the non-GE programs were included in the calculation of the 
loan repayment rate, the loan repayment rate would show that the median 
borrower has made loan payments sufficient to reduce by at least one 
dollar the outstanding balance of each of the borrower's FFEL or Direct 
Loans received for enrollment in the institution.
    (i) Financial protection disclosures--(1) General. An institution 
must deliver a disclosure to enrolled and prospective students in the 
form and manner described in paragraph (i)(3), (4), and (5) of this 
section, and post that disclosure to its Web site as described in 
paragraph (i)(6) of this section, within 30 days of notifying the 
Secretary under Sec. 668.171(h) of the occurrence of a triggering event 
or events identified pursuant to paragraph (i)(2) of this section. The 
requirements in this paragraph (i) apply for the 12-month period 
following the date the institution notifies the Secretary under 
Sec. 668.171(h) of a triggering event or events identified under 
paragraph (i)(2).
    (2) Triggering events. The Secretary will conduct consumer testing 
to inform the identification of events for which a disclosure is 
required. The Secretary will consumer test each of the events identified 
in Sec. 668.171(c) through (g), as well as other events that result in 
an institution being required to provide financial protection to the 
Department, to determine which of these events are most meaningful to 
students in their educational decision-making. The Secretary will 
identify the triggering events for which a disclosure is required under 
paragraph (i)(1) in a document published in the Federal Register.
    (3) Form of disclosure. The Secretary will conduct consumer testing 
to ensure the form of the disclosure is meaningful and helpful to 
students. The Secretary will specify the form and placement of the 
disclosure in a notice published in the Federal Register following the 
consumer testing.
    (4) Delivery to enrolled students. An institution must deliver the 
disclosure required under this paragraph (i) to each enrolled student in 
writing by--
    (i) Hand-delivering the disclosure as a separate document to the 
student individually or as part of a group presentation; or
    (ii)(A) Sending the disclosure to the student's primary email 
address or delivering the disclosure through the electronic method used 
by the institution for communicating with the student about 
institutional matters; and
    (B) Ensuring that the disclosure is the only substantive content in 
the message sent to the student under this paragraph unless the 
Secretary specifies additional, contextual language to be included in 
the message.

[[Page 554]]

    (5) Delivery to prospective students. An institution must deliver 
the disclosure required under this paragraph (i) to a prospective 
student before that student enrolls, registers, or enters into a 
financial obligation with the institution by--
    (i) Hand-delivering the disclosure as a separate document to the 
student individually, or as part of a group presentation; or
    (ii)(A) Sending the disclosure to the student's primary email 
address or delivering the disclosure through the electronic method used 
by the institution for communicating with prospective students about 
institutional matters; and
    (B) Ensuring that the disclosure is the only substantive content in 
the message sent to the student under this paragraph unless the 
Secretary specifies additional, contextual language to be included in 
the message.
    (6) Institutional Web site. An institution must prominently provide 
the disclosure required under this paragraph (i) in a simple and 
meaningful manner on the home page of the institution's Web site.

                                * * * * *

(Authority: 20 U.S.C. 1092, 1094, 1099c)



Sec. 668.42  Financial assistance information.

    (a)(1) Information on financial assistance that the institution must 
publish and make readily available to current and prospective students 
under this subpart includes, but is not limited to, a description of all 
the Federal, State, local, private and institutional student financial 
assistance programs available to students who enroll at that 
institution.
    (2) These programs include both need-based and non-need-based 
programs.
    (3) The institution may describe its own financial assistance 
programs by listing them in general categories.
    (4) The institution must describe the terms and conditions of the 
loans students receive under the Federal Family Education Loan Program, 
the William D. Ford Federal Direct Student Loan Program, and the Federal 
Perkins Loan Program.
    (b) For each program referred to in paragraph (a) of this section, 
the information provided by the institution must describe--
    (1) The procedures and forms by which students apply for assistance;
    (2) The student eligibility requirements;
    (3) The criteria for selecting recipients from the group of eligible 
applicants; and
    (4) The criteria for determining the amount of a student's award.
    (c) The institution must describe the rights and responsibilities of 
students receiving financial assistance and, specifically, assistance 
under the title IV, HEA programs. This description must include specific 
information regarding--
    (1) Criteria for continued student eligibility under each program;
    (2)(i) Standards which the student must maintain in order to be 
considered to be making satisfactory progress in his or her course of 
study for the purpose of receiving financial assistance; and
    (ii) Criteria by which the student who has failed to maintain 
satisfactory progress may re-establish his or her eligibility for 
financial assistance;
    (3) The method by which financial assistance disbursements will be 
made to the students and the frequency of those disbursements;
    (4) The terms of any loan received by a student as part of the 
student's financial assistance package, a sample loan repayment schedule 
for sample loans and the necessity for repaying loans;
    (5) The general conditions and terms applicable to any employment 
provided to a student as part of the student's financial assistance 
package; and
    (6) The exit counseling information the institution provides and 
collects as required by 34 CFR 674.42 for borrowers under the Federal 
Perkins Loan Program, by 34 CFR 685.304 for borrowers under the William 
D. Ford Federal Direct Student Loan Program, and by 34 CFR 682.604 for 
borrowers under the Federal Stafford Loan Program.

(Approved by the Office of Management and Budget under control number 
1845-0022)

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

[51 FR 43323, Dec. 1, 1986. Redesignated and amended at 64 FR 59067, 
Nov. 1, 1999; 74 FR 55649, Oct. 29, 2009]

[[Page 555]]



Sec. 668.43  Institutional information.

    (a) Institutional information that the institution must make readily 
available to enrolled and prospective students under this subpart 
includes, but is not limited to--
    (1) The cost of attending the institution, including--
    (i) Tuition and fees charged to full-time and part-time students;
    (ii) Estimates of costs for necessary books and supplies;
    (iii) Estimates of typical charges for room and board;
    (iv) Estimates of transportation costs for students; and
    (v) Any additional cost of a program in which a student is enrolled 
or expresses a specific interest;
    (2) Any refund policy with which the institution is required to 
comply for the return of unearned tuition and fees or other refundable 
portions of costs paid to the institution;
    (3) The requirements and procedures for officially withdrawing from 
the institution;
    (4) A summary of the requirements under Sec. 668.22 for the return 
of title IV grant or loan assistance;
    (5) The academic program of the institution, including--
    (i) The current degree programs and other educational and training 
programs;
    (ii) The instructional, laboratory, and other physical facilities 
which relate to the academic program;
    (iii) The institution's faculty and other instructional personnel; 
and
    (iv) Any plans by the institution for improving the academic program 
of the institution, upon a determination by the institution that such a 
plan exists;
    (6) The names of associations, agencies or governmental bodies that 
accredit, approve, or license the institution and its programs and the 
procedures by which documents describing that activity may be reviewed 
under paragraph (b) of this section;
    (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;
    (8) The titles of persons designated under Sec. 668.44 and 
information regarding how and where those persons may be contacted;
    (9) A statement that a student's enrollment in a program of study 
abroad approved for credit by the home institution may be considered 
enrollment at the home institution for the purpose of applying for 
assistance under the title IV, HEA programs;
    (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;
    (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; and
    (11) A description of the transfer of credit policies established by 
the institution which must include a statement of the institution's 
current transfer of credit policies that includes, at a minimum--
    (i) Any established criteria the institution uses regarding the 
transfer of credit earned at another institution; and
    (ii) A list of institutions with which the institution has 
established an articulation agreement; and
    (12) A description of written arrangements the institution has 
entered into in accordance with Sec. 668.5, including, but not limited 
to, information on--
    (i) The portion of the educational program that the institution that 
grants the degree or certificate is not providing;
    (ii) The name and location of the other institutions or 
organizations that are providing the portion of the educational program 
that the institution that grants the degree or certificate is not 
providing;
    (iii) The method of delivery of the portion of the educational 
program

[[Page 556]]

that the institution that grants the degree or certificate is not 
providing; and
    (iv) Estimated additional costs students may incur as the result of 
enrolling in an educational program that is provided, in part, under the 
written arrangement.
    (b) The institution must make available for review to any enrolled 
or prospective student upon request, a copy of the documents describing 
the institution's accreditation and its State, Federal, or tribal 
approval or licensing. The institution must also provide its students or 
prospective students with contact information for filing complaints with 
its accreditor and with its State approval or licensing entity and any 
other relevant State official or agency that would appropriately handle 
a student's complaint.

(Approved by the Office of Management and Budget under control number 
1845-0022)

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

[64 FR 59068, Nov. 1, 1999, as amended at 74 FR 55943, Oct. 29, 2009; 75 
FR 66954, Oct. 29, 2010]



Sec. 668.44  Availability of employees for information dissemination
purposes.

    (a) Availability. (1) Except as provided in paragraph (b) of this 
section each institution shall designate an employee or group of 
employees who shall be available on a full-time basis to assist enrolled 
or prospective students in obtaining the information specified in 
Secs. 668.42, 668.43, 668.45 and 668.46.
    (2) If the institution designates one person, that person shall be 
available, upon reasonable notice, to any enrolled or prospective 
student throughout the normal administrative working hours of that 
institution.
    (3) If more than one person is designated, their combined work 
schedules must be arranged so that at least one of them is available, 
upon reasonable notice, throughout the normal administrative working 
hours of that institution.
    (b) Waiver. (1) the Secretary may waive the requirement that the 
employee or group of employees designated under paragraph (a) of this 
section be available on a full-time basis if the institution's total 
enrollment, or the portion of the enrollment participating in the title 
IV, HEA programs, is too small to necessitate an employee or group of 
employees being available on a full-time basis.
    (2) In determining whether an institution's total enrollment or the 
number of title IV, HEA program recipients is too small, the Secretary 
considers whether there will be an insufficient demand for information 
dissemination services among its enrolled or prospective students to 
necessitate the full-time availability of an employee or group of 
employees.
    (3) To receive a waiver, the institution shall apply to the 
Secretary at the time and in the manner prescribed by the Secretary.
    (c) The granting of a waiver under paragraph (b) of this section 
does not exempt an institution from designating a specific employee or 
group of employees to carry out on a part-time basis the information 
dissemination requirements.

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

[51 FR 43323, Dec. 1, 1986. Redesignated at 64 FR 59067, Nov. 1, 1999, 
as amended at 69 FR 12276, Mar. 16, 2004]



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.

[[Page 557]]

    (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 for 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--

[[Page 558]]

    (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 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)

[74 FR 55944, Oct. 29, 2009]



Sec. 668.46  Institutional security policies and crime statistics.

    (a) Definitions. Additional definitions that apply to this section:
    Business day. Monday through Friday, excluding any day when the 
institution is closed.
    Campus. (i) Any building or property owned or controlled by an 
institution within the same reasonably contiguous geographic area and 
used by the institution in direct support of, or in a manner related to, 
the institution's educational purposes, including residence halls; and
    (ii) Any building or property that is within or reasonably 
contiguous to the area identified in paragraph (i) of this definition, 
that is owned by the institution but controlled by another person, is 
frequently used by students, and supports institutional purposes (such 
as a food or other retail vendor).
    Campus security authority. (i) A campus police department or a 
campus security department of an institution.
    (ii) Any individual or individuals who have responsibility for 
campus security but who do not constitute a campus police department or 
a campus security department under paragraph (i) of this definition, 
such as an individual who is responsible for monitoring entrance into 
institutional property.
    (iii) Any individual or organization specified in an institution's 
statement

[[Page 559]]

of campus security policy as an individual or organization to which 
students and employees should report criminal offenses.
    (iv) An official of an institution who has significant 
responsibility for student and campus activities, including, but not 
limited to, student housing, student discipline, and campus judicial 
proceedings. If such an official is a pastoral or professional counselor 
as defined below, the official is not considered a campus security 
authority when acting as a pastoral or professional counselor.
    Clery geography. (i) For the purposes of collecting statistics on 
the crimes listed in paragraph (c) of this section for submission to the 
Department and inclusion in an institution's annual security report, 
Clery geography includes--
    (A) Buildings and property that are part of the institution's 
campus;
    (B) The institution's noncampus buildings and property; and
    (C) Public property within or immediately adjacent to and accessible 
from the campus.
    (ii) For the purposes of maintaining the crime log required in 
paragraph (f) of this section, Clery geography includes, in addition to 
the locations in paragraph (i) of this definition, areas within the 
patrol jurisdiction of the campus police or the campus security 
department.
    Dating violence. Violence committed by a person who is or has been 
in a social relationship of a romantic or intimate nature with the 
victim.
    (i) The existence of such a relationship shall be determined based 
on the reporting party's statement and with consideration of the length 
of the relationship, the type of relationship, and the frequency of 
interaction between the persons involved in the relationship.
    (ii) For the purposes of this definition--
    (A) Dating violence includes, but is not limited to, sexual or 
physical abuse or the threat of such abuse.
    (B) Dating violence does not include acts covered under the 
definition of domestic violence.
    (iii) For the purposes of complying with the requirements of this 
section and Sec. 668.41, any incident meeting this definition is 
considered a crime for the purposes of Clery Act reporting.
    Domestic violence. (i) A felony or misdemeanor crime of violence 
committed--
    (A) By a current or former spouse or intimate partner of the victim;
    (B) By a person with whom the victim shares a child in common;
    (C) By a person who is cohabitating with, or has cohabitated with, 
the victim as a spouse or intimate partner;
    (D) By a person similarly situated to a spouse of the victim under 
the domestic or family violence laws of the jurisdiction in which the 
crime of violence occurred, or
    (E) By any other person against an adult or youth victim who is 
protected from that person's acts under the domestic or family violence 
laws of the jurisdiction in which the crime of violence occurred.
    (ii) For the purposes of complying with the requirements of this 
section and Sec. 668.41, any incident meeting this definition is 
considered a crime for the purposes of Clery Act reporting.
    Federal Bureau of Investigation's (FBI) Uniform Crime Reporting 
(UCR) program. A nationwide, cooperative statistical effort in which 
city, university and college, county, State, Tribal, and federal law 
enforcement agencies voluntarily report data on crimes brought to their 
attention. The UCR program also serves as the basis for the definitions 
of crimes in Appendix A to this subpart and the requirements for 
classifying crimes in this subpart.
    Hate crime. A crime reported to local police agencies or to a campus 
security authority that manifests evidence that the victim was 
intentionally selected because of the perpetrator's bias against the 
victim. For the purposes of this section, the categories of bias include 
the victim's actual or perceived race, religion, gender, gender 
identity, sexual orientation, ethnicity, national origin, and 
disability.
    Hierarchy Rule. A requirement in the FBI's UCR program that, for 
purposes of reporting crimes in that system, when more than one criminal 
offense was committed during a single incident, only the most serious 
offense be counted.

[[Page 560]]

    Noncampus building or property. (i) Any building or property owned 
or controlled by a student organization that is officially recognized by 
the institution; or
    (ii) Any building or property owned or controlled by an institution 
that is used in direct support of, or in relation to, the institution's 
educational purposes, is frequently used by students, and is not within 
the same reasonably contiguous geographic area of the institution.
    Pastoral counselor. A person who is associated with a religious 
order or denomination, is recognized by that religious order or 
denomination as someone who provides confidential counseling, and is 
functioning within the scope of that recognition as a pastoral 
counselor.
    Professional counselor. A person whose official responsibilities 
include providing mental health counseling to members of the 
institution's community and who is functioning within the scope of the 
counselor's license or certification.
    Programs to prevent dating violence, domestic violence, sexual 
assault, and stalking. (i) Comprehensive, intentional, and integrated 
programming, initiatives, strategies, and campaigns intended to end 
dating violence, domestic violence, sexual assault, and stalking that--
    (A) Are culturally relevant, inclusive of diverse communities and 
identities, sustainable, responsive to community needs, and informed by 
research or assessed for value, effectiveness, or outcome; and
    (B) Consider environmental risk and protective factors as they occur 
on the individual, relationship, institutional, community, and societal 
levels.
    (ii) Programs to prevent dating violence, domestic violence, sexual 
assault, and stalking include both primary prevention and awareness 
programs directed at incoming students and new employees and ongoing 
prevention and awareness campaigns directed at students and employees, 
as defined in paragraph (j)(2) of this section.
    Public property. All public property, including thoroughfares, 
streets, sidewalks, and parking facilities, that is within the campus, 
or immediately adjacent to and accessible from the campus.
    Referred for campus disciplinary action. The referral of any person 
to any campus official who initiates a disciplinary action of which a 
record is kept and which may result in the imposition of a sanction.
    Sexual assault. An offense that meets the definition of rape, 
fondling, incest, or statutory rape as used in the FBI's UCR program and 
included in Appendix A of this subpart.
    Stalking. (i) Engaging in a course of conduct directed at a specific 
person that would cause a reasonable person to--
    (A) Fear for the person's safety or the safety of others; or
    (B) Suffer substantial emotional distress.
    (ii) For the purposes of this definition--
    (A) Course of conduct means two or more acts, including, but not 
limited to, acts in which the stalker directly, indirectly, or through 
third parties, by any action, method, device, or means, follows, 
monitors, observes, surveils, threatens, or communicates to or about a 
person, or interferes with a person's property.
    (B) Reasonable person means a reasonable person under similar 
circumstances and with similar identities to the victim.
    (C) Substantial emotional distress means significant mental 
suffering or anguish that may, but does not necessarily, require medical 
or other professional treatment or counseling.
    (iii) For the purposes of complying with the requirements of this 
section and section 668.41, any incident meeting this definition is 
considered a crime for the purposes of Clery Act reporting.
    Test. Regularly scheduled drills, exercises, and appropriate follow-
through activities, designed for assessment and evaluation of emergency 
plans and capabilities.
    (b) Annual security report. An institution must prepare an annual 
security report reflecting its current policies that contains, at a 
minimum, the following information:
    (1) The crime statistics described in paragraph (c) of this section.

[[Page 561]]

    (2) A statement of policies regarding procedures for students and 
others to report criminal actions or other emergencies occurring on 
campus. This statement must include the institution's policies 
concerning its response to these reports, including--
    (i) Policies for making timely warning reports to members of the 
campus community, as required by paragraph (e) of this section, 
regarding the occurrence of crimes described in paragraph (c)(1) of this 
section;
    (ii) Policies for preparing the annual disclosure of crime 
statistics;
    (iii) A list of the titles of each person or organization to whom 
students and employees should report the criminal offenses described in 
paragraph (c)(1) of this section for the purposes of making timely 
warning reports and the annual statistical disclosure; and
    (iv) Policies or procedures for victims or witnesses to report 
crimes on a voluntary, confidential basis for inclusion in the annual 
disclosure of crime statistics.
    (3) A statement of policies concerning security of and access to 
campus facilities, including campus residences, and security 
considerations used in the maintenance of campus facilities.
    (4) A statement of policies concerning campus law enforcement that--
    (i) Addresses the enforcement authority and jurisdiction of security 
personnel;
    (ii) Addresses the working relationship of campus security personnel 
with State and local police agencies, including--
    (A) Whether those security personnel have the authority to make 
arrests; and
    (B) Any agreements, such as written memoranda of understanding 
between the institution and such agencies, for the investigation of 
alleged criminal offenses.
    (iii) Encourages accurate and prompt reporting of all crimes to the 
campus police and the appropriate police agencies, when the victim of a 
crime elects to, or is unable to, make such a report; and
    (iv) Describes procedures, if any, that encourage pastoral 
counselors and professional counselors, if and when they deem it 
appropriate, to inform the persons they are counseling of any procedures 
to report crimes on a voluntary, confidential basis for inclusion in the 
annual disclosure of crime statistics.
    (5) A description of the type and frequency of programs designed to 
inform students and employees about campus security procedures and 
practices and to encourage students and employees to be responsible for 
their own security and the security of others.
    (6) A description of programs designed to inform students and 
employees about the prevention of crimes.
    (7) A statement of policy concerning the monitoring and recording 
through local police agencies of criminal activity by students at 
noncampus locations of student organizations officially recognized by 
the institution, including student organizations with noncampus housing 
facilities.
    (8) A statement of policy regarding the possession, use, and sale of 
alcoholic beverages and enforcement of State underage drinking laws.
    (9) A statement of policy regarding the possession, use, and sale of 
illegal drugs and enforcement of Federal and State drug laws.
    (10) A description of any drug or alcohol-abuse education programs, 
as required under section 120(a) through (d) of the HEA, otherwise known 
as the Drug-Free Schools and Communities Act of 1989. For the purpose of 
meeting this requirement, an institution may cross-reference the 
materials the institution uses to comply with section 120(a) through (d) 
of the HEA.
    (11) A statement of policy regarding the institution's programs to 
prevent dating violence, domestic violence, sexual assault, and 
stalking, as defined in paragraph (a) of this section, and of procedures 
that the institution will follow when one of these crimes is reported. 
The statement must include--
    (i) A description of the institution's educational programs and 
campaigns to promote the awareness of dating violence, domestic 
violence, sexual assault, and stalking, as required by paragraph (j) of 
this section;
    (ii) Procedures victims should follow if a crime of dating violence, 
domestic violence, sexual assault, or stalking

[[Page 562]]

has occurred, including written information about--
    (A) The importance of preserving evidence that may assist in proving 
that the alleged criminal offense occurred or may be helpful in 
obtaining a protection order;
    (B) How and to whom the alleged offense should be reported;
    (C) Options about the involvement of law enforcement and campus 
authorities, including notification of the victim's option to--
    (1) Notify proper law enforcement authorities, including on-campus 
and local police;
    (2) Be assisted by campus authorities in notifying law enforcement 
authorities if the victim so chooses; and
    (3) Decline to notify such authorities; and
    (D) Where applicable, the rights of victims and the institution's 
responsibilities for orders of protection, ``no-contact'' orders, 
restraining orders, or similar lawful orders issued by a criminal, 
civil, or tribal court or by the institution;
    (iii) Information about how the institution will protect the 
confidentiality of victims and other necessary parties, including how 
the institution will--
    (A) Complete publicly available recordkeeping, including Clery Act 
reporting and disclosures, without the inclusion of personally 
identifying information about the victim, as defined in section 
40002(a)(20) of the Violence Against Women Act of 1994 (42 U.S.C. 
13925(a)(20)); and
    (B) Maintain as confidential any accommodations or protective 
measures provided to the victim, to the extent that maintaining such 
confidentiality would not impair the ability of the institution to 
provide the accommodations or protective measures;
    (iv) A statement that the institution will provide written 
notification to students and employees about existing counseling, 
health, mental health, victim advocacy, legal assistance, visa and 
immigration assistance, student financial aid, and other services 
available for victims, both within the institution and in the community;
    (v) A statement that the institution will provide written 
notification to victims about options for, available assistance in, and 
how to request changes to academic, living, transportation, and working 
situations or protective measures. The institution must make such 
accommodations or provide such protective measures if the victim 
requests them and if they are reasonably available, regardless of 
whether the victim chooses to report the crime to campus police or local 
law enforcement;
    (vi) An explanation of the procedures for institutional disciplinary 
action in cases of alleged dating violence, domestic violence, sexual 
assault, or stalking, as required by paragraph (k) of this section; and
    (vii) A statement that, when a student or employee reports to the 
institution that the student or employee has been a victim of dating 
violence, domestic violence, sexual assault, or stalking, whether the 
offense occurred on or off campus, the institution will provide the 
student or employee a written explanation of the student's or employee's 
rights and options, as described in paragraphs (b)(11)(ii) through (vi) 
of this section.
    (12) A statement advising the campus community where law enforcement 
agency information provided by a State under section 121 of the Adam 
Walsh Child Protection and Safety Act of 2006 (42 U.S.C. 16921), 
concerning registered sex offenders may be obtained, such as the law 
enforcement office of the institution, a local law enforcement agency 
with jurisdiction for the campus, or a computer network address.
    (13) A statement of policy regarding emergency response and 
evacuation procedures, as required by paragraph (g) of this section.
    (14) A statement of policy regarding missing student notification 
procedures, as required by paragraph (h) of this section.
    (c) Crime statistics--(1) Crimes that must be reported and 
disclosed. An institution must report to the Department and disclose in 
its annual security report statistics for the three most recent calendar 
years concerning the number of each of the following crimes that 
occurred on or within its Clery geography and that are reported to local

[[Page 563]]

police agencies or to a campus security authority:
    (i) Primary crimes, including--
    (A) Criminal homicide:
    (1) Murder and nonnegligent manslaughter; and
    (2) Negligent manslaughter.
    (B) Sex offenses:
    (1) Rape;
    (2) Fondling;
    (3) Incest; and
    (4) Statutory rape.
    (C) Robbery.
    (D) Aggravated assault.
    (E) Burglary.
    (F) Motor vehicle theft.
    (G) Arson.
    (ii) Arrests and referrals for disciplinary actions, including--
    (A) Arrests for liquor law violations, drug law violations, and 
illegal weapons possession.
    (B) Persons not included in paragraph (c)(1)(ii)(A) of this section 
who were referred for campus disciplinary action for liquor law 
violations, drug law violations, and illegal weapons possession.
    (iii) Hate crimes, including--
    (A) The number of each type of crime in paragraph (c)(1)(i) of this 
section that are determined to be hate crimes; and
    (B) The number of the following crimes that are determined to be 
hate crimes:
    (1) Larceny-theft.
    (2) Simple assault.
    (3) Intimidation.
    (4) Destruction/damage/vandalism of property.
    (iv) Dating violence, domestic violence, and stalking as defined in 
paragraph (a) of this section.
    (2) All reported crimes must be recorded. (i) An institution must 
include in its crime statistics all crimes listed in paragraph (c)(1) of 
this section occurring on or within its Clery geography that are 
reported to a campus security authority for purposes of Clery Act 
reporting. Clery Act reporting does not require initiating an 
investigation or disclosing personally identifying information about the 
victim, as defined in section 40002(a)(20) of the Violence Against Women 
Act of 1994 (42 U.S.C. 13925(a)(20)).
    (ii) An institution may not withhold, or subsequently remove, a 
reported crime from its crime statistics based on a decision by a court, 
coroner, jury, prosecutor, or other similar noncampus official.
    (iii) An institution may withhold, or subsequently remove, a 
reported crime from its crime statistics in the rare situation where 
sworn or commissioned law enforcement personnel have fully investigated 
the reported crime and, based on the results of this full investigation 
and evidence, have made a formal determination that the crime report is 
false or baseless and therefore ``unfounded.'' Only sworn or 
commissioned law enforcement personnel may ``unfound'' a crime report 
for purposes of reporting under this section. The recovery of stolen 
property, the low value of stolen property, the refusal of the victim to 
cooperate with the prosecution, and the failure to make an arrest do not 
``unfound'' a crime report.
    (A) An institution must report to the Department and disclose in its 
annual security report statistics the total number of crime reports 
listed in paragraph (c)(1) of this section that were ``unfounded'' and 
subsequently withheld from its crime statistics pursuant to paragraph 
(c)(2)(iii) of this section during each of the three most recent 
calendar years.
    (B) [Reserved]
    (3) Crimes must be recorded by calendar year. (i) An institution 
must record a crime statistic for the calendar year in which the crime 
was reported to local police agencies or to a campus security authority.
    (ii) When recording crimes of stalking by calendar year, an 
institution must follow the requirements in paragraph (c)(6) of this 
section.
    (4) Hate crimes must be recorded by category of bias. For each hate 
crime recorded under paragraph (c)(1)(iii) of this section, an 
institution must identify the category of bias that motivated the crime. 
For the purposes of this paragraph, the categories of bias include the 
victim's actual or perceived--
    (i) Race;
    (ii) Gender;
    (iii) Gender identity;
    (iv) Religion;

[[Page 564]]

    (v) Sexual orientation;
    (vi) Ethnicity;
    (vii) National origin; and
    (viii) Disability.
    (5) Crimes must be recorded by location. (i) An institution must 
specify whether each of the crimes recorded under paragraph (c)(1) of 
this section occurred--
    (A) On campus;
    (B) In or on a noncampus building or property; or
    (C) On public property.
    (ii) An institution must identify, of the crimes that occurred on 
campus, the number that took place in dormitories or other residential 
facilities for students on campus.
    (iii) When recording stalking by location, an institution must 
follow the requirements in paragraph (c)(6) of this section.
    (6) Recording reports of stalking. (i) When recording reports of 
stalking that include activities in more than one calendar year, an 
institution must record a crime statistic for each and every year in 
which the course of conduct is reported to a local police agency or to a 
campus security authority.
    (ii) An institution must record each report of stalking as occurring 
at only the first location within the institution's Clery geography in 
which:
    (A) A perpetrator engaged in the stalking course of conduct; or
    (B) A victim first became aware of the stalking.
    (7) Identification of the victim or the accused. The statistics 
required under paragraph (c) of this section do not include the 
identification of the victim or the person accused of committing the 
crime.
    (8) Pastoral and professional counselor. An institution is not 
required to report statistics under paragraph (c) of this section for 
crimes reported to a pastoral or professional counselor.
    (9) Using the FBI's UCR program and the Hierarchy Rule. (i) An 
institution must compile the crime statistics for murder and 
nonnegligent manslaughter, negligent manslaughter, rape, robbery, 
aggravated assault, burglary, motor vehicle theft, arson, liquor law 
violations, drug law violations, and illegal weapons possession using 
the definitions of those crimes from the ``Summary Reporting System 
(SRS) User Manual'' from the FBI's UCR Program, as provided in Appendix 
A to this subpart.
    (ii) An institution must compile the crime statistics for fondling, 
incest, and statutory rape using the definitions of those crimes from 
the ``National Incident-Based Reporting System (NIBRS) User Manual'' 
from the FBI's UCR Program, as provided in Appendix A to this subpart.
    (iii) An institution must compile the crime statistics for the hate 
crimes of larceny-theft, simple assault, intimidation, and destruction/
damage/vandalism of property using the definitions provided in the 
``Hate Crime Data Collection Guidelines and Training Manual'' from the 
FBI's UCR Program, as provided in Appendix A to this subpart.
    (iv) An institution must compile the crime statistics for dating 
violence, domestic violence, and stalking using the definitions provided 
in paragraph (a) of this section.
    (v) In counting crimes when more than one offense was committed 
during a single incident, an institution must conform to the 
requirements of the Hierarchy Rule in the ``Summary Reporting System 
(SRS) User Manual.
    (vi) If arson is committed, an institution must always record the 
arson in its statistics, regardless of whether or not it occurs in the 
same incident as another crime.
    (vii) If rape, fondling, incest, or statutory rape occurs in the 
same incident as a murder, an institution must record both the sex 
offense and the murder in its statistics.
    (10) Use of a map. In complying with the statistical reporting 
requirements under this paragraph (c) of this section, an institution 
may provide a map to current and prospective students and employees that 
depicts its campus, noncampus buildings or property, and public property 
areas if the map accurately depicts its campus, noncampus buildings or 
property, and public property areas.
    (11) Statistics from police agencies. (i) In complying with the 
statistical reporting requirements under paragraph (c) of this section, 
an institution must make a reasonable, good-faith effort to

[[Page 565]]

obtain statistics for crimes that occurred on or within the 
institution's Clery geography and may rely on the information supplied 
by a local or State police agency.
    (ii) If the institution makes such a reasonable, good-faith effort, 
it is not responsible for the failure of the local or State police 
agency to supply the required statistics.
    (d) Separate campus. An institution must comply with the 
requirements of this section for each separate campus.
    (e) Timely warning and emergency notification. (1) An institution 
must, in a manner that is timely and that withholds as confidential the 
names and other identifying information of victims, as defined in 
section 40002(a)(20) of the Violence Against Women Act of 1994 (42 
U.S.C. 13925(a)(20)), and that will aid in the prevention of similar 
crimes, report to the campus community on crimes that are--
    (i) Described in paragraph (c)(1) of this section;
    (ii) Reported to campus security authorities as identified under the 
institution's statement of current campus policies pursuant to paragraph 
(b)(2) of this section or local police agencies; and
    (iii) Considered by the institution to represent a threat to 
students and employees.
    (2) An institution is not required to provide a timely warning with 
respect to crimes reported to a pastoral or professional counselor.
    (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.
    (f) Crime log. (1) An institution that maintains a campus police or 
a campus security department must maintain a written, easily understood 
daily crime log that records, by the date the crime was reported, any 
crime that occurred within its Clery geography, as described in 
paragraph (ii) of the definition of Clery geography in paragraph (a) of 
this section, and that is reported to the campus police or the campus 
security department. This log must include--
    (i) The nature, date, time, and general location of each crime; and
    (ii) The disposition of the complaint, if known.
    (2) The institution must make an entry or an addition to an entry to 
the log within two business days, as defined under paragraph (a) of this 
section, of the report of the information to the campus police or the 
campus security department, unless that disclosure is prohibited by law 
or would jeopardize the confidentiality of the victim.
    (3)(i) An institution may withhold information required under 
paragraphs (f)(1) and (2) of this section if there is clear and 
convincing evidence that the release of the information would--
    (A) Jeopardize an ongoing criminal investigation or the safety of an 
individual;
    (B) Cause a suspect to flee or evade detection; or
    (C) Result in the destruction of evidence.
    (ii) The institution must disclose any information withheld under 
paragraph (f)(3)(i) of this section once the adverse effect described in 
that paragraph is no longer likely to occur.
    (4) An institution may withhold under paragraph (f)(2) and (3) of 
this section only that information that would cause the adverse effects 
described in those paragraphs.
    (5) The institution must make the crime 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.
    (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

[[Page 566]]

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 to identify a contact 
person or persons whom the institution shall notify within 24 hours of 
the determination that the student is missing, if the student has been 
determined 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 
within 24 hours of the determination that the student is missing, in 
addition to notifying any additional contact person designated by the 
student; and
    (vi) Advise students that the institution will notify the local law 
enforcement agency within 24 hours of the determination that the student 
is missing, unless the local law enforcement agency was the entity that 
made the determination 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 that the student is missing;
    (ii) If the student is under 18 years of age and is not emancipated, 
notifying

[[Page 567]]

the student's custodial parent or guardian and any other designated 
contact person within 24 hours that the student is missing; 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 
within 24 hours that the student is missing.
    (i) [Reserved]
    (j) Programs to prevent dating violence, domestic violence, sexual 
assault, and stalking. As required by paragraph (b)(11) of this section, 
an institution must include in its annual security report a statement of 
policy that addresses the institution's programs to prevent dating 
violence, domestic violence, sexual assault, and stalking.
    (1) The statement must include--
    (i) A description of the institution's primary prevention and 
awareness programs for all incoming students and new employees, which 
must include--
    (A) A statement that the institution prohibits the crimes of dating 
violence, domestic violence, sexual assault, and stalking, as those 
terms are defined in paragraph (a) of this section;
    (B) The definition of ``dating violence,'' ``domestic violence,'' 
``sexual assault,'' and ``stalking'' in the applicable jurisdiction;
    (C) The definition of ``consent,'' in reference to sexual activity, 
in the applicable jurisdiction;
    (D) A description of safe and positive options for bystander 
intervention;
    (E) Information on risk reduction; and
    (F) The information described in paragraphs (b)(11) and (k)(2) of 
this section; and
    (ii) A description of the institution's ongoing prevention and 
awareness campaigns for students and employees, including information 
described in paragraph (j)(1)(i)(A) through (F) of this section.
    (2) For the purposes of this paragraph (j)--
    (i) Awareness programs means community-wide or audience-specific 
programming, initiatives, and strategies that increase audience 
knowledge and share information and resources to prevent violence, 
promote safety, and reduce perpetration.
    (ii) Bystander intervention means safe and positive options that may 
be carried out by an individual or individuals to prevent harm or 
intervene when there is a risk of dating violence, domestic violence, 
sexual assault, or stalking. Bystander intervention includes recognizing 
situations of potential harm, understanding institutional structures and 
cultural conditions that facilitate violence, overcoming barriers to 
intervening, identifying safe and effective intervention options, and 
taking action to intervene.
    (iii) Ongoing prevention and awareness campaigns means programming, 
initiatives, and strategies that are sustained over time and focus on 
increasing understanding of topics relevant to and skills for addressing 
dating violence, domestic violence, sexual assault, and stalking, using 
a range of strategies with audiences throughout the institution and 
including information described in paragraph (j)(1)(i)(A) through (F) of 
this section.
    (iv) Primary prevention programs means programming, initiatives, and 
strategies informed by research or assessed for value, effectiveness, or 
outcome that are intended to stop dating violence, domestic violence, 
sexual assault, and stalking before they occur through the promotion of 
positive and healthy behaviors that foster healthy, mutually respectful 
relationships and sexuality, encourage safe bystander intervention, and 
seek to change behavior and social norms in healthy and safe directions.
    (v) Risk reduction means options designed to decrease perpetration 
and bystander inaction, and to increase empowerment for victims in order 
to promote safety and to help individuals and communities address 
conditions that facilitate violence.
    (3) An institution's programs to prevent dating violence, domestic 
violence, sexual assault, and stalking must include, at a minimum, the 
information described in paragraph (j)(1) of this section.
    (k) Procedures for institutional disciplinary action in cases of 
alleged dating violence, domestic violence, sexual assault, or stalking. 
As required by paragraph

[[Page 568]]

(b)(11)(vi) of this section, an institution must include in its annual 
security report a clear statement of policy that addresses the 
procedures for institutional disciplinary action in cases of alleged 
dating violence, domestic violence, sexual assault, or stalking, as 
defined in paragraph (a) of this section, and that--
    (1)(i) Describes each type of disciplinary proceeding used by the 
institution; the steps, anticipated timelines, and decision-making 
process for each type of disciplinary proceeding; how to file a 
disciplinary complaint; and how the institution determines which type of 
proceeding to use based on the circumstances of an allegation of dating 
violence, domestic violence, sexual assault, or stalking;
    (ii) Describes the standard of evidence that will be used during any 
institutional disciplinary proceeding arising from an allegation of 
dating violence, domestic violence, sexual assault, or stalking;
    (iii) Lists all of the possible sanctions that the institution may 
impose following the results of any institutional disciplinary 
proceeding for an allegation of dating violence, domestic violence, 
sexual assault, or stalking; and
    (iv) Describes the range of protective measures that the institution 
may offer to the victim following an allegation of dating violence, 
domestic violence, sexual assault, or stalking;
    (2) Provides that the proceedings will--
    (i) Include a prompt, fair, and impartial process from the initial 
investigation to the final result;
    (ii) Be conducted by officials who, at a minimum, receive annual 
training on the issues related to dating violence, domestic violence, 
sexual assault, and stalking and on how to conduct an investigation and 
hearing process that protects the safety of victims and promotes 
accountability;
    (iii) Provide the accuser and the accused with the same 
opportunities to have others present during any institutional 
disciplinary proceeding, including the opportunity to be accompanied to 
any related meeting or proceeding by the advisor of their choice;
    (iv) Not limit the choice of advisor or presence for either the 
accuser or the accused in any meeting or institutional disciplinary 
proceeding; however, the institution may establish restrictions 
regarding the extent to which the advisor may participate in the 
proceedings, as long as the restrictions apply equally to both parties; 
and
    (v) Require simultaneous notification, in writing, to both the 
accuser and the accused, of--
    (A) The result of any institutional disciplinary proceeding that 
arises from an allegation of dating violence, domestic violence, sexual 
assault, or stalking;
    (B) The institution's procedures for the accused and the victim to 
appeal the result of the institutional disciplinary proceeding, if such 
procedures are available;
    (C) Any change to the result; and
    (D) When such results become final.
    (3) For the purposes of this paragraph (k)--
    (i) A prompt, fair, and impartial proceeding includes a proceeding 
that is--
    (A) Completed within reasonably prompt timeframes designated by an 
institution's policy, including a process that allows for the extension 
of timeframes for good cause with written notice to the accuser and the 
accused of the delay and the reason for the delay;
    (B) Conducted in a manner that--
    (1) Is consistent with the institution's policies and transparent to 
the accuser and accused;
    (2) Includes timely notice of meetings at which the accuser or 
accused, or both, may be present; and
    (3) Provides timely and equal access to the accuser, the accused, 
and appropriate officials to any information that will be used during 
informal and formal disciplinary meetings and hearings; and
    (C) Conducted by officials who do not have a conflict of interest or 
bias for or against the accuser or the accused.
    (ii) Advisor means any individual who provides the accuser or 
accused support, guidance, or advice.
    (iii) Proceeding means all activities related to a non-criminal 
resolution of an institutional disciplinary complaint, including, but 
not limited to, factfinding investigations, formal or

[[Page 569]]

informal meetings, and hearings. Proceeding does not include 
communications and meetings between officials and victims concerning 
accommodations or protective measures to be provided to a victim.
    (iv) Result means any initial, interim, and final decision by any 
official or entity authorized to resolve disciplinary matters within the 
institution. The result must include any sanctions imposed by the 
institution. Notwithstanding section 444 of the General Education 
Provisions Act (20 U.S.C. 1232g), commonly referred to as the Family 
Educational Rights and Privacy Act (FERPA), the result must also include 
the rationale for the result and the sanctions.
    (l) Compliance with paragraph (k) of this section does not 
constitute a violation of FERPA.
    (m) Prohibition on retaliation. An institution, or an officer, 
employee, or agent of an institution, may not retaliate, intimidate, 
threaten, coerce, or otherwise discriminate against any individual for 
exercising their rights or responsibilities under any provision in this 
section.

[79 FR 62783, Oct. 20, 2014]



Sec. 668.47  Report on athletic program participation rates and
financial support data.

    (a) Applicability. This section applies to a co-educational 
institution of higher education that--
    (1) Participates in any title IV, HEA program; and
    (2) Has an intercollegiate athletic program.
    (b) Definitions. The following definitions apply for purposes of 
this section only.
    (1) Expenses--(i) Expenses means expenses attributable to 
intercollegiate athletic activities. This includes appearance guarantees 
and options, athletically related student aid, contract services, 
equipment, fundraising activities, operating expenses, promotional 
activities, recruiting expenses, salaries and benefits, supplies, 
travel, and any other expenses attributable to intercollegiate athletic 
activities.
    (ii) Operating expenses means all expenses an institution incurs 
attributable to home, away, and neutral-site intercollegiate athletic 
contests (commonly known as ``game-day expenses''), for--
    (A) Lodging, meals, transportation, uniforms, and equipment for 
coaches, team members, support staff (including, but not limited to team 
managers and trainers), and others; and
    (B) Officials.
    (iii) Recruiting expenses means all expenses an institution incurs 
attributable to recruiting activities. This includes, but is not limited 
to, expenses for lodging, meals, telephone use, and transportation 
(including vehicles used for recruiting purposes) for both recruits and 
personnel engaged in recruiting, any other expenses for official and 
unofficial visits, and all other expenses related to recruiting.
    (2) Institutional salary means all wages and bonuses an institution 
pays a coach as compensation attributable to coaching.
    (3)(i) Participants means students who, as of the day of a varsity 
team's first scheduled contest--
    (A) Are listed by the institution on the varsity team's roster;
    (B) Receive athletically related student aid; or
    (C) Practice with the varsity team and receive coaching from one or 
more varsity coaches.
    (ii) Any student who satisfies one or more of the criteria in 
paragraphs (b)(3)(i)(A) through (C) of this section is a participant, 
including a student on a team the institution designates or defines as 
junior varsity, freshman, or novice, or a student withheld from 
competition to preserve eligibility (i.e., a redshirt), or for academic, 
medical, or other reasons.
    (4) Reporting year means a consecutive twelve-month period of time 
designated by the institution for the purposes of this section.
    (5) Revenues means revenues attributable to intercollegiate athletic 
activities. This includes revenues from appearance guarantees and 
options, an athletic conference, tournament or bowl games, concessions, 
contributions from alumni and others, institutional support, program 
advertising and sales, radio and television, royalties, signage and 
other sponsorships, sports camps, State or other government support,

[[Page 570]]

student activity fees, ticket and luxury box sales, and any other 
revenues attributable to intercollegiate athletic activities.
    (6) Undergraduate students means students who are consistently 
designated as such by the institution.
    (7) Varsity team means a team that--
    (i) Is designated or defined by its institution or an athletic 
association as a varsity team; or
    (ii) Primarily competes against other teams that are designated or 
defined by their institutions or athletic associations as varsity teams.
    (c) Report. An institution described in paragraph (a) of this 
section must annually, for the preceding reporting year, prepare a 
report that contains the following information:
    (1) The number of male and the number of female full-time 
undergraduate students that attended the institution.
    (2) A listing of the varsity teams that competed in intercollegiate 
athletic competition and for each team the following data:
    (i) The total number of participants as of the day of its first 
scheduled contest of the reporting year, the number of participants who 
also participated on another varsity team, and the number of other 
varsity teams on which they participated.
    (ii) Total operating expenses attributable to the team, except that 
an institution may report combined operating expenses for closely 
related teams, such as track and field or swimming and diving. Those 
combinations must be reported separately for men's and women's teams.
    (iii) In addition to the data required by paragraph (c)(2)(ii) of 
this section, an institution may report operating expenses attributable 
to the team on a per-participant basis.
    (iv)(A) Whether the head coach was male or female, was assigned to 
the team on a full-time or part-time basis, and, if assigned on a part-
time basis, whether the head coach was a full-time or part-time employee 
of the institution.
    (B) The institution must consider graduate assistants and volunteers 
who served as head coaches to be head coaches for the purposes of this 
report.
    (v)(A) The number of assistant coaches who were male and the number 
of assistant coaches who were female, and, within each category, the 
number who were assigned to the team on a full-time or part-time basis, 
and, of those assigned on a part-time basis, the number who were full-
time and part-time employees of the institution.
    (B) The institution must consider graduate assistants and volunteers 
who served as assistant coaches to be assistant coaches for purposes of 
this report.
    (3) The unduplicated head count of the individuals who were listed 
under paragraph (c)(2)(i) of this section as a participant on at least 
one varsity team, by gender.
    (4)(i) Revenues derived by the institution according to the 
following categories (Revenues not attributable to a particular sport or 
sports must be included only in the total revenues attributable to 
intercollegiate athletic activities, and, if appropriate, revenues 
attributable to men's sports combined or women's sports combined. Those 
revenues include, but are not limited to, alumni contributions to the 
athletic department not targeted to a particular sport or sports, 
investment interest income, and student activity fees.):
    (A) Total revenues attributable to its intercollegiate athletic 
activities.
    (B) Revenues attributable to all men's sports combined.
    (C) Revenues attributable to all women's sports combined.
    (D) Revenues attributable to football.
    (E) Revenues attributable to men's basketball.
    (F) Revenues attributable to women's basketball.
    (G) Revenues attributable to all men's sports except football and 
basketball, combined.
    (H) Revenues attributable to all women's sports except basketball, 
combined.
    (ii) In addition to the data required by paragraph (c)(4)(i) of this 
section, an institution may report revenues attributable to the 
remainder of the teams, by team.
    (5) Expenses incurred by the institution, according to the following 
categories (Expenses not attributable to a

[[Page 571]]

particular sport, such as general and administrative overhead, must be 
included only in the total expenses attributable to intercollegiate 
athletic activities.):
    (i) Total expenses attributable to intercollegiate athletic 
activities.
    (ii) Expenses attributable to football.
    (iii) Expenses attributable to men's basketball.
    (iv) Expenses attributable to women's basketball.
    (v) Expenses attributable to all men's sports except football and 
basketball, combined.
    (vi) Expenses attributable to all women's sports except basketball, 
combined.
    (6) The total amount of money spent on athletically related student 
aid, including the value of waivers of educational expenses, aggregately 
for men's teams, and aggregately for women's teams.
    (7) The ratio of athletically related student aid awarded male 
athletes to athletically related student aid awarded female athletes.
    (8) The total amount of recruiting expenses incurred, aggregately 
for all men's teams, and aggregately for all women's teams.
    (9)(i) The average annual institutional salary of the non-volunteer 
head coaches of all men's teams, across all offered sports, and the 
average annual institutional salary of the non-volunteer head coaches of 
all women's teams, across all offered sports, on a per person and a per 
full-time equivalent position basis. These data must include the number 
of persons and full-time equivalent positions used to calculate each 
average.
    (ii) If a head coach has responsibilities for more than one team and 
the institution does not allocate that coach's salary by team, the 
institution must divide the salary by the number of teams for which the 
coach has responsibility and allocate the salary among the teams on a 
basis consistent with the coach's responsibilities for the different 
teams.
    (10)(i) The average annual institutional salary of the non-volunteer 
assistant coaches of men's teams, across all offered sports, and the 
average annual institutional salary of the non-volunteer assistant 
coaches of women's teams, across all offered sports, on a per person and 
a full-time equivalent position basis. These data must include the 
number of persons and full-time equivalent positions used to calculate 
each average.
    (ii) If an assistant coach had responsibilities for more than one 
team and the institution does not allocate that coach's salary by team, 
the institution must divide the salary by the number of teams for which 
the coach has responsibility and allocate the salary among the teams on 
a basis consistent with the coach's responsibilities for the different 
teams.

(Approved by the Office of Management and Budget under control number 
1845-0010)

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

[64 FR 59071, Nov. 1, 1999]



Sec. 668.48  Report on completion or graduation rates for student-athletes.

    (a)(1) Annually, by July 1, an institution that is attended by 
students receiving athletically-related student aid must produce a 
report containing the following information:
    (i) The number of students, categorized by race and gender, who 
attended that institution during the year prior to the submission of the 
report.
    (ii) The number of students described in paragraph (a)(1)(i) of this 
section who received athletically-related student aid, categorized by 
race and gender within each sport.
    (iii) The completion or graduation rate and if applicable, transfer-
out rate of all the entering, certificate- or degree-seeking, full-time, 
undergraduate students described in Sec. 668.45(a)(1), categorized by 
race and gender.
    (iv) The completion or graduation rate and if applicable, transfer-
out rate of the entering students described in Sec. 668.45(a)(1) who 
received athletically-related student aid, categorized by race and 
gender within each sport.
    (v) The average completion or graduation rate and if applicable, 
transfer-out rate for the four most recent completing or graduating 
classes of entering students described in Sec. 668.45(a)(1), (3), and 
(4) categorized by race and gender. If an institution has completion or 
graduation rates and, if applicable,

[[Page 572]]

transfer-out rates for fewer than four of those classes, it must 
disclose the average rate of those classes for which it has rates.
    (vi) The average completion or graduation rate and if applicable, 
transfer-out rate of the four most recent completing or graduating 
classes of entering students described in Sec. 668.45 (a)(1) who 
received athletically-related student aid, categorized by race and 
gender within each sport. If an institution has completion or graduation 
rates and if applicable, transfer-out rates for fewer than four of those 
classes, it must disclose the average rate of those classes for which it 
has rates.
    (2) For purposes of this section, sport means--
    (i) Basketball;
    (ii) Football;
    (iii) Baseball;
    (iv) Cross-country and track combined; and
    (v) All other sports combined.
    (3) If a category of students identified in paragraph (a)(1)(iv) 
above contains five or fewer students, the institution need not disclose 
information on that category of students.
    (b) The provisions of Sec. 668.45 (a), (b), (c), and (d) apply for 
purposes of calculating the completion or graduation rates and, if 
applicable, transfer-out rates required under paragraphs (a)(1)(iii) 
through (vi) of this section.
    (c) Each institution of higher education described in paragraph (a) 
of this section may also provide to students and the Secretary 
supplemental information containing--
    (1) The graduation or completion rate of the students who 
transferred into the institution; and
    (2) The number of students who transferred out of the institution.
    (d) The provisions of Sec. 668.45(e) apply for purposes of this 
section.

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

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

[60 FR 61788, Dec. 1, 1995. Redesignated and amended at 64 FR 59067, 
59072, Nov. 1, 1999; 69 FR 12276, Mar. 16, 2004]



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, employees, 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:

[[Page 573]]

    (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 and employees. 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 persons who received fire-related injuries 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)

[74 FR 55946, Oct. 29, 2009]



Sec. 668.50  Institutional disclosures for distance or correspondence
programs.

    (a) General. In addition to the other institutional disclosure 
requirements established in this and other subparts, an institution 
described under 34 CFR 600.9(a)(1) or (b) that offers an educational 
program that is provided, or can be completed solely through distance 
education or correspondence courses, excluding internships and 
practicums, must provide the information described in paragraphs (b) and 
(c) of this section to enrolled and prospective students in that 
program.
    (b) Public disclosures. An institution described under 34 CFR 
600.9(a)(1) that offers an educational program that is provided, or can 
be completed solely through distance education or correspondence 
courses, excluding internships and practicums, must make available the 
following information to enrolled and prospective students of such 
program, the form and content of which the Secretary may determine:
    (1)(i) Whether the institution is authorized by each State in which 
enrolled students reside to provide the program;
    (ii) Whether the institution is authorized through a State 
authorization

[[Page 574]]

reciprocity agreement, as defined in 34 CFR 600.2, to provide the 
program; and
    (iii) An explanation of the consequences, including ineligibility 
for title IV, HEA funds, for a student who changes his or her State of 
residence to a State where the institution does not meet State 
requirements or, in the case of a GE program, as defined under 
Sec. 668.402, where the program does not meet licensure or certification 
requirements in the State;
    (2)(i) If the institution is required to provide a disclosure under 
paragraph (b)(1)(i) of this section, a description of the process for 
submitting complaints, including contact information for the receipt of 
consumer complaints at the appropriate State authorities in the State in 
which the institution's main campus is located, as required under 
Sec. 668.43(b); and
    (ii) If the institution is required to provide a disclosure under 
paragraph (b)(1)(ii) of this section, and that agreement establishes a 
complaint process as described in 34 CFR 600.9(c)(2)(ii), a description 
of the process for submitting complaints that was established in the 
reciprocity agreement, including contact information for receipt of 
consumer complaints at the appropriate State authorities;
    (3) A description of the process for submitting consumer complaints 
in each State in which the program's enrolled students reside, including 
contact information for receipt of consumer complaints at the 
appropriate State authorities;
    (4) Any adverse actions a State entity has initiated, and the years 
in which such actions were initiated, related to postsecondary education 
programs offered solely through distance education or correspondence 
courses at the institution for the five calendar years prior to the year 
in which the disclosure is made;
    (5) Any adverse actions an accrediting agency has initiated, and the 
years in which such actions were initiated, related to postsecondary 
education programs offered solely through distance education or 
correspondence courses at the institution for the five calendar years 
prior to the year in which the disclosure is made;
    (6) Refund policies with which the institution is required to comply 
by any State in which enrolled students reside for the return of 
unearned tuition and fees; and
    (7)(i) The applicable educational prerequisites for professional 
licensure or certification for the occupation for which the program 
prepares students to enter in--
    (A) Each State in which the program's enrolled students reside; and
    (B) Any other State for which the institution has made a 
determination regarding such prerequisites;
    (ii) If the institution makes a determination with respect to 
certification or licensure prerequisites in a State, whether the program 
does or does not satisfy the applicable educational prerequisites for 
professional licensure or certification in that State; and
    (iii) For any State as to which the institution has not made a 
determination with respect to the licensure or certification 
prerequisites, a statement to that effect.
    (c) Individualized disclosures. (1) An institution described under 
34 CFR 600.9(a)(1) or (b) that offers an educational program that is 
provided, or can be completed solely through distance education or 
correspondence courses, excluding internships or practicums, must 
disclose directly and individually--
    (i) Prior to each prospective student's enrollment, any 
determination by the institution that the program does not meet 
licensure or certification prerequisites in the State of the student's 
residence; and
    (ii) To each enrolled and prospective student--
    (A) Any adverse action initiated by a State or an accrediting agency 
related to postsecondary education programs offered by the institution 
solely through distance education or correspondence study within 30 days 
of the institution's becoming aware of such action; or
    (B) Any determination by the institution that the program ceases to 
meet licensure or certification prerequisites of a State within 14 
calendar days of that determination.
    (2) For a prospective student who received a disclosure under 
paragraph

[[Page 575]]

(c)(1)(i) of this section and who subsequently enrolls in the program, 
the institution must receive acknowledgment from that student that the 
student received the disclosure and be able to demonstrate that it 
received the student's acknowledgment.

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

    Effective Date Note: At 81 FR 92262, Dec. 19, 2016, Sec. 668.50 was 
added, effective July 1, 2020.



     Sec. 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 (UCR) Program. The definitions 
for murder, rape, robbery, aggravated assault, burglary, motor vehicle 
theft, weapons: carrying, possessing, etc., law violations, drug abuse 
violations, and liquor law violations are from the ``Summary Reporting 
System (SRS) User Manual'' from the FBI's UCR Program. The definitions 
of fondling, incest, and statutory rape are excerpted from the 
``National Incident-Based Reporting System (NIBRS) User Manual'' from 
the FBI's UCR Program. The definitions of larceny-theft (except motor 
vehicle theft), simple assault, intimidation, and destruction/damage/
vandalism of property are from the ``Hate Crime Data Collection 
Guidelines and Training Manual'' from the FBI's UCR Program.

 Crime Definitions From the Summary Reporting System (SRS) User Manual 
                       From the FBI's UCR Program

                                  Arson

    Any willful or malicious burning or attempt to burn, with or without 
intent to defraud, a dwelling house, public building, motor vehicle or 
aircraft, personal property of another, etc.

              Criminal Homicide--Manslaughter by Negligence

    The killing of another person through gross negligence.

         Criminal Homicide--Murder and Nonnegligent Manslaughter

    The willful (nonnegligent) killing of one human being by another.

                                  Rape

    The penetration, no matter how slight, of the vagina or anus with 
any body part or object, or oral penetration by a sex organ of another 
person, without the consent of the victim.

                                 Robbery

    The taking or attempting to take anything of value from the care, 
custody, or control of a person or persons by force or threat of force 
or violence and/or by putting the victim in fear.

                           Aggravated Assault

    An unlawful attack by one person upon another for the purpose of 
inflicting severe or aggravated bodily injury. This type of assault 
usually is accompanied by the use of a weapon or by means likely to 
produce death or great bodily harm. (It is not necessary that injury 
result from an aggravated assault when a gun, knife, or other weapon is 
used which could and probably would result in serious personal injury if 
the crime were successfully completed.)

                                Burglary

    The unlawful entry of a structure to commit a felony or a theft. For 
reporting purposes this definition includes: unlawful entry with intent 
to commit a larceny or felony; breaking and entering with intent to 
commit a larceny; housebreaking; safecracking; and all attempts to 
commit any of the aforementioned.

                           Motor Vehicle Theft

    The theft or attempted theft of a motor vehicle. (Classify as motor 
vehicle theft all cases where automobiles are taken by persons not 
having lawful access even though the vehicles are later abandoned--
including joyriding.)

                   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.

[[Page 576]]

                          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.

  Crime Definitions From the National Incident-Based Reporting System 
             (NIBRS) User Manual from the FBI's UCR Program

                              Sex Offenses

    Any sexual act directed against another person, without the consent 
of the victim, including instances where the victim is incapable of 
giving consent.
    A. Fondling--The touching of the private body parts of another 
person for the purpose of sexual gratification, without the consent of 
the victim, including instances where the victim is incapable of giving 
consent because of his/her age or because of his/her temporary or 
permanent mental incapacity.
    B. Incest--Sexual intercourse between persons who are related to 
each other within the degrees wherein marriage is prohibited by law.
    C. Statutory Rape--Sexual intercourse with a person who is under the 
statutory age of consent.

  Crime Definitions From the Hate Crime Data Collection Guidelines and 
               Training Manual From the FBI's UCR Program

               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.

[79 FR 62789, Oct. 20, 2014]



     Subpart E_Verification and Updating of Student Aid Application 
                               Information

    Source: 75 FR 66954, Oct. 29, 2010, unless otherwise noted.



Sec. 668.51  General.

    (a) Scope and purpose. The regulations in this subpart govern the 
verification by institutions of information submitted by applicants for 
student financial assistance under the subsidized student financial 
assistance programs.
    (b) Applicant responsibility. If the Secretary or the institution 
requests documents or information from an applicant under this subpart, 
the applicant must provide the specified documents or information.
    (c) Foreign schools. The Secretary exempts from the provisions of 
this subpart participating institutions that are not located in a State.

(Authority: 20 U.S.C. 1094)



Sec. 668.52  Definitions.

    The following definitions apply to this subpart:
    Specified year: (1) The calendar year preceding the first calendar 
year of an award year, i.e., the base year; or
    (2) The year preceding the year described in paragraph (1) of this 
definition.
    Subsidized student financial assistance programs: Title IV, HEA 
programs for which eligibility is determined on the basis of an 
applicant's EFC. These programs include the Federal Pell Grant, Federal 
Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study 
(FWS), Federal Perkins Loan, and Direct Subsidized Loan programs.
    Unsubsidized student financial assistance programs: Title IV, HEA 
programs for which eligibility is not based on an applicant's EFC. These 
programs include the Teacher Education Assistance for College and Higher 
Education (TEACH) Grant, Direct Unsubsidized

[[Page 577]]

Loan, and Direct PLUS Loan programs.

(Authority: 20 U.S.C. 1094)



Sec. 668.53  Policies and procedures.

    (a) An institution must establish and use written policies and 
procedures for verifying an applicant's FAFSA information in accordance 
with the provisions of this subpart. These policies and procedures must 
include--
    (1) The time period within which an applicant must provide any 
documentation requested by the institution in accordance with 
Sec. 668.57;
    (2) The consequences of an applicant's failure to provide the 
requested documentation within the specified time period;
    (3) The method by which the institution notifies an applicant of the 
results of its verification if, as a result of verification, the 
applicant's EFC changes and results in a change in the amount of the 
applicant's assistance under the title IV, HEA programs;
    (4) The procedures the institution will follow itself or the 
procedures the institution will require an applicant to follow to 
correct FAFSA information determined to be in error; and
    (5) The procedures for making referrals under Sec. 668.16(g).
    (b) An institution's procedures must provide that it will furnish, 
in a timely manner, to each applicant whose FAFSA information is 
selected for verification a clear explanation of--
    (1) The documentation needed to satisfy the verification 
requirements; and
    (2) The applicant's responsibilities with respect to the 
verification of FAFSA information, including the deadlines for 
completing any actions required under this subpart and the consequences 
of failing to complete any required action.
    (c) An institution's procedures must provide that an applicant whose 
FAFSA information is selected for verification is required to complete 
verification before the institution exercises any authority under 
section 479A(a) of the HEA to make changes to the applicant's cost of 
attendance or to the values of the data items required to calculate the 
EFC.


Approved by the Office of Management and Budget under control number 
1845-0041)

(Authority: 20 U.S.C. 1094)



Sec. 668.54  Selection of an applicant's FAFSA information for
verification.

    (a) General requirements. (1) Except as provided in paragraph (b) of 
this section, an institution must require an applicant whose FAFSA 
information is selected for verification by the Secretary, to verify the 
information specified by the Secretary pursuant to Sec. 668.56.
    (2) If an institution has reason to believe that an applicant's 
FAFSA information is inaccurate, it must verify the accuracy of that 
information.
    (3) An institution may require an applicant to verify any FAFSA 
information that it specifies.
    (4) If an applicant is selected to verify FAFSA information under 
paragraph (a)(1) of this section, the institution must require the 
applicant to verify the information as specified in Sec. 668.56 if the 
applicant is selected for a subsequent verification of FAFSA 
information, except that the applicant is not required to provide 
documentation for the FAFSA information previously verified for the 
applicable award year to the extent that the FAFSA information 
previously verified remains unchanged.
    (b) Exclusions from verification. (1) An institution need not verify 
an applicant's FAFSA information if--
    (i) The applicant dies;
    (ii) The applicant does not receive assistance under the title IV, 
HEA programs for reasons other than failure to verify FAFSA information;
    (iii) The applicant is eligible to receive only unsubsidized student 
financial assistance; or
    (iv) The applicant who transfers to the institution, had previously 
completed verification at the institution from which he or she 
transferred, and applies for assistance based on the same FAFSA 
information used at the previous institution, if the current institution 
obtains a letter from the previous institution--

[[Page 578]]

    (A) Stating that it has verified the applicant's information; and
    (B) Providing the transaction number of the applicable valid ISIR.
    (2) Unless the institution has reason to believe that the 
information reported by a dependent student is incorrect, it need not 
verify the applicant's parents' FAFSA information if--
    (i) The parents are residing in a country other than the United 
States and cannot be contacted by normal means of communication;
    (ii) The parents cannot be located because their contact information 
is unknown and cannot be obtained by the applicant; or
    (iii) Both of the applicant's parents are mentally incapacitated.
    (3) Unless the institution has reason to believe that the 
information reported by an independent student is incorrect, it need not 
verify the applicant's spouse's information if--
    (i) The spouse is deceased;
    (ii) The spouse is mentally incapacitated;
    (iii) The spouse is residing in a country other than the United 
States and cannot be contacted by normal means of communication; or
    (iv) The spouse cannot be located because his or her contact 
information is unknown and cannot be obtained by the applicant.


Approved by the Office of Management and Budget under control number 
1845-0041)

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



Sec. 668.55  Updating information.

    (a) If an applicant's dependency status changes at any time during 
the award year, the applicant must update FAFSA information, except when 
the update is due to a change in his or her marital status.
    (b)(1) An applicant who is selected for verification of the number 
of persons in his or her household (household size) or the number of 
those in the household who are attending postsecondary institutions 
(number in college) must update those items to be correct as of the date 
of verification, except when the update is due to a change in his or her 
marital status.
    (2) Notwithstanding paragraph (b)(1) of this section, an applicant 
is not required to provide documentation of household size or number in 
college during a subsequent verification of either item if the 
information has not changed.
    (c) An institution may require an applicant to update FAFSA 
information under paragraph (a) or (b) of this section for a change in 
the applicant's marital status if the institution determines the update 
is necessary to address an inequity or to reflect more accurately the 
applicant's ability to pay.


Approved by the Office of Management and Budget under control number 
1845-0041)

(Authority: 20 U.S.C. 1094)



Sec. 668.56  Information to be verified.

    (a) For each award year the Secretary publishes in the Federal 
Register notice the FAFSA information that an institution and an 
applicant may be required to verify.
    (b) For each applicant whose FAFSA information is selected for 
verification by the Secretary, the Secretary specifies the specific 
information under paragraph (a) of this section that the applicant must 
verify.


Approved by the Office of Management and Budget under control number 
1845-0041)

(Authority: 20 U.S.C. 1094, 1095)



Sec. 668.57  Acceptable documentation.

    If an applicant is selected to verify any of the following 
information, an institution must obtain the specified documentation.
    (a) Adjusted Gross Income (AGI), income earned from work, or U.S. 
income tax paid. (1) Except as provided in paragraphs (a)(2), (a)(3), 
and (a)(4) of this section, an institution must require an applicant 
selected for verification of AGI, income earned from work or U.S. income 
tax paid to submit to it--
    (i) A copy of the income tax return or an Internal Revenue Service 
(IRS) form that lists tax account information of the applicant, his or 
her spouse, or his or her parents, as applicable for the specified year. 
The copy of the return must include the signature (which need not be an 
original) of the filer of the return or of one of the filers of a joint 
return;

[[Page 579]]

    (ii) For a dependent student, a copy of each IRS Form W-2 for the 
specified year received by the parent whose income is being taken into 
account if--
    (A) The parents filed a joint return; and
    (B) The parents are divorced or separated or one of the parents has 
died; and
    (iii) For an independent student, a copy of each IRS Form W-2 for 
the specified year he or she received if the independent student--
    (A) Filed a joint return; and
    (B) Is a widow or widower, or is divorced or separated.
    (2) An institution may accept, in lieu of an income tax return or an 
IRS form that lists tax account information, the information reported 
for an item on the applicant's FAFSA for the specified year if the 
Secretary has identified that item as having been obtained from the IRS 
and not having been changed.
    (3) An institution must accept, in lieu of an income tax return or 
an IRS form that lists tax account information, the documentation set 
forth in paragraph (a)(4) of this section if the individual for the 
specified year--
    (i) Has not filed and, under IRS rules, or other applicable 
government agency rules, is not required to file an income tax return;
    (ii) Is required to file a U.S. tax return and has been granted a 
filing extension by the IRS; or
    (iii) Has requested a copy of the tax return or an IRS form that 
lists tax account information, and the IRS or a government of a U.S. 
territory or commonwealth or a foreign central government cannot locate 
the return or provide an IRS form that lists tax account information.
    (4) An institution must accept--
    (i) For an individual described in paragraph (a)(3)(i) of this 
section, a statement signed by that individual certifying that he or she 
has not filed and is not required to file an income tax return for the 
specified year and certifying for that year that individual's--
    (A) Sources of income earned from work as stated on the FAFSA; and
    (B) Amounts of income from each source. In lieu of a certification 
of these amounts of income, the applicant may provide a copy of his or 
her IRS Form W-2 for each source listed under paragraph (a)(4)(i)(A) of 
this section;
    (ii) For an individual described in paragraph (a)(3)(ii) of this 
section--
    (A) A copy of the IRS Form 4868, ``Application for Automatic 
Extension of Time to File U.S. Individual Income Tax Return,'' that the 
individual filed with the IRS for the specified year, or a copy of the 
IRS's approval of an extension beyond the automatic six-month extension 
if the individual requested an additional extension of the filing time; 
and
    (B) A copy of each IRS Form W-2 that the individual received for the 
specified year, or for a self-employed individual, a statement signed by 
the individual certifying the amount of the AGI for the specified year; 
and
    (iii) For an individual described in paragraph (a)(3)(iii) of this 
section--
    (A) A copy of each IRS Form W-2 that the individual received for the 
specified year; or
    (B) For an individual who is self-employed or has filed an income 
tax return with a government of a U. S. territory or commonwealth, or a 
foreign central government, a statement signed by the individual 
certifying the amount of AGI and taxes paid for the specified year.
    (5) An institution may require an individual described in paragraph 
(a)(3)(ii) of this section to provide to it a copy of his or her 
completed and signed income tax return when filed. If an institution 
receives the copy of the return, it must reverify the AGI and taxes paid 
by the applicant and his or her spouse or parents.
    (6) If an individual who is required to submit an IRS Form W-2, 
under paragraph (a) of this section, is unable to obtain one in a timely 
manner, the institution may permit that individual to set forth, in a 
statement signed by the individual, the amount of income earned from 
work, the source of that income, and the reason that the IRS Form W-2 is 
not available in a timely manner.
    (7) For the purpose of this section, an institution may accept in 
lieu of a copy of an income tax return signed by the filer of the return 
or one of the filers of

[[Page 580]]

a joint return, a copy of the filer's return that includes the 
preparer's Social Security Number, Employer Identification Number or the 
Preparer Tax Identification Number and has been signed, stamped, typed, 
or printed with the name and address of the preparer of the return.
    (b) Number of family members in household. An institution must 
require an applicant selected for verification of the number of family 
members in the household to submit to it a statement signed by both the 
applicant and one of the applicant's parents if the applicant is a 
dependent student, or only the applicant if the applicant is an 
independent student, listing the name and age of each family member in 
the household and the relationship of that household member to the 
applicant.
    (c) Number of family household members enrolled in eligible 
postsecondary institutions. (1) An institution must require an applicant 
selected for verification of the number of household members in the 
applicant's family enrolled on at least a half-time basis in eligible 
postsecondary institutions to submit a statement signed by both the 
applicant and one of the applicant's parents, if the applicant is a 
dependent student, or by only the applicant if the applicant is an 
independent student, listing--
    (i) The name of each family member who is or will be attending an 
eligible postsecondary educational institution as at least a half-time 
student in the award year;
    (ii) The age of each student; and
    (iii) The name of the institution that each student is or will be 
attending.
    (2) If the institution has reason to believe that an applicant's 
FAFSA information or the statement provided under paragraph (c)(1) of 
this section regarding the number of family household members enrolled 
in eligible postsecondary institutions is inaccurate, the institution 
must obtain a statement from each institution named by the applicant in 
response to the requirement of paragraph (c)(1)(iii) of this section 
that the household member in question is or will be attending the 
institution on at least a half-time basis, unless--
    (i) The institution the student is attending determines that such a 
statement is not available because the household member in question has 
not yet registered at the institution he or she plans to attend; or
    (ii) The institution has information indicating that the student 
will be attending the same institution as the applicant.
    (d) Other information. If an applicant is selected to verify other 
information specified in the annual Federal Register notice, the 
applicant must provide the documentation specified for that information 
in the Federal Register notice.


Approved by the Office of Management and Budget under control number 
1845-0041)

(Authority: 20 U.S.C. 1094)



Sec. 668.58  Interim disbursements.

    (a)(1) If an institution has reason to believe that an applicant's 
FAFSA information is inaccurate, until the information is verified and 
any corrections are made in accordance with Sec. 668.59(a), the 
institution may not--
    (i) Disburse any Federal Pell Grant, FSEOG, or Federal Perkins Loan 
Program funds to the applicant;
    (ii) Employ or allow an employer to employ the applicant in its FWS 
Program; or
    (iii) Originate a Direct Subsidized Loan, or disburse any such loan 
proceeds for any previously originated Direct Subsidized Loan to the 
applicant.
    (2) If an institution does not have reason to believe that an 
applicant's FAFSA information is inaccurate prior to verification, the 
institution may--
    (i)(A) Withhold payment of Federal Pell Grant, Federal Perkins Loan, 
or FSEOG Program funds for the applicant; or
    (B) Make one disbursement from each of the Federal Pell Grant, 
Federal Perkins Loan, or FSEOG Program funds for the applicant's first 
payment period of the award year;
    (ii) Employ or allow an employer to employ that applicant, once he 
or she is an eligible student, under the FWS Program for the first 60 
consecutive days after the student's enrollment in that award year; or

[[Page 581]]

    (iii)(A) Withhold origination of the applicant's Direct Subsidized 
Loan; or
    (B) Originate the Direct Subsidized Loan provided that the 
institution does not disburse Direct Subsidized Loan proceeds.
    (3) If, after verification, an institution determines that changes 
to an applicant's information will not change the amount the applicant 
would receive under a title IV, HEA program, the institution--
    (i) Must ensure corrections are made in accordance with 
Sec. 668.59(a); and
    (ii) May prior to receiving the corrected valid SAR or valid ISIR--
    (A) Make one disbursement from each of the Federal Pell Grant, 
Federal Perkins Loan, or FSEOG Program funds for the applicant's first 
payment period of the award year;
    (B) Employ or allow an employer to employ the applicant, once he or 
she is an eligible student, under the FWS Program for the first 60 
consecutive days after the student's enrollment in that award year; or
    (C) Originate the Direct Subsidized Loan and disburse the Direct 
Subsidized Loan proceeds for the applicant.
    (b) If an institution chooses to make a disbursement under--
    (1) Paragraph (a)(2)(i)(B) of this section, it--
    (i) Is liable for any overpayment discovered as a result of 
verification to the extent that the overpayment is not recovered through 
reducing subsequent disbursements in the award year or from the student; 
and
    (ii) Must recover the overpayment in accordance with Sec. 668.61(a);
    (2) Paragraph (a)(2)(ii) of this section, it--
    (i) Is liable for any overpayment discovered as a result of 
verification to the extent that the overpayment is not eliminated by 
adjusting other financial assistance; and
    (ii) Must recover the overpayment in accordance with Sec. 668.61(b); 
or
    (3) Paragraph (a)(3) of this section, it--
    (i) Is liable for any subsidized student financial assistance 
disbursed if it does not receive the valid SAR or valid ISIR reflecting 
corrections within the deadlines established under Sec. 668.60; and
    (ii) Must recover the funds in accordance with Sec. 668.61(c).

(Authority: 20 U.S.C. 1094)

[75 FR 66954, Oct. 29, 2010, as amended at 77 FR 20536, Apr. 13, 2012]



Sec. 668.59  Consequences of a change in an applicant's FAFSA information.

    (a) For the subsidized student financial assistance programs, if an 
applicant's FAFSA information changes as a result of verification, the 
applicant or the institution must submit to the Secretary any changes 
to--
    (1) A nondollar item; or
    (2) A single dollar item of $25 or more.
    (b) For the Federal Pell Grant Program, if an applicant's FAFSA 
information changes as a result of verification, an institution must--
    (1) Recalculate the applicant's Federal Pell Grant on the basis of 
the EFC on the corrected valid SAR or valid ISIR; and
    (2)(i) Disburse any additional funds under that award only if the 
institution receives a corrected valid SAR or valid ISIR for the 
applicant and only to the extent that additional funds are payable based 
on the recalculation;
    (ii) Comply with the procedures specified in Sec. 668.61 for an 
interim disbursement if, as a result of verification, the Federal Pell 
Grant award is reduced; or--
    (iii) Comply with the procedures specified in 34 CFR 690.79 for an 
overpayment that is not an interim disbursement if, as a result of 
verification, the Federal Pell Grant award is reduced.
    (c) For the subsidized student financial assistance programs, 
excluding the Federal Pell Grant Program, if an applicant's FAFSA 
information changes as a result of verification, the institution must--
    (1) Adjust the applicant's financial aid package on the basis of the 
EFC on the corrected valid SAR or valid ISIR; and
    (2)(i) Comply with the procedures specified in Sec. 668.61 for an 
interim disbursement if, as a result of verification, the financial aid 
package must be reduced;
    (ii) Comply with the procedures specified in 34 CFR 673.5(f) for a 
Federal

[[Page 582]]

Perkins loan or an FSEOG overpayment that is not the result of an 
interim disbursement if, as a result of verification, the financial aid 
package must be reduced; and
    (iii) Comply with the procedures specified in 34 CFR 685.303(e) for 
Direct Subsidized Loan excess loan proceeds that are not the result of 
an interim disbursement if, as a result of verification, the financial 
aid package must be reduced.


Approved by the Office of Management and Budget under control number 
1845-0041)

(Authority: 20 U.S.C. 1094)



Sec. 668.60  Deadlines for submitting documentation and the 
consequences of failing to provide documentation.

    (a) An institution must require an applicant selected for 
verification to submit to it, within the period of time it or the 
Secretary specifies, the documentation set forth in Sec. 668.57 that is 
requested by the institution.
    (b) For purposes of the subsidized student financial assistance 
programs, excluding the Federal Pell Grant Program--
    (1) If an applicant fails to provide the requested documentation 
within a reasonable time period established by the institution--
    (i) The institution may not--
    (A) Disburse any additional Federal Perkins Loan or FSEOG Program 
funds to the applicant;
    (B) Employ, continue to employ or allow an employer to employ the 
applicant under FWS; or
    (C) Originate the applicant's Direct Subsidized Loan or disburse any 
additional Direct Subsidized Loan proceeds for the applicant; and
    (ii) The applicant must repay to the institution any Federal Perkins 
Loan or FSEOG received for that award year;
    (2) If the applicant provides the requested documentation after the 
time period established by the institution, the institution may, at its 
option, disburse aid to the applicant notwithstanding paragraph (b)(1) 
of this section; and
    (3) If an institution has received proceeds for a Direct Subsidized 
Loan on behalf of an applicant, the institution must return all or a 
portion of those funds as provided under Sec. 668.166(b) if the 
applicant does not complete verification within the time period 
specified.
    (c) For purposes of the Federal Pell Grant Program--
    (1) An applicant may submit a valid SAR to the institution or the 
institution may receive a valid ISIR after the applicable deadline 
specified in 34 CFR 690.61 but within an established additional time 
period set by the Secretary through publication of a notice in the 
Federal Register; and
    (2) If the applicant does not provide to the institution the 
requested documentation and, if necessary, a valid SAR or the 
institution does not receive a valid ISIR, within the additional time 
period referenced in paragraph (c)(1) of this section, the applicant--
    (i) Forfeits the Federal Pell Grant for the award year; and
    (ii) Must return any Federal Pell Grant payments previously received 
for that award year.
    (d) The Secretary may determine not to process FAFSA information of 
an applicant who has been requested to provide documentation until the 
applicant provides the documentation or the Secretary decides that there 
is no longer a need for the documentation.
    (e) If an applicant selected for verification for an award year dies 
before the deadline for completing verification without completing that 
process, the institution may not--
    (1) Make any further disbursements on behalf of that applicant;
    (2) Originate that applicant's Direct Subsidized Loan, or disburse 
that applicant's Direct Subsidized Loan proceeds; or
    (3) Consider any funds it disbursed to that applicant under 
Sec. 668.58(a)(2) as an overpayment.

(Authority: 20 U.S.C. 1094)



Sec. 668.61  Recovery of funds from interim disbursements.

    (a) If an institution discovers, as a result of verification, that 
an applicant received under Sec. 668.58(a)(2)(i)(B) more financial aid 
than the applicant was eligible to receive, the institution must

[[Page 583]]

eliminate the Federal Pell Grant, Federal Perkins Loan, or FSEOG 
overpayment by--
    (1) Adjusting subsequent disbursements in the award year in which 
the overpayment occurred; or
    (2) Reimbursing the appropriate program account by--
    (i) Requiring the applicant to return the overpayment to the 
institution if the institution cannot correct the overpayment under 
paragraph (a)(1) of this section; or
    (ii) Making restitution from its own funds, by the earlier of the 
following dates, if the applicant does not return the overpayment:
    (A) Sixty days after the applicant's last day of attendance.
    (B) The last day of the award year in which the institution 
disbursed Federal Pell Grant, Federal Perkins Loan, or FSEOG Program 
funds to the applicant.
    (b) If an institution discovers, as a result of verification, that 
an applicant received under Sec. 668.58(a)(2)(ii) more financial aid 
than the applicant was eligible to receive, the institution must 
eliminate the FWS overpayment by--
    (1) Adjusting the applicant's other financial aid; or
    (2) Reimbursing the FWS program account by making restitution from 
its own funds, if the institution cannot correct the overpayment under 
paragraph (b)(1) of this section. The applicant must still be paid for 
all work performed under the institution's own payroll account.
    (c) If an institution disbursed subsidized student financial 
assistance to an applicant under Sec. 668.58(a)(3), and did not receive 
the valid SAR or valid ISIR reflecting corrections within the deadlines 
established under Sec. 668.60, the institution must reimburse the 
appropriate program account by making restitution from its own funds. 
The applicant must still be paid for all work performed under the 
institution's own payroll account.


Approved by the Office of Management and Budget under control number 
1845-0041)

(Authority: 20 U.S.C. 1094)



                       Subpart F_Misrepresentation

    Source: 75 FR 66958, Oct. 29, 2010, unless otherwise noted.



Sec. 668.71  Scope and special definitions.

    (a) If the Secretary determines that an eligible institution has 
engaged in substantial misrepresentation, the Secretary may--
    (1) Revoke the eligible institution's program participation 
agreement, if the institution is provisionally certified under 
Sec. 668.13(c);
    (2) Impose limitations on the institution's participation in the 
title IV, HEA programs, if the institution is provisionally certified 
under Sec. 668.13(c) ;
    (3) Deny participation applications made on behalf of the 
institution; or
    (4) Initiate a proceeding against the eligible institution under 
subpart G of this part.
    (b) This subpart establishes the types of activities that constitute 
substantial misrepresentation by an eligible institution. An eligible 
institution is deemed to have engaged in substantial misrepresentation 
when the institution itself, one of its representatives, or any 
ineligible institution, organization, or person with whom the eligible 
institution has an agreement to provide educational programs, marketing, 
advertising, recruiting or admissions services, makes a substantial 
misrepresentation about the nature of its educational program, its 
financial charges, or the employability of its graduates. Substantial 
misrepresentations are prohibited in all forms, including those made in 
any advertising, promotional materials, or in the marketing or sale of 
courses or programs of instruction offered by the institution.
    (c) The following definitions apply to this subpart:
    Misrepresentation: Any false, erroneous or misleading statement an 
eligible institution, one of its representatives, or any ineligible 
institution, organization, or person with whom the eligible institution 
has an agreement to provide educational programs, or to provide 
marketing, advertising, recruiting or admissions services makes directly 
or indirectly to a student, prospective student or any member of the 
public, or to an accrediting agency, to

[[Page 584]]

a State agency, or to the Secretary. A misleading statement includes any 
statement that has the likelihood or tendency to deceive. A statement is 
any communication made in writing, visually, orally, or through other 
means. Misrepresentation includes the dissemination of a student 
endorsement or testimonial that a student gives either under duress or 
because the institution required the student to make such an endorsement 
or testimonial to participate in a program.
    Prospective student: Any individual who has contacted an eligible 
institution for the purpose of requesting information about enrolling at 
the institution or who has been contacted directly by the institution or 
indirectly through advertising about enrolling at the institution.
    Substantial misrepresentation: Any misrepresentation on which the 
person to whom it was made could reasonably be expected to rely, or has 
reasonably relied, to that person's detriment.

(Authority: 20 U.S.C. 1094)

[75 FR 66958, Oct. 29, 2010, as amended at 78 FR 57799, Sept. 20, 2013]

    Effective Date Note: At 81 FR 76072, Nov. 1, 2016, Sec. 668.71 was 
amended in paragraph (c), in the second sentence of the definition of 
``Misrepresentation'', by removing the word ``deceive'' and adding in 
its place the words ``mislead under the circumstances'' and by adding a 
fourth sentence, effective July 1, 2019. For the convenience of the 
user, the added text is set forth as follows:



Sec. 668.71  Scope and special definitions.

                                * * * * *

    (c) * * *
    Misrepresentation: * * * Misrepresentation includes any statement 
that omits information in such a way as to make the statement false, 
erroneous, or misleading.



Sec. 668.72  Nature of educational program.

    Misrepresentation concerning the nature of an eligible institution's 
educational program includes, but is not limited to, false, erroneous or 
misleading statements concerning--
    (a) The particular type(s), specific source(s), nature and extent of 
its institutional, programmatic, or specialized accreditation;
    (b)(1) Whether a student may transfer course credits earned at the 
institution to any other institution;
    (2) Conditions under which the institution will accept transfer 
credits earned at another institution;
    (c) Whether successful completion of a course of instruction 
qualifies a student--
    (1) For acceptance to a labor union or similar organization; or
    (2) To receive, to apply to take or to take the examination required 
to receive, a local, State, or Federal license, or a nongovernmental 
certification required as a precondition for employment, or to perform 
certain functions in the States in which the educational program is 
offered, or to meet additional conditions that the institution knows or 
reasonably should know are generally needed to secure employment in a 
recognized occupation for which the program is represented to prepare 
students;
    (d) The requirements for successfully completing the course of study 
or program and the circumstances that would constitute grounds for 
terminating the student's enrollment;
    (e) Whether its courses are recommended or have been the subject of 
unsolicited testimonials or endorsements by--
    (1) Vocational counselors, high schools, colleges, educational 
organizations, employment agencies, members of a particular industry, 
students, former students, or others; or
    (2) Governmental officials for governmental employment;
    (f) Its size, location, facilities, or equipment;
    (g) The availability, frequency, and appropriateness of its courses 
and programs to the employment objectives that it states its programs 
are designed to meet;
    (h) The nature, age, and availability of its training devices or 
equipment and their appropriateness to the employment objectives that it 
states its programs and courses are designed to meet;
    (i) The number, availability, and qualifications, including the 
training and experience, of its faculty and other personnel;

[[Page 585]]

    (j) The availability of part-time employment or other forms of 
financial assistance;
    (k) The nature and availability of any tutorial or specialized 
instruction, guidance and counseling, or other supplementary assistance 
it will provide its students before, during or after the completion of a 
course;
    (l) The nature or extent of any prerequisites established for 
enrollment in any course;
    (m) The subject matter, content of the course of study, or any other 
fact related to the degree, diploma, certificate of completion, or any 
similar document that the student is to be, or is, awarded upon 
completion of the course of study;
    (n) Whether the academic, professional, or occupational degree that 
the institution will confer upon completion of the course of study has 
been authorized by the appropriate State educational agency. This type 
of misrepresentation includes, in the case of a degree that has not been 
authorized by the appropriate State educational agency or that requires 
specialized accreditation, any failure by an eligible institution to 
disclose these facts in any advertising or promotional materials that 
reference such degree; or
    (o) Any matters required to be disclosed to prospective students 
under Secs. 668.42 and 668.43 of this part.

(Authority: 20 U.S.C. 1094)



Sec. 668.73  Nature of financial charges.

    Misrepresentation concerning the nature of an eligible institution's 
financial charges includes, but is not limited to, false, erroneous, or 
misleading statements concerning--
    (a) Offers of scholarships to pay all or part of a course charge;
    (b) Whether a particular charge is the customary charge at the 
institution for a course;
    (c) The cost of the program and the institution's refund policy if 
the student does not complete the program;
    (d) The availability or nature of any financial assistance offered 
to students, including a student's responsibility to repay any loans, 
regardless of whether the student is successful in completing the 
program and obtaining employment; or
    (e) The student's right to reject any particular type of financial 
aid or other assistance, or whether the student must apply for a 
particular type of financial aid, such as financing offered by the 
institution.

(Authority: 20 U.S.C. 1094)



Sec. 668.74  Employability of graduates.

    Misrepresentation regarding the employability of an eligible 
institution's graduates includes, but is not limited to, false, 
erroneous, or misleading statements concerning--
    (a) The institution's relationship with any organization, employment 
agency, or other agency providing authorized training leading directly 
to employment;
    (b) The institution's plans to maintain a placement service for 
graduates or otherwise assist its graduates to obtain employment;
    (c) The institution's knowledge about the current or likely future 
conditions, compensation, or employment opportunities in the industry or 
occupation for which the students are being prepared;
    (d) Whether employment is being offered by the institution or that a 
talent hunt or contest is being conducted, including, but not limited 
to, through the use of phrases such as ``Men/women wanted to train for * 
* *,'' ``Help Wanted,'' ``Employment,'' or ``Business Opportunities'';
    (e) Government job market statistics in relation to the potential 
placement of its graduates; or
    (f) Other requirements that are generally needed to be employed in 
the fields for which the training is provided, such as requirements 
related to commercial driving licenses or permits to carry firearms, and 
failing to disclose factors that would prevent an applicant from 
qualifying for such requirements, such as prior criminal records or 
preexisting medical conditions.

(Authority: 20 U.S.C. 1094)



   Subpart G_Fine, Limitation, Suspension and Termination Proceedings

    Source: 51 FR 43325, Dec. 1, 1986, unless otherwise noted.

[[Page 586]]



Sec. 668.81  Scope and special definitions.

    (a) This subpart establishes regulations for the following actions 
with respect to a participating institution or third-party servicer:
    (1) An emergency action.
    (2) The imposition of a fine.
    (3) The limitation, suspension, or termination of the participation 
of the institution in a title IV, HEA program.
    (4) The limitation, suspension, or termination of the eligibility of 
the servicer to contract with any institution to administer any aspect 
of the institution's participation in a Title IV, HEA program.
    (5) The determination of--
    (i) Borrower defense to repayment claims that are brought by the 
Department against an institution under Sec. 685.206 or Sec. 685.222; 
and
    (ii) Liability of an institution to the Secretary for losses to the 
Secretary arising from these claims.
    (b) This subpart applies to an institution or a third-party servicer 
that violates any statutory provision of or applicable to Title IV of 
the HEA, any regulatory provision prescribed under that statutory 
authority, or any applicable special arrangement, agreement, or 
limitation entered into under the authority of statutes applicable to 
Title IV of the HEA.
    (c) This subpart does not apply to a determination that--
    (1) An institution or any of its locations or educational programs 
fails to qualify for initial designation as an eligible institution, 
location, or educational program because the institution, location, or 
educational program fails to satisfy the statutory and regulatory 
provisions that define an eligible institution or educational program 
with respect to the Title IV, HEA program for which a designation of 
eligibility is sought;
    (2) An institution fails to qualify for initial certification or 
provisional certification to participate in any Title IV, HEA program 
because the institution does not meet the factors of financial 
responsibility and standards of administrative capability contained in 
subpart B of this part;
    (3) A participating institution's or a provisionally certified 
participating institution's period of participation, as specified under 
Sec. 668.13, has expired; or
    (4) A participating institution's provisional certification is 
revoked under the procedures in Sec. 668.13.
    (d) This subpart does not apply to a determination by the Secretary 
of the system to be used to disburse Title IV, HEA program funds to a 
participating institution (i.e., advance payments and payments by way of 
reimbursements).
    (e) The proceedings described in this subpart provide the 
institution's sole opportunity for a hearing on the existence and amount 
of the debt that is required by applicable law prior to the Department 
collecting the debt from any available funds, including but not limited 
to offsetting the debt or any liability against funds to be provided to 
an institution pursuant to any Title IV, HEA program in which that 
institution participates.
    (f) Nothing contained in this subpart limits the right of the 
Department to gather information, including by subpoena, or conduct any 
examination, audit, program review, investigation, or other review 
authorized by other applicable law.
    (g) Unless directed by a court of competent jurisdiction, the 
hearing official, or the Secretary for good cause, if a collateral 
attack is brought in any court concerning all or any part of any 
proceeding under this subpart, the challenged proceeding shall continue 
without regard to the pendency of that court proceeding. No default or 
other failure to timely act as directed in a proceeding authorized by 
this subpart shall be excused based on the pendency of such court 
proceeding.

(Authority: 20 U.S.C. 1094)

[51 FR 43325, Dec. 1, 1986, as amended at 55 FR 32183, Aug. 7, 1990; 58 
FR 13344, Mar. 10, 1993; 59 FR 22443, Apr. 29, 1994; 59 FR 61186, Nov. 
29, 1994; 63 FR 40626, July 29, 1998; 82 FR 6256, Jan. 19, 2017]



Sec. 668.82  Standard of conduct.

    (a) A participating institution or a third-party servicer that 
contracts with that institution acts in the nature of a fiduciary in the 
administration of the Title IV, HEA programs. To participate in any 
Title IV, HEA program, the institution or servicer must at all

[[Page 587]]

times act with the competency and integrity necessary to qualify as a 
fiduciary.
    (b) In the capacity of a fiduciary--
    (1) A participating institution is subject to the highest standard 
of care and diligence in administering the programs and in accounting to 
the Secretary for the funds received under those programs; and
    (2) A third-party servicer is subject to the highest standard of 
care and diligence in administering any aspect of the programs on behalf 
of the institutions with which the servicer contracts and in accounting 
to the Secretary and those institutions for any funds administered by 
the servicer under those programs.
    (c) The failure of a participating institution or any of the 
institution's third-party servicers to administer a Title IV, HEA 
program, or to account for the funds that the institution or servicer 
receives under that program, in accordance with the highest standard of 
care and diligence required of a fiduciary, constitutes grounds for--
    (1) An emergency action against the institution, a fine on the 
institution, or the limitation, suspension, or termination of the 
institution's participation in that program; or
    (2) An emergency action against the servicer, a fine on the 
servicer, or the limitation, suspension, or termination of the 
servicer's eligibility to contract with any institution to administer 
any aspect of the institution's participation in that program.
    (d)(1) A participating institution or a third-party servicer with 
which the institution contracts violates its fiduciary duty if--
    (i)(A) The servicer has been convicted of, or has pled nolo 
contendere or guilty to, a crime involving the acquisition, use, or 
expenditure of Federal, State, or local government funds, or has been 
administratively or judicially determined to have committed fraud or any 
other material violation of law involving those funds;
    (B) A person who exercises substantial control over the servicer, as 
determined according to Sec. 668.15, has been convicted of, or has pled 
nolo contendere or guilty to, a crime involving the acquisition, use, or 
expenditure of Federal, State, or local government funds, or has been 
administratively or judicially determined to have committed fraud or any 
other material violation of law involving those funds;
    (C) The servicer employs a person in a capacity that involves the 
administration of Title IV, HEA programs or the receipt of Title IV, HEA 
program funds who has been convicted of, or has pled nolo contendere or 
guilty to, a crime involving the acquisition, use, or expenditure of 
Federal, State, or local government funds, or who has been 
administratively or judicially determined to have committed fraud or any 
other material violation of law involving those funds; or
    (D) The servicer uses or contracts in a capacity that involves any 
aspect of the administration of the Title IV, HEA programs with any 
other person, agency, or organization that has been or whose officers or 
employees have been--
    (1) Convicted of, or pled nolo contendere or guilty to, a crime 
involving the acquisition, use, or expenditure of Federal, State, or 
local government funds; or
    (2) Administratively or judicially determined to have committed 
fraud or any other material violation of law involving Federal, State, 
or local government funds; and
    (ii) Upon learning of a conviction, plea, or administrative or 
judicial determination described in paragraph (d)(1)(i) of this section, 
the institution or servicer, as applicable, does not promptly remove the 
person, agency, or organization from any involvement in the 
administration of the institution's participation in Title IV, HEA 
programs, or, as applicable, the removal or elimination of any 
substantial control, as determined according to Sec. 668.15, over the 
servicer.
    (2) A violation for a reason contained in paragraph (d)(1) of this 
section is grounds for terminating--
    (i) The servicer's eligibility to contract with any institution to 
administer any aspect of the institution's participation in a Title IV, 
HEA program; and
    (ii) The participation in any Title IV, HEA program of any 
institution under whose contract the servicer committed

[[Page 588]]

the violation, if that institution had been aware of the violation and 
had failed to take the appropriate action described in paragraph 
(d)(1)(ii) of this section.
    (e)(1) A participating institution or third-party servicer, as 
applicable, violates its fiduciary duty if--
    (i)(A) The institution or servicer, as applicable, is debarred or 
suspended under Executive Order (E.O.) 12549 (3 CFR, 1986 Comp., p. 189) 
or the Federal Acquisition Regulations (FAR), 48 CFR part 9, subpart 
9.4; or
    (B) Cause exists under 2 CFR 180.700 or 180.800, as both those 
sections are adopted at 2 CFR 3485.12, for debarring or suspending the 
institution, servicer, or any principal or affiliate of the institution 
or servicer under E.O. 12549 (3 CFR, 1986 Comp., p. 189) or the FAR, 48 
CFR part 9, subpart 9.4; and
    (ii) Upon learning of the debarment, suspension, or cause for 
debarment or suspension, the institution or servicer, as applicable, 
does not promptly--
    (A) Discontinue the affiliation; or
    (B) Remove the principal from responsibility for any aspect of the 
administration of an institution's or servicer's participation in the 
Title IV, HEA programs.
    (2) A violation for a reason contained in paragraph (e)(1) of this 
section is grounds for terminating--
    (i) The institution's participation in any Title IV, HEA program; 
and
    (ii) The servicer's eligibility to contract with any institution to 
administer any aspect of the institution's participation in any Title 
IV, HEA program. The violation is also grounds for terminating, under 
this subpart, the participation in any Title IV, HEA program of any 
institution under whose contract the servicer committed the violation, 
if that institution knew or should have known of the violation.
    (f)(1) The debarment of a participating institution or third-party 
servicer, as applicable, under E.O. 12549 (3 CFR, 1986 Comp., p. 189) or 
the FAR, 48 CFR part 9, subpart 9.4, or another Federal agency from 
participation in Federal programs, under the procedures described in 2 
CFR 3485.612(d) terminates, for the duration of the debarment--
    (i) The institution's participation in any Title IV, HEA program; 
and
    (ii) The servicer's eligibility to contract with any institution to 
administer any aspect of the institution's participation in any Title 
IV, HEA program.
    (2)(i) The suspension of a participating institution or third-party 
servicer, as applicable, under E.O. 12549 (3 CFR, 1986 Comp., p. 189) or 
the FAR, 48 CFR part 9, subpart 9.4, or another Federal agency from 
participation in Federal programs, under the procedures described in 2 
CFR 3485.612(d), suspends--
    (A) The institution's participation in any Title IV, HEA program; 
and
    (B) The servicer's eligibility to contract with any institution to 
administer any aspect of the institution's participation in any Title 
IV, HEA program.
    (ii) A suspension described in paragraph (f)(2) of this section 
lasts for a period of 60 days, beginning on the effective date specified 
in the notice by the Secretary under 2 CFR 3485.612(c), unless--
    (A) The institution or servicer, as applicable, and the Secretary, 
agree to an extension of the suspension; or
    (B) The Secretary begins a limitation or termination proceeding 
against the institution or servicer, as applicable, under this subpart 
before the 60th day of the suspension.
    (3) A debarment or suspension not described in (f)(1) or (f)(2) of 
this section of a participating institution or third-party servicer by 
another Federal agency constitutes prima facie evidence in a proceeding 
under this subpart that cause for suspension or debarment and 
termination, as applicable, exists.

(Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189), E.O. 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1070, et seq., 1082(a)(1) and (h)(1), 
1094(c)(1)(D) and (H), and 3474)

[59 FR 22444, Apr. 29, 1994, as amended at 60 FR 33058, June 26, 1995; 
68 FR 66615, Nov. 26, 2003; 77 FR 18679, Mar. 28, 2012]



Sec. 668.83  Emergency action.

    (a) Under an emergency action, the Secretary may--
    (1) Withhold Title IV, HEA program funds from a participating 
institution

[[Page 589]]

or its students, or from a third-party servicer, as applicable;
    (2)(i) Withdraw the authority of the institution or servicer, as 
applicable, to commit, disburse, deliver, or cause the commitment, 
disbursement, or delivery of Title IV, HEA program funds; or
    (ii) Withdraw the authority of the institution or servicer, as 
applicable, to commit, disburse, deliver, or cause the commitment, 
disbursement, or delivery of Title IV, HEA program funds except in 
accordance with a particular procedure; and
    (3)(i) Withdraw the authority of the servicer to administer any 
aspect of any institution's participation in any Title IV, HEA program; 
or
    (ii) Withdraw the authority of the servicer to administer any aspect 
of any institution's participation in any Title IV, HEA program except 
in accordance with a particular procedure.
    (b)(1) An initiating official begins an emergency action against an 
institution or third-party servicer by sending the institution or 
servicer a notice by registered mail, return receipt requested. In an 
emergency action against a third-party servicer, the official also sends 
the notice to each institution that contracts with the servicer. The 
official also may transmit the notice by other, more expeditious means 
if practical.
    (2) The emergency action takes effect on the date the initiating 
official mails the notice to the institution or servicer, as applicable.
    (3) The notice states the grounds on which the emergency action is 
based, the consequences of the emergency action, and that the 
institution or servicer, as applicable, may request an opportunity to 
show cause why the emergency action is unwarranted.
    (c)(1) An initiating official takes emergency action against an 
institution or third-party servicer only if that official--
    (i) Receives information, determined by the official to be reliable, 
that the institution or servicer, as applicable, is violating any 
statutory provision of or applicable to Title IV of the HEA, any 
regulatory provision prescribed under that statutory authority, or any 
applicable special arrangement, agreement, or limitation entered into 
under the authority of statutes applicable to Title IV of the HEA;
    (ii) Determines that immediate action is necessary to prevent misuse 
of Title IV, HEA program funds; and
    (iii) Determines that the likelihood of loss from that misuse 
outweighs the importance of awaiting completion of any proceeding that 
may be initiated to limit, suspend, or terminate, as applicable--
    (A) The participation of the institution in one or more Title IV, 
HEA programs; or
    (B) The eligibility of the servicer to contract with any institution 
to administer any aspect of the institution's participation in a Title 
IV, HEA program.
    (2) Examples of violations of a Title IV, HEA program requirement 
that cause misuse and the likely loss of Title IV, HEA program funds 
include--
    (i) Causing the commitment, disbursement, or delivery by any party 
of Title IV, HEA program funds in an amount that exceeds--
    (A) The amount for which students are eligible; or
    (B) The amount of principal, interest, or special allowance payments 
that would have been payable to the holder of a Federal Stafford or 
Federal PLUS loan if a refund allocable to that loan had been made in 
the amount and at the time required;
    (ii) Using, offering to make available, or causing the use or 
availability of Title IV, HEA program funds for educational services 
if--
    (A) The institution, servicer, or agents of the institution or 
servicer have made a substantial misrepresentation as described in 
Secs. 668.72, 668.73, or 668.74 related to those services;
    (B) The institution lacks the administrative or financial ability to 
provide those services in full; or
    (C) The institution, or servicer, as applicable, lacks the 
administrative or financial ability to make all required payments under 
Sec. 668.22; and
    (iii) Engaging in fraud involving the administration of a Title IV, 
HEA program. Examples of fraud include--
    (A) Falsification of any document received from a student or 
pertaining to

[[Page 590]]

a student's eligibility for assistance under a Title IV, HEA program;
    (B) Falsification, including false certifications, of any document 
submitted by the institution or servicer to the Secretary;
    (C) Falsification, including false certifications, of any document 
used for or pertaining to--
    (1) The legal authority of an institution to provide postsecondary 
education in the State in which the institution is located; or
    (2) The accreditation or preaccreditation of an institution or any 
of the institution's educational programs or locations;
    (D) Falsification, including false certifications, of any document 
submitted to a guaranty agency under the Federal Stafford Loan or 
Federal PLUS programs or an independent auditor;
    (E) Falsification of any document submitted to a third-party 
servicer by an institution or to an institution by a third-party 
servicer pertaining to the institution's participation in a Title IV, 
HEA program; and
    (F) Falsification, including false certifications, of any document 
pertaining to the performance of any loan collection activity, including 
activity that is not required by the HEA or applicable program 
regulations.
    (3) If the Secretary begins an emergency action against a third-
party servicer, the Secretary may also begin an emergency action against 
any institution under whose contract a third-party servicer commits the 
violation.
    (d)(1) Except as provided in paragraph (d)(2) of this section, after 
an emergency action becomes effective, an institution or third-party 
servicer, as applicable, may not--
    (i) Make or increase awards or make other commitments of aid to a 
student under the applicable Title IV, HEA program;
    (ii) Disburse either program funds, institutional funds, or other 
funds as assistance to a student under that Title IV, HEA program;
    (iii) In the case of an emergency action pertaining to participation 
in the Federal Stafford Loan or Federal PLUS programs--
    (A) Certify an application for a loan under that program;
    (B) Deliver loan proceeds to a student under that program; or
    (C) Retain the proceeds of a loan made under that program that are 
received after the emergency action takes effect; or
    (iv) In the case of an emergency action against a third-party 
servicer, administer any aspect of any institution's participation in 
any Title IV, HEA program.
    (2) If the initiating official withdraws, by an emergency action, 
the authority of the institution or servicer to commit, disburse, 
deliver, or cause the commitment, disbursement, or delivery of Title IV, 
HEA program funds, or the authority of the servicer to administer any 
aspect of any institution's participation in any Title IV, HEA program, 
except in accordance with a particular procedure specified in the notice 
of emergency action, the institution or servicer, as applicable, may not 
take any action described in paragraph (d)(1) of this section except in 
accordance with the procedure specified in the notice.
    (e)(1) Upon request by the institution or servicer, as applicable, 
the Secretary provides the institution or servicer, as soon as 
practicable, with an opportunity to show cause that the emergency action 
is unwarranted or should be modified.
    (2) An opportunity to show cause consists of an opportunity to 
present evidence and argument to a show-cause official. The initiating 
official does not act as the show-cause official for any emergency 
action that the initiating official has begun. The show-cause official 
is authorized to grant relief from the emergency action. The institution 
or servicer may make its presentation in writing or, upon its request, 
at an informal meeting with the show-cause official.
    (3) The show-cause official may limit the time and manner in which 
argument and evidence may be presented in order to avoid unnecessary 
delay or the presentation of immaterial, irrelevant, or repetitious 
matter.
    (4) The institution or servicer, as applicable, has the burden of 
persuading the show-cause official that the emergency action imposed by 
the notice is

[[Page 591]]

unwarranted or should be modified because--
    (i) The grounds stated in the notice did not, or no longer, exist;
    (ii) The grounds stated in the notice will not cause loss or misuse 
of Title IV, HEA program funds; or
    (iii) The institution or servicer, as applicable, will use 
procedures that will reliably eliminate the risk of loss from the misuse 
described in the notice.
    (5) The show-cause official continues, modifies, or revokes the 
emergency action promptly after consideration of any argument and 
evidence presented by the institution or servicer, as applicable, and 
the initiating official.
    (6) The show-cause official notifies the institution or servicer, as 
applicable, of that official's determination promptly after the 
completion of the show-cause meeting or, if no meeting is requested, 
after the official receives all the material submitted by the 
institution in opposition to the emergency action. In the case of a 
notice to a third-party servicer, the official also notifies each 
institution that contracts with the servicer of that determination. The 
show-cause official may explain that determination by adopting or 
modifying the statement of reasons provided in the notice of emergency 
action.
    (f)(1) An emergency action does not extend more than 30 days after 
initiated unless the Secretary initiates a limitation, suspension, or 
termination proceeding under this part or under 34 CFR part 600 against 
the institution or servicer, as applicable, within that 30-day period, 
in which case the emergency action continues until a final decision is 
issued in that proceeding, as provided in Sec. 668.91(c), as applicable.
    (2) Until a final decision is issued by the Secretary in a 
proceeding described in paragraph (f)(1) of this section, any action 
affecting the emergency action is at the sole discretion of the 
initiating official, or, if a show- cause proceeding is conducted, the 
show-cause official.
    (3) If an emergency action extends beyond 180 days by virtue of 
paragraph (f)(1) of this section, the institution or servicer, as 
applicable, may then submit written material to the show-cause official 
to demonstrate that because of facts occurring after the later of the 
notice by the initiating official or the show-cause meeting, 
continuation of the emergency action is unwarranted and the emergency 
action should be modified or ended. The show-cause official considers 
any written material submitted and issues a determination that 
continues, modifies, or revokes the emergency action.
    (g) The expiration of an emergency action, or its modification or 
revocation by the show-cause official, does not bar subsequent emergency 
action on a ground other than one specifically identified in the notice 
imposing the prior emergency action. Separate grounds may include 
violation of an agreement or limitation imposed or resulting from the 
prior emergency action.

(Authority: 20 U.S.C. 1094)

[59 FR 22445, Apr. 29, 1994, as amended at 60 FR 34432, June 30, 1995; 
63 FR 40626, July 29, 1998; 64 FR 59042, Nov. 1, 1999; 82 FR 6257, Jan. 
19, 2017]



Sec. 668.84  Fine proceedings.

    (a) Scope and consequences. (1) The Secretary may impose a fine of 
up to $55,907 \1\ per violation on a participating institution or third-
party servicer that--
---------------------------------------------------------------------------

    \1\ As adjusted in accordance with the Federal Civil Penalties 
Inflation Adjustment Act of 1990, as amended (28 U.S.C. 2461 note).
---------------------------------------------------------------------------

    (i) Violates any statutory provision of or applicable to Title IV of 
the HEA, any regulatory provision prescribed under that statutory 
authority, or any applicable special arrangement, agreement, or 
limitation entered into under the authority of statutes applicable to 
Title IV of the HEA; or
    (ii) Substantially misrepresents the nature of--
    (A) In the case of an institution, its educational program, its 
financial charges, or the employability of its graduates; or
    (B) In the case of a third-party servicer, as applicable, the 
educational program, financial charges, or employability of the 
graduates of any institution that contracts with the servicer.
    (2) If the Secretary begins a fine proceeding against a third-party 
servicer,

[[Page 592]]

the Secretary also may begin a fine, limitation, suspension, or 
termination proceeding against any institution under whose contract a 
third-party servicer commits the violation.
    (b) Procedures. (1) A designated department official begins a fine 
proceeding by sending the institution or servicer, as applicable, a 
notice by certified mail, return receipt requested. In the case of a 
fine proceeding against a third-party servicer, the official also sends 
the notice to each institution that is affected by the alleged 
violations identified as the basis for the fine action, and, to the 
extent possible, to each institution that contracts with the servicer 
for the same service affected by the violation. This notice--
    (i) Informs the institution or servicer of the Secretary's intent to 
fine the institution or servicer, as applicable, and the amount of the 
fine and identifies the alleged violations that constitute the basis for 
the action;
    (ii) Specifies the proposed effective date of the fine, which is at 
least 20 days from mailing of the notice of intent;
    (iii) Informs the institution or servicer that the fine will not be 
effective on the date specified in the notice if the designated 
department official receives from the institution or servicer, as 
applicable, by that date a written request for a hearing or written 
material indicating why the fine should not be imposed; and
    (iv) In the case of a fine proceeding against a third-party 
servicer, informs each institution that is affected by the alleged 
violations of the consequences of the action to the institution.
    (2) If the institution or servicer does not request a hearing but 
submits written material, the designated department official, after 
considering that material, notifies the institution or, in the case of a 
third-party servicer, the servicer and each institution affected by the 
alleged violations that--
    (i) The fine will not be imposed; or
    (ii) The fine is imposed as of a specified date, and in a specified 
amount.
    (3) If the institution or servicer requests a hearing by the time 
specified in paragraph (b)(1)(iii) of this section, the designated 
department official transmits the request for hearing and response to 
the Office of Hearings and Appeals, which sets the date and the place. 
The date is at least 15 days after the designated department official 
receives the request.
    (4) A hearing official conducts a hearing in accordance with 
Sec. 668.89.
    (c) Expedited proceedings. With the approval of the hearing official 
and the consent of the designated department official and the 
institution or servicer, any time schedule specified in this section may 
be shortened.

(Authority: 20 U.S.C. 1094)

[59 FR 22446, Apr. 29, 1994, as amended at 67 FR 69655, Nov. 18, 2002; 
82 FR 6257, Jan. 19, 2017; 83 FR 2065, Jan. 15, 2018]



Sec. 668.85  Suspension proceedings.

    (a) Scope and consequences. (1) The Secretary may suspend an 
institution's participation in a Title IV, HEA program or the 
eligibility of a third-party servicer to contract with any institution 
to administer any aspect of the institution's participation in any Title 
IV, HEA program, if the institution or servicer--
    (i) Violates any statutory provision of or applicable to Title IV of 
the HEA, any regulatory provision prescribed under that statutory 
authority, or any applicable special arrangement, agreement, or 
limitation entered into under the authority of statutes applicable to 
Title IV of the HEA; or
    (ii) Substantially misrepresents the nature of--
    (A) In the case of an institution, its educational program, its 
financial charges, or the employability of its graduates; or
    (B) In the case of a third-party servicer, as applicable, the 
educational program, financial charges, or employability of the 
graduates of any institution that contracts with the servicer.
    (2) If the Secretary begins a suspension proceeding against a third-
party servicer, the Secretary also may begin a fine, limitation, 
suspension, or termination proceeding against any institution under 
whose contract a third-party servicer commits the violation.
    (3) The suspension may not exceed 60 days unless--
    (i) The institution or servicer and the Secretary agree to an 
extension if the

[[Page 593]]

institution or servicer, as applicable, has not requested a hearing; or
    (ii) The designated department official begins a limitation or 
termination proceeding under Sec. 668.86.
    (b) Procedures. (1) A designated department official begins a 
suspension proceeding by sending a notice to an institution or third-
party servicer by certified mail, return receipt requested. In the case 
of a suspension proceeding against a third-party servicer, the official 
also sends the notice to each institution that contracts with the 
servicer. The designated department official may also transmit the 
notice by other, more expeditious means if practical. The notice--
    (i) Informs the institution or servicer of the intent of the 
Secretary to suspend the institution's participation or the servicer's 
eligibility, as applicable, cites the consequences of that action, and 
identifies the alleged violations that constitute the basis for the 
action;
    (ii) Specifies the proposed effective date of the suspension, which 
is at least 20 days after the date of mailing of the notice of intent;
    (iii) Informs the institution or servicer that the suspension will 
not be effective on the date specified in the notice, except as provided 
in Sec. 668.91(b)(2), if the designated department official receives 
from the institution or servicer, as applicable, by that date a request 
for a hearing or written material indicating why the suspension should 
not take place; and
    (iv) In the case of a suspension proceeding against a third-party 
servicer, informs each institution that contracts with the servicer of 
the consequences of the action to the institution.
    (2) If the institution or servicer does not request a hearing, but 
submits written material, the designated department official, after 
considering that material, notifies the institution or, in the case of a 
third-party servicer, the servicer and each institution that contracts 
with the servicer that--
    (i) The proposed suspension is dismissed; or
    (ii) The suspension is effective as of a specified date.
    (3) If the institution or servicer requests a hearing by the time 
specified in paragraph (b)(1)(iii) of this section, the designated 
department official transmits the request for hearing and response to 
the Office of Hearings and Appeals, which sets the date and the place. 
The date is at least 15 days after the designated department official 
receives the request. The suspension does not take place until the 
requested hearing is held.
    (4) A hearing official conducts a hearing in accordance with 
Sec. 668.89.
    (c) Expedited proceedings. With the approval of the hearing official 
and the consent of the designated department official and the 
institution or servicer, as applicable, any time period specified in 
this section may be shortened.

(Authority: 20 U.S.C. 1094)

[59 FR 22447, Apr. 29, 1994, as amended at 60 FR 61773, Dec. 1, 1995; 65 
FR 65637, Nov. 1, 2000; 82 FR 6257, Jan. 19, 2017]



Sec. 668.86  Limitation or termination proceedings.

    (a) Scope and consequences. (1) The Secretary may limit or terminate 
an institution's participation in a Title IV, HEA program or the 
eligibility of a third-party servicer to contract with any institution 
to administer any aspect of the institution's participation in any Title 
IV, HEA program, if the institution or servicer--
    (i) Violates any statutory provision of or applicable to Title IV of 
the HEA, any regulatory provision prescribed under that statutory 
authority, or any applicable special arrangement, agreement, or 
limitation entered into under the authority of statutes applicable to 
Title IV of the HEA; or
    (ii) Substantially misrepresents the nature of--
    (A) In the case of an institution, its educational program, its 
financial charges, or the employability of its graduates; or
    (B) In the case of a third-party servicer, as applicable, the 
educational program, financial charges, or employability of the 
graduates of any institution that contracts with the servicer.
    (2) If the Secretary begins a limitation or termination proceeding 
against a third-party servicer, the Secretary also may begin a fine, 
limitation, suspension, or termination proceeding against any 
institution under whose

[[Page 594]]

contract a third-party servicer commits the violation.
    (3) The consequences of the limitation or termination of the 
institution's participation or the servicer's eligibility are described 
in Secs. 668.94 and 668.95, respectively.
    (b) Procedures. (1) A designated department official begins a 
limitation or termination proceeding by sending an institution or third-
party servicer a notice by certified mail, return receipt requested. In 
the case of a limitation or termination proceeding against a third-party 
servicer, the official also sends the notice to each institution that 
contracts with the servicer. The designated department official may also 
transmit the notice by other, more expeditious means if practical. This 
notice--
    (i) Informs the institution or servicer of the intent of the 
Secretary to limit or terminate the institution's participation or 
servicer's eligibility, as applicable, cites the consequences of that 
action, and identifies the alleged violations that constitute the basis 
for the action, and, in the case of a limitation proceeding, states the 
limits to be imposed;
    (ii) Specifies the proposed effective date of the limitation or 
termination, which is at least 20 days after the date of mailing of the 
notice of intent;
    (iii) Informs the institution or servicer that the limitation or 
termination will not be effective on the date specified in the notice if 
the designated department official receives from the institution or 
servicer, as applicable, by that date a request for a hearing or written 
material indicating why the limitation or termination should not take 
place; and
    (iv) In the case of a limitation or termination proceeding against a 
third-party servicer, informs each institution that contracts with the 
servicer of the consequences of the action to the institution.
    (2) If the institution or servicer does not request a hearing but 
submits written material, the designated department official, after 
considering that material, notifies the institution or, in the case of a 
third-party servicer, the servicer and each institution that contracts 
with the servicer that--
    (i) The proposed action is dismissed;
    (ii) Limitations are effective as of a specified date; or
    (iii) The termination is effective as of a specified date.
    (3) If the institution or servicer requests a hearing by the time 
specified in paragraph (b)(1)(iii) of this section, the designated 
department official transmits the request for hearing and response to 
the Office of Hearings and Appeals, which sets the date and place. The 
date is at least 15 days after the designated department official 
receives the request. The limitation or termination does not take place 
until after the requested hearing is held.
    (4) A hearing official conducts a hearing in accordance with 
Sec. 668.89.
    (c) Expedited proceeding. With the approval of the hearing official 
and the consent of the designated department official and the 
institution or servicer, as applicable, any time schedule specified in 
this section may be shortened.

(Authority: 20 U.S.C. 1094)

[59 FR 22447, Apr. 29, 1994, as amended at 60 FR 61774, Dec. 1, 1995; 65 
FR 65637, Nov. 1, 2000; 82 FR 6257, Jan. 19, 2017]



Sec. 668.87  Borrower defense and recovery proceedings.

    (a) Procedures. (1) A designated department official begins a 
borrower defense and recovery proceeding against an institution by 
sending the institution a notice by certified mail, return receipt 
requested. This notice--
    (i) Informs the institution of the Secretary's intent--
    (A) To determine the validity of borrower defense claims on behalf 
of a group under Sec. 685.222(h), to demonstrate the validity of 
borrower defense claims already approved, or both, as applicable; and
    (B) To recover from the institution by offset, by claim on a letter 
of credit or other protection provided by the institution, or otherwise, 
for losses on account of borrower defense claims asserted on behalf of 
the group and borrower defense claims already approved, as applicable;
    (ii) Includes a statement of facts and law sufficient to show that 
the Department is entitled to grant any borrower defense relief asserted 
within the statement, and recover for the amount of

[[Page 595]]

losses to the Secretary caused by the granting of such relief;
    (iii) Specifies the date on which the Secretary intends to take 
action to recover the amount of losses arising from the granting of such 
relief, which date will be at least 20 days from mailing of the notice 
of intent and informs the institution that the Secretary will not take 
action to recover the amount of such loss on the date specified if the 
designated department official receives, by that date, a written 
response from the institution indicating why the Secretary should not 
recover. The notice shall also inform the institution that if it wishes 
to request a hearing pursuant to this subpart, the institution must 
include such a request with its written response; and
    (iv) Informs the institution whether the designated Department 
official intends to proceed with--
    (A) A single action; or
    (B) An action in two phases--
    (1) The determination whether the institution's act or omission gave 
rise to valid borrower defense claims; and
    (2) The determination of the amount of borrower defense relief.
    (2) Although the hearing official shall have the discretion to 
bifurcate proceedings with, or without, a motion of either party, any 
decision by the designated department official to bifurcate the 
proceeding in accordance with paragraph (a)(1)(iv)(B) of this section 
may only be modified on motion with good cause shown.
    (3) A hearing official conducts a hearing in accordance with 
Sec. 668.89.
    (b) Effect of a response by the institution. (1) If the institution 
submits a written response, but does not therein request a hearing, the 
designated department official, after considering that material, 
notifies the institution whether the Secretary will take the proposed 
recovery action for borrower defense claims and, if so, the date of such 
action and the amount of losses.
    (2) If the institution submits a response and requests a hearing by 
the time specified in the notice under paragraph (a)(1)(iii) of this 
section, the designated department official may, in that official's sole 
discretion, withdraw the notice or transmit the response and request for 
hearing to the Office of Hearings and Appeals, which sets the date and 
the place for the hearing. The date of the hearing is at least 15 days 
after the designated department official receives the request. No 
liability shall be imposed on the institution prior to the hearing.
    (c) Limitations on participation. The parties in any borrower 
defense and recovery proceeding are the Department and the 
institution(s) against which the Department seeks to recover losses 
caused to the Department as a result of borrower defense relief. 
Borrowers are not permitted to intervene or appear in this proceeding, 
either on their own behalf or on behalf of any purported group, except 
as witnesses put forth by either party. However, nothing in this section 
limits the rights available to borrowers under other regulations, 
including 34 CFR 685.206 and 685.222.
    (d) Effect on the borrower. No proceeding under this subpart imposes 
liability on any borrower who has already obtained a discharge in an 
individual proceeding under 34 CFR 685.206(c) or 34 CFR 685.222(e). A 
borrower defense and recovery proceeding may determine whether and how 
much relief is due to, and whether and how much of a loan remains owing 
by, a borrower participating in a group process proceeding as defined in 
34 CFR 685.222(f) through (h).

(Authority: 20 U.S.C. 1087a et seq., 1094)

[82 FR 6257, Jan. 19, 2017]



Sec. 668.88  Prehearing conference and motion practice.

    (a) A hearing official may convene a prehearing conference if he or 
she thinks that the conference would be useful, or if the conference is 
requested by--
    (1) The designated department official who brought a proceeding 
against an institution or third-party servicer under this subpart; or
    (2) The institution or servicer, as applicable.
    (b) The purpose of a prehearing conference is to allow the parties 
to settle or narrow the dispute.
    (c) If the hearing official, the designated department official, and 
the institution, or servicer, as applicable,

[[Page 596]]

agree, a prehearing conference may consist of--
    (1) A conference telephone call;
    (2) An informal meeting; or
    (3) The submission and exchange of written material.
    (d) A non-dispositive motion shall be made, if at all, consistent 
with any procedures set forth by the hearing official. In the absence of 
such procedures, non-dispositive motions shall be permitted, and 
responses to such motions shall be permitted though not required.
    (e)(1) A party may make a motion for summary disposition asserting 
that the undisputed facts, admissions, affidavits, stipulations, 
documentary evidence, matters as to which official notice may be taken, 
and any other evidentiary materials properly submitted in connection 
with a motion for summary disposition establish that--
    (i) There is no genuine issue as to any material fact; and
    (ii) The moving party is entitled to a decision in its favor as a 
matter of law.
    (2) A motion for summary disposition must be accompanied by a 
statement of the material facts as to which the moving party contends 
there is no genuine issue. Such motion must be supported by evidence 
that the moving party contends support his or her position. The motion 
must be accompanied by a brief containing the points and authorities 
supporting the motion.


Any party may oppose such a motion by filing a response setting forth 
those material facts as to which he or she contends a genuine dispute 
exists. Such response must be supported by evidence of the same type as 
may be submitted in support of a motion for summary disposition and a 
brief containing the points and authorities in support of the contention 
that summary disposition would be inappropriate.
    (f) A motion under consideration by the Secretary or the hearing 
official shall not stay proceedings before the hearing official unless 
the Secretary or the hearing official, as appropriate, so orders.

(Authority: 20 U.S.C. 1094)

[82 FR 6258, Jan. 19, 2017]



Sec. 668.89  Hearing.

    (a) A hearing is an orderly presentation of arguments and evidence 
conducted by a hearing official. At the discretion of the hearing 
official, any right to a hearing may be satisfied by one or more of the 
following: Summary disposition pursuant to Sec. 668.88(e), with or 
without oral argument; an oral evidentiary hearing conducted in person, 
by telephone, by video conference, or any combination thereof; or a 
review limited to written evidence.
    (b)(1) Notwithstanding any provision to the contrary, the hearing 
official sets the procedures to be used in the hearing, and may take 
steps to expedite the proceeding as appropriate.
    (2) The formal rules of evidence and procedures applicable to 
proceedings in a court of law are not applicable. However, discussions 
of settlement between the parties or the terms of settlement offers are 
not admissible to prove the validity or invalidity of any claim or 
defense.
    (3)(i) The proponent of any factual proposition has the burden of 
proof with respect thereto.
    (ii) The designated department official has the burden of persuasion 
in any fine, suspension, limitation, or termination proceeding under 
this subpart.
    (iii) The designated department official has the burden of 
persuasion in a borrower defense and recovery action; however, for a 
borrower defense claim based on a substantial misrepresentation under 
Sec. 682.222(d), the designated department official has the burden of 
persuasion regarding the substantial misrepresentation, and the 
institution has the burden of persuasion in establishing any offsetting 
value of the education under Sec. 685.222(i)(2)(i).
    (4) Discovery, as provided for under the Federal Rules of Civil 
Procedure, is not permitted.
    (5) The hearing official accepts only evidence that is relevant and 
material to the proceeding and is not unduly repetitious.
    (6) The hearing official may restrict the number of witnesses or 
exclude witnesses to avoid undue delay or presentation of cumulative 
evidence. Any witness permitted to appear may do so via telephonic, 
video, or other means,

[[Page 597]]

with the approval of the hearing official.
    (7) Either party may call qualified expert witnesses. Each party 
will be limited to calling three expert witnesses, as a matter of right, 
including any rebuttal or surrebuttal witnesses. Additional expert 
witnesses shall be allowed only by order of the hearing official, 
granted only upon a showing of good cause.
    (i) At a date set by the hearing official, each party shall serve 
the other with any report prepared by each of its expert witnesses. Each 
party shall serve the other party with a list of any rebuttal expert 
witnesses and a rebuttal report prepared by each such witness not later 
than 60 days after the deadline for service of expert reports, unless 
another date is set by the hearing official. A rebuttal report shall be 
limited to rebuttal of matters set forth in the expert report for which 
it is offered in rebuttal. If material outside the scope of fair 
rebuttal is presented, a party may file a motion not later than five 
days after the deadline for service of rebuttal reports, seeking 
appropriate relief with the hearing official, including striking all or 
part of the report, leave to submit a surrebuttal report by the party's 
own experts, or leave to call a surrebuttal witness and to submit a 
surrebuttal report by that witness.
    (ii) No party may call an expert witness at the hearing unless the 
party has listed the expert and has provided reports as required by this 
section.
    (iii) Each report shall be signed by the expert and contain a 
complete statement of all opinions to be expressed and the basis and 
reasons therefor; the data, materials, or other information considered 
by the witness in forming the opinions; any exhibits to be used as a 
summary of or support for the opinions; the qualifications of the 
witness, including a list of all publications authored or co-authored by 
the witness within the preceding ten years; the compensation to be paid 
for the study and testimony; and a listing of any other cases in which 
the witness has testified or sought to testify as an expert at trial or 
hearing, or by deposition, within the preceding four years. A rebuttal 
or surrebuttal report need not include any information already included 
in the initial report of the witness.
    (8)(i) Except as provided in paragraph (b)(8)(ii) of this section, 
if an institution has been required through compulsory process under 
section 490A of the HEA or other applicable law to submit to the United 
States or to the Department material regarding an express or an implied 
representation, the institution cannot thereafter, in any proceeding 
under this subpart in which it is alleged that the representation was 
false, erroneous, or misleading, and for any purpose relating to the 
defense of such allegation, introduce into the record, either directly 
or indirectly through references contained in documents or oral 
testimony, any material of any type that was required to be but was not 
timely submitted in response to that compulsory process.
    (ii) The hearing official shall, upon motion at any stage, exclude 
all material that was required to be but was not timely submitted in 
response to a compulsory process described in paragraph (b)(8)(i) of 
this section, or any reference to such material, unless the institution 
demonstrates, and the hearing official finds, that by the exercise of 
due diligence the material could not have been timely submitted in 
response to the compulsory process, and the institution notified the 
Department or such other party that issued the order to produce, of the 
existence of the material immediately upon its discovery. The hearing 
official shall specify with particularity the evidence relied upon.
    (9) When issues not raised in the notice of proposed action are 
tried without objection at the hearing, they will be treated in all 
respects as if they had been raised in the notice of proposed action, 
and no formal amendments are required.
    (c) The hearing official makes a transcribed record of the 
proceeding and makes a copy of the record available to the designated 
Department official and to the institution or servicer.

(Authority: 20 U.S.C. 1094)

[82 FR 6258, Jan. 19, 2017]

[[Page 598]]



Sec. 668.90  Authority and responsibilities of the hearing official.

    (a) The hearing official regulates the course of a hearing and the 
conduct of the parties during the hearing. The hearing official takes 
all necessary steps to conduct a fair and impartial hearing.
    (b)(1) The hearing official is not authorized to issue subpoenas.
    (2) If requested by the hearing official, the parties to a hearing 
shall provide available personnel who have knowledge about the matter 
under review for oral or written examination.
    (c) The hearing official takes whatever measures are appropriate to 
expedite a hearing. These measures may include, but are not limited to, 
the following--
    (1) Scheduling of conferences;
    (2) Setting time limits for hearings and submission of written 
documents; and
    (3) Terminating the hearing and issuing a decision against a party 
if that party does not meet those time limits.
    (d) The hearing official is bound by all applicable statutes and 
regulations. The hearing official may not--
    (1) Waive applicable statutes and regulations; or
    (2) Rule them invalid.

(Authority: 20 U.S.C. 1094)

[51 FR 43325, Dec. 1, 1986, as amended at 57 FR 47753, Oct. 19, 1992; 59 
FR 22448, Apr. 29, 1994. Redesignated at 82 FR 6257, Jan. 19, 2017]

    Effective Date Note: At 81 FR 76072, Nov. 1, 2016 Sec. 668.90 was 
amended by revising paragraph (a)(3), effective July 1, 2019. For the 
convenience of the user, the revised text is set forth as follows:



Sec. 668.90  Initial and final decisions.

    (a) * * *
    (3) Notwithstanding the provisions of paragraph (a)(2) of this 
section--
    (i) If, in a termination action against an institution, the hearing 
official finds that the institution has violated the provisions of 
Sec. 668.14(b)(18), the hearing official also finds that termination of 
the institution's participation is warranted;
    (ii) If, in a termination action against a third-party servicer, the 
hearing official finds that the servicer has violated the provisions of 
Sec. 668.82(d)(1), the hearing official also finds that termination of 
the institution's participation or servicer's eligibility, as 
applicable, is warranted;
    (iii) In an action brought against an institution or third-party 
servicer that involves its failure to provide a letter of credit or 
other financial protection under Sec. 668.15 or Sec. 668.171(c) through 
(g), the hearing official finds that the amount of the letter of credit 
or other financial protection established by the Secretary under 
Sec. 668.175(f)(4) is appropriate, unless the institution can 
demonstrate that the amount was not warranted because--
    (A) For financial protection demanded based on events or conditions 
described in Sec. 668.171(c) through (f), the events or conditions no 
longer exist or have been resolved or the institution demonstrates that 
it has insurance that will cover the debts and liabilities that arise 
from the triggering event or condition, or, for a condition or event 
described in Sec. 668.171(c)(1)(iii) (teach out) or (iv) (gainful 
employment eligibility loss), the amount of educationally related 
expenses reasonably attributable to the programs or location is greater 
than the amount calculated in accordance with Appendix C of subpart L of 
this part. The institution can demonstrate that insurance covers risk by 
presenting the Department with a statement from the insurer that the 
institution is covered for the full or partial amount of the liability 
in question;
    (B) For financial protection demanded based on a suit described in 
Sec. 668.171(c)(1)(i) that does not state a specific amount of relief 
and on which the court has not ruled on the amount of relief, the 
institution demonstrates that, accepting the facts alleged as true, and 
assuming the claims asserted are fully successful, the action pertains 
to a period, program, or location for which the maximum potential relief 
is less than the amount claimed or the amount determined under 
Sec. 668.171(c)(2)(ii);
    (C) For financial protection demanded based on the ground identified 
in Sec. 668.171(g), the factor or event does not and will not have a 
material adverse effect on the financial condition, business, or results 
of operations of the institution;
    (D)(1) For financial protection demanded under 
Sec. 668.175(f)(4)(i), the institution does not participate and has not 
participated for the prior fiscal year in a title IV, HEA loan program; 
and
    (2) For any financial protection demanded of an institution 
described in paragraph (a)(3)(iii)(D)(1) of this section, and any 
portion of financial protection demanded of any other institution 
greater than 10 percent of the amount of title IV, HEA funds received by 
the institution in its most recently completed fiscal year--
    (i) The risk of loss to the Secretary on the grounds demonstrated by 
the Secretary does not exist;

[[Page 599]]

    (ii) The loss as demonstrated by the Secretary is not reasonably 
likely to arise within the next 18 months; or
    (iii) The amount is unnecessary to protect, or contrary to, the 
Federal interest;
    (E) The institution has proffered alternative financial protection 
that provides students and the Department adequate protection against 
losses resulting from the risks identified by the Secretary. In the 
Secretary's discretion, adequate protection may consist of one or more 
of the following--
    (1) An agreement with the Secretary that a portion of the funds due 
to the institution under a reimbursement or heightened cash monitoring 
funding arrangement will be temporarily withheld in such amounts as will 
meet, no later than the end of a nine-month period, the amount of the 
required financial protection demanded; or
    (2) Other form of financial protection specified by the Secretary in 
a notice published in the Federal Register.
    (iv) In a termination action taken against an institution or third-
party servicer based on the grounds that the institution or servicer 
failed to comply with the requirements of Sec. 668.23(c)(3), if the 
hearing official finds that the institution or servicer failed to meet 
those requirements, the hearing official finds that the termination is 
warranted;
    (v)(A) In a termination action against an institution based on the 
grounds that the institution is not financially responsible under 
Sec. 668.15(c)(1), the hearing official finds that the termination is 
warranted unless the institution demonstrates that all applicable 
conditions described in Sec. 668.15(d)(4) have been met; and
    (B) In a termination or limitation action against an institution 
based on the grounds that the institution is not financially 
responsible--
    (1) Upon proof of the conditions in Sec. 668.174(a), the hearing 
official finds that the limitation or termination is warranted unless 
the institution demonstrates that all the conditions in Sec. 668.175(f) 
have been met; and
    (2) Upon proof of the conditions in Sec. 668.174(b)(1), the hearing 
official finds that the limitation or termination is warranted unless 
the institution demonstrates that all applicable conditions described in 
Sec. 668.174(b)(2) or Sec. 668.175(g) have been met.



Sec. 668.91  Initial and final decisions.

    (a)(1)(i) A hearing official issues a written initial decision in a 
hearing by certified mail, return receipt requested to--
    (A) The designated department official who began a proceeding 
against an institution or third-party servicer;
    (B) The institution or servicer, as applicable; and
    (C) In the case of a proceeding against a third-party servicer, each 
institution that contracts with the servicer.
    (ii) The hearing official may also transmit the notice by other, 
more expeditious means if practical.
    (iii) The hearing official issues the decision within the latest of 
the following dates:
    (A) The 30th day after the last submission is filed with the hearing 
official.
    (B) The 60th day after the last submission is filed with the hearing 
official if the Secretary, upon request of the hearing official, 
determines that the unusual complexity of the case requires additional 
time for preparation of the decision.
    (C) The 50th day after the last day of the hearing, if the hearing 
official does not request the parties to make any posthearing 
submission.
    (2)(i) The hearing official's initial decision states whether the 
imposition of the fine, limitation, suspension, or termination or 
recovery sought by the designated department official is warranted, in 
whole or in part. If the designated department official brought a 
termination action against the institution or servicer, the hearing 
official may, if appropriate, issue an initial decision to fine the 
institution or servicer, as applicable, or, rather than terminating the 
institution's participation or servicer's eligibility, as applicable, 
impose one or more limitations on the institution's participation or 
servicer's eligibility.
    (ii) In a borrower defense and recovery proceeding conducted in two 
phases under Sec. 668.87(a)(1)(iv)(B), the hearing official's initial 
decision determines whether the institution is liable for the act or 
omission described in the notice of intent to recover, and the hearing 
official issues an initial decision on liability only.
    (3) Notwithstanding the provisions of paragraph (a)(2) of this 
section--
    (i) If, in a termination action against an institution, the hearing 
official finds that the institution has violated the provisions of 
Sec. 668.14(b)(18), the

[[Page 600]]

hearing official also finds that termination of the institution's 
participation is warranted;
    (ii) If, in a termination action against a third-party servicer, the 
hearing official finds that the servicer has violated the provisions of 
Sec. 668.82(d)(1), the hearing official also finds that termination of 
the institution's participation or servicer's eligibility, as 
applicable, is warranted;
    (iii) If an action brought against an institution or third-party 
servicer involves its failure to provide surety in the amount specified 
by the Secretary under Sec. 668.15, the hearing official finds that the 
amount of the surety established by the Secretary was appropriate, 
unless the institution can demonstrate that the amount was unreasonable;
    (iv) In a termination action taken against an institution or third-
party servicer based on the grounds that the institution or servicer 
failed to comply with the requirements of Sec. 668.23(c)(3), if the 
hearing official finds that the institution or servicer failed to meet 
those requirements, the hearing official finds that the termination is 
warranted;
    (v) In a termination action against an institution based on the 
grounds that the institution is not financially responsible under 
Sec. 668.15(c)(1), the hearing official finds that the termination is 
warranted unless the institution demonstrates that all applicable 
conditions described in Sec. 668.15(d)(4) have been met; and
    (vi) In a termination action against an institution or third-party 
servicer on the grounds that the institution or servicer, as applicable, 
engaged in fraud involving the administration of any Title IV, HEA 
program, the hearing official finds that the termination action is 
warranted if the hearing official finds that the institution or 
servicer, as applicable, engaged in that fraud. Examples of fraud 
include--
    (A) Falsification of any document received from a student or 
pertaining to a student's eligibility for assistance under a Title IV, 
HEA program;
    (B) Falsification, including false certifications, of any document 
submitted by the institution or servicer to the Department of Education;
    (C) Falsification, including false certifications, of any document 
used for or pertaining to--
    (1) The legal authority of an institution to provide postsecondary 
education in the State in which the institution is located; or
    (2) The accreditation or preaccreditation of an institution or any 
of the institution's educational programs or locations;
    (D) Falsification, including false certifications, of any document 
submitted to a guaranty agency under the Federal Stafford Loan, Federal 
PLUS, and Federal SLS programs, an independent auditor, an eligible 
institution, or a third-party servicer;
    (E) Falsification of any document submitted to a third-party 
servicer by an institution or to an institution by a third-party 
servicer pertaining to the institution's participation in a Title IV, 
HEA program; and
    (F) Falsification, including false certifications, of any document 
pertaining to the performance of any loan collection activity, including 
activity that is not required by the HEA or applicable program 
regulations.
    (4) The hearing official bases findings of fact only on evidence 
considered at the hearing and on matters given judicial notice.
    (b)(1) In a suspension proceeding, the Secretary reviews the hearing 
official's initial decision and issues a final decision within 20 days 
after the initial decision. The Secretary adopts the initial decision 
unless it is clearly unsupported by the evidence presented at the 
hearing.
    (2) The Secretary notifies the institution or servicer and, in the 
case of a suspension proceeding against a third-party servicer, each 
institution that contracts with the servicer of the final decision. If 
the Secretary suspends the institution's participation or servicer's 
eligibility, the suspension takes effect on the later of--
    (i) The day that the institution or servicer receives the notice; or
    (ii) The date specified in the designated department official's 
original notice of intent to suspend the institution's participation or 
servicer's eligibility.

[[Page 601]]

    (3) A suspension may not exceed 60 days unless a designated 
department official begins a limitation or termination proceeding under 
this subpart before the expiration of that period. In that case, the 
period may be extended until a final decision is issued in that 
proceeding according to paragraph (c) of this section.
    (c)(1) In a fine, limitation, or termination proceeding, the hearing 
official's initial decision automatically becomes the Secretary's final 
decision 30 days after the initial decision is issued and received by 
both parties unless, within that 30-day period, the institution or 
servicer, as applicable, or the designated department official appeals 
the initial decision to the Secretary.
    (2)(i) A party may appeal the hearing official's initial decision by 
submitting to the Secretary, within 30 days after the party receives the 
initial decision, a brief or other written statement that explains why 
the party believes that the Secretary should reverse or modify the 
decision of the hearing official.
    (ii) At the time the party files its appeal submission, the party 
shall provide a copy of that submission to the opposing party.
    (iii) The opposing party shall submit its brief or other responsive 
statement to the Secretary, with a copy to the appellant, within 30 days 
after the opposing party receives the appellant's brief or written 
statement.
    (iv) The appealing party may submit proposed findings of fact or 
conclusions of law. However, the proposed findings of fact must be 
supported by--
    (A) The evidence introduced into the record at the hearing;
    (B) Stipulations of the parties if the hearing consisted of written 
submissions; or
    (C) Matters that may be judicially noticed.
    (v) Neither party may introduce new evidence on appeal.
    (vi) The initial decision of the hearing official imposing a fine or 
limiting or terminating the institution's participation or servicer's 
eligibility does not take effect pending the appeal.
    (vii) The Secretary renders a final decision. The Secretary may 
delegate to a designated department official the functions described in 
paragraph (c)(2) (vii) through (ix) of this section.
    (viii) In rendering a final decision, the Secretary considers only 
evidence introduced into the record at the hearing and facts agreed to 
by the parties if the hearing consisted only of written submissions and 
matters that may be judicially noticed.
    (ix) If the hearing official finds that a termination is warranted 
pursuant to paragraph (a)(3) of this section, the Secretary may affirm, 
modify, or reverse the initial decision, or may remand the case to the 
hearing official for further proceedings consistent with the Secretary's 
decision. If the Secretary affirms the initial decision without issuing 
a statement of reasons, the Secretary adopts the opinion of the hearing 
official as the decision of the Secretary. If the Secretary modifies, 
remands, or reverses the initial decision, in whole or in part, the 
Secretary's decision states the reasons for the action taken.
    (x) In a borrower defense and recovery proceeding conducted in two 
phases under Sec. 668.87(a)(1)(iv)(B), if a party appeals an initial 
decision of the hearing official in the first phase, the Secretary may 
affirm, modify, or reverse the initial decision, or may remand the case 
to the hearing official for further proceedings consistent with the 
Secretary's decision.

(Approved by the Office of Management and Budget under control number 
1840-0537)

(Authority: 20 U.S.C. 1082, 1094)

[59 FR 22448, Apr. 29, 1994, as amended at 59 FR 34964, July 7, 1994; 60 
FR 61774, Dec. 1, 1995; 65 FR 65637, Nov. 1, 2000. Redesignated and 
amended at 82 FR 6257, 6259, Jan. 19, 2017]



Sec. 668.92  Filing of requests for hearings and appeals; confirmation
of mailing and receipt dates.

    (a) Filing of request for hearing, show-cause opportunity, or 
appeal. (1)(i) A request by an institution or third-party servicer for a 
hearing or show-cause opportunity, or other material submitted by an 
institution or third-party servicer in response to a notice of proposed 
action under this subpart, must be filed with the designated department 
official by hand-delivery, mail, or facsimile transmission.

[[Page 602]]

    (ii) An appeal to the Secretary by a party must be filed with the 
designated department official by hand-delivery, mail, facsimile 
transmission, or by use of the Office of Hearings and Appeals Electronic 
Filing System (OES).
    (2) Documents filed by facsimile transmission must be transmitted to 
the designated department official identified, either in the notice 
initiating the action, or, for an appeal, in instructions provided by 
the hearing official, as the individual responsible to receive them. A 
party filing a document by facsimile transmission must confirm that a 
complete and legible copy of the document was received by the Department 
of Education, and may be required by the designated department official 
to provide a hard copy of the document.
    (3) The Secretary discourages the use of facsimile transmission for 
documents longer than five pages.
    (4)(i) A party may file an appeal to the Secretary, and any other 
pleading or other document submitted in a proceeding under this subpart, 
by use of the Office of Hearings and Appeals Electronic Filing System 
(OES), by hand-delivery, by mail, or by facsimile transmission.
    (ii) A party must serve a copy on the other party of any pleading or 
other document it files, including an appeal to the Secretary, in a 
proceeding under this subpart. A party must do so by certified mail, 
return receipt requested; by hand-delivery; or, if agreed upon by the 
parties, service may also be made by use of the OES or any other means 
agreed to by the parties.
    (iii) A party who agrees to receive a document by any means other 
than service by certified mail, return receipt requested or hand-
delivery may limit that agreement to one or more particular documents.
    (iv) A party who agrees to service of a document through the OES 
thereby agrees that the notice of such filing provided to the party by 
the OES suffices to meet any obligation of the filing party under these 
regulations to provide a copy of that document.
    (5) Documents filed using the OES must be transmitted to the 
designated department official identified in instructions provided by 
the hearing official as the individual responsible to receive them. A 
party filing a document using the OES must ensure that the party has 
received an electronic confirmation that the document was accepted and 
approved for filing by the OES, and may be required by the designated 
department official to provide a hard copy of the document.
    (6) Electronic documents must be formatted in Adobe Portable 
Document Format (PDF). To use PDF you must have Adobe Acrobat Reader, 
which is available free at www.adobe.com.
    (b) Confirmation of mailing and receipt dates. (1) The mailing date 
of a notice from a designated department official initiating an action 
under this subpart is the date evidenced on the original receipt of 
mailing from the U.S. Postal Service.
    (2) The date on which a request for a show-cause opportunity, a 
request for a hearing, other material submitted in response to a notice 
of action under this subpart, a decision by a hearing official, or a 
notice of appeal is received is, as applicable--
    (i) The date of receipt evidenced on the original receipt for a 
document sent by certified mail.
    (ii) The date following the date recorded by the delivery service as 
the date material was sent for a document sent by next-day delivery 
service.
    (iii) The date a document sent by regular mail is recorded, 
according to the regular business practice of the office receiving the 
document, as received.
    (iv) The date a document sent by facsimile transmission is recorded 
as received by the facsimile equipment that receives the transmission.
    (v) The date a document sent electronically via the OES is recorded 
as received by the OES as indicated in the confirmation of receipt email 
for E-filing.
    (c) Refusals. If an institution or third-party servicer refuses to 
accept a notice mailed under this subpart, the Secretary considers the 
notice as being received on the date that the institution or servicer 
refuses to accept the notice.

(Authority: 20 U.S.C. 1094)

[51 FR 43325, Dec. 1, 1986, as amended at 58 FR 13345, Mar. 10, 1993; 59 
FR 22450, Apr. 29, 1994; 78 FR 48050, Aug. 7, 2013. Redesignated at 82 
FR 6257, Jan. 19, 2017]

[[Page 603]]



Sec. 668.93  Fines.

    (a) In determining the amount of a fine, the designated department 
official, hearing official, and Secretary take into account--
    (1) (i) The gravity of an institution's or third-party servicer's 
violation or failure to carry out the relevant statutory provision, 
regulatory provision, special arrangement, agreement, or limitation 
entered into under the authority of statutes applicable to Title IV of 
the HEA; or
    (ii) The gravity of the institution's or servicer's 
misrepresentation;
    (2) The size of the institution;
    (3) The size of the servicer's business, including the number of 
institutions and students served by the servicer;
    (4) In the case of a violation by a third-party servicer, the extent 
to which the servicer can document that the institution contributed to 
that violation; and
    (5) For purposes of assessing a fine on a third-party servicer, the 
extent to which--
    (i) Violations are caused by repeated mechanical systemic 
unintentional errors. The Secretary counts the total of violations 
caused by a repeated mechanical systemic unintentional error as a single 
violation, unless the servicer has been cited for a similar violation 
previously and had failed to make the appropriate corrections to the 
system; and
    (ii) The financial loss of Title IV, HEA program funds was 
attributable to a repeated mechanical systemic unintentional error.
    (b) In determining the gravity of the institution's or servicer's 
violation, failure, or misrepresentation under paragraph (a) of this 
section, the designated department official, hearing official, and 
Secretary take into account the amount of any liability owed by the 
institution and any third-party servicer that contracts with the 
institution, and the number of students affected as a result of that 
violation, failure, or misrepresentation on--
    (1) Improperly expended or unspent Title IV, HEA program funds 
received by the institution or servicer, as applicable; or
    (2) Required refunds, including the treatment of title IV, HEA 
program funds when a student withdraws under Sec. 668.22.
    (c) Upon the request of the institution or third-party servicer, the 
Secretary may compromise the fine.
    (d)(1) Notwithstanding any other provision of statute or regulation, 
any individual described in paragraph (d)(2) of this section, in 
addition to other penalties provided by law, is liable to the Secretary 
for amounts that should have been refunded or returned under Sec. 668.22 
of the title IV program funds not returned, to the same extent with 
respect to those funds that such an individual would be liable as a 
responsible person for a penalty under section 6672(a) of Internal 
Revenue Code of 1986 with respect to the nonpayment of taxes.
    (2) The individual subject to the penalty described in paragraph 
(d)(1) is any individual who--
    (i) The Secretary determines, in accordance with Sec. 668.174(c), 
exercises substantial control over an institution participating in, or 
seeking to participate in, a program under this title;
    (ii) Is required under Sec. 668.22 to return title IV program funds 
to a lender or to the Secretary on behalf of a student or borrower, or 
was required under Sec. 668.22 in effect on June 30, 2000 to return 
title IV program funds to a lender or to the Secretary on behalf of a 
student or borrower; and
    (iii) Willfully fails to return those funds or willfully attempts in 
any manner to evade that payment.

(Authority: 20 U.S.C. 1094 and 1099c)

[59 FR 22450, Apr. 29, 1994, as amended at 64 FR 58618, Oct. 29, 1999; 
64 FR 59042, Nov. 1, 1999. Redesignated at 82 FR 6257, Jan. 19, 2017]

    Effective Date Note: At 83 FR 76072, Nov. 1, 2016, Sec. 668.93 was 
amended by redesignating paragraphs (h) and (i) as paragraphs (i) and 
(j), respectively, and adding a new paragraph (h), effective July 1, 
2019. For the convenience of the user, the added text is set forth as 
follows:



Sec. 668.93  Limitation.

                                * * * * *

    (h) A change in the participation status of the institution from 
fully certified to participate to provisionally certified to participate 
under Sec. 668.13(c).

[[Page 604]]



Sec. 668.94  Limitation.

    A limitation may include, as appropriate to the Title IV, HEA 
program in question--
    (a) A limit on the number or percentage of students enrolled in an 
institution who may receive Title IV, HEA program funds;
    (b) A limit, for a stated period of time, on the percentage of an 
institution's total receipts from tuition and fees derived from Title 
IV, HEA program funds;
    (c) A limit on the number or size of institutions with which a 
third-party servicer may contract;
    (d) A limit on the number of borrower or loan accounts that a third-
party servicer may service under a contract with an institution;
    (e) A limit on the responsibilities that a third-party servicer may 
perform under a contract with an institution;
    (f) A requirement for a third-party servicer to perform additional 
responsibilities under a contract with an institution;
    (g) A requirement that an institution obtain surety, in a specified 
amount, to assure its ability to meet its financial obligations to 
students who receive Title IV, HEA program funds;
    (h) A requirement that a third-party servicer obtain surety, in a 
specified amount, to assure the servicer's ability to meet the 
servicer's financial obligations under a contract; or
    (i) Other conditions as may be determined by the Secretary to be 
reasonable and appropriate.

(Authority: 20 U.S.C. 1094)

[59 FR 22450, Apr. 29, 1994. Redesignated at 82 FR 6257, Jan. 17, 2017]



Sec. 668.95  Termination.

    (a) A termination--(1) Ends an institution's participation in a 
Title IV, HEA program or ends a third-party servicer's eligibility to 
contract with any institution to administer any aspect of the 
institution's participation in a Title IV, HEA program;
    (2) Ends the authority of a third-party servicer to administer any 
aspect of any institution's participation in that program;
    (3) Prohibits an institution or third-party servicer, as applicable, 
or the Secretary from making or increasing awards under that program;
    (4) Prohibits an institution or third-party servicer, as applicable, 
from making any other new commitments of funds under that program; and
    (5) If an institution's participation in the Federal Stafford Loan 
Program or Federal PLUS programs has been terminated, prohibits further 
guarantee commitments by the Secretary for loans under that program to 
students to attend that institution, and, if the institution is a lender 
under that program, prohibits further disbursements by the institution 
(whether or not guarantee commitments have been issued by the Secretary 
or a guaranty agency for those disbursements).
    (b) After its participation in a Title IV, HEA program has been 
terminated, an institution may disburse or deliver funds under that 
Title IV, HEA program to students enrolled at the institution only in 
accordance with Sec. 668.26 and with any additional requirements imposed 
under this part.
    (c) If a third-party servicer's eligibility is terminated, the 
servicer must return to each institution that contracts with the 
servicer any funds received by the servicer under the applicable Title 
IV, HEA program on behalf of the institution or the institution's 
students or otherwise dispose of those funds under instructions from the 
Secretary. The servicer also must return to each institution that 
contracts with the servicer all records pertaining to the servicer's 
administration of that program on behalf of that institution.

(Authority: 20 U.S.C. 1094)

[59 FR 22450, Apr. 29, 1994, as amended at 63 FR 40626, July 29, 1998. 
Redesignated at 82 FR 6257, Jan. 19, 2017]



Sec. 668.96  Reimbursements, refunds, and offsets.

    (a) In an action to fine an institution or servicer, or to limit, 
suspend, or terminate the participation of an institution or the 
eligibility of a servicer, the designated department official, hearing 
official, or Secretary may require an institution or third-party 
servicer to

[[Page 605]]

take reasonable and appropriate corrective action to remedy the 
institution's or servicer's violation, as applicable, of any statutory 
provision of or applicable to Title IV of the HEA, any regulatory 
provision prescribed under that statutory authority, or any applicable 
special arrangement, agreement, or limitation entered into under the 
authority of statutes applicable to Title IV of the HEA.
    (b) The corrective action under paragraph (a) of this section may 
include payment of any funds to the Secretary, or to designated 
recipients, that the institution or servicer, as applicable, improperly 
received, withheld, disbursed, or caused to be disbursed. Corrective 
action may, for example, relate to--
    (1) With respect to the Federal Stafford Loan, Federal PLUS, and 
Federal SLS programs--
    (i) Ineligible interest benefits, special allowances, or other 
claims paid by the Secretary; and
    (ii) Discounts, premiums, or excess interest paid in violation of 34 
CFR part 682; and
    (2) With respect to all Title IV, HEA programs--
    (i) Refunds or returns of title IV, HEA program funds required under 
program regulations when a student withdraws.
    (ii) Any grants, work-study assistance, or loans made in violation 
of program regulations.
    (c) If any final decision in any action under this subpart requires 
an institution or third-party servicer to reimburse or make any other 
payment to the Secretary, the Secretary may offset these claims against 
any benefits or claims due to the institution or servicer.
    (d) If an institution's violation in paragraph (a) of this section 
results from an administrative, accounting, or recordkeeping error, and 
that error was not part of a pattern of error, and there is no evidence 
of fraud or misconduct related to the error, the Secretary permits the 
institution to correct or cure the error. If the institution corrects or 
cures the error, the Secretary does not limit, suspend, terminate, or 
fine the institution for that error.

(Authority: 20 U.S.C. 1094 and 1099c-1)

[59 FR 22451, Apr. 29, 1994, as amended at 64 FR 58619, Oct. 29, 1999; 
64 FR 59042, Nov. 1, 1999; Redsignated and amended at 82 FR 6257, 6259, 
Jan. 19, 2017]



Sec. 668.97  Reinstatement after termination.

    (a)(1) An institution whose participation in a Title IV, HEA program 
has been terminated may file a request for reinstatement of that 
participation.
    (2) A third-party servicer whose eligibility to contract with any 
institution to administer any aspect of the institution's participation 
in a Title IV, HEA program has been terminated may file a request for 
reinstatement of that eligibility.
    (b) An institution whose participation has been terminated or a 
third-party servicer whose eligibility has been terminated may request 
reinstatement only after the later of the expiration of--
    (1) Eighteen months from the effective date of the termination; or
    (2) A debarment or suspension under Executive Order 12549 (3 CFR, 
1986 Comp., p. 189) or the Federal Acquisition Regulations, 48 CFR part 
9, subpart 9.4.
    (c) To be reinstated, an institution or third-party servicer must 
submit its request for reinstatement in writing to the Secretary and 
must--
    (1) Demonstrate to the Secretary's satisfaction that it has 
corrected the violation or violations on which its termination was 
based, including payment in full to the Secretary or to other recipients 
of funds that the institution or servicer, as applicable, has improperly 
received, withheld, disbursed, or caused to be disbursed;
    (2) Meet all applicable requirements of this part; and
    (3) In the case of an institution, enter into a new program 
participation agreement with the Secretary.
    (d) The Secretary, within 60 days of receiving the reinstatement 
request--
    (1) Grants the request;
    (2) Denies the request; or

[[Page 606]]

    (3) Grants the request subject to a limitation or limitations.

(Approved by the Office of Management and Budget under control number 
1840-0537)

(Authority: 20 U.S.C. 1094; E.O. 12549 (3 CFR, 1986 Comp., p. 189), 
12689 (3 CFR, 1989 Comp., p. 235))

[59 FR 22451, Apr. 29, 1994, as amended at 59 FR 34964, July 7, 1994. 
Redesignated at 82 FR 6257, Jan. 19, 2017]



Sec. 668.98  Removal of limitation.

    (a) An institution whose participation in a Title IV, HEA program 
has been limited may not apply for removal of the limitation before the 
expiration of 12 months from the effective date of the limitation.
    (b) A third-party servicer whose eligibility to contract with any 
institution to administer any aspect of the institution's participation 
in a Title IV, HEA program has been limited may request removal of the 
limitation.
    (c) The institution or servicer may not apply for removal of the 
limitation before the later of the expiration of--
    (1) Twelve months from the effective date of the limitation; or
    (2) A debarment or suspension under Executive Order 12549 (3 CFR, 
1986 Comp., p. 189) or the Federal Acquisition Regulations, 48 CFR part 
9, subpart 9.4.
    (d) If the institution or servicer requests removal of the 
limitation, the request must be in writing and show that the institution 
or servicer, as applicable, has corrected the violation or violations on 
which the limitation was based.
    (e) No later than 60 days after the Secretary receives the request, 
the Secretary responds to the institution or servicer--
    (1) Granting its request;
    (2) Denying its request; or
    (3) Granting the request subject to other limitation or limitations.
    (f) If the Secretary denies the request or establishes other 
limitations, the Secretary grants the institution or servicer, upon the 
institution's or servicer's request, an opportunity to show cause why 
the participation or eligibility, as applicable, should be fully 
reinstated.
    (g) The institution's or servicer's request for an opportunity to 
show cause does not waive--
    (1) The institution's right to participate in any or all Title IV, 
HEA programs if it complies with the continuing limitation or 
limitations pending the outcome of the opportunity to show cause; and
    (2) The servicer's right to contract with any institution to 
administer any aspect of the institution's participation in any Title 
IV, HEA program, if the servicer complies with the continuing limitation 
pending the outcome of the opportunity to show cause.

(Authority: 20 U.S.C. 1094; E.O. 12549 (3 CFR, 1986 Comp., p. 189), 
12689 (3 CFR, 1989 Comp., p. 235))

[59 FR 22451, Apr. 29, 1994. Redesignated at 82 FR 6257, Jan. 19, 2017]



Sec. 668.99  Interlocutory appeals to the Secretary from rulings of
a hearing official.

    (a) A ruling by a hearing official may not be appealed to the 
Secretary until the issuance of an initial decision, except that the 
Secretary may, at any time prior to the issuance of the initial 
decision, grant a review of a ruling upon either a certification by a 
hearing official of the ruling to the Secretary for review or the filing 
of a petition for review of a ruling by one or both of the parties, if--
    (1) That ruling involves a controlling question of substantive or 
procedural law; and
    (2) The immediate resolution of the question will materially advance 
the final disposition of the proceeding or subsequent review will be an 
inadequate remedy.
    (b)(1) A petition for interlocutory review of an interim ruling must 
include the following:
    (i) A brief statement of the facts necessary to an understanding of 
the issue on which review is sought.
    (ii) A statement of the issue.
    (iii) A statement of the reasons showing that the ruling complained 
of involves a controlling question of substantive or procedural law and 
why immediate review of the ruling will materially advance the 
disposition of the case, or why subsequent review will be an inadequate 
remedy.

[[Page 607]]

    (2) A petition may not exceed ten pages, double-spaced, and must be 
filed with a copy of the ruling and any findings and opinions relating 
to the ruling.
    (c) A copy of the petition must be provided to the hearing official 
at the time of filing with the Secretary, and a copy of a petition or 
any certification must be served upon the parties as provided in 
Sec. 668.92(a)(4). The petition or certification must reflect this 
service.
    (d) If a party files a petition under this section, the hearing 
official may state to the Secretary a view as to whether review is 
appropriate or inappropriate by submitting a brief statement addressing 
the party's petition within 10 days of the receipt of that petition by 
the hearing official. A copy of the statement must be served on all 
parties in the manner provided in Sec. 668.91(a)(4)(ii).
    (e) A party's response to a petition or certification for 
interlocutory review must be filed within 7 days after service of the 
petition or statement, as applicable, and may not exceed 10 pages, 
double-spaced, in length. The response must be filed, and a copy served 
on the other party, as provided in Sec. 668.91(a)(4).
    (f) The filing of a petition for interlocutory review does not 
automatically stay the proceedings. A stay during consideration of a 
petition for review may be granted by the hearing official if that 
official has certified or stated to the Secretary that review of the 
ruling is appropriate. The Secretary may order a stay of proceedings at 
any time after the filing of a request for interlocutory review.
    (g) The Secretary notifies the parties if a petition or 
certification for interlocutory review is accepted, and may provide the 
parties a reasonable time within which to submit written argument with 
regard to the merit of the petition or certification.
    (h) If the Secretary takes no action on a petition or certification 
for review within 15 days of receipt of it, the request is deemed to be 
denied.
    (i) The Secretary may affirm, modify, set aside, or remand the 
interim ruling of the hearing official.
    (j) The Secretary may delegate to a designated department official 
the functions described in paragraphs (f) through (i) of this section.

(Authority: 20 U.S.C. 1094)

(Approved by the Office of Management and Budget under control number 
1801-0003)

[57 FR 60034, Dec. 17, 1992, as amended at 58 FR 14153, Mar. 16, 1993; 
78 FR 48051, Aug. 7, 2013. Redesignated and amended at 82 FR 6257, 6259, 
Jan. 19, 2017]



Subpart H_Appeal Procedures for Audit Determinations and Program Review 
                             Determinations

    Source: 52 FR 30115, Aug. 12, 1987, unless otherwise noted. 
Correctly designated at 52 FR 46354, Dec. 7, 1987.



Sec. 668.111  Scope and purpose.

    (a) This subpart establishes rules governing the appeal by an 
institution or third-party servicer from a final audit determination or 
a final program review determination arising from an audit or program 
review of the institution's participation in any Title IV, HEA program 
or of the servicer's administration of any aspect of an institution's 
participation in any Title IV, HEA program.
    (b) This subpart applies to any participating institution or third-
party servicer that appeals a final audit determination or final program 
review determination.
    (c) This subpart does not apply to proceedings governed by subpart G 
of this part or to a determination that--
    (1) An institution fails to meet the applicable statutory definition 
set forth in sections 435, 481, or 1201 of the HEA, except to the extent 
that such a determination forms the basis of a final audit determination 
or a final program review determination; or
    (2) An institution fails to qualify for certification to participate 
in the title IV, HEA programs because it does not meet the fiscal and 
administrative standards set forth in subpart B of this part, except to 
the extent that such a determination forms the basis of a

[[Page 608]]

final audit determination or a program review determination.

(Authority: 20 U.S.C. 1094)

[52 FR 30115, Aug. 12, 1987, correctly designated at 52 FR 46354, Dec. 
7, 1987, as amended at 59 FR 22452, Apr. 29, 1994]



Sec. 668.112  Definitions.

    The following definitions apply to this subpart:
    (a) Final audit determination means the written notice of a 
determination issued by a designated department official based on an 
audit of--
    (1) An institution's participation in any or all of the Title IV, 
HEA programs; or
    (2) A third-party servicer's administration of any aspect of an 
institution's participation in any or all of the Title IV, HEA programs.
    (b) Final program review determination means the written notice of a 
determination issued by a designated department official and resulting 
from a program compliance review of--
    (1) An institution's participation in any or all of the Title IV, 
HEA programs; or
    (2) A third-party servicer's administration of any aspect of an 
institution's participation in any Title IV, HEA program.

(Authority: 20 U.S.C. 1094)

[59 FR 22452, Apr. 29, 1994]



Sec. 668.113  Request for review.

    (a) An institution or third-party servicer seeking the Secretary's 
review of a final audit determination or a final program review 
determination shall file a written request for review with the 
designated department official.
    (b) The institution or servicer must file its request for review no 
later than 45 days from the date that the institution or servicer 
receives the final audit determination or final program review 
determination.
    (c) The institution or servicer shall attach to the request for 
review a copy of the final audit determination or final program review 
determination, and shall--
    (1) Identify the issues and facts in dispute; and
    (2) State the institution's or servicer's position, as applicable, 
together with the pertinent facts and reasons supporting that position.
    (d)(1) If an institution's violation that resulted in the final 
audit determination or final program review determination in paragraph 
(a) of this section results from an administrative, accounting, or 
recordkeeping error, and that error was not part of a pattern of error, 
and there is no evidence of fraud or misconduct related to the error, 
the Secretary permits the institution to correct or cure the error.
    (2) If the institution is charged with a liability as a result of an 
error described in paragraph (d)(1) of this section, the institution 
cures or corrects that error with regard to that liability if the cure 
or correction eliminates the basis for the liability.

(Approved by the Office of Management and Budget under control number 
1840-0537)

(Authority: 20 U.S.C. 1094 and 1099c-1)

[59 FR 22452, Apr. 29, 1994, as amended at 59 FR 34964, July 7, 1994; 64 
FR 58619, Oct. 29, 1999; 78 FR 48051, Aug. 7, 2013]



Sec. 668.114  Notification of hearing.

    (a) Upon receipt of an institution's or third-party servicer's 
request for review, the designated department official arranges for a 
hearing before a hearing official.
    (b) Within 30 days of the designated department official's receipt 
of an institution's or third-party servicer's request for review, the 
hearing official notifies the designated department official and the 
parties to the proceeding of the schedule for the submission of briefs 
by both the designated department official and, as applicable, the 
institution or servicer.
    (c) The hearing official schedules the submission of briefs and of 
accompanying evidence admissible under the terms of Sec. 668.116 (e) and 
(f) to occur no later than 120 days from the date that the hearing 
official notifies the institution or servicer.

(Authority: 20 U.S.C. 1094)

[59 FR 22452, Apr. 29, 1994]

[[Page 609]]



Sec. 668.115  Prehearing conference.

    (a) In the event that the hearing official considers a prehearing 
conference necessary, he may convene a prehearing conference.
    (b) The purpose of a prehearing conference is to allow the parties 
to settle or narrow the dispute. A prehearing conference consists of--
    (1) A telephone conference call;
    (2) An informal meeting of the parties with the hearing official; or
    (3) The submission and exchange of written materials by the parties.
    (c) All prehearing conferences requiring appearances by the parties 
shall take place in the Washington, D.C. metropolitan area.

(Authority: 20 U.S.C. 1094)

[52 FR 30115, Aug. 12, 1987, correctly designated at 52 FR 46354, Dec. 
7, 1987, as amended at 57 FR 47753, Oct. 19, 1992]



Sec. 668.116  Hearing.

    (a) A hearing is a process conducted by the hearing official whereby 
an orderly presentation of arguments and evidence is made by the 
parties.
    (b) The hearing process consists of the submission of written briefs 
to the hearing official by the institution or third-party servicer, as 
applicable, and by the designated department official, unless the 
hearing official determines, under paragraph (g) of this section, that 
an oral hearing is also necessary.
    (c) Each party shall provide a copy of its brief and any 
accompanying materials to the opposing party simultaneously with the 
filing of its brief and materials with the hearing official.
    (d) An institution or third-party servicer requesting review of the 
final audit determination or final program review determination issued 
by the designated department official shall have the burden of proving 
the following matters, as applicable:
    (1) That expenditures questioned or disallowed were proper.
    (2) That the institution or servicer complied with program 
requirements.
    (e)(1) A party may submit as evidence to the hearing official only 
materials within one or more of the following categories:
    (i) Department of Education audit reports and audit work papers for 
audits performed by the department's Office of Inspector General.
    (ii) In the case of an institution, institutional audit work papers, 
records, and other materials.
    (iii) In the case of a third-party servicer, the servicer's audit 
work papers and the records and other materials of the servicer or any 
institution that contracts with the servicer.
    (iv) Department of Education program review reports and work papers 
for program reviews.
    (v) Institutional or servicer records and other materials (including 
records and other materials of any institution that contracts with the 
servicer) provided to the Department of Education in response to a 
program review.
    (vi) Other Department of Education records and materials.
    (f) The hearing official accepts only evidence that is both 
admissible and timely under the terms of paragraph (e) of this section, 
and relevant and material to the appeal. Examples of evidence that shall 
be deemed irrelevant and immaterial except upon a clear showing of 
probative value respecting the matters described in paragraph (d) of 
this section include--
    (1) Evidence relating to a period of time other than the period of 
time covered by the audit or program review;
    (2) Evidence relating to an audit or program review of an 
institution or third-party servicer other than the institution or 
servicer bringing the appeal, or the resolution thereof; and
    (3) Evidence relating to the current practice of the institution or 
servicer bringing the appeal in the program areas at issue in the 
appeal.
    (g)(1) The hearing official may schedule an oral argument if he or 
she determines that an oral argument is necessary to clarify the issues 
and the positions of the parties as presented in the parties' written 
submissions.
    (2) In the event that an oral argument is conducted, the designated 
department official makes a transcribed record of the proceedings and 
makes one copy of that record available to each of the parties to the 
proceeding.
    (h) Any oral argument shall take place in the Washington, DC 
metropolitan area.

[[Page 610]]

    (i) Either party may be represented by counsel.

(Authority: 20 U.S.C. 1094)

[52 FR 30115, Aug. 12, 1987; 52 FR 46354, Dec. 7, 1987, as amended at 57 
FR 47753, Oct. 19, 1992; 59 FR 22452, Apr. 29, 1994; 59 FR 61186, Nov. 
29, 1994; 78 FR 48051, Aug. 7, 2013]



Sec. 668.117  Authority and responsibilities of the hearing official.

    (a) The hearing official regulates the course of the proceedings and 
the conduct of the parties following a request for review and takes all 
steps necessary to conduct fair and impartial proceedings.
    (b) The hearing official is not authorized to issue subpoenas or 
compel discovery as provided for in the Federal Rules of Civil 
Procedure.
    (c) The hearing official shall take whatever measures are 
appropriate to expedite the proceedings. These measures may include, but 
are not limited to, one or more of the following:
    (1) Scheduling of conferences.
    (2) Setting time limits for oral arguments and the submission of 
briefs.
    (3) Terminating the hearing process and issuing a decision against a 
party if that party does not meet time limits established by the hearing 
official.
    (d) The hearing official is bound by all applicable statutes and 
regulations. The hearing official may not--
    (1) Waive applicable statutes and regulations; or
    (2) Rule them invalid.

(Authority: 20 U.S.C. 1094)

[52 FR 30115, Aug. 12, 1987, correctly designated at 52 FR 46354, Dec. 
7, 1987, as amended at 57 FR 47753, Oct. 19, 1992]



Sec. 668.118  Decision of the hearing official.

    (a) Upon review of the parties' written submissions and termination 
of the oral argument if one is held, the hearing official issues a 
written decision.
    (b) The hearing official's decision states and explains whether the 
final audit determination or final program review determination issued 
by the designated ED official was supportable, in whole or in part.
    (c) The hearing official bases any findings of fact only on evidence 
properly presented before him, on matters given official notice, or on 
facts stipulated to by the parties.

(Authority: 20 U.S.C. 1094)

[52 FR 30115, Aug. 12, 1987, correctly designated at 52 FR 46354, Dec. 
7, 1987, as amended at 57 FR 47753, Oct. 19, 1992]



Sec. 668.119  Appeal to the Secretary.

    (a) Within 30 days of its receipt of the initial decision of the 
hearing official, a party wishing to appeal the decision shall submit a 
brief or other written material to the Secretary explaining why the 
decision of the hearing official should be overturned or modified.
    (b) The party appealing the initial decision shall, simultaneously 
with its filing of the appeal, provide the opposing party with a copy of 
its brief or other written material.
    (c) In its brief to the Secretary, the party appealing the initial 
decision may submit proposed findings of fact or conclusions of law. 
However, the proposed findings of fact must be supported by--
    (1) The admissible evidence already in the record;
    (2) Matters that may be given official notice; or
    (3) Stipulations of the parties
    (d) The opposing party shall file its response to the appeal, if 
any, with the Secretary within 30 days of that party's receipt of the 
appeal to the Secretary.
    (e) The opposing party shall, simultaneously with the filing of any 
response, provide a copy of its response to the appeal to the party 
appealing the initial decision.
    (f) Neither party may introduce new evidence on appeal.

(Authority: 20 U.S.C. 1094)

[52 FR 30115, Aug. 12, 1987, correctly designated at 52 FR 46354, Dec. 
7, 1987, as amended at 57 FR 47753, Oct. 19, 1992; 57 FR 60035, Dec. 17, 
1992]



Sec. 668.120  Decision of the Secretary.

    (a)(1) The Secretary issues a final decision. The Secretary may 
affirm, modify, or reverse the decision of the hearing official, or may 
remand the case to the hearing official for further proceedings 
consistent with the Secretary's decision.

[[Page 611]]

    (2) The Secretary may delegate the performance of functions under 
this section to a designated department official.
    (b) If the Secretary modifies, remands, or overturns the initial 
decision of the hearing official, the Secretary issues a decision that--
    (1) Includes a statement of the reasons for this action;
    (2) Is provided to both parties; and
    (3) Unless the decision is remanded to the hearing official for 
further review or determination of fact, becomes final upon its 
issuance.

(Authority: 20 U.S.C. 1094)

[52 FR 30115, Aug. 12, 1987, correctly designated at 52 FR 46354, Dec. 
7, 1987, as amended at 57 FR 47753, Oct. 19, 1992; 57 FR 60035, Dec. 17, 
1992]



Sec. 668.121  Final decision of the Department.

    (a) In the event that the initial decision of the hearing official 
is appealed, the decision of the Secretary is the final decision of the 
Department, unless the hearing official's decision is remanded by the 
Secretary.
    (b) In the event that the initial decision of the hearing official 
is not appealed within the time limit specified in Sec. 668.119(a), the 
initial decision automatically becomes the final decision of the 
Department.

(Authority: 20 U.S.C. 1094)

[52 FR 30115, Aug. 12, 1987; 52 FR 46354, Dec. 7, 1987, as amended at 57 
FR 47753, Oct. 19, 1992]



Sec. 668.122  Determination of filing, receipt, and submission dates.

    (a)(1) Appeals and written submissions to a hearing official 
referred to in this subpart may be hand-delivered, mailed, or filed 
electronically by use of the Office of Hearings and Appeals Electronic 
Filing System (OES).
    (2)(i) Service on the other party of a document required to be 
served on another party may be made by mail or by hand delivery, or, if 
agreed upon by the parties, by use of the OES or by any other means 
agreed to by the parties. A party who agrees to receive a document filed 
by another party by any means other than service by mail or hand-
delivery may limit that agreement to one or more particular documents.
    (ii) A party who agrees to service of a document through the OES 
thereby agrees that the notice of such filing provided to the party by 
the OES suffices to meet any obligation of the filing party under these 
regulations to provide a copy of that document.
    (b) All mailed written submissions referred to in this subpart shall 
be mailed by certified mail, return receipt requested.
    (c) Determination of filing, receipt, or submission dates is based 
on the date of hand-delivery, the date of receipt recorded by the U.S. 
Postal Service, the date a document sent electronically by using the OES 
is recorded as received as indicated in the confirmation of receipt 
email for E-filing, or for other means, the date on which the delivery 
is recorded in the medium used for delivery.

(Authority: 20 U.S.C. 1094)

[52 FR 30115, Aug. 12, 1987, as amended at 78 FR 48051, Aug. 7, 2013]



Sec. 668.123  Collection.

    To the extent that the decision of the Secretary sustains the final 
audit determination or program review determination, subject to the 
provisions of Sec. 668.24(c)(3), the Department of Education will take 
steps to collect the debt at issue or otherwise effect the determination 
that was subject to the request for review.

(Authority: 20 U.S.C. 1094)

[59 FR 22453, Apr. 29, 1994]



Sec. 668.124  Interlocutory appeals to the Secretary from rulings of
a hearing official.

    (a) A ruling by a hearing official may not be appealed to the 
Secretary until the issuance of an initial decision, except that the 
Secretary may, at any time prior to the issuance of the initial 
decision, grant a review of a ruling upon either a certification by a 
hearing official of the ruling to the Secretary for review or the filing 
of a petition for review of a ruling by one or both of the parties, if--
    (1) That ruling involves a controlling question of substantive or 
procedural law; and

[[Page 612]]

    (2) The immediate resolution of the question will materially advance 
the final disposition of the proceeding or subsequent review will be an 
inadequate remedy.
    (b)(1) A petition for interlocutory review of an interim ruling must 
include the following:
    (i) A brief statement of the facts necessary to an understanding of 
the issue on which review is sought.
    (ii) A statement of the issue.
    (iii) A statement of the reasons showing that the ruling complained 
of involves a controlling question of substantive or procedural law and 
why immediate review of the ruling will materially advance the 
disposition of the case, or why subsequent review will be an inadequate 
remedy.
    (2) A petition may not exceed ten pages, double-spaced, and must be 
filed with a copy of the ruling and any findings and opinions relating 
to the ruling.
    (c) A copy of the petition must be provided to the hearing official 
at the time of filing with the Secretary, and a copy of a petition or 
any certification must be served upon the parties as provided in 
Sec. 668.122(a)(2). The petition or certification must reflect this 
service.
    (d) If a party files a petition under this section, the hearing 
official may state to the Secretary a view as to whether review is 
appropriate or inappropriate by submitting a brief statement addressing 
the party's petition within 10 days of the receipt of that petition by 
the hearing official. A copy of the statement must be served on all 
parties in the manner provided in Sec. 668.122(a)(2).
    (e) A party's response to a petition or certification for 
interlocutory review must be filed within 7 days after service of the 
petition or statement, as applicable, and may not exceed 10 pages, 
double-spaced, in length. A copy of the response must be served on the 
parties and the hearing official as provided in Sec. 668.122(a)(2).
    (f) The filing of a petition for interlocutory review does not 
automatically stay the proceedings. A stay during consideration of a 
petition for review may be granted by the hearing official if that 
official has certified or stated to the Secretary that review of the 
ruling is appropriate. The Secretary may order a stay of proceedings at 
any time after the filing of a request for interlocutory review.
    (g) The Secretary notifies the parties if a petition or 
certification for interlocutory review is accepted, and may provide the 
parties a reasonable time within which to submit written argument with 
regard to the merit of the petition or certification.
    (h) If the Secretary takes no action on a petition or certification 
for review within 15 days of receipt of it, the request is deemed to be 
denied.
    (i) The Secretary may affirm, modify, set aside, or remand the 
interim ruling of the hearing official.
    (j) The Secretary may delegate to a designated department official 
the functions described in paragraphs (f) through (i) of this section.

(Approved by the Office of Management and Budget under control number 
1801-0003)

(Authority: 20 U.S.C. 1094)

[57 FR 60035, Dec. 17, 1992, as amended at 58 FR 14153, Mar. 16, 1993; 
78 FR 48051, Aug. 7, 2013]



                Subpart I_Immigration-Status Confirmation

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

    Source: 58 FR 3184, Jan. 7, 1993, unless otherwise noted.



Sec. 668.130  General.

    (a) Scope and purpose. The regulations in this subpart govern the 
responsibilities of institutions and students in determining the 
eligibility of those noncitizen applicants for title IV, HEA assistance 
who must, under Sec. 668.33(a)(2), produce evidence from the United 
States Immigration and Naturalization Service (INS) that they are 
permanent residents of the United States or in the United States for 
other than a temporary purpose with the intention of becoming citizens 
or permanent residents.
    (b) Student responsibility. At the request of the Secretary or the 
institution at which an applicant for title IV, HEA financial assistance 
is enrolled or accepted for enrollment, an applicant who asserts 
eligibility under

[[Page 613]]

Sec. 668.33(a)(2) shall provide documentation from the INS of 
immigration status.

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

[58 FR 3184, Jan. 7, 1993, as amended at 63 FR 40626, July 29, 1998]



Sec. 668.131  Definitions.

    The following definitions apply to this subpart:
    Eligible noncitizen: An individual possessing an immigration status 
that meets the requirements of Sec. 668.33(a)(2).
    Immigration status: The status conferred on a noncitizen under the 
Immigration and Nationality Act of 1952, as amended, 8 U.S.C. 1182.
    Primary confirmation: A process by which the Secretary, by means of 
a matching program conducted with the INS, compares the information 
contained in an Application for Federal Student Aid or a multiple data 
entry application regarding the immigration status of a noncitizen 
applicant for title IV, HEA assistance with records of that status 
maintained by the INS in its Alien Status Verification Index (ASVI) 
system for the purpose of determining whether a student's immigration 
status meets the requirements of Sec. 668.33(a)(2) and reports the 
results of this comparison on an output document.
    Secondary confirmation: A process by which the INS, in response to 
the submission of INS Document Verification Form G-845 by an 
institution, searches pertinent paper and automated INS files, other 
than the ASVI database, for the purpose of determining a student's 
immigration status and the validity of the submitted INS documents, and 
reports the results of this search to the institution.

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

[58 FR 3184, Jan. 7, 1993, as amended at 59 FR 12521, Mar. 16, 1994; 63 
FR 40626, July 29, 1998]



Sec. 668.132  Institutional determinations of eligibility based on
primary confirmation.

    (a) Except as provided in Sec. 668.133(a)(1)(ii), the institution 
shall determine a student to be an eligible noncitizen if the 
institution receives an output document for that student establishing 
that--
    (1) The INS has confirmed the student's immigration status; and
    (2) The student's immigration status meets the noncitizen 
eligibility requirements of Sec. 668.33(a)(2).
    (b) If an institution determines a student to be an eligible 
noncitizen in accordance with paragraph (a) of this section, the 
institution may not require the student to produce the documentation 
otherwise required under Sec. 668.33(a)(2).

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

[58 FR 3184, Jan. 7, 1993, as amended at 63 FR 40626, July 29, 1998]



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

    (a) General requirements. Except as provided in paragraph (b) of 
this section, an institution shall require the student to produce the 
documentation required under Sec. 668.33(a)(2) and request the INS to 
perform secondary confirmation for a student claiming eligibility under 
Sec. 668.33(a)(2), in accordance with the procedures set forth in 
Sec. 668.135, if--
    (1) The institution--
    (i) Receives an output document indicating that the student must 
provide the institution with evidence of the student's immigration 
status required under Sec. 668.33(a)(2); or
    (ii) Receives an output document that satisfies the requirements of 
Sec. 668.132(a) (1) and (2), but the institution--
    (A) Has documentation that conflicts with immigration-status 
documents submitted by the student or the immigration status reported on 
the output document; or
    (B) Has reason to believe that the immigration status reported by 
the student or on the output document is incorrect; and
    (2) The institution determines that the immigration-status documents 
submitted by the student constitute reasonable evidence of the student's 
claim to be an eligible noncitizen.
    (b) Exclusions from secondary confirmation. (1) An institution may 
not require the student to produce the documentation requested under 
Sec. 668.33(a)(2) and

[[Page 614]]

may not request that INS perform secondary confirmation, if the 
student--
    (i) Demonstrates eligibility under the provisions of Sec. 668.33 
(a)(1) or (b); or
    (ii) Demonstrated eligibility under the provisions of 
Sec. 668.33(a)(2) in a previous award year as a result of secondary 
confirmation and the documents used to establish that eligibility have 
not expired; and
    (iii) The institution does not have conflicting documentation or 
reason to believe that the student's claim of citizenship or immigration 
status is incorrect.
    (2) [Reserved]

(Approved by the Office of Management and Budget under control number 
1840-0650)

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

[58 FR 3184, Jan. 7, 1993, as amended at 58 FR 26674, May 4, 1993; 60 FR 
61813, Dec. 1, 1995; 63 FR 40626, July 29, 1998]



Sec. 668.134  Institutional policies and procedures for requesting
documentation and receiving secondary confirmation.

    (a) An institution shall establish and use written policies and 
procedures for requesting proof and securing confirmation of the 
immigration status of applicants for title IV, HEA student financial 
assistance who claim to meet the eligibility requirements of 
Sec. 668.33(a)(2). These policies and procedures must include--
    (1) Providing the student a deadline by which to provide the 
documentation that the student wishes to have considered to support the 
claim that the student meets the requirements of Sec. 668.33(a)(2);
    (2) Providing to the student information concerning the consequences 
of a failure to provide the documentation by the deadline set by the 
institution; and
    (3) Providing that the institution will not make a determination 
that the student is not an eligible noncitizen until the institution has 
provided the student the opportunity to submit the documentation in 
support of the student's claim of eligibility under Sec. 668.33(a)(2).
    (b) An institution shall furnish, in writing, to each student 
required to undergo secondary confirmation--
    (1) A clear explanation of the documentation the student must submit 
as evidence that the student satisfies the requirements of 
Sec. 668.33(a)(2); and
    (2) A clear explanation of the student's responsibilities with 
respect to the student's compliance with Sec. 668.33(a)(2), including 
the deadlines for completing any action required under this subpart and 
the consequences of failing to complete any required action, as 
specified in Sec. 668.137.

(Approved by the Office of Management and Budget under control number 
1840-0650)

(Authority: 20 U.S.C. 1091, 1092, 1094)

[58 FR 3184, Jan. 7, 1993, as amended at 58 FR 26674, May 4, 1993; 63 FR 
40626, July 29, 1998]



Sec. 668.135  Institutional procedures for completing secondary
confirmation.

    Within 10 business days after an institution receives the 
documentary evidence of immigration status submitted by a student 
required to undergo secondary confirmation, the institution shall--
    (a) Complete the request portion of the INS Document Verification 
Request Form G-845;
    (b) Copy front and back sides of all immigration-status documents 
received from the student and attach copies to the Form G-845; and
    (c) Submit Form G-845 and attachments to the INS District Office.

(Approved by the Office of Management and Budget under control number 
1840-0650)

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

[58 FR 3184, Jan. 7, 1993, as amended at 58 FR 26674, May 4, 1993]



Sec. 668.136  Institutional determinations of eligibility based on
INS responses to secondary confirmation requests.

    (a) Except as provided in paragraphs (b) and (c) of this section, an 
institution that has requested secondary confirmation under 
Sec. 668.133(a) shall make its determination concerning a student's 
eligibility under Sec. 668.33(a)(2) by relying on the INS response to 
the Form G-845.
    (b) An institution shall make its determination concerning a 
student's eligibility under Sec. 668.33(a)(2) pending the institution's 
receipt of an INS response

[[Page 615]]

to the institution's Form G-845 request concerning that student, if--
    (1) The institution has given the student an opportunity to submit 
documents to the institution to support the student's claim to be an 
eligible noncitizen;
    (2) The institution possesses sufficient documentation concerning a 
student's immigration status to make that determination;
    (3) At least 15 business days have elapsed from the date that the 
institution sent the Form G-845 request to the INS;
    (4) The institution has no documentation that conflicts with the 
immigration-status documentation submitted by the student; and
    (5) The institution has no reason to believe that the immigration 
status reported by the applicant is incorrect.
    (c) An institution shall establish and use policies and procedures 
to ensure that, if the institution has disbursed or released title IV, 
HEA funds to the student in the award year or employed the student under 
the Federal Work-Study Program, and the institution determines, in 
reliance on the INS response to the institution's request for secondary 
confirmation regarding that student, that the student was in fact not an 
eligible noncitizen during that award year, the institution provides the 
student with notice of the institution's determination, an opportunity 
to contest the institution's determination, and notice of the 
institution's final determination.

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

[58 FR 3184, Jan. 7, 1993, as amended at 63 FR 40626, July 29, 1998]



Sec. 668.137  Deadlines for submitting documentation and the 
consequences of failure to submit documentation.

    (a) A student shall submit before a deadline specified by the 
institution all documentation the student wishes to have considered to 
support a claim that the student meets the requirements of 
Sec. 668.33(a)(2). The deadline, set by the institution, must be not 
less than 30 days from the date the institution receives the student's 
output document.
    (b) If a student fails to submit the documentation by the deadline 
established in accordance with paragraph (a) of this section, the 
institution may not disburse to the student, or certify the student as 
eligible for, any title IV, HEA program funds for that period of 
enrollment or award year; employ the student under the Federal Work-
Study Program; certify a Federal Stafford or Federal PLUS loan 
application, or originate a Direct Loan Program loan application for the 
student for that period of enrollment.

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

[58 FR 3184, Jan. 7, 1993, as amended at 63 FR 40626, July 29, 1998]



Sec. 668.138  Liability.

    (a) A student is liable for any LEAP, FSEOG, Federal Pell Grant, 
ACG, National SMART Grant, or TEACH Grant payment and for any Federal 
Stafford, Direct Subsidized, Direct Unsubsidized or Federal Perkins loan 
made to him or her if the student was ineligible for the Title IV, HEA 
assistance.
    (b) A Federal PLUS or Direct PLUS Loan borrower is liable for any 
Federal PLUS or Direct PLUS Loan made to him or her on behalf of an 
ineligible student.
    (c) The Secretary does not take any action against an institution 
with respect to an error in the institution's determination that a 
student is an eligible noncitizen if, in making that determination, the 
institution followed the provisions in this subpart and relied on--
    (1) An output document for that student indicating that the INS has 
confirmed that the student's immigration status meets the eligibility 
requirements for title IV, HEA assistance;
    (2) An INS determination of the student's immigration status and the 
authenticity of the student's immigration documents provided in response 
to the institution's request for secondary confirmation; or
    (3) Immigration-status documents submitted by the student and the 
institution did not have reason to believe that the documents did not 
support the student's claim to be an eligible noncitizen.
    (d) Except as provided in paragraph (c) of this section, if an 
institution makes an error in its determination

[[Page 616]]

that a student is an eligible noncitizen, the institution is liable for 
any title IV, HEA disbursements made to this student during the award 
year or period of enrollment for which the student applied for title IV, 
HEA assistance.

(Authority: 20 U.S.C. 1070g, 1091, 1094)

[58 FR 3184, Jan. 7, 1993, as amended at 63 FR 40626, July 29, 1998; 65 
FR 38729, June 22, 2000; 71 FR 38003, July 3, 2006; 73 FR 35493, June 
23, 2008]



Sec. 668.139  Recovery of payments and loan disbursements to
ineligible students.

    (a) If an institution makes a payment of a grant or a disbursement 
of a Federal Perkins loan to an ineligible student for which it is not 
liable in accordance with Sec. 668.138, it shall assist the Secretary in 
recovering the funds by--
    (1) Making a reasonable effort to contact the student; and
    (2) Making a reasonable effort to collect the payment or Federal 
Perkins loan.
    (b) If an institution causes a Federal Stafford, Federal PLUS, 
Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan to be 
disbursed to or on behalf of an ineligible student for which it is not 
liable in accordance with Sec. 668.138, it shall assist the Secretary in 
recovering the funds by notifying the lender in the case of an FFEL 
Program loan or the Secretary in the case of a Direct Loan Program loan 
that the student has failed to establish eligibility under the 
requirements of Secs. 668.201 or 685.200, as appropriate.
    (c) If an institution is liable for a payment of a grant or Federal 
Perkins loan to an ineligible student, the institution shall restore the 
amount equal to the payment or disbursement to the institution's Federal 
Perkins loan fund or Federal Pell Grant, ACG, National SMART Grant, 
TEACH Grant, FSEOG, or LEAP amount, even if the institution cannot 
collect the payment or disbursement from the student.
    (d) If an institution is liable for a Federal Stafford, Federal 
PLUS, Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan 
disbursement to an ineligible student, the institution shall repay an 
amount equal to the disbursement to the lender in the case of an FFEL 
Program loan or the Secretary in the case of a Direct Loan Program loan, 
and provide written notice to the borrower.

(Authority: 20 U.S.C. 1070g, 1091, 1094)

[58 FR 3184, Jan. 7, 1993, as amended at 63 FR 40626, July 29, 1998; 64 
FR 38729, June 22, 2000; 71 FR 38003, July 3, 2006; 73 FR 35493, June 
23, 2008]



Subpart J_Approval of Independently Administered Tests; Specification of 
                Passing Score; Approval of State Process

    Source: 75 FR 66960, Oct. 29, 2010, unless otherwise noted.



Sec. 668.141  Scope.

    (a) This subpart sets forth the provisions under which a student who 
has neither a high school diploma nor its recognized equivalent may 
become eligible to receive title IV, HEA program funds by--
    (1) Achieving a passing score, specified by the Secretary, on an 
independently administered test approved by the Secretary under this 
subpart; or
    (2) Being enrolled in an eligible institution that participates in a 
State process approved by the Secretary under this subpart.
    (b) Under this subpart, the Secretary sets forth--
    (1) The procedures and criteria the Secretary uses to approve tests;
    (2) The basis on which the Secretary specifies a passing score on 
each approved test;
    (3) The procedures and conditions under which the Secretary 
determines that an approved test is independently administered;
    (4) The information that a test publisher or a State must submit, as 
part of its test submission, to explain the methodology it will use for 
the test anomaly studies as described in Sec. 668.144(c)(17) and (d)(8), 
as appropriate;
    (5) The requirements that a test publisher or a State, as 
appropriate--
    (i) Have a process to identify and follow up on test score 
irregularities;

[[Page 617]]

    (ii) Take corrective action--up to and including decertification of 
test administrators--if the test publisher or the State determines that 
test score irregularities have occurred; and
    (iii) Report to the Secretary the names of any test administrators 
it decertifies and any other action taken as a result of test score 
analyses; and
    (6) The procedures and conditions under which the Secretary 
determines that a State process demonstrates that students in the 
process have the ability to benefit from the education and training 
being offered to them.

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



Sec. 668.142  Special definitions.

    The following definitions apply to this subpart:
    Assessment center: A facility that--
    (1) Is located at an eligible institution that provides two-year or 
four-year degrees or is a postsecondary vocational institution;
    (2) Is responsible for gathering and evaluating information about 
individual students for multiple purposes, including appropriate course 
placement;
    (3) Is independent of the admissions and financial aid processes at 
the institution at which it is located;
    (4) Is staffed by professionally trained personnel;
    (5) Uses test administrators to administer tests approved by the 
Secretary under this subpart; and
    (6) Does not have as its primary purpose the administration of 
ability to benefit tests.
    ATB test irregularity: An irregularity that results from an ATB test 
being administered in a manner that does not conform to the established 
rules for test administration consistent with the provisions of subpart 
J of part 668 and the test administrator's manual.
    Computer-based test: A test taken by a student on a computer and 
scored by a computer.
    General learned abilities: Cognitive operations, such as deductive 
reasoning, reading comprehension, or translation from graphic to 
numerical representation, that may be learned in both school and non-
school environments.
    Independent test administrator: A test administrator who administers 
tests at a location other than an assessment center and who--
    (1) Has no current or prior financial or ownership interest in the 
institution, its affiliates, or its parent corporation, other than the 
fees earned for administering approved ATB tests through an agreement 
with the test publisher or State and has no controlling interest in any 
other institution;
    (2) Is not a current or former employee of or consultant to the 
institution, its affiliates, or its parent corporation, a person in 
control of another institution, or a member of the family of any of 
these individuals;
    (3) Is not a current or former member of the board of directors, a 
current or former employee of or a consultant to a member of the board 
of directors, chief executive officer, chief financial officer of the 
institution, its affiliates, or its parent corporation or of any other 
institution, or a member of the family of any of these individuals; and
    (4) Is not a current or former student of the institution.
    Individual with a disability: A person who has a physical or mental 
impairment which substantially limits one or more major life activities, 
has a record of such an impairment, or is regarded as having such an 
impairment.
    Non-native speaker of English: A person whose first language is not 
English and who is not fluent in English.
    Secondary school level: As applied to ``content,'' ``curricula,'' or 
``basic verbal and quantitative skills,'' the basic knowledge or skills 
generally learned in the 9th through 12th grades in United States 
secondary schools.
    Test: A standardized test, assessment or instrument that has formal 
protocols on how it is to be administered in order to be valid. These 
protocols include, for example, the use of parallel, equated forms; 
testing conditions; time allowed for the test; and standardized scoring. 
Tests are not limited to traditional paper and pencil (or computer-
administered) instruments for which forms are constructed prior to 
administration to examinees. Tests may also include adaptive instruments 
that use computerized algorithms for selecting and administering items 
in real time; however, for such instruments, the size of the item pool 
and the method of

[[Page 618]]

item selection must ensure negligible overlap in items across retests.
    Test administrator: An individual who is certified by the test 
publisher (or the State, in the case of an approved State test or 
assessment) to administer tests approved under this subpart in 
accordance with the instructions provided by the test publisher or the 
State, as applicable, which includes protecting the test and the test 
results from improper disclosure or release, and who is not compensated 
on the basis of test outcomes.
    Test item: A question on a test.
    Test publisher: An individual, organization, or agency that owns a 
registered copyright of a test, or has been authorized by the copyright 
holder to represent the copyright holder's interests regarding the test.

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



Sec. 668.143  [Reserved]



Sec. 668.144  Application for test approval.

    (a) The Secretary only reviews tests under this subpart that are 
submitted by the publisher of that test or by a State.
    (b) A test publisher or a State that wishes to have its test 
approved by the Secretary under this subpart must submit an application 
to the Secretary at such time and in such manner as the Secretary may 
prescribe. The application must contain all the information necessary 
for the Secretary to approve the test under this subpart, including but 
not limited to, the information contained in paragraph (c) or (d) of 
this section, as applicable.
    (c) A test publisher must include with its application--
    (1) A summary of the precise editions, forms, levels, and (if 
applicable) sub-tests for which approval is being sought;
    (2) The name, address, telephone number, and e-mail address of a 
contact person to whom the Secretary may address inquiries;
    (3) Each edition, form, level, and sub-test of the test for which 
the test publisher requests approval;
    (4) The distribution of test scores for each edition, form, level, 
or sub-test for which approval is sought, that allows the Secretary to 
prescribe the passing score for each test in accordance with 
Sec. 668.147;
    (5) Documentation of test development, including a history of the 
test's use;
    (6) Norming data and other evidence used in determining the 
distribution of test scores;
    (7) Material that defines the content domains addressed by the test;
    (8) Documentation of periodic reviews of the content and 
specifications of the test to ensure that the test reflects secondary 
school level verbal and quantitative skills;
    (9) If a test being submitted is a revision of the most recent 
edition approved by the Secretary, an analysis of the revisions, 
including the reasons for the revisions, the implications of the 
revisions for the comparability of scores on the current test to scores 
on the previous test, and data from validity studies of the test 
undertaken subsequent to the revisions;
    (10) A description of the manner in which test-taking time was 
determined in relation to the content representativeness requirements in 
Sec. 668.146(b)(3) and an analysis of the effects of time on 
performance. This description may also include the manner in which test-
taking time was determined in relation to the other requirements in 
Sec. 668.146(b);
    (11) A technical manual that includes--
    (i) An explanation of the methodology and procedures for measuring 
the reliability of the test;
    (ii) Evidence that different forms of the test, including, if 
applicable, short forms, are comparable in reliability;
    (iii) Other evidence demonstrating that the test permits consistent 
assessment of individual skill and ability;
    (iv) Evidence that the test was normed using--
    (A) Groups that were of sufficient size to produce defensible 
standard errors of the mean and were not disproportionately composed of 
any race or gender; and
    (B) A contemporary sample that is representative of the population 
of persons who have earned a high school diploma in the United States;
    (v) Documentation of the level of difficulty of the test;

[[Page 619]]

    (vi) Unambiguous scales and scale values so that standard errors of 
measurement can be used to determine statistically significant 
differences in performance; and
    (vii) Additional guidance on the interpretation of scores resulting 
from any modifications of the test for individuals with temporary 
impairments, individuals with disabilities and guidance on the types of 
accommodations that are allowable;
    (12) The manual provided to test administrators containing 
procedures and instructions for test security and administration, and 
the forwarding of tests to the test publisher;
    (13) An analysis of the item-content of each edition, form, level, 
and (if applicable) sub-test to demonstrate compliance with the required 
secondary school level criterion specified in Sec. 668.146(b);
    (14) A description of retesting procedures and the analysis upon 
which the criteria for retesting are based;
    (15) Other evidence establishing the test's compliance with the 
criteria for approval of tests as provided in Sec. 668.146;
    (16) A description of its test administrator certification process 
that provides--
    (i) How the test publisher will determine that the test 
administrator has the necessary training, knowledge, skill, and 
integrity to test students in accordance with this subpart and the test 
publisher's requirements; and
    (ii) How the test publisher will determine that the test 
administrator has the ability and facilities to keep its test secure 
against disclosure or release;
    (17) A description of the test anomaly analysis the test publisher 
will conduct and submit to the Secretary that includes--
    (i) An explanation of how the test publisher will identify potential 
test irregularities and make a determination that test irregularities 
have occurred;
    (ii) An explanation of the process and procedures for corrective 
action (up to and including decertification of a certified test 
administrator) when the test publisher determines that test 
irregularities have occurred; and
    (iii) Information on when and how the test publisher will notify a 
test administrator, the Secretary, and the institutions for which the 
test administrator had previously provided testing services for that 
test publisher, that the test administrator has been decertified; and
    (18)(i) An explanation of any accessible technologies that are 
available to accommodate individuals with disabilities, and
    (ii) A description of the process for a test administrator to 
identify and report to the test publisher when accommodations for 
individuals with disabilities were provided, for scoring and norming 
purposes.
    (d) A State must include with its application--
    (1) The information necessary for the Secretary to determine that 
the test the State uses measures a student's skills and abilities for 
the purpose of determining whether the student has the skills and 
abilities the State expects of a high school graduate in that State;
    (2) The passing scores on that test;
    (3) Any guidance on the interpretation of scores resulting from any 
modifications of the test for individuals with disabilities;
    (4) A statement regarding how the test will be kept secure;
    (5) A description of retesting procedures and the analysis upon 
which the criteria for retesting are based;
    (6) Other evidence establishing the test's compliance with the 
criteria for approval of tests as provided in Sec. 668.146;
    (7) A description of its test administrator certification process 
that provides--
    (i) How the State will determine that the test administrator has the 
necessary training, knowledge, skill, and integrity to test students in 
accordance with the State's requirements; and
    (ii) How the State will determine that the test administrator has 
the ability and facilities to keep its test secure against disclosure or 
release;
    (8) A description of the test anomaly analysis that the State will 
conduct and submit to the Secretary that includes--

[[Page 620]]

    (i) An explanation of how the State will identify potential test 
irregularities and make a determination that test irregularities have 
occurred;
    (ii) An explanation of the process and procedures for corrective 
action (up to and including decertification of a test administrator) 
when the State determines that test irregularities have occurred; and
    (iii) Information on when and how the State will notify a test 
administrator, the Secretary, and the institutions for which the test 
administrator had previously provided testing services for that State, 
that the test administrator has been decertified;
    (9)(i) An explanation of any accessible technologies that are 
available to accommodate individuals with disabilities; and
    (ii) A description of the process for a test administrator to 
identify and report to the test publisher when accommodations for 
individuals with disabilities were provided, for scoring and norming 
purposes; and
    (10) The name, address, telephone number, and e-mail address of a 
contact person to whom the Secretary may address inquiries.
    (11) A technical manual that includes--
    (i) An explanation of the methodology and procedures for measuring 
the reliability of the test;
    (ii) Evidence that different forms of the test, including, if 
applicable, short forms, are comparable in reliability;
    (iii) Other evidence demonstrating that the test permits consistent 
assessment of individual skill and ability;
    (iv) Evidence that the test was normed using--
    (A) Groups that were of sufficient size to produce defensible 
standard errors of the mean and were not disproportionately composed of 
any race or gender; and
    (B) A contemporary sample that is representative of the population 
of persons who have earned a high school diploma in the United States;
    (v) Documentation of the level of difficulty of the test;
    (vi) Unambiguous scales and scale values so that standard errors of 
measurement can be used to determine statistically significant 
differences in performance; and
    (vii) Additional guidance on the interpretation of scores resulting 
from any modifications of the test for individuals with temporary 
impairments, individuals with disabilities and guidance on the types of 
accommodations that are allowable;
    (12) the manual provided to test administrators containing 
procedures and instructions for test security and administration, and 
the forwarding of tests to the State.


Approved by the Office of Management and Budget under control number 
1845-0049)

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



Sec. 668.145  Test approval procedures.

    (a)(1) When the Secretary receives a complete application from a 
test publisher or a State, the Secretary selects one or more experts in 
the field of educational testing and assessment, who possess appropriate 
advanced degrees and experience in test development or psychometric 
research, to determine whether the test meets the requirements for test 
approval contained in Secs. 668.146, 668.147, 668.148, or 668.149, as 
appropriate, and to advise the Secretary of their determinations.
    (2) If the test involves a language other than English, the 
Secretary selects at least one individual who is fluent in the language 
in which the test is written to collaborate with the testing expert or 
experts described in paragraph (a)(1) of this section and to advise the 
Secretary on whether the test meets the additional criteria, provisions, 
and conditions for test approval contained in Secs. 668.148 and 668.149.
    (3) For test batteries that contain multiple sub-tests measuring 
content domains other than verbal and quantitative domains, the 
Secretary reviews only those sub-tests covering the verbal and 
quantitative domains.
    (b)(1) If the Secretary determines that a test satisfies the 
criteria and requirements for test approval, the Secretary notifies the 
test publisher or the State, as applicable, of the Secretary's decision, 
and publishes the name of the test and the passing scores in the Federal 
Register.

[[Page 621]]

    (2) If the Secretary determines that a test does not satisfy the 
criteria and requirements for test approval, the Secretary notifies the 
test publisher or the State, as applicable, of the Secretary's decision, 
and the reasons why the test did not meet those criteria and 
requirements.
    (3) If the Secretary determines that a test does not satisfy the 
criteria and requirements for test approval, the test publisher or the 
State that submitted the test for approval may request that the 
Secretary reevaluate the Secretary's decision. Such a request must be 
accompanied by--
    (i) Documentation and information that address the reasons for the 
non-approval of the test; and
    (ii) An analysis of why the information and documentation submitted 
meet the criteria and requirements for test approval notwithstanding the 
Secretary's earlier decision to the contrary.
    (c)(1) The Secretary approves a test for a period not to exceed five 
years from the date the notice of approval of the test is published in 
the Federal Register.
    (2) The Secretary extends the approval period of a test to include 
the period of review if the test publisher or the State, as applicable, 
re-submits the test for review and approval under Sec. 668.144 at least 
six months before the date on which the test approval is scheduled to 
expire.
    (d)(1) The Secretary's approval of a test may be revoked if the 
Secretary determines that the test publisher or the State violated any 
terms of the agreement described in Sec. 668.150, that the information 
the test publisher or the State submitted as a basis for approval of the 
test was inaccurate, or that the test publisher or the State 
substantially changed the test and did not resubmit the test, as 
revised, for approval.
    (2) If the Secretary revokes approval of a previously approved test, 
the Secretary publishes a notice of that revocation in the Federal 
Register. The revocation becomes effective--
    (i) One hundred and twenty days from the date the notice of 
revocation is published in the Federal Register; or
    (ii) An earlier date specified by the Secretary in a notice 
published in the Federal Register.


Approved by the Office of Management and Budget under control number 
1845-0049)

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



Sec. 668.146  Criteria for approving tests.

    (a) Except as provided in Sec. 668.148, the Secretary approves a 
test under this subpart if--
    (1) The test meets the criteria set forth in paragraph (b) of this 
section;
    (2) The test publisher or the State satisfies the requirements set 
forth in paragraph (c) of this section; and
    (3) The Secretary makes a determination that the information the 
test publisher or State submitted in accordance with Sec. 668.144(c)(17) 
or (d)(8), as applicable, provides adequate assurance that the test 
publisher or State will conduct rigorous test anomaly analyses and take 
appropriate action if test administrators do not comply with testing 
procedures.
    (b) To be approved under this subpart, a test must--
    (1) Assess secondary school level basic verbal and quantitative 
skills and general learned abilities;
    (2) Sample the major content domains of secondary school level 
verbal and quantitative skills with sufficient numbers of questions to--
    (i) Adequately represent each domain; and
    (ii) Permit meaningful analyses of item-level performance by 
students who are representative of the contemporary population beyond 
the age of compulsory school attendance and have earned a high school 
diploma;
    (3) Require appropriate test-taking time to permit adequate sampling 
of the major content domains described in paragraph (b)(2) of this 
section;
    (4) Have all forms (including short forms) comparable in 
reliability;
    (5) Have, in the case of a test that is revised, new scales, scale 
values, and scores that are demonstrably comparable to the old scales, 
scale values, and scores;
    (6) Meet all standards for test construction provided in the 1999 
edition of the Standards for Educational and Psychological Testing, 
prepared by a joint

[[Page 622]]

committee of the American Educational Research Association, the American 
Psychological Association, and the National Council on Measurement in 
Education incorporated by reference in this section. Incorporation by 
reference of this document has been approved by the Director of the 
Office of the Federal Register pursuant to the Director's authority 
under 5 U.S.C. 552(a) and 1 CFR part 51. The incorporated document is on 
file at the Department of Education, Federal Student Aid, room 113E2, 
830 First Street, NE., Washington, DC 20002, phone (202) 377-4026, and 
at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 1-866-
272-6272, or go to: http://www.archives.gov/federal_register/
code_of_federal_regulations/ibr_locations.html. The document also may be 
obtained from the American Educational Research Association at: http://
www.aera.net; and
    (7) Have the test publisher's or the State's guidelines for 
retesting, including time between test-taking, be based on empirical 
analyses that are part of the studies of test reliability.
    (c) In order for a test to be approved under this subpart, a test 
publisher or a State must--
    (1) Include in the test booklet or package--
    (i) Clear, specific, and complete instructions for test 
administration, including information for test takers on the purpose, 
timing, and scoring of the test; and
    (ii) Sample questions representative of the content and average 
difficulty of the test;
    (2) Have two or more secure, equated, alternate forms of the test;
    (3) Except as provided in Secs. 668.148 and 668.149, provide tables 
of distributions of test scores which clearly indicate the mean score 
and standard deviation for high school graduates who have taken the test 
within three years prior to the date that the test is submitted to the 
Secretary for approval under Sec. 668.144;
    (4) Norm the test with--
    (i) Groups that are of sufficient size to produce defensible 
standard errors of the mean and are not disproportionately composed of 
any race or gender; and
    (ii) A contemporary sample that is representative of the population 
of persons who have earned a high school diploma in the United States; 
and
    (5) If test batteries include sub-tests assessing different verbal 
and/or quantitative skills, a distribution of test scores as described 
in paragraph (c)(3) of this section that allows the Secretary to 
prescribe either--
    (i) A passing score for each sub-test; or
    (ii) One composite passing score for verbal skills and one composite 
passing score for quantitative skills.


Approved by the Office of Management and Budget under control number 
1845-0049)

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



Sec. 668.147  Passing scores.

    Except as provided in Secs. 668.144(d), 668.148, and 668.149, to 
demonstrate that a test taker has the ability to benefit from the 
education and training offered by the institution, the Secretary 
specifies that the passing score on each approved test is one standard 
deviation below the mean score of a sample of individuals who have taken 
the test within the three years before the test is submitted to the 
Secretary for approval. The sample must be representative of the 
population of high school graduates in the United States.

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



Sec. 668.148  Additional criteria for the approval of certain tests.

    (a) In addition to satisfying the criteria in Sec. 668.146, to be 
approved by the Secretary, a test must meet the following criteria, if 
applicable:
    (1) In the case of a test developed for a non-native speaker of 
English who is enrolled in a program that is taught in his or her native 
language, the test must be--
    (i) Linguistically accurate and culturally sensitive to the 
population for which the test is designed, regardless of the language in 
which the test is written;
    (ii) Supported by documentation detailing the development of 
normative data;

[[Page 623]]

    (iii) If translated from an English version, supported by 
documentation of procedures to determine its reliability and validity 
with reference to the population for which the translated test was 
designed;
    (iv) Developed in accordance with guidelines provided in the 1999 
edition of the ``Testing Individuals of Diverse Linguistic Backgrounds'' 
section of the Standards for Educational and Psychological Testing 
prepared by a joint committee of the American Educational Research 
Association, the American Psychological Association, and the National 
Council on Measurement in Education incorporated by reference in this 
section. Incorporation by reference of this document has been approved 
by the Director of the Office of the Federal Register pursuant to the 
Director's authority under 5 U.S.C. 552(a) and 1 CFR part 51. The 
incorporated document is on file at the Department of Education, Federal 
Student Aid, room 113E2, 830 First Street, NE., Washington, DC 20002, 
phone (202) 377-4026, and at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 1-866-272-6272, or go to: http://
www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html. The document also may be obtained from the American 
Educational Research Association at: http://www.aera.net; and
    (v)(A) If the test is in Spanish, accompanied by a distribution of 
test scores that clearly indicates the mean score and standard deviation 
for Spanish-speaking students with high school diplomas who have taken 
the test within five years before the date on which the test is 
submitted to the Secretary for approval.
    (B) If the test is in a language other than Spanish, accompanied by 
a recommendation for a provisional passing score based upon performance 
of a sample of test takers representative of non-English speaking 
individuals who speak a language other than Spanish and who have a high 
school diploma. The sample upon which the recommended provisional 
passing score is based must be large enough to produce stable norms.
    (2) In the case of a test that is modified for use for individuals 
with disabilities, the test publisher or State must--
    (i) Follow guidelines provided in the ``Testing Individuals with 
Disabilities'' section of the Standards for Educational and 
Psychological Testing; and
    (ii) Provide documentation of the appropriateness and feasibility of 
the modifications relevant to test performance.
    (3) In the case of a computer-based test, the test publisher or 
State, as applicable, must--
    (i) Provide documentation to the Secretary that the test complies 
with the basic principles of test construction and standards of 
reliability and validity as promulgated in the Standards for Educational 
and Psychological Testing;
    (ii) Provide test administrators with instructions for familiarizing 
test takers with computer hardware prior to test-taking; and
    (iii) Provide two or more parallel, equated forms of the test, or, 
if parallel forms are generated from an item pool, provide documentation 
of the methods of item selection for alternate forms.
    (b) If a test is designed solely to measure the English language 
competence of non-native speakers of English--
    (1) The test must meet the criteria set forth in Sec. 668.146(b)(6), 
(c)(1), (c)(2), and (c)(4); and
    (2) The test publisher must recommend a passing score based on the 
mean score of test takers beyond the age of compulsory school attendance 
who completed U.S. high school equivalency programs, formal training 
programs, or bilingual vocational programs.


Approved by the Office of Management and Budget under control number 
1845-0049)

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



Sec. 668.149  Special provisions for the approval of assessment
procedures for individuals with disabilities.

    If no test is reasonably available for individuals with disabilities 
so that no test can be approved under Secs. 668.146 or 668.148 for these 
individuals, the following procedures apply:

[[Page 624]]

    (a) The Secretary considers a modified test or testing procedure, or 
instrument that has been scientifically developed specifically for the 
purpose of evaluating the ability to benefit from postsecondary training 
or education of individuals with disabilities to be an approved test for 
purposes of this subpart provided that the testing procedure or 
instrument measures both basic verbal and quantitative skills at the 
secondary school level.
    (b) The Secretary considers the passing scores for these testing 
procedures or instruments to be those recommended by the test publisher 
or State, as applicable.
    (c) The test publisher or State, as applicable, must--
    (1) Maintain appropriate documentation, including a description of 
the procedures or instruments, their content domains, technical 
properties, and scoring procedures; and
    (2) Require the test administrator to--
    (i) Use the procedures or instruments in accordance with 
instructions provided by the test publisher or State, as applicable; and
    (ii) Use the passing scores recommended by the test publisher or 
State, as applicable.


Approved by the Office of Management and Budget under control number 
1845-0049)


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



Sec. 668.150  Agreement between the Secretary and a test publisher or a State.

    (a) If the Secretary approves a test under this subpart, the test 
publisher or the State that submitted the test must enter into an 
agreement with the Secretary that contains the provisions set forth in 
paragraph (b) of this section before an institution may use the test to 
determine a student's eligibility for title IV, HEA program funds.
    (b) The agreement between a test publisher or a State, as 
applicable, and the Secretary provides that the test publisher or the 
State, as applicable, must--
    (1) Allow only test administrators that it certifies to give its 
test;
    (2) Require each test administrator it certifies to--
    (i) Provide the test publisher or the State, as applicable, with a 
certification statement that indicates he or she is not currently 
decertified; and
    (ii) Notify the test publisher or the State, as applicable, 
immediately if any other test publisher or State decertifies the test 
administrator;
    (3) Only certify test administrators who--
    (i) Have the necessary training, knowledge, and skill to test 
students in accordance with the test publisher's or the State's testing 
requirements;
    (ii) Have the ability and facilities to keep its test secure against 
disclosure or release; and
    (iii) Have not been decertified within the last three years by any 
test publisher or State;
    (4) Decertify a test administrator for a period of three years if 
the test publisher or the State finds that the test administrator--
    (i) Has failed to give its test in accordance with the test 
publisher's or the State's instructions;
    (ii) Has not kept the test secure;
    (iii) Has compromised the integrity of the testing process; or
    (iv) Has given the test in violation of the provisions contained in 
Sec. 668.151;
    (5) Reevaluate the qualifications of a test administrator who has 
been decertified by another test publisher or State and determine 
whether to continue the test administrator's certification or to 
decertify the test administrator;
    (6) Immediately notify the test administrator, the Secretary, and 
the institutions where the test administrator previously administered 
approved tests when the test publisher or the State decertifies a test 
administrator;
    (7)(i) Review the test results of the tests administered by a 
decertified test administrator and determine which tests may have been 
improperly administered during the five (5) year period preceding the 
date of decertification;
    (ii) Immediately notify the affected institutions and students or 
prospective students; and
    (iii) Provide a report to the Secretary on the results of the review 
and the notifications provided to institutions and students or 
prospective students;

[[Page 625]]

    (8) Report to the Secretary if the test publisher or the State 
certifies a previously decertified test administrator after the three 
year period specified in paragraph (b)(4) of this section;
    (9) Score a test answer sheet that it receives from a test 
administrator;
    (10) If a computer-based test is used, provide the test 
administrator with software that will--
    (i) Immediately generate a score report for each test taker;
    (ii) Allow the test administrator to send to the test publisher or 
the State, as applicable, a record of the test taker's performance on 
each test item and the test taker's test scores using a data transfer 
method that is encrypted and secure; and
    (iii) Prohibit any changes in test taker responses or test scores;
    (11) Promptly send to the student and the institution the student 
indicated he or she is attending or scheduled to attend a notice stating 
the student's score for the test and whether or not the student passed 
the test;
    (12) Keep each test answer sheet or electronic record forwarded for 
scoring and all other documents forwarded by the test administrator with 
regard to the test for a period of three years from the date the 
analysis of the tests results, described in paragraph (b)(13) of this 
section, was sent to the Secretary;
    (13) Analyze the test scores of students who take the test to 
determine whether the test scores and data produce any irregular pattern 
that raises an inference that the tests were not being properly 
administered, and provide the Secretary with a copy of this analysis 
within 18 months after the test was approved and every 18 months 
thereafter during the period of test approval;
    (14) Upon request, give the Secretary, a State agency, an 
accrediting agency, and law enforcement agencies access to test records 
or other documents related to an audit, investigation, or program review 
of an institution, the test publisher, or a test administrator;
    (15) Immediately report to the Secretary if the test publisher or 
the State finds any credible information indicating that a test has been 
compromised;
    (16) Immediately report to the Office of Inspector General of the 
Department of Education for investigation if the test publisher or the 
State finds any credible information indicating that a test 
administrator or institution may have engaged in civil or criminal 
fraud, or other misconduct; and
    (17) Require a test administrator who provides a test to an 
individual with a disability who requires an accommodation in the test's 
administration to report to the test publisher or the State within the 
time period specified in Sec. 668.151(b)(2) or Sec. 668.152(b)(2), as 
applicable, the nature of the disability and the accommodations that 
were provided.
    (c)(1) The Secretary may terminate an agreement with a test 
publisher or a State, as applicable, if the test publisher or the State 
fails to carry out the terms of the agreement described in paragraph (b) 
of this section.
    (2) Before terminating the agreement, the Secretary gives the test 
publisher or the State, as applicable, the opportunity to show that it 
has not failed to carry out the terms of its agreement.
    (3) If the Secretary terminates an agreement with a test publisher 
or a State under this section, the Secretary publishes a notice in the 
Federal Register specifying when institutions may no longer use the test 
publisher's or the State's test(s) for purposes of determining a 
student's eligibility for title IV, HEA program funds.


Approved by the Office of Management and Budget under control number 
1845-0049)


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



Sec. 668.151  Administration of tests.

    (a)(1) To establish a student's eligibility for title IV, HEA 
program funds under this subpart, an institution must select a test 
administrator to give an approved test.
    (2) An institution may use the results of an approved test it 
received from an approved test publisher or assessment center to 
determine a student's eligibility to receive title IV, HEA program funds 
if the test was independently administered and properly administered in 
accordance with this subpart.

[[Page 626]]

    (b) The Secretary considers that a test is independently 
administered if the test is--
    (1) Given at an assessment center by a certified test administrator 
who is an employee of the center; or
    (2) Given by an independent test administrator who maintains the 
test at a secure location and submits the test for scoring by the test 
publisher or the State or, for a computer-based test, a record of the 
test scores, within two business days of administering the test.
    (c) The Secretary considers that a test is not independently 
administered if an institution--
    (1) Compromises test security or testing procedures;
    (2) Pays a test administrator a bonus, commission, or any other 
incentive based upon the test scores or pass rates of its students who 
take the test; or
    (3) Otherwise interferes with the test administrator's independence 
or test administration.
    (d) The Secretary considers that a test is properly administered if 
the test administrator--
    (1) Is certified by the test publisher or the State, as applicable, 
to give the test publisher's or the State's test;
    (2) Administers the test in accordance with instructions provided by 
the test publisher or the State, as applicable, and in a manner that 
ensures the integrity and security of the test;
    (3) Makes the test available only to a test-taker, and then only 
during a regularly scheduled test;
    (4) Secures the test against disclosure or release; and
    (5) Submits the completed test or, for a computer-based test, a 
record of test scores, to the test publisher or the State, as 
applicable, within the time period specified in Sec. 668.152(b) or 
paragraph (b)(2) of this section, as appropriate, and in accordance with 
the test publisher's or the State's instructions.
    (e) An independent test administrator may not score a test.
    (f) An individual who fails to pass a test approved under this 
subpart may not retake the same form of the test for the period 
prescribed by the test publisher or the State responsible for the test.
    (g) An institution must maintain a record for each individual who 
took a test under this subpart. The record must include--
    (1) The test taken by the individual;
    (2) The date of the test;
    (3) The individual's scores as reported by the test publisher, an 
assessment center, or the State;
    (4) The name and address of the test administrator who administered 
the test and any identifier assigned to the test administrator by the 
test publisher or the State; and
    (5) If the individual who took the test is an individual with a 
disability and was unable to be evaluated by the use of an approved ATB 
test or the individual requested or required testing accommodations, 
documentation of the individual's disability and of the testing 
arrangements provided in accordance with Sec. 668.153(b).

(Approved by the Office of Management and Budget under control number 
1845-0049)

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



Sec. 668.152  Administration of tests by assessment centers.

    (a) If a test is given by an assessment center, the assessment 
center must properly administer the test as described in 
Sec. 668.151(d), and Sec. 668.153, if applicable.
    (b)(1) Unless an agreement between a test publisher or a State, as 
applicable, and an assessment center indicates otherwise, an assessment 
center scores the tests it gives and promptly notifies the institution 
and the student of the student's score on the test and whether the 
student passed the test.
    (2) If the assessment center scores the test, it must provide weekly 
to the test publisher or the State, as applicable--
    (i) All copies of the completed test, including the name and address 
of the test administrator who administered the test and any identifier 
assigned to the test administrator by the test publisher or the State, 
as applicable; or
    (ii) A report listing all test-takers' scores and institutions to 
which the scores were sent and the name and address of the test 
administrator who administered the test and any identifier assigned to 
the test administrator by

[[Page 627]]

the test publisher or the State, as applicable.

(Approved by the Office of Management and Budget under control number 
1845-0049)

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



Sec. 668.153  Administration of tests for individuals whose native
language is not English or for individuals with disabilities.

    (a) Individuals whose native language is not English. For an 
individual whose native language is not English and who is not fluent in 
English, the institution must use the following tests, as applicable:
    (1) If the individual is enrolled or plans to enroll in a program 
conducted entirely in his or her native language, the individual must 
take a test approved under Secs. 668.146 and 668.148(a)(1).
    (2) If the individual is enrolled or plans to enroll in a program 
that is taught in English with an ESL component, the individual must 
take an English language proficiency assessment approved under 
Sec. 668.148(b) and, before beginning the portion of the program taught 
in English, a test approved under Sec. 668.146.
    (3) If the individual is enrolled or plans to enroll in a program 
that is taught in English without an ESL component, or the individual 
does not enroll in any ESL component offered, the individual must take a 
test in English approved under Sec. 668.146.
    (4) If the individual enrolls in an ESL program, the individual must 
take an ESL test approved under Sec. 668.148(b).
    (5) If the individual enrolls or plans to enroll in a program that 
is taught in the student's native language that either has an ESL 
component or a portion of the program will be taught in English, the 
individual must take an English proficiency test approved under 
Sec. 668.148(b) prior to beginning the portion of the program taught in 
English.
    (b) Individuals with disabilities. (1) For an individual with a 
disability who has neither a high school diploma nor its equivalent and 
who is applying for title IV, HEA program funds and seeks to show his or 
her ability to benefit through the testing procedures in this subpart, 
an institution must use a test described in Sec. 668.148(a)(2) or 
Sec. 668.149(a).
    (2) The test must reflect the individual's skills and general 
learned abilities.
    (3) The test administrator must ensure that there is documentation 
to support the determination that the individual is an individual with a 
disability and requires accommodations--such as extra time or a quiet 
room--for taking an approved test, or is unable to be evaluated by the 
use of an approved ATB test.
    (4) Documentation of an individual's disability may be satisfied 
by--
    (i) A written determination, including a diagnosis and information 
about testing accommodations, if such accommodation information is 
available, by a licensed psychologist or physician; or
    (ii) A record of the disability from a local or State educational 
agency, or other government agency, such as the Social Security 
Administration or a vocational rehabilitation agency, that identifies 
the individual's disability. This record may, but is not required to, 
include a diagnosis and recommended testing accommodations.

(Approved by the Office of Management and Budget under control number 
1845-0049)

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



Sec. 668.154  Institutional accountability.

    An institution is liable for the title IV, HEA program funds 
disbursed to a student whose eligibility is determined under this 
subpart only if--
    (a) The institution used a test that was not administered 
independently, in accordance with Sec. 668.151(b);
    (b) The institution or an employee of the institution compromised 
the testing process in any way; or
    (c) The institution is unable to document that the student received 
a passing score on an approved test.

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



Sec. 668.155  [Reserved]



Sec. 668.156  Approved State process.

    (a)(1) A State that wishes the Secretary to consider its State 
process as an alternative to achieving a passing score on an approved, 
independently administered test for the purpose of determining a 
student's eligibility for

[[Page 628]]

title IV, HEA program funds must apply to the Secretary for approval of 
that process.
    (2) To be an approved State process, the State process does not have 
to include all the institutions located in that State, but must indicate 
which institutions are included.
    (b) The Secretary approves a State's process if--
    (1) The State administering the process can demonstrate that the 
students it admits under that process without a high school diploma or 
its equivalent, who enroll in participating institutions have a success 
rate as determined under paragraph (h) of this section that is within 95 
percent of the success rate of students with high school diplomas; and
    (2) The State's process satisfies the requirements contained in 
paragraphs (c) and (d) of this section.
    (c) A State process must require institutions participating in the 
process to provide each student they admit without a high school diploma 
or its recognized equivalent with the following services:
    (1) Orientation regarding the institution's academic standards and 
requirements, and student rights.
    (2) Assessment of each student's existing capabilities through means 
other than a single standardized test.
    (3) Tutoring in basic verbal and quantitative skills, if 
appropriate.
    (4) Assistance in developing educational goals.
    (5) Counseling, including counseling regarding the appropriate class 
level for that student given the student's individual's capabilities.
    (6) Follow-up by teachers and counselors regarding the student's 
classroom performance and satisfactory progress toward program 
completion.
    (d) A State process must--
    (1) Monitor on an annual basis each participating institution's 
compliance with the requirements and standards contained in the State's 
process;
    (2) Require corrective action if an institution is found to be in 
noncompliance with the State process requirements; and
    (3) Terminate an institution from the State process if the 
institution refuses or fails to comply with the State process 
requirements.
    (e)(1) The Secretary responds to a State's request for approval of 
its State's process within six months after the Secretary's receipt of 
that request. If the Secretary does not respond by the end of six 
months, the State's process is deemed to be approved.
    (2) An approved State process becomes effective for purposes of 
determining student eligibility for title IV, HEA program funds under 
this subpart--
    (i) On the date the Secretary approves the process; or
    (ii) Six months after the date on which the State submits the 
process to the Secretary for approval, if the Secretary neither approves 
nor disapproves the process during that six month period.
    (f) The Secretary approves a State process for a period not to 
exceed five years.
    (g)(1) The Secretary withdraws approval of a State process if the 
Secretary determines that the State process violated any terms of this 
section or that the information that the State submitted as a basis for 
approval of the State process was inaccurate.
    (2) The Secretary provides a State with the opportunity to contest a 
finding that the State process violated any terms of this section or 
that the information that the State submitted as a basis for approval of 
the State process was inaccurate.
    (h) The State must calculate the success rates as referenced in 
paragraph (b) of this section by--
    (1) Determining the number of students with high school diplomas 
who, during the applicable award year described in paragraph (i) of this 
section, enrolled in participating institutions and--
    (i) Successfully completed education or training programs;
    (ii) Remained enrolled in education or training programs at the end 
of that award year; or
    (iii) Successfully transferred to and remained enrolled in another 
institution at the end of that award year;
    (2) Determining the number of students with high school diplomas who

[[Page 629]]

enrolled in education or training programs in participating institutions 
during that award year;
    (3) Determining the number of students calculated in paragraph 
(h)(2) of this section who remained enrolled after subtracting the 
number of students who subsequently withdrew or were expelled from 
participating institutions and received a 100 percent refund of their 
tuition under the institutions' refund policies;
    (4) Dividing the number of students determined in paragraph (h)(1) 
of this section by the number of students determined in paragraph (h)(3) 
of this section;
    (5) Making the calculations described in paragraphs (h)(1) through 
(h)(4) of this section for students without a high school diploma or its 
recognized equivalent who enrolled in participating institutions.
    (i) For purposes of paragraph (h) of this section, the applicable 
award year is the latest complete award year for which information is 
available that immediately precedes the date on which the State requests 
the Secretary to approve its State process, except that the award year 
selected must be one of the latest two completed award years preceding 
that application date.

(Approved by the Office of Management and Budget under control number 
1845-0049)

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



                        Subpart K_Cash Management

    Source: 80 FR 67194, Oct. 30, 2015, unless otherwise noted.



Sec. 668.161  Scope and institutional responsibility.

    (a) General. (1) This subpart establishes the rules under which a 
participating institution requests, maintains, disburses, and otherwise 
manages title IV, HEA program funds.
    (2) As used in this subpart--
    (i) Access device means a card, code, or other means of access to a 
financial account, or any combination thereof, that may be used by a 
student to initiate electronic fund transfers;
    (ii) Day means a calendar day, unless otherwise specified;
    (iii) Depository account means an account at a depository 
institution described in 12 U.S.C. 461(b)(1)(A), or an account 
maintained by a foreign institution at a comparable depository 
institution that meets the requirements of Sec. 668.163(a)(1);
    (iv) EFT (Electronic Funds Transfer) means a transaction initiated 
electronically instructing the crediting or debiting of a financial 
account, or an institution's depository account. For purposes of 
transactions initiated by the Secretary, the term ``EFT'' includes all 
transactions covered by 31 CFR 208.2(f). For purposes of transactions 
initiated by or on behalf of an institution, the term ``EFT'' includes, 
from among the transactions covered by 31 CFR 208.2(f), only Automated 
Clearinghouse transactions;
    (v) Financial account means a student's or parent's checking or 
savings account, prepaid card account, or other consumer asset account 
held directly or indirectly by a financial institution;
    (vi) Financial institution means a bank, savings association, credit 
union, or any other person or entity that directly or indirectly holds a 
financial account belonging to a student, issues to a student an access 
device associated with a financial account, and agrees with the student 
to provide EFT services;
    (vii) Parent means the parent borrower of a Direct PLUS Loan;
    (viii) Student ledger account means a bookkeeping account maintained 
by an institution to record the financial transactions pertaining to a 
student's enrollment at the institution; and
    (ix) Title IV, HEA programs means the Federal Pell Grant, Iraq-
Afghanistan Service Grant, TEACH Grant, FSEOG, Federal Perkins Loan, 
FWS, and Direct Loan programs, and any other program designated by the 
Secretary.
    (b) Federal interest in title IV, HEA program funds. Except for 
funds provided by the Secretary for administrative expenses, and for 
funds used for the Job Location and Development Program under 20 CFR 
part 675, subpart B, funds received by an institution under the title 
IV, HEA programs are held in trust for the intended beneficiaries or the 
Secretary. The institution, as a trustee of those funds, may

[[Page 630]]

not use or hypothecate (i.e., use as collateral) the funds for any other 
purpose or otherwise engage in any practice that risks the loss of those 
funds.
    (c) Standard of conduct. An institution must exercise the level of 
care and diligence required of a fiduciary with regard to managing title 
IV, HEA program funds under this subpart.



Sec. 668.162  Requesting funds.

    (a) General. The Secretary has sole discretion to determine the 
method under which the Secretary provides title IV, HEA program funds to 
an institution. In accordance with procedures established by the 
Secretary, the Secretary may provide funds to an institution under the 
advance payment method, reimbursement payment method, or heightened cash 
monitoring payment method.
    (b) Advance payment method. (1) Under the advance payment method, an 
institution submits a request for funds to the Secretary. The 
institution's request may not exceed the amount of funds the institution 
needs immediately for disbursements the institution has made or will 
make to eligible students and parents.
    (2) If the Secretary accepts that request, the Secretary initiates 
an EFT of that amount to the depository account designated by the 
institution.
    (3) The institution must disburse the funds requested as soon as 
administratively feasible but no later than three business days 
following the date the institution received those funds.
    (c) Reimbursement payment method. (1) Under the reimbursement 
payment method, an institution must credit a student's ledger account 
for the amount of title IV, HEA program funds that the student or parent 
is eligible to receive, and pay the amount of any credit balance due 
under Sec. 668.164(h), before the institution seeks reimbursement from 
the Secretary for those disbursements.
    (2) An institution seeks reimbursement by submitting to the 
Secretary a request for funds that does not exceed the amount of the 
disbursements the institution has made to students or parents included 
in that request.
    (3) As part of its reimbursement request, the institution must--
    (i) Identify the students or parents for whom reimbursement is 
sought; and
    (ii) Submit to the Secretary, or an entity approved by the 
Secretary, documentation that shows that each student or parent included 
in the request was--
    (A) Eligible to receive and has received the title IV, HEA program 
funds for which reimbursement is sought; and
    (B) Paid directly any credit balance due under Sec. 668.164(h).
    (4) The Secretary will not approve the amount of the institution's 
reimbursement request for a student or parent and will not initiate an 
EFT of that amount to the depository account designated by the 
institution, if the Secretary determines with regard to that student or 
parent, and in the judgment of the Secretary, that the institution has 
not--
    (i) Accurately determined the student's or parent's eligibility for 
title IV, HEA program funds;
    (ii) Accurately determined the amount of title IV, HEA program funds 
disbursed, including the amount paid directly to the student or parent; 
and
    (iii) Submitted the documentation required under paragraph (c)(3) of 
this section.
    (d) Heightened cash monitoring payment method. Under the heightened 
cash monitoring payment method, an institution must credit a student's 
ledger account for the amount of title IV, HEA program funds that the 
student or parent is eligible to receive, and pay the amount of any 
credit balance due under Sec. 668.164(h), before the institution--
    (1) Submits a request for funds under the provisions of the advance 
payment method described in paragraphs (b)(1) and (2) of this section, 
except that the institution's request may not exceed the amount of the 
disbursements the institution has made to the students included in that 
request; or
    (2) Seeks reimbursement for those disbursements under the provisions 
of the reimbursement payment method described in paragraph (c) of this 
section, except that the Secretary may

[[Page 631]]

modify the documentation requirements and review procedures used to 
approve the reimbursement request.



Sec. 668.163  Maintaining and accounting for funds.

    (a)(1) Institutional depository account. An institution must 
maintain title IV, HEA program funds in a depository account. For an 
institution located in a State, the depository account must be insured 
by the FDIC or NCUA. For a foreign institution, the depository account 
may be insured by the FDIC or NCUA, or by an equivalent agency of the 
government of the country in which the institution is located. If there 
is no equivalent agency, the Secretary may approve a depository account 
designated by the foreign institution.
    (2) For each depository account that includes title IV, HEA program 
funds, an institution located in a State must clearly identify that 
title IV, HEA program funds are maintained in that account by--
    (i) Including in the name of each depository account the phrase 
``Federal Funds''; or
    (ii)(A) Notifying the depository institution that the depository 
account contains title IV, HEA program funds that are held in trust and 
retaining a record of that notice; and
    (B) Except for a public institution located in a State or a foreign 
institution, filing with the appropriate State or municipal government 
entity a UCC-1 statement disclosing that the depository account contains 
Federal funds and maintaining a copy of that statement.
    (b) Separate depository account. The Secretary may require an 
institution to maintain title IV, HEA program funds in a separate 
depository account that contains no other funds if the Secretary 
determines that the institution failed to comply with--
    (1) The requirements in this subpart;
    (2) The recordkeeping and reporting requirements in subpart B of 
this part; or
    (3) Applicable program regulations.
    (c) Interest-bearing depository account. (1) An institution located 
in a State is required to maintain its title IV, HEA program funds in an 
interest-bearing depository account, except as provided in 2 CFR 
200.305(b)(8).
    (2) Any interest earned on Federal Perkins Loan program funds is 
retained by the institution as provided under 34 CFR 674.8(a).
    (3) An institution may keep the initial $500 in interest it earns 
during the award year on other title IV, HEA program funds it maintains 
in accordance with paragraph (c)(1) of this section. No later than 30 
days after the end of that award year, the institution must remit to the 
Department of Health and Human Services, Payment Management System, 
Rockville, MD 20852, any interest over $500.
    (d) Accounting and fiscal records. An institution must--
    (1) Maintain accounting and internal control systems that identify 
the cash balance of the funds of each title IV, HEA program that are 
included in the institution's depository account or accounts as readily 
as if those funds were maintained in a separate depository account;
    (2) Identify the earnings on title IV, HEA program funds maintained 
in the institution's depository account or accounts; and
    (3) Maintain its fiscal records in accordance with the provisions in 
Sec. 668.24.



Sec. 668.164  Disbursing funds.

    (a) Disbursement. (1) Except as provided under paragraph (a)(2) of 
this section, a disbursement of title IV, HEA program funds occurs on 
the date that the institution credits the student's ledger account or 
pays the student or parent directly with--
    (i) Funds received from the Secretary; or
    (ii) Institutional funds used in advance of receiving title IV, HEA 
program funds.
    (2)(i) For a Direct Loan for which the student is subject to the 
delayed disbursement requirements under 34 CFR 685.303(b)(5), if an 
institution credits a student's ledger account with institutional funds 
earlier than 30 days after the beginning of a payment period, the 
Secretary considers that the institution makes that disbursement on the 
30th day after the beginning of the payment period; or

[[Page 632]]

    (ii) If an institution credits a student's ledger account with 
institutional funds earlier than 10 days before the first day of classes 
of a payment period, the Secretary considers that the institution makes 
that disbursement on the 10th day before the first day of classes of a 
payment period.
    (b) Disbursements by payment period. (1) Except for paying a student 
under the FWS program or unless 34 CFR 685.303(d)(4)(i) applies, an 
institution must disburse during the current payment period the amount 
of title IV, HEA program funds that a student enrolled at the 
institution, or the student's parent, is eligible to receive for that 
payment period.
    (2) An institution may make a prior year, late, or retroactive 
disbursement, as provided under paragraph (c)(3), (j), or (k) of this 
section, respectively, during the current payment period as long as the 
student was enrolled and eligible during the payment period covered by 
that prior year, late, or retroactive disbursement.
    (3) At the time a disbursement is made to a student for a payment 
period, an institution must confirm that the student is eligible for the 
type and amount of title IV, HEA program funds identified by that 
disbursement. A third-party servicer is also responsible for confirming 
the student's eligibility if the institution engages the servicer to 
perform activities or transactions that lead to or support that 
disbursement. Those activities and transactions include but are not 
limited to--
    (i) Determining the type and amount of title IV, HEA program funds 
that a student is eligible to receive;
    (ii) Requesting funds under a payment method described in 
Sec. 668.162; or
    (iii) Accounting for funds that are originated, requested, or 
disbursed, in reports or data submissions to the Secretary.
    (c) Crediting a student's ledger account. (1) An institution may 
credit a student's ledger account with title IV, HEA program funds to 
pay for allowable charges associated with the current payment period. 
Allowable charges are--
    (i) The amount of tuition, fees, and institutionally provided room 
and board assessed the student for the payment period or, as provided in 
paragraph (c)(5) of this section, the prorated amount of those charges 
if the institution debits the student's ledger account for more than the 
charges associated with the payment period; and
    (ii) The amount incurred by the student for the payment period for 
purchasing books, supplies, and other educationally related goods and 
services provided by the institution for which the institution obtains 
the student's or parent's authorization under Sec. 668.165(b).
    (2) An institution may include the costs of books and supplies as 
part of tuition and fees under paragraph (c)(1)(i) of this section if --
    (i) The institution--
    (A) Has an arrangement with a book publisher or other entity that 
enables it to make those books or supplies available to students below 
competitive market rates;
    (B) Provides a way for a student to obtain those books and supplies 
by the seventh day of a payment period; and
    (C) Has a policy under which the student may opt out of the way the 
institution provides for the student to obtain books and supplies under 
this paragraph (c)(2). A student who opts out under this paragraph 
(c)(2) is considered to also opt out under paragraph (m)(3) of this 
section;
    (ii) The institution documents on a current basis that the books or 
supplies, including digital or electronic course materials, are not 
available elsewhere or accessible by students enrolled in that program 
from sources other than those provided or authorized by the institution; 
or
    (iii) The institution demonstrates there is a compelling health or 
safety reason.
    (3)(i) An institution may include in one or more payment periods for 
the current year, prior year charges of not more than $200 for--
    (A) Tuition, fees, and institutionally provided room and board, as 
provided under paragraph (c)(1)(i) of this section, without obtaining 
the student's or parent's authorization; and
    (B) Educationally related goods and services provided by the 
institution, as described in paragraph (c)(1)(ii) of this section, if 
the institution obtains the

[[Page 633]]

student's or parent's authorization under Sec. 668.165(b).
    (ii) For purposes of this section--
    (A) The current year is--
    (1) The current loan period for a student or parent who receives 
only a Direct Loan;
    (2) The current award year for a student who does not receive a 
Direct Loan but receives funds under any other title IV, HEA program; or
    (3) At the discretion of the institution, either the current loan 
period or the current award year if a student receives a Direct Loan and 
funds from any other title IV, HEA program.
    (B) A prior year is any loan period or award year prior to the 
current loan period or award year, as applicable.
    (4) An institution may include in the current payment period unpaid 
allowable charges from any previous payment period in the current award 
year or current loan period for which the student was eligible for title 
IV, HEA program funds.
    (5) For purposes of this section, an institution determines the 
prorated amount of charges associated with the current payment period 
by--
    (i) For a program with substantially equal payment periods, dividing 
the total institutional charges for the program by the number of payment 
periods in the program; or
    (ii) For other programs, dividing the number of credit or clock 
hours in the current payment period by the total number of credit or 
clock hours in the program, and multiplying that result by the total 
institutional charges for the program.
    (d) Direct payments. (1) Except as provided under paragraph (d)(3) 
of this section, an institution makes a direct payment--
    (i) To a student, for the amount of the title IV, HEA program funds 
that a student is eligible to receive, including Direct PLUS Loan funds 
that the student's parent authorized the student to receive, by--
    (A) Initiating an EFT of that amount to the student's financial 
account;
    (B) Issuing a check for that amount payable to, and requiring the 
endorsement of, the student; or
    (C) Dispensing cash for which the institution obtains a receipt 
signed by the student;
    (ii) To a parent, for the amount of the Direct PLUS Loan funds that 
a parent does not authorize the student to receive, by--
    (A) Initiating an EFT of that amount to the parent's financial 
account;
    (B) Issuing a check for that amount payable to and requiring the 
endorsement of the parent; or
    (C) Dispensing cash for which the institution obtains a receipt 
signed by the parent.
    (2) Issuing a check. An institution issues a check on the date that 
it--
    (i) Mails the check to the student or parent; or
    (ii) Notifies the student or parent that the check is available for 
immediate pick-up at a specified location at the institution. The 
institution may hold the check for no longer than 21 days after the date 
it notifies the student or parent. If the student or parent does not 
pick up the check, the institution must immediately mail the check to 
the student or parent, pay the student or parent directly by other 
means, or return the funds to the appropriate title IV, HEA program.
    (3) Payments by the Secretary. The Secretary may pay title IV, HEA 
credit balances under paragraphs (h) and (m) of this section directly to 
a student or parent using a method established or authorized by the 
Secretary and published in the Federal Register.
    (4) Student choice. (i) An institution located in a State that makes 
direct payments to a student by EFT and that enters into an arrangement 
described in paragraph (e) or (f) of this section, including an 
institution that uses a third-party servicer to make those payments, 
must establish a selection process under which the student chooses one 
of several options for receiving those payments.
    (A) In implementing its selection process, the institution must--
    (1) Inform the student in writing that he or she is not required to 
open or obtain a financial account or access device offered by or 
through a specific financial institution;

[[Page 634]]

    (2) Ensure that the student's options for receiving direct payments 
are described and presented in a clear, fact-based, and neutral manner;
    (3) Ensure that initiating direct payments by EFT to a student's 
existing financial account is as timely and no more onerous to the 
student as initiating an EFT to an account provided under an arrangement 
described in paragraph (e) or (f) of this section;
    (4) Allow the student to change, at any time, his or her previously 
selected payment option, as long as the student provides the institution 
with written notice of the change within a reasonable time;
    (5) Ensure that no account option is preselected; and
    (6) Ensure that a student who does not make an affirmative selection 
is paid the full amount of the credit balance within the appropriate 
time-period specified in paragraph (h)(2) of this section, using a 
method specified in paragraph (d)(1) of this section.
    (B) In describing the options under its selection process, the 
institution--
    (1) Must present prominently as the first option, the financial 
account belonging to the student;
    (2) Must list and identify the major features and commonly assessed 
fees associated with each financial account offered under the 
arrangements described in paragraphs (e) and (f) of this section, as 
well as a URL for the terms and conditions of each account. For each 
account, if an institution by July 1, 2017 follows the format, content, 
and update requirements specified by the Secretary in a notice published 
in the Federal Register following consultation with the Bureau of 
Consumer Financial Protection, it will be in compliance with the 
requirements of this paragraph with respect to the major features and 
assessed fees associated with the account; and
    (3) May provide, for the benefit of the student, information about 
available financial accounts other than those described in paragraphs 
(e) and (f) of this section that have deposit insurance under 12 CFR 
part 330, or share insurance in accordance with 12 CFR part 745.
    (ii) An institution that does not offer or use any financial 
accounts offered under paragraph (e) or (f) of this section may make 
direct payments to a student's or parent's existing financial account, 
or issue a check or disburse cash to the student or parent without 
establishing the selection process described in paragraph (d)(4)(i) of 
this section.
    (e) Tier one arrangement. (1) In a Tier one (T1) arrangement--
    (i) An institution located in a State has a contract with a third-
party servicer under which the servicer performs one or more of the 
functions associated with processing direct payments of title IV, HEA 
program funds on behalf of the institution; and
    (ii) The institution or third-party servicer makes payments to--
    (A) One or more financial accounts that are offered to students 
under the contract;
    (B) A financial account where information about the account is 
communicated directly to students by the third-party servicer, or the 
institution on behalf of or in conjunction with the third-party 
servicer; or
    (C) A financial account where information about the account is 
communicated directly to students by an entity contracting with or 
affiliated with the third-party servicer.
    (2) Under a T1 arrangement, the institution must--
    (i) Ensure that the student's consent to open the financial account 
is obtained before an access device, or any representation of an access 
device, is sent to the student, except that an institution may send the 
student an access device that is a card provided to the student for 
institutional purposes, such as a student ID card, so long as the 
institution or financial institution obtains the student's consent 
before validating the device to enable the student to access the 
financial account;
    (ii) Ensure that any personally identifiable information about a 
student that is shared with the third-party servicer before the student 
makes a selection under paragraph (d)(4)(i) of this section--
    (A) Does not include information about the student, other than 
directory information under 34 CFR 99.3 that is disclosed pursuant to 34 
CFR 99.31(a)(11) and 99.37, beyond--

[[Page 635]]

    (1) A unique student identifier generated by the institution that 
does not include a Social Security number, in whole or in part;
    (2) The disbursement amount;
    (3) A password, PIN code, or other shared secret provided by the 
institution that is used to identify the student; or
    (4) Any additional items specified by the Secretary in a notice 
published in the Federal Register;
    (B) Is used solely for activities that support making direct 
payments to the student and not for any other purpose; and
    (C) Is not shared with any other affiliate or entity except for the 
purpose described in paragraph (e)(2)(ii)(B) of this section;
    (iii) Inform the student of the terms and conditions of the 
financial account, as required under paragraph (d)(4)(i)(B)(2) of this 
section, before the financial account is opened;
    (iv) Ensure that the student--
    (A) Has convenient access to the funds in the financial account 
through a surcharge-free national or regional Automated Teller Machine 
(ATM) network that has ATMs sufficient in number and housed and serviced 
such that title IV funds are reasonably available to students, including 
at the times the institution or its third-party servicer makes direct 
payments into the financial accounts of those students;
    (B) Does not incur any cost--
    (1) For opening the financial account or initially receiving an 
access device;
    (2) Assessed by the institution, third-party servicer, or a 
financial institution associated with the third-party servicer, when the 
student conducts point-of-sale transactions in a State; and
    (3) For conducting a balance inquiry or withdrawal of funds at an 
ATM in a State that belongs to the surcharge-free regional or national 
network;
    (v) Ensure that--
    (A) The financial account or access device is not marketed or 
portrayed as, or converted into, a credit card;
    (B) No credit is extended or associated with the financial account, 
and no fee is charged to the student for any transaction or withdrawal 
that exceeds the balance in the financial account or on the access 
device, except that a transaction or withdrawal that exceeds the balance 
may be permitted only for an inadvertently authorized overdraft, so long 
as no fee is charged to the student for such inadvertently authorized 
overdraft; and
    (C) The institution, third-party servicer, or third-party servicer's 
associated financial institution provides a student accountholder 
convenient access to title IV, HEA program funds in part and in full up 
to the account balance via domestic withdrawals and transfers without 
charge, during the student's entire period of enrollment following the 
date that such title IV, HEA program funds are deposited or transferred 
to the financial account;
    (vi) No later than September 1, 2016, and then no later than 60 days 
following the most recently completed award year thereafter, disclose 
conspicuously on the institution's Web site the contract(s) establishing 
the T1 arrangement between the institution and third-party servicer or 
financial institution acting on behalf of the third-party servicer, as 
applicable, except for any portions that, if disclosed, would compromise 
personal privacy, proprietary information technology, or the security of 
information technology or of physical facilities;
    (vii) No later than September 1, 2017, and then no later than 60 
days following the most recently completed award year thereafter, 
disclose conspicuously on the institution's Web site and in a format 
established by the Secretary--
    (A) The total consideration for the most recently completed award 
year, monetary and non-monetary, paid or received by the parties under 
the terms of the contract; and
    (B) For any year in which the institution's enrolled students open 
30 or more financial accounts under the T1 arrangement, the number of 
students who had financial accounts under the contract at any time 
during the most recently completed award year, and the mean and median 
of the actual costs incurred by those account holders;
    (viii) Provide to the Secretary an up-to-date URL for the contract 
and contract data as described in paragraph (e)(2)(vii) of this section 
for publication

[[Page 636]]

in a centralized database accessible to the public;
    (ix) Ensure that the terms of the accounts offered pursuant to a T1 
arrangement are not inconsistent with the best financial interests of 
the students opening them. The Secretary considers this requirement to 
be met if--
    (A) The institution documents that it conducts reasonable due 
diligence reviews at least every two years to ascertain whether the fees 
imposed under the T1 arrangement are, considered as a whole, consistent 
with or below prevailing market rates; and
    (B) All contracts for the marketing or offering of accounts pursuant 
to T1 arrangements to the institution's students make provision for 
termination of the arrangement by the institution based on complaints 
received from students or a determination by the institution under 
paragraph (e)(2)(ix)(A) of this section that the fees assessed under the 
T1 arrangement are not consistent with or are higher than prevailing 
market rates; and
    (x) Take affirmative steps, by way of contractual arrangements with 
the third-party servicer as necessary, to ensure that requirements of 
this section are met with respect to all accounts offered pursuant to T1 
arrangements.
    (3) Except for paragraphs (e)(2)(ii)(B) and (C) of this section, the 
requirements of paragraph (e)(2) of this section no longer apply to a 
student who has an account described under paragraph (e)(1) of this 
section when the student is no longer enrolled at the institution and 
there are no pending title IV disbursements for that student, except 
that nothing in this paragraph (e)(3) should be construed to limit the 
institution's responsibility to comply with paragraph (e)(2)(vii) of 
this section with respect to students enrolled during the award year for 
which the institution is reporting. To effectuate this provision, an 
institution may share information related to students' enrollment status 
with the servicer or entity that is party to the arrangement.
    (f) Tier two arrangement. (1) In a Tier two (T2) arrangement, an 
institution located in a State has a contract with a financial 
institution, or entity that offers financial accounts through a 
financial institution, under which financial accounts are offered and 
marketed directly to students enrolled at the institution.
    (2) Under a T2 arrangement, an institution must--
    (i) Comply with the requirements described in paragraphs (d)(4)(i), 
(f)(4)(i) through (iii), (vii), and (ix) through (xi), and (f)(5) of 
this section if it has at least one student with a title IV credit 
balance in each of the three most recently completed award years, but 
has less than the number and percentage of students with credit balances 
as described in paragraphs (f)(2)(ii)(A) and (B) of this section; and
    (ii) Comply with the requirements specified in paragraphs (d)(4)(i), 
(f)(4), and (f)(5) of this section if, for the three most recently 
completed award years--
    (A) An average of 500 or more of its students had a title IV credit 
balance; or
    (B) An average of five percent or more of the students enrolled at 
the institution had a title IV credit balance. The institution 
calculates this percentage as follows:

The average number of students with credit balances for the three most 
          recently completed award years
The average number of students enrolled at the institution at any time 
          during the three most recently completed award years.

    (3) The Secretary considers that a financial account is marketed 
directly if--
    (i) The institution communicates information directly to its 
students about the financial account and how it may be opened;
    (ii) The financial account or access device is cobranded with the 
institution's name, logo, mascot, or other affiliation and is marketed 
principally to students at the institution; or
    (iii) A card or tool that is provided to the student for 
institutional purposes, such as a student ID card, is validated, 
enabling the student to use the device to access a financial account.
    (4) Under a T2 arrangement, the institution must--

[[Page 637]]

    (i) Ensure that the student's consent to open the financial account 
has been obtained before--
    (A) The institution provides, or permits a third-party servicer to 
provide, any personally identifiable information about the student to 
the financial institution or its agents, other than directory 
information under 34 CFR 99.3 that is disclosed pursuant to 34 CFR 
99.31(a)(11) and 99.37;
    (B) An access device, or any representation of an access device, is 
sent to the student, except that an institution may send the student an 
access device that is a card provided to the student for institutional 
purposes, such as a student ID card, so long as the institution or 
financial institution obtains the student's consent before validating 
the device to enable the student to access the financial account;
    (ii) Inform the student of the terms and conditions of the financial 
account as required under paragraph (d)(4)(i)(B)(2) of this section, 
before the financial account is opened;
    (iii) No later than September 1, 2016, and then no later than 60 
days following the most recently completed award year thereafter--
    (A) Disclose conspicuously on the institution's Web site the 
contract(s) establishing the T2 arrangement between the institution and 
financial institution in its entirety, except for any portions that, if 
disclosed, would compromise personal privacy, proprietary information 
technology, or the security of information technology or of physical 
facilities; and
    (B) Provide to the Secretary an up-to-date URL for the contract for 
publication in a centralized database accessible to the public;
    (iv) No later than September 1, 2017, and then no later than 60 days 
following the most recently completed award year thereafter, disclose 
conspicuously on the institution's Web site and in a format established 
by the Secretary--
    (A) The total consideration for the most recently completed award 
year, monetary and non-monetary, paid or received by the parties under 
the terms of the contract; and
    (B) For any year in which the institution's enrolled students open 
30 or more financial accounts marketed under the T2 arrangement, the 
number of students who had financial accounts under the contract at any 
time during the most recently completed award year, and the mean and 
median of the actual costs incurred by those account holders;
    (v) Ensure that the items under paragraph (f)(4)(iv) of this section 
are posted at the URL that is sent to the Secretary under paragraph 
(f)(4)(iii)(B) of this section for publication in a centralized database 
accessible to the public;
    (vi) Ensure that the student accountholder can execute balance 
inquiries and access funds deposited in the financial accounts through 
surcharge-free in-network ATMs sufficient in number and housed and 
serviced such that the funds are reasonably available to the 
accountholder, including at the times the institution or its third-party 
servicer makes direct payments into them;
    (vii) Ensure that the financial accounts are not marketed or 
portrayed as, or converted into, credit cards;
    (viii) Ensure that the terms of the accounts offered pursuant to a 
T2 arrangement are not inconsistent with the best financial interests of 
the students opening them. The Secretary considers this requirement to 
be met if--
    (A) The institution documents that it conducts reasonable due 
diligence reviews at least every two years to ascertain whether the fees 
imposed under the T2 arrangement are, considered as a whole, consistent 
with or below prevailing market rates; and
    (B) All contracts for the marketing or offering of accounts pursuant 
to T2 arrangements to the institution's students make provision for 
termination of the arrangement by the institution based on complaints 
received from students or a determination by the institution under 
paragraph (f)(4)(viii)(A) of this section that the fees assessed under 
the T2 arrangement are not consistent with or are above prevailing 
market rates;
    (ix) Take affirmative steps, by way of contractual arrangements with 
the financial institution as necessary, to ensure that requirements of 
this section

[[Page 638]]

are met with respect to all accounts offered pursuant to T2 
arrangements; and
    (x) Ensure students incur no cost for opening the account or 
initially receiving or validating an access device.
    (xi) If the institution enters into an agreement for the cobranding 
of a financial account with the institution's name, logo, mascot, or 
other affiliation but maintains that the account is not marketed 
principally to its enrolled students and is not otherwise marketed 
directly within the meaning of paragraph (f)(3) of this section, the 
institution must retain the cobranding contract and other documentation 
it believes establishes that the account is not marketed directly to its 
enrolled students, including documentation that the cobranded financial 
account or access device is offered generally to the public.
    (xii) Institutions falling below the thresholds described in 
paragraph (f)(2) of this section are encouraged to comply voluntarily 
with the applicable provisions of paragraphs (f)(4) and (f)(5) of this 
section.
    (5) The requirements of paragraph (f)(4) of this section no longer 
apply with respect to a student who has an account described under 
paragraph (f)(1) of this section when the student is no longer enrolled 
at the institution and there are no pending title IV disbursements, 
except that nothing in this paragraph should be construed to limit the 
institution's responsibility to comply with paragraph (f)(4)(iv) of this 
section with respect to students enrolled during the award year for 
which the institution is reporting. To effectuate this provision, an 
institution may share information related to students' enrollment status 
with the financial institution or entity that is party to the 
arrangement.
    (g) Ownership of financial accounts opened through outreach to an 
institution's students. Any financial account offered or marketed 
pursuant to an arrangement described in paragraph (e) or (f) of this 
section must meet the requirements of 31 CFR 210.5(a) or (b)(5), as 
applicable.
    (h) Title IV, HEA credit balances. (1) A title IV, HEA credit 
balance occurs whenever the amount of title IV, HEA program funds 
credited to a student's ledger account for a payment period exceeds the 
amount assessed the student for allowable charges associated with that 
payment period as provided under paragraph (c) of this section.
    (2) A title IV, HEA credit balance must be paid directly to the 
student or parent as soon as possible, but no later than--
    (i) Fourteen (14) days after the balance occurred if the credit 
balance occurred after the first day of class of a payment period; or
    (ii) Fourteen (14) days after the first day of class of a payment 
period if the credit balance occurred on or before the first day of 
class of that payment period.
    (i) Early disbursements. (1) Except as provided in paragraph (i)(2) 
of this section, the earliest an institution may disburse title IV, HEA 
funds to an eligible student or parent is--
    (i) If the student is enrolled in a credit-hour program offered in 
terms that are substantially equal in length, 10 days before the first 
day of classes of a payment period; or
    (ii) If the student is enrolled in a credit-hour program offered in 
terms that are not substantially equal in length, a non-term credit-hour 
program, or a clock-hour program, the later of--
    (A) Ten days before the first day of classes of a payment period; or
    (B) The date the student completed the previous payment period for 
which he or she received title IV, HEA program funds.
    (2) An institution may not--
    (i) Make an early disbursement of a Direct Loan to a first-year, 
first-time borrower who is subject to the 30-day delayed disbursement 
requirements in 34 CFR 685.303(b)(5). This restriction does not apply if 
the institution is exempt from the 30-day delayed disbursement 
requirements under 34 CFR 685.303(b)(5)(i)(A) or (B); or
    (ii) Compensate a student employed under the FWS program until the 
student earns that compensation by performing work, as provided in 34 
CFR 675.16(a)(5).
    (j) Late disbursements--(1) Ineligible student. For purposes of this 
paragraph

[[Page 639]]

(j), an otherwise eligible student becomes ineligible to receive title 
IV, HEA program funds on the date that--
    (i) For a Direct Loan, the student is no longer enrolled at the 
institution as at least a half-time student for the period of enrollment 
for which the loan was intended; or
    (ii) For an award under the Federal Pell Grant, FSEOG, Federal 
Perkins Loan, Iraq-Afghanistan Service Grant, and TEACH Grant programs, 
the student is no longer enrolled at the institution for the award year.
    (2) Conditions for a late disbursement. Except as limited under 
paragraph (j)(4) of this section, a student who becomes ineligible, as 
described in paragraph (j)(1) of this section, qualifies for a late 
disbursement (and the parent qualifies for a parent Direct PLUS Loan 
disbursement) if, before the date the student became ineligible--
    (i) The Secretary processed a SAR or ISIR with an official expected 
family contribution for the student for the relevant award year; and
    (ii)(A) For a loan made under the Direct Loan program or for an 
award made under the TEACH Grant program, the institution originated the 
loan or award; or
    (B) For an award under the Federal Perkins Loan or FSEOG programs, 
the institution made that award to the student.
    (3) Making a late disbursement. Provided that the conditions 
described in paragraph (j)(2) of this section are satisfied--
    (i) If the student withdrew from the institution during a payment 
period or period of enrollment, the institution must make any post-
withdrawal disbursement required under Sec. 668.22(a)(4) in accordance 
with the provisions of Sec. 668.22(a)(5);
    (ii) If the student completed the payment period or period of 
enrollment, the institution must provide the student or parent the 
choice to receive the amount of title IV, HEA program funds that the 
student or parent was eligible to receive while the student was enrolled 
at the institution. For a late disbursement in this circumstance, the 
institution may credit the student's ledger account as provided in 
paragraph (c) of this section, but must pay or offer any remaining 
amount to the student or parent; or
    (iii) If the student did not withdraw but ceased to be enrolled as 
at least a half-time student, the institution may make the late 
disbursement of a loan under the Direct Loan program to pay for 
educational costs that the institution determines the student incurred 
for the period in which the student or parent was eligible.
    (4) Limitations. (i) An institution may not make a late disbursement 
later than 180 days after the date the institution determines that the 
student withdrew, as provided in Sec. 668.22, or for a student who did 
not withdraw, 180 days after the date the student otherwise became 
ineligible, pursuant to paragraph (j)(1) of this section.
    (ii) An institution may not make a late second or subsequent 
disbursement of a loan under the Direct Loan program unless the student 
successfully completed the period of enrollment for which the loan was 
intended.
    (iii) An institution may not make a late disbursement of a Direct 
Loan if the student was a first-year, first-time borrower as described 
in 34 CFR 685.303(b)(5) unless the student completed the first 30 days 
of his or her program of study. This limitation does not apply if the 
institution is exempt from the 30-day delayed disbursement requirements 
under 34 CFR 685.303(b)(5)(i)(A) or (B).
    (iv) An institution may not make a late disbursement of any title 
IV, HEA program assistance unless it received a valid SAR or a valid 
ISIR for the student by the deadline date established by the Secretary 
in a notice published in the Federal Register.
    (k) Retroactive payments. If an institution did not make a 
disbursement to an enrolled student for a payment period the student 
completed (for example, because of an administrative delay or because 
the student's ISIR was not available until a subsequent payment period), 
the institution may pay the student for all prior payment periods in the 
current award year or loan period for which the student was eligible. 
For Pell Grant payments under this paragraph (k), the student's 
enrollment status must be determined according

[[Page 640]]

to work already completed, as required by 34 CFR 690.76(b).
    (l) Returning funds. (1) Notwithstanding any State law (such as a 
law that allows funds to escheat to the State), an institution must 
return to the Secretary any title IV, HEA program funds, except FWS 
program funds, that it attempts to disburse directly to a student or 
parent that are not received by the student or parent. For FWS program 
funds, the institution is required to return only the Federal portion of 
the payroll disbursement.
    (2) If an EFT to a student's or parent's financial account is 
rejected, or a check to a student or parent is returned, the institution 
may make additional attempts to disburse the funds, provided that those 
attempts are made not later than 45 days after the EFT was rejected or 
the check returned. In cases where the institution does not make another 
attempt, the funds must be returned to the Secretary before the end of 
this 45-day period.
    (3) If a check sent to a student or parent is not returned to the 
institution but is not cashed, the institution must return the funds to 
the Secretary no later than 240 days after the date it issued the check.
    (m) Provisions for books and supplies. (1) An institution must 
provide a way for a student who is eligible for title IV, HEA program 
funds to obtain or purchase, by the seventh day of a payment period, the 
books and supplies applicable to the payment period if, 10 days before 
the beginning of the payment period--
    (i) The institution could disburse the title IV, HEA program funds 
for which the student is eligible; and
    (ii) Presuming the funds were disbursed, the student would have a 
credit balance under paragraph (h) of this section.
    (2) The amount the institution provides to the student to obtain or 
purchase books and supplies is the lesser of the presumed credit balance 
under this paragraph or the amount needed by the student, as determined 
by the institution.
    (3) The institution must have a policy under which the student may 
opt out of the way the institution provides for the student to obtain or 
purchase books and supplies under this paragraph (m). A student who opts 
out under this paragraph is considered to also opt out under paragraph 
(c)(2)(i)(C) of this section;
    (4) If a student uses the method provided by the institution to 
obtain or purchase books and supplies under this paragraph, the student 
is considered to have authorized the use of title IV, HEA funds and the 
institution does not need to obtain a written authorization under 
paragraph (c)(1)(ii) of this section and Sec. 668.165(b) for this 
purpose.

[80 FR 67194, Oct. 30, 2015, as amended at 81 FR 20251, Apr. 7, 2016]



Sec. 668.165  Notices and authorizations.

    (a) Notices. (1) Before an institution disburses title IV, HEA 
program funds for any award year, the institution must notify a student 
of the amount of funds that the student or his or her parent can expect 
to receive under each title IV, HEA program, and how and when those 
funds will be disbursed. If those funds include Direct Loan program 
funds, the notice must indicate which funds are from subsidized loans, 
which are from unsubsidized loans, and which are from PLUS loans.
    (2) Except in the case of a post-withdrawal disbursement made in 
accordance with Sec. 668.22(a)(5), if an institution credits a student 
ledger account with Direct Loan, Federal Perkins Loan, or TEACH Grant 
program funds, the institution must notify the student or parent of--
    (i) The anticipated date and amount of the disbursement;
    (ii) The student's or parent's right to cancel all or a portion of 
that loan, loan disbursement, TEACH Grant, or TEACH Grant disbursement 
and have the loan proceeds or TEACH Grant proceeds returned to the 
Secretary; and
    (iii) The procedures and time by which the student or parent must 
notify the institution that he or she wishes to cancel the loan, loan 
disbursement, TEACH Grant, or TEACH Grant disbursement.
    (3) The institution must provide the notice described in paragraph 
(a)(2) of this section in writing--
    (i) No earlier than 30 days before, and no later than 30 days after, 
crediting

[[Page 641]]

the student's ledger account at the institution, if the institution 
obtains affirmative confirmation from the student under paragraph 
(a)(6)(i) of this section; or
    (ii) No earlier than 30 days before, and no later than seven days 
after, crediting the student's ledger account at the institution, if the 
institution does not obtain affirmative confirmation from the student 
under paragraph (a)(6)(i) of this section.
    (4)(i) A student or parent must inform the institution if he or she 
wishes to cancel all or a portion of a loan, loan disbursement, TEACH 
Grant, or TEACH Grant disbursement.
    (ii) The institution must return the loan or TEACH Grant proceeds, 
cancel the loan or TEACH Grant, or do both, in accordance with program 
regulations provided that the institution receives a loan or TEACH Grant 
cancellation request--
    (A) By the later of the first day of a payment period or 14 days 
after the date it notifies the student or parent of his or her right to 
cancel all or a portion of a loan or TEACH Grant, if the institution 
obtains affirmative confirmation from the student under paragraph 
(a)(6)(i) of this section; or
    (B) Within 30 days of the date the institution notifies the student 
or parent of his or her right to cancel all or a portion of a loan, if 
the institution does not obtain affirmative confirmation from the 
student under paragraph (a)(6)(i) of this section.
    (iii) If a student or parent requests a loan cancellation after the 
period set forth in paragraph (a)(4)(ii) of this section, the 
institution may return the loan or TEACH Grant proceeds, cancel the loan 
or TEACH Grant, or do both, in accordance with program regulations.
    (5) An institution must inform the student or parent in writing 
regarding the outcome of any cancellation request.
    (6) For purposes of this section--
    (i) Affirmative confirmation is a process under which an institution 
obtains written confirmation of the types and amounts of title IV, HEA 
program loans that a student wants for the period of enrollment before 
the institution credits the student's account with those loan funds. The 
process under which the TEACH Grant program is administered is 
considered to be an affirmative confirmation process; and
    (ii) An institution is not required by this section to return any 
loan or TEACH Grant proceeds that it disbursed directly to a student or 
parent.
    (b) Student or parent authorizations. (1) If an institution obtains 
written authorization from a student or parent, as applicable, the 
institution may--
    (i) Use the student's or parent's title IV, HEA program funds to pay 
for charges described in Sec. 668.164(c)(1)(ii) or (c)(3)(i)(B) that are 
included in that authorization; and
    (ii) Unless the Secretary provides funds to the institution under 
the reimbursement payment method or the heightened cash monitoring 
payment method described in Sec. 668.162(c) or (d), respectively, hold 
on behalf of the student or parent any title IV, HEA program funds that 
would otherwise be paid directly to the student or parent as a credit 
balance under Sec. 668.164(h).
    (2) In obtaining the student's or parent's authorization to perform 
an activity described in paragraph (b)(1) of this section, an 
institution--
    (i) May not require or coerce the student or parent to provide that 
authorization;
    (ii) Must allow the student or parent to cancel or modify that 
authorization at any time; and
    (iii) Must clearly explain how it will carry out that activity.
    (3) A student or parent may authorize an institution to carry out 
the activities described in paragraph (b)(1) of this section for the 
period during which the student is enrolled at the institution.
    (4)(i) If a student or parent modifies an authorization, the 
modification takes effect on the date the institution receives the 
modification notice.
    (ii) If a student or parent cancels an authorization to use title 
IV, HEA program funds to pay for authorized charges under paragraph 
(a)(4) of this section, the institution may use title IV, HEA program 
funds to pay only those authorized charges incurred by the student 
before the institution received the notice.

[[Page 642]]

    (iii) If a student or parent cancels an authorization to hold title 
IV, HEA program funds under paragraph (b)(1)(ii) of this section, the 
institution must pay those funds directly to the student or parent as 
soon as possible but no later than 14 days after the institution 
receives that notice.
    (5) If an institution holds excess student funds under paragraph 
(b)(1)(ii) of this section, the institution must--
    (i) Identify the amount of funds the institution holds for each 
student or parent in a subsidiary ledger account designed for that 
purpose;
    (ii) Maintain, at all times, cash in its depository account in an 
amount at least equal to the amount of funds the institution holds on 
behalf of the student or the parent; and
    (iii) Notwithstanding any authorization obtained by the institution 
under this paragraph, pay any remaining balance on loan funds by the end 
of the loan period and any remaining other title IV, HEA program funds 
by the end of the last payment period in the award year for which they 
were awarded.

[80 FR 67194, Oct. 30, 2015, as amended at 81 FR 20251, Apr. 7, 2016]



Sec. 668.166  Excess cash.

    (a) General. The Secretary considers excess cash to be any amount of 
title IV, HEA program funds, other than Federal Perkins Loan program 
funds, that an institution does not disburse to students by the end of 
the third business day following the date the institution--
    (1) Received those funds from the Secretary; or
    (2) Deposited or transferred to its depository account previously 
disbursed title IV, HEA program funds, such as those resulting from 
award adjustments, recoveries, or cancellations.
    (b) Excess cash tolerance. An institution may maintain for up to 
seven days an amount of excess cash that does not exceed one percent of 
the total amount of funds the institution drew down in the prior award 
year. The institution must return immediately to the Secretary any 
amount of excess cash over the one-percent tolerance and any amount of 
excess cash remaining in its account after the seven-day tolerance 
period.
    (c) Consequences for maintaining excess cash. Upon a finding that an 
institution maintained excess cash for any amount or time over that 
allowed in the tolerance provisions in paragraph (b) of this section, 
the actions the Secretary may take include, but are not limited to--
    (1) Requiring the institution to reimburse the Secretary for the 
costs the Federal government incurred in providing that excess cash to 
the institution; and
    (2) Providing funds to the institution under the reimbursement 
payment method or heightened cash monitoring payment method described in 
Sec. 668.162(c) and (d), respectively.

[80 FR 67194, Oct. 30, 2015, as amended at 81 FR 20251, Apr. 7, 2016]



Sec. 668.167  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the section or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.



                   Subpart L_Financial Responsibility

    Source: 62 FR 62877, Nov. 25, 1997, unless otherwise noted.



Sec. 668.171  General.

    (a) Purpose. To begin and to continue to participate in any title 
IV, HEA program, an institution must demonstrate to the Secretary that 
it is financially responsible under the standards established in this 
subpart. As provided under section 498(c)(1) of the HEA, the Secretary 
determines whether an institution is financially responsible based on 
the institution's ability to--
    (1) Provide the services described in its official publications and 
statements;
    (2) Administer properly the title IV, HEA programs in which it 
participates; and
    (3) Meet all of its financial obligations.
    (b) General standards of financial responsibility. Except as 
provided under paragraphs (c) and (d) of this section, the Secretary 
considers an institution to be financially responsible if the Secretary 
determines that--

[[Page 643]]

    (1) The institution's Equity, Primary Reserve, and Net Income ratios 
yield a composite score of at least 1.5, as provided under Sec. 668.172 
and appendices A and B to this subpart;
    (2) The institution has sufficient cash reserves to make required 
returns of unearned title IV HEA program funds, as provided under 
Sec. 668.173;
    (3) The institution is current in its debt payments. An institution 
is not current in its debt payments if--
    (i) It is in violation of any existing loan agreement at its fiscal 
year end, as disclosed in a note to its audited financial statements or 
audit opinion; or
    (ii) It fails to make a payment in accordance with existing debt 
obligations for more than 120 days, and at least one creditor has filed 
suit to recover funds under those obligations; and
    (4) The institution is meeting all of its financial obligations, 
including but not limited to--
    (i) Refunds that it is required to make under its refund policy, 
including the return of title IV, HEA program funds for which it is 
responsible under Sec. 668.22; and
    (ii) Repayments to the Secretary for debts and liabilities arising 
from the institution's participation in the title IV, HEA programs.
    (c) Public institutions. (1) The Secretary considers a domestic 
public institution to be financially responsible if the institution--
    (i)(A) Notifies the Secretary that it is designated as a public 
institution by the State, local, or municipal government entity, tribal 
authority, or other government entity that has the legal authority to 
make that designation; and
    (B) Provides a letter from an official of that State or other 
government entity confirming that the institution is a public 
institution; and
    (ii) Is not in violation of any past performance requirement under 
Sec. 668.174.
    (2) The Secretary considers a foreign public institution to be 
financially responsible if the institution--
    (i)(A) Notifies the Secretary that it is designated as a public 
institution by the country or other government entity that has the legal 
authority to make that designation; and
    (B) Provides documentation from an official of that country or other 
government entity confirming that the institution is a public 
institution and is backed by the full faith and credit of the country or 
other government entity; and
    (ii) Is not in violation of any past performance requirement under 
Sec. 668.174.
    (d) Audit opinions and past performance provisions. Even if an 
institution satisfies all of the general standards of financial 
responsibility under paragraph (b) of this section, the Secretary does 
not consider the institution to be financially responsible if--
    (1) In the institution's audited financial statements, the opinion 
expressed by the auditor was an adverse, qualified, or disclaimed 
opinion, or the auditor expressed doubt about the continued existence of 
the institution as a going concern, unless the Secretary determines that 
a qualified or disclaimed opinion does not have a significant bearing on 
the institution's financial condition; or
    (2) As provided under the past performance provisions in 
Sec. 668.174 (a) and (b)(1), the institution violated a title IV, HEA 
program requirement, or the persons or entities affiliated with the 
institution owe a liability for a violation of a title IV, HEA program 
requirement.
    (e) Administrative actions. If the Secretary determines that an 
institution is not financially responsible under the standards and 
provisions of this section or under an alternative standard in 
Sec. 668.175, or the institution does not submit its financial and 
compliance audits by the date permitted and in the manner required under 
Sec. 668.23, the Secretary may--
    (1) Initiate an action under subpart G of this part to fine the 
institution, or limit, suspend, or terminate the institution's 
participation in the title IV, HEA programs; or
    (2) For an institution that is provisionally certified, take an 
action

[[Page 644]]

against the institution under the procedures established in 
Sec. 668.13(d).

(Approved by the Office of Management and Budget under control number 
1840-0537)

(Authority: 20 U.S.C. 1094 and 1099c and section 4 of Pub. L. 95-452, 92 
Stat. 1101-1109)

[62 FR 62877, Nov. 25, 1997, as amended at 63 FR 40348, July 28, 1998; 
64 FR 59042, Nov. 1, 1999; 65 FR 65637, Nov. 1, 2000; 67 FR 67074, Nov. 
1, 2002; 75 FR 67199, Nov. 1, 2010]

    Effective Date Note: At 81 FR 76072, Nov. 1, 2016, Sec. 668.171 was 
revised, effective July 1, 2019. For the convenience of the user, the 
revised text is set forth as follows:



Sec. 668.171  General.

    (a) Purpose. To begin and to continue to participate in any title 
IV, HEA program, an institution must demonstrate to the Secretary that 
it is financially responsible under the standards established in this 
subpart. As provided under section 498(c)(1) of the HEA, the Secretary 
determines whether an institution is financially responsible based on 
the institution's ability to--
    (1) Provide the services described in its official publications and 
statements;
    (2) Meet all of its financial obligations; and
    (3) Provide the administrative resources necessary to comply with 
title IV, HEA program requirements.
    (b) General standards of financial responsibility. Except as 
provided under paragraphs (e) and (f) of this section, the Secretary 
considers an institution to be financially responsible if the Secretary 
determines that--
    (1) The institution's Equity, Primary Reserve, and Net Income ratios 
yield a composite score of at least 1.5, as provided under Sec. 668.172 
and appendices A and B to this subpart;
    (2) The institution has sufficient cash reserves to make required 
returns of unearned title IV, HEA program funds, as provided under 
Sec. 668.173;
    (3) The institution is able to meet all of its financial obligations 
and otherwise provide the administrative resources necessary to comply 
with title IV, HEA program requirements. An institution may not be able 
to meet its financial or administrative obligations if it is subject to 
an action or event described in paragraph (c), (d), (e), (f), or (g) of 
this section. The Secretary considers those actions or events in 
determining whether the institution is financially responsible only if 
they occur on or after July 1, 2017; and
    (4) The institution or persons affiliated with the institution are 
not subject to a condition of past performance under Sec. 668.174(a) or 
(b).
    (c) Debts, liabilities, and losses. (1) Except as provided under 
paragraph (h)(3) of this section, an institution is not able to meet its 
financial or administrative obligations under paragraph (b)(3) of this 
section if, after the end of the fiscal year for which the Secretary has 
most recently calculated an institution's composite score, the 
institution is subject to one or more of the following actions or 
triggering events, and as a result of the actual or potential debts, 
liabilities, or losses that have stemmed or may stem from those actions 
or events, the institution's recalculated composite score is less than 
1.0, as determined by the Secretary under paragraph (c)(2) of this 
section:
    (i) Debts and borrower defense-related lawsuits. (A) The institution 
is required to pay any debt or incur any liability arising from a final 
judgment in a judicial proceeding or from an administrative proceeding 
or determination, or from a settlement; or
    (B) The institution is being sued in an action brought on or after 
July 1, 2017 by a Federal or State authority for financial relief on 
claims related to the making of the Direct Loan for enrollment at the 
school or the provision of educational services and the suit has been 
pending for 120 days.
    (ii) Other litigation. The institution is being sued in an action 
brought on or after July 1, 2017 that is not described in paragraph 
(c)(1)(i)(B) of this section and--
    (A) The institution has filed a motion for summary judgment or 
summary disposition and that motion has been denied or the court has 
issued an order reserving judgment on the motion;
    (B) The institution has not filed a motion for summary judgment or 
summary disposition by the deadline set for such motions by the court or 
agreement of the parties; or
    (C) If the court did not set a deadline for filing a motion for 
summary judgment and the institution did not file such a motion, the 
court has set a pretrial conference date or trial date and the case is 
pending on the earlier of those two dates.
    (iii) Accrediting agency actions. The institution was required by 
its accrediting agency to submit a teach-out plan, for a reason 
described in Sec. 602.24(c)(1), that covers the closing of the 
institution or any of its branches or additional locations.
    (iv) Gainful employment. As determined annually by the Secretary, 
the institution has gainful employment programs that, under 
Sec. 668.403, could become ineligible based on their final D/E rates for 
the next award year.
    (v) Withdrawal of owner's equity. For a proprietary institution 
whose composite score is less than 1.5, any withdrawal of owner's equity 
from the institution by any means, including by declaring a dividend, 
unless the transfer is to an entity included in the affiliated entity 
group on whose basis the institution's composite score was calculated.
    (2) Recalculating the composite score--(i) General. Unless the 
institution demonstrates to the satisfaction of the Secretary that the

[[Page 645]]

event or condition has had or will have no effect on the assets and 
liabilities of the institution under paragraph (g)(3)(iv) of this 
section, as specified in Appendix C of this subpart, the Secretary 
recognizes and accounts for the actual or potential losses associated 
with the actions or events under paragraph (c)(1) of this section and, 
based on that accounting, recalculates the institution's most recent 
composite score. The recalculation will occur regularly after associated 
actions or events are reported to the Secretary. The Secretary 
recalculates the composite score under this paragraph using the 
financial statements on which the institution's composite score has been 
calculated under Sec. 668.172.
    (ii) Calculation of potential loss--debts and borrower defense-
related lawsuits. For a debt or a suit described in paragraph (c)(1)(i) 
of this section, the amount of loss is--
    (A) The amount of debt;
    (B) For a suit, the amount set by a court ruling, or, in the absence 
of a court ruling--
    (1) The amount of relief claimed in the complaint;
    (2) If the complaint demands no specific amount of relief, the 
amount stated in any final written demand issued by the agency to the 
institution prior to the suit or a lesser amount that the agency offers 
to accept in settlement of any financial demand in the suit; or
    (3) If the agency stated no specific demand in the complaint, in a 
pre-filing demand, or in a written offer of settlement, the amount of 
tuition and fees received by the institution during the period, and for 
the program or location, described in the allegations in the complaint.
    (iii) Calculation of potential loss--other litigation. For any suit 
described in paragraph (c)(1)(ii) of this section, the amount of loss is 
the amount set by a court ruling, or, in the absence of a court ruling--
    (A) The amount of relief claimed in the complaint;
    (B) If the complaint demands no specific amount of relief, the 
amount stated in any final written demand by the claimant to the 
institution prior to the suit or a lesser amount that the plaintiff 
offers to accept in settlement of any financial demand in the suit; or
    (C) If the complainant stated no specific demand in the complaint, 
in a pre-filing demand, or in a written offer of settlement, the amount 
of the claim as stated in a response to a discovery request, including 
an expert witness report.
    (iv) Calculation of potential loss--other events. (A) For a closed 
location or institution, or the potential loss of eligibility for 
gainful employment programs, as described in paragraph (c)(1)(iii) or 
(iv), the amount of loss is the amount of title IV, HEA program funds 
the institution received in its most recently completed fiscal year for 
that location or institution, or for those GE programs.
    (B) For the withdrawal of owner's equity, described in paragraph 
(c)(1)(v) of this section, the amount of loss is the amount transferred 
to any entity other than the institution.
    (d) Non-title IV revenue. Except as provided under paragraph (h)(3) 
of this section, a proprietary institution is not able to meet its 
financial or administrative obligations under paragraph (b)(3) of this 
section if, for its most recently completed fiscal year, the institution 
did not derive at least 10 percent of its revenue from sources other 
than title IV, HEA program funds, as provided under Sec. 668.28(c).
    (e) Publicly traded institutions. Except as provided under paragraph 
(h)(3) of this section, a publicly traded institution is not able to 
meet its financial or administrative obligations under paragraph (b)(3) 
of this section if the institution is currently subject to one or more 
of the following actions or events:
    (1) SEC actions. The SEC warns the institution that it may suspend 
trading on the institution's stock.
    (2) SEC reports. The institution failed to file a required annual or 
quarterly report with the SEC within the time period prescribed for that 
report or by any extended due date under 17 CFR 240.12b-25.
    (3) Exchange actions. The exchange on which the institution's stock 
is traded notifies the institution that it is not in compliance with 
exchange requirements, or its stock is delisted.
    (f) Cohort default rates. Except as provided under paragraph (h)(3) 
of this section, an institution is not able to meet its financial or 
administrative obligations under paragraph (b)(3) of this section if the 
institution's two most recent official cohort default rates are 30 
percent or greater, as determined under subpart N of this part, unless--
    (1) The institution files a challenge, request for adjustment, or 
appeal under that subpart with respect to its rates for one or both of 
those fiscal years; and
    (2) That challenge, request, or appeal remains pending, results in 
reducing below 30 percent the official cohort default rate for either or 
both years, or precludes the rates from either or both years from 
resulting in a loss of eligibility or provisional certification.
    (g) Discretionary factors or events. Except as provided under 
paragraph (h)(3) of this section, an institution is not able to meet its 
financial or administrative obligations under paragraph (b)(3) of this 
section if the Secretary demonstrates that there is an event or 
condition that is reasonably likely to

[[Page 646]]

have a material adverse effect on the financial condition, business, or 
results of operations of the institution, including but not limited to 
whether--
    (1) There is a significant fluctuation between consecutive award 
years, or a period of award years, in the amount of Direct Loan or Pell 
Grant funds, or a combination of those funds, received by the 
institution that cannot be accounted for by changes in those programs;
    (2) The institution is cited by a State licensing or authorizing 
agency for failing State or agency requirements;
    (3) The institution fails a financial stress test developed or 
adopted by the Secretary to evaluate whether the institution has 
sufficient capital to absorb losses that may be incurred as a result of 
adverse conditions and continue to meet its financial obligations to the 
Secretary and students;
    (4) As calculated by the Secretary, the institution has high annual 
dropout rates;
    (5) The institution is or was placed on probation or issued a show-
cause order, or placed on an accreditation status that poses an 
equivalent or greater risk to its accreditation, by its accrediting 
agency for failing to meet one or more of the agency's standards;
    (6)(i) The institution violated a provision or requirement in a loan 
agreement; and
    (ii) As provided under the terms of a security or loan agreement 
between the institution and the creditor, a monetary or nonmonetary 
default or delinquency event occurs, or other events occur, that 
trigger, or enable the creditor to require or impose on the institution, 
an increase in collateral, a change in contractual obligations, an 
increase in interest rates or payments, or other sanctions, penalties, 
or fees;
    (7) The institution has pending claims for borrower relief discharge 
under Sec. 685.206 or Sec. 685.222; or
    (8) The Secretary expects to receive a significant number of claims 
for borrower relief discharge under Sec. 685.206 or Sec. 685.222 as a 
result of a lawsuit, settlement, judgement, or finding from a State or 
Federal administrative proceeding.
    (h) Reporting requirements. (1) In accordance with procedures 
established by the Secretary, an institution must notify the Secretary 
of any of the following actions or events identified in paragraphs (c) 
through (g) of this section no later than--
    (i) For lawsuits and for other actions or events described in 
paragraph (c)(1)(i) of this section--
    (A) For lawsuits, 10 days after the institution is served with the 
complaint and 10 days after the suit has been pending for 120 days; and
    (B) For debts arising from lawsuits and for other actions or events, 
10 days after a payment was required or a liability was incurred.
    (ii) For lawsuits described in paragraph (c)(1)(ii) of this 
section--
    (A) Ten days after the institution is served with the complaint;
    (B) Ten days after the court sets the dates for the earliest of the 
events described in paragraph (c)(1)(ii) of this section, provided that, 
if the deadline is set by procedural rules, notice of the applicable 
deadline must be included with notice of the service of the complaint; 
and
    (C) Ten days after the earliest of the applicable events occurs;
    (iii) For an accrediting agency action described in paragraph 
(c)(1)(iii) of this section, 10 days after the institution is notified 
by its accrediting agency that it must submit a teach-out plan;
    (iv) For a withdrawal of owner's equity described in paragraph 
(c)(1)(v) of this section, 10 days after the withdrawal is made;
    (v) For the non-title IV revenue provision in paragraph (d) of this 
section, 45 days after the end of the institution's fiscal year, as 
provided in Sec. 668.28(c)(3);
    (vi) For the SEC and stock exchange provisions for publicly traded 
institutions in paragraph (e), 10 days after the SEC or exchange warns, 
notifies, or takes an action against the institution, or 10 days after 
any extension granted by the SEC;
    (vii) For State or agency actions in paragraph (g)(2) of this 
section, 10 days after the institution is cited for violating a State or 
agency requirement;
    (viii) For probation or show cause actions under paragraph (g)(5) of 
this section, 10 days after the institution's accrediting agency places 
the institution on that status; or
    (ix) For the loan agreement provisions in paragraph (g)(6) of this 
section, 10 days after a loan violation occurs, the creditor waives the 
violation, or the creditor imposes sanctions or penalties in exchange or 
as a result of the waiver.
    (2) The Secretary may take an administrative action under paragraph 
(k) of this section against the institution if it fails to provide 
timely notice under this paragraph (h).
    (3) In its notice to the Secretary, the institution may demonstrate 
that--
    (i) For a suit by a Federal or State agency described in paragraph 
(c)(1)(i)(B) of this section, the amount claimed in the complaint or 
determined under paragraph (c)(2)(ii) of this section exceeds the 
potential recovery because the allegations in the complaint, if accepted 
as true, and the claims asserted, if fully successful, cannot produce 
relief in the amount claimed or, if no amount was claimed, the amount 
deemed under paragraph (c)(2)(ii) because they pertain to a period, 
program, or location for which the full recovery possible is a lesser 
amount;

[[Page 647]]

    (ii) The reported withdrawal of owner's equity under paragraph 
(c)(1)(v) of this section was used exclusively to meet tax liabilities 
of the institution or its owners for income derived from the 
institution;
    (iii) The reported violation of a provision or requirement in a loan 
agreement under paragraph (g)(6) of this section was waived by the 
creditor. However, if the creditor imposes additional constraints or 
requirements as a condition of waiving the violation, or imposes 
penalties or requirements under paragraph (g)(6)(ii) of this section, 
the institution must identify and describe those penalties, constraints, 
or requirements and may demonstrate that complying with those actions 
will not adversely affect the institution's ability to meet its current 
and future financial obligations; or
    (iv) The action or event reported under this paragraph (h) no longer 
exists or has been resolved or the institution has insurance that will 
cover part or all of the debts and liabilities that arise at any time 
from that action or event.
    (i) Public institutions. (1) The Secretary considers a domestic 
public institution to be financially responsible if the institution--
    (i)(A) Notifies the Secretary that it is designated as a public 
institution by the State, local, or municipal government entity, tribal 
authority, or other government entity that has the legal authority to 
make that designation; and
    (B) Provides a letter from an official of that State or other 
government entity confirming that the institution is a public 
institution; and
    (ii) Is not subject to a condition of past performance under 
Sec. 668.174.
    (2) The Secretary considers a foreign public institution to be 
financially responsible if the institution--
    (i)(A) Notifies the Secretary that it is designated as a public 
institution by the country or other government entity that has the legal 
authority to make that designation; and
    (B) Provides documentation from an official of that country or other 
government entity confirming that the institution is a public 
institution and is backed by the full faith and credit of the country or 
other government entity; and
    (ii) Is not subject to a condition of past performance under 
Sec. 668.174.
    (j) Audit opinions. Even if an institution satisfies all of the 
general standards of financial responsibility under paragraph (b) of 
this section, the Secretary does not consider the institution to be 
financially responsible if, in the institution's audited financial 
statements, the opinion expressed by the auditor was an adverse, 
qualified, or disclaimed opinion, or the auditor expressed doubt about 
the continued existence of the institution as a going concern, unless 
the Secretary determines that a qualified or disclaimed opinion does not 
significantly bear on the institution's financial condition.
    (k) Administrative actions. If the Secretary determines that an 
institution is not financially responsible under the standards and 
provisions of this section or under an alternative standard in 
Sec. 668.175, or the institution does not submit its financial and 
compliance audits by the date and in the manner required under 
Sec. 668.23, the Secretary may--
    (1) Initiate an action under subpart G of this part to fine the 
institution, or limit, suspend, or terminate the institution's 
participation in the title IV, HEA programs; or
    (2) For an institution that is provisionally certified, take an 
action against the institution under the procedures established in 
Sec. 668.13(d).

(Authority: 20 U.S.C. 1094 and 1099c and section 4 of Pub. L. 95-452, 92 
Stat. 1101-1109)



Sec. 668.172  Financial ratios.

    (a) Appendices A and B, ratio methodology. As provided under 
appendices A and B to this subpart, the Secretary determines an 
institution's composite score by--
    (1) Calculating the result of its Primary Reserve, Equity, and Net 
Income ratios, as described under paragraph (b) of this section;
    (2) Calculating the strength factor score for each of those ratios 
by using the corresponding algorithm;
    (3) Calculating the weighted score for each ratio by multiplying the 
strength factor score by its corresponding weighting percentage;
    (4) Summing the resulting weighted scores to arrive at the composite 
score; and
    (5) Rounding the composite score to one digit after the decimal 
point.
    (b) Ratios. The Primary Reserve, Equity, and Net Income ratios are 
defined under appendix A for proprietary institutions, and under 
appendix B for private non-profit institutions.
    (1) The ratios for proprietary institutions are:
    For proprietary institutions:

[[Page 648]]

[GRAPHIC] [TIFF OMITTED] TR25NO97.022

    (2) The ratios for private non-profit institutions are:
    [GRAPHIC] [TIFF OMITTED] TR25NO97.023
    
    (c) Excluded items. In calculating an institution's ratios, the 
Secretary--
    (1) Generally excludes extraordinary gains or losses, income or 
losses from discontinued operations, prior period adjustments, the 
cumulative effect of changes in accounting principles, and the effect of 
changes in accounting estimates;
    (2) May include or exclude the effects of questionable accounting 
treatments, such as excessive capitalization of marketing costs;
    (3) Excludes all unsecured or uncollateralized related-party 
receivables;
    (4) Excludes all intangible assets defined as intangible in 
accordance with generally accepted accounting principles; and
    (5) Excludes from the ratio calculations Federal funds provided to 
an institution by the Secretary under program authorized by the HEA only 
if--
    (i) In the notes to the institution's audited financial statement, 
or as a separate attestation, the auditor discloses by name and CFDA 
number, the amount of HEA program funds reported as expenses in the 
Statement of Activities for the fiscal year covered by that audit or 
attestation; and
    (ii) The institution's composite score, as determined by the 
Secretary, is less than 1.5 before the reported expenses arising from 
those HEA funds are excluded from the ratio calculations.

(Approved by the Office of Management and Budget under control number 
1840-0537)

(Authority: 20 U.S.C. 1094 and 1099c and section 4 of Pub. L. 95-452, 92 
Stat. 1101-1109)

[62 FR 62877, Nov. 25, 1997, as amended at 63 FR 40348, July 28, 1998; 
65 FR 65637, Nov. 1, 2000]



Sec. 668.173  Refund reserve standards.

    (a) General. The Secretary considers that an institution has 
sufficient cash reserves, as required under Sec. 668.171(b)(2), if the 
institution--
    (1) Satisfies the requirements for a public institution under 
Sec. 668.171(c)(1);
    (2) Is located in a State that has a tuition recovery fund approved 
by the Secretary and the institution contributes to that fund; or
    (3) Returns, in a timely manner as described in paragraph (b) of 
this section, unearned title IV, HEA program funds that it is 
responsible for returning under the provisions of Sec. 668.22 for a 
student that withdrew from the institution.

[[Page 649]]

    (b) Timely return of title IV, HEA program funds. In accordance with 
procedures established by the Secretary or FFEL Program lender, an 
institution returns unearned title IV, HEA program funds timely if--
    (1) The institution deposits or transfers the funds into the bank 
account it maintains under Sec. 668.163 no later than 45 days after the 
date it determines that the student withdrew;
    (2) The institution initiates an electronic funds transfer (EFT) no 
later than 45 days after the date it determines that the student 
withdrew;
    (3) The institution initiates an electronic transaction, no later 
than 45 days after the date it determines that the student withdrew, 
that informs a FFEL lender to adjust the borrower's loan account for the 
amount returned; or
    (4) The institution issues a check no later than 45 days after the 
date it determines that the student withdrew. An institution does not 
satisfy this requirement if--
    (i) The institution's records show that the check was issued more 
than 45 days after the date the institution determined that the student 
withdrew; or
    (ii) The date on the cancelled check shows that the bank used by the 
Secretary or FFEL Program lender endorsed that check more than 60 days 
after the date the institution determined that the student withdrew.
    (c) Compliance thresholds. (1) An institution does not comply with 
the reserve standard under Sec. 668.173(a)(3) if, in a compliance audit 
conducted under Sec. 668.23, an audit conducted by the Office of the 
Inspector General, or a program review conducted by the Department or 
guaranty agency, the auditor or reviewer finds--
    (i) In the sample of student records audited or reviewed that the 
institution did not return unearned title IV, HEA program funds within 
the timeframes described in paragraph (b) of this section for 5% or more 
of the students in the sample. (For purposes of determining this 
percentage, the sample includes only students for whom the institution 
was required to return unearned funds during its most recently completed 
fiscal year.); or
    (ii) A material weakness or reportable condition in the 
institution's report on internal controls relating to the return of 
unearned title IV, HEA program funds.
    (2) The Secretary does not consider an institution to be out of 
compliance with the reserve standard under Sec. 668.173(a)(3) if the 
institution is cited in any audit or review report because it did not 
return unearned funds in a timely manner for one or two students, or for 
less than 5% of the students in the sample referred to in paragraph 
(c)(1)(i) of this section.
    (d) Letter of credit. (1) Except as provided under paragraph (e)(1) 
of this section, an institution that can satisfy the reserve standard 
only under paragraph (a)(3) of this section, must submit an irrevocable 
letter of credit acceptable and payable to the Secretary if a finding in 
an audit or review shows that the institution exceeded the compliance 
thresholds in paragraph (c) of this section for either of its two most 
recently completed fiscal years.
    (2) The amount of the letter of credit required under paragraph 
(d)(1) of this section is 25 percent of the total amount of unearned 
title IV, HEA program funds that the institution was required to return 
under Sec. 668.22 during the institution's most recently completed 
fiscal year.
    (3) An institution that is subject to paragraph (d)(1) of this 
section must submit to the Secretary a letter of credit no later than 30 
days after the earlier of the date that--
    (i) The institution is required to submit its compliance audit;
    (ii) The Office of the Inspector General issues a final audit 
report;
    (iii) The designated department official issues a final program 
review determination;
    (iv) The Department issues a preliminary program review report or 
draft audit report, or a guaranty agency issues a preliminary report 
showing that the institution did not return unearned funds for more than 
10% of the sampled students; or
    (v) The Secretary sends a written notice to the institution 
requesting the letter of credit that explains why the institution has 
failed to return unearned funds in a timely manner.

[[Page 650]]

    (e) Exceptions. With regard to the letter of credit described in 
paragraph (d) of this section--
    (1) An institution does not have to submit the letter of credit if 
the amount calculated under paragraph (d)(2) of this section is less 
than $5,000 and the institution can demonstrate that it has cash 
reserves of at least $5,000 available at all times.
    (2) An institution may delay submitting the letter of credit and 
request the Secretary to reconsider a finding made in its most recent 
audit or review report that it failed to return unearned title IV, HEA 
program funds in a timely manner if--
    (i)(A) The institution submits documents showing that the unearned 
title IV, HEA program funds were not returned in a timely manner solely 
because of exceptional circumstances beyond the institution's control 
and that the institution would not have exceeded the compliance 
thresholds under paragraph (c)(1) of this section had it not been for 
these exceptional circumstances; or
    (B) The institution submits documents showing that it did not fail 
to make timely refunds as provided under paragraphs (b) and (c) of this 
section; and
    (ii) The institution's request, along with the documents described 
in paragraph (e)(2)(i) of this section, is submitted to the Secretary no 
later than the date it would otherwise be required to submit a letter of 
credit under paragraph (d)(3).
    (3) If the Secretary denies the institution's request under 
paragraph (e)(2) of this section, the Secretary notifies the institution 
of the date it must submit the letter of credit.
    (f) State tuition recovery funds. In determining whether to approve 
a State's tuition recovery fund, the Secretary considers the extent to 
which that fund--
    (1) Provides refunds to both in-State and out-of-State students;
    (2) Allocates all refunds in accordance with the order required 
under Sec. 668.22; and
    (3) Provides a reliable mechanism for the State to replenish the 
fund should any claims arise that deplete the fund's assets.

(Authority: 20 U.S.C. 1094 and 1099c and section 4 of Pub. L. 95-452, 92 
Stat. 1101-1109)

(Approved by the Office of Management and Budget under control number 
1845-0022)

[62 FR 62877, Nov. 25, 1997, as amended at 63 FR 40348, July 28, 1998; 
64 FR 59042, Nov. 1, 1999; 67 FR 67074, Nov. 1, 2003; 71 FR 45696, Aug. 
9, 2006]



Sec. 668.174  Past performance.

    (a) Past performance of an institution. An institution is not 
financially responsible if the institution--
    (1) Has been limited, suspended, terminated, or entered into a 
settlement agreement to resolve a limitation, suspension, or termination 
action initiated by the Secretary or a guaranty agency, as defined in 34 
CFR part 682, within the preceding five years;
    (2) In either of its two most recent compliance audits had an audit 
finding, or in a report issued by the Secretary had a program review 
finding for its current fiscal year or either of its preceding two 
fiscal years, that resulted in the institution's being required to repay 
an amount greater than 5 percent of the funds that the institution 
received under the title IV, HEA programs during the year covered by 
that audit or program review;
    (3) Has been cited during the preceding five years for failure to 
submit in a timely fashion acceptable compliance and financial statement 
audits required under this part, or acceptable audit reports required 
under the individual title IV, HEA program regulations; or
    (4) Has failed to resolve satisfactorily any compliance problems 
identified in audit or program review reports based upon a final 
decision of the Secretary issued pursuant to subpart G or H of this 
part.
    (b) Past performance of persons affiliated with an institution. 
(1)(i) Except as provided under paragraph (b)(2) of this section, an 
institution is not financially responsible if a person who exercises 
substantial control over the institution, as described under 34 CFR 
600.30, or any member or members of that person's family, alone or 
together--

[[Page 651]]

    (A) Exercises or exercised substantial control over another 
institution or a third-party servicer that owes a liability for a 
violation of a title IV, HEA program requirement; or
    (B) Owes a liability for a violation of a title IV, HEA program 
requirement; and
    (ii) That person, family member, institution, or servicer does not 
demonstrate that the liability is being repaid in accordance with an 
agreement with the Secretary.
    (2) The Secretary may determine that an institution is financially 
responsible, even if the institution is not otherwise financially 
responsible under paragraph (b)(1) of this section, if--
    (i) The institution notifies the Secretary, within the time 
permitted and in the manner provided under 34 CFR 600.30, that the 
person referenced in paragraph (b)(1) of this section exercises 
substantial control over the institution; and
    (ii) The person referenced in paragraph (b)(1) of this section 
repaid to the Secretary a portion of the applicable liability, and the 
portion repaid equals or exceeds the greater of--
    (A) The total percentage of the ownership interest held in the 
institution or third-party servicer that owes the liability by that 
person or any member or members of that person's family, either alone or 
in combination with one another;
    (B) The total percentage of the ownership interest held in the 
institution or servicer that owes the liability that the person or any 
member or members of the person's family, either alone or in combination 
with one another, represents or represented under a voting trust, power 
of attorney, proxy, or similar agreement; or
    (C) Twenty-five percent, if the person or any member of the person's 
family is or was a member of the board of directors, chief executive 
officer, or other executive officer of the institution or servicer that 
owes the liability, or of an entity holding at least a 25 percent 
ownership interest in the institution that owes the liability; or
    (iii) The applicable liability described in paragraph (b)(1) of this 
section is currently being repaid in ac-cordance with a written 
agreement with the Secretary; or
    (iv) The institution demonstrates to the satisfaction of the 
Secretary why--
    (A) The person who exercises substantial control over the 
institution should nevertheless be considered to lack that control; or
    (B) The person who exercises substantial control over the 
institution and each member of that person's family nevertheless does 
not or did not exercise substantial control over the institution or 
servicer that owes the liability.
    (c) Ownership interest. (1) An ownership interest is a share of the 
legal or beneficial ownership or control of, or a right to share in the 
proceeds of the operation of, an institution, an institution's parent 
corporation, a third-party servicer, or a third-party servicer's parent 
corporation. The term ``ownership interest'' includes, but is not 
limited to--
    (i) An interest as tenant in common, joint tenant, or tenant by the 
entireties;
    (ii) A partnership; and
    (iii) An interest in a trust.
    (2) The term ``ownership interest'' does not include any share of 
the ownership or control of, or any right to share in the proceeds of 
the operation of a profit-sharing plan, provided that all employees are 
covered by the plan.
    (3) The Secretary generally considers a person to exercise 
substantial control over an institution or third-party servicer if the 
person--
    (i) Directly or indirectly holds at least a 25 percent ownership 
interest in the institution or servicer;
    (ii) Holds, together with other members of his or her family, at 
least a 25 percent ownership interest in the institution or servicer;
    (iii) Represents, either alone or together with other persons under 
a voting trust, power of attorney, proxy, or similar agreement, one or 
more persons who hold, either individually or in combination with the 
other persons represented or the person representing them, at least a 25 
percent ownership in the institution or servicer; or

[[Page 652]]

    (iv) Is a member of the board of directors, a general partner, the 
chief executive officer, or other executive officer of--
    (A) The institution or servicer; or
    (B) An entity that holds at least a 25 percent ownership interest in 
the institution or servicer.
    (4) ``Family member'' is defined in Sec. 600.21(f) of this chapter.

(Approved by the Office of Management and Budget under control number 
1840-0537)

(Authority: 20 U.S.C. 1094 and 1099c and section 4 of Pub. L. 95-452, 92 
Stat. 1101-1109)

[62 FR 62877, Nov. 25, 1997, as amended at 63 FR 40348, 40349, July 28, 
1998; 67 FR 67075, Nov. 1, 2002]



Sec. 668.175  Alternative standards and requirements.

    (a) General. An institution that is not financially responsible 
under the general standards and provisions in Sec. 668.171, may begin or 
continue to participate in the title IV, HEA programs by qualifying 
under an alternate standard set forth in this section.
    (b) Letter of credit alternative for new institutions. A new 
institution that is not financially responsible solely because the 
Secretary determines that its composite score is less than 1.5, 
qualifies as a financially responsible institution by submitting an 
irrevocable letter of credit, that is acceptable and payable to the 
Secretary, for an amount equal to at least one-half of the amount of 
title IV, HEA program funds that the Secretary determines the 
institution will receive during its initial year of participation. A new 
institution is an institution that seeks to participate for the first 
time in the title IV, HEA programs.
    (c) Letter of credit alternative for participating institutions. A 
participating institution that is not financially responsible either 
because it does not satisfy one or more of the standards of financial 
responsibility under Sec. 668.171(b), or because of an audit opinion 
described under Sec. 668.171(d), qualifies as a financially responsible 
institution by submitting an irrevocable letter of credit, that is 
acceptable and payable to the Secretary, for an amount determined by the 
Secretary that is not less than one-half of the title IV, HEA program 
funds received by the institution during its most recently completed 
fiscal year.
    (d) Zone alternative. (1) A participating institution that is not 
financially responsible solely because the Secretary determines that its 
composite score is less than 1.5 may participate in the title IV, HEA 
programs as a financially responsible institution for no more than three 
consecutive years, beginning with the year in which the Secretary 
determines that the institution qualifies under this alternative. (i)(A) 
An institution qualifies initially under this alternative if, based on 
the institution's audited financial statement for its most recently 
completed fiscal year, the Secretary determines that its composite score 
is in the range from 1.0 to 1.4; and
    (B) An institution continues to qualify under this alternative if, 
based on the institution's audited financial statement for each of its 
subsequent two fiscal years, the Secretary determines that the 
institution's composite score is in the range from 1.0 to 1.4.
    (ii) An institution that qualified under this alternative for three 
consecutive years or for one of those years, may not seek to qualify 
again under this alternative until the year after the institution 
achieves a composite score of at least 1.5, as determined by the 
Secretary.
    (2) Under this zone alternative, the Secretary--
    (i) Requires the institution to make disbursements to eligible 
students and parents under either the cash monitoring or reimbursement 
payment method described in Sec. 668.162;
    (ii) Requires the institution to provide timely information 
regarding any of the following oversight and financial events--
    (A) Any adverse action, including a probation or similar action, 
taken against the institution by its accrediting agency;
    (B) Any event that causes the institution, or related entity as 
defined in the Statement of Financial Accounting Standards (SFAS) 57, to 
realize any liability that was noted as a contingent liability in the 
institution's or related entity's most recent audited financial 
statement;

[[Page 653]]

    (C) Any violation by the institution of any loan agreement;
    (D) Any failure of the institution to make a payment in accordance 
with its debt obligations that results in a creditor filing suit to 
recover funds under those obligations;
    (E) Any withdrawal of owner's equity from the institution by any 
means, including by declaring a dividend; or
    (F) Any extraordinary losses, as defined in accordance with 
Accounting Principles Board (APB) Opinion No. 30.
    (iii) May require the institution to submit its financial statement 
and compliance audits earlier than the time specified under 
Sec. 668.23(a)(4); and
    (iv) May require the institution to provide information about its 
current operations and future plans.
    (3) Under the zone alternative, the institution must--
    (i) For any oversight or financial event described under paragraph 
(d)(2)(ii) of this section for which the institution is required to 
provide information, provide that information to the Secretary by 
certified mail or electronic or facsimile transmission no later than 10 
days after that event occurs. An institution that provides this 
information electronically or by facsimile transmission is responsible 
for confirming that the Secretary received a complete and legible copy 
of that transmission; and
    (ii) As part of its compliance audit, require its auditor to express 
an opinion on the institution's compliance with the requirements under 
the zone alternative, including the institution's administration of the 
payment method under which the institution received and disbursed title 
IV, HEA program funds.
    (4) If an institution fails to comply with the requirements under 
paragraphs (d) (2) or (3) of this section, the Secretary may determine 
that the institution no longer qualifies under this alternative.
    (e) [Reserved]
    (f) Provisional certification alternative. (1) The Secretary may 
permit an institution that is not financially responsible to participate 
in the title IV, HEA programs under a provisional certification for no 
more than three consecutive years if--
    (i) The institution is not financially responsible because it does 
not satisfy the general standards under Sec. 668.171(b) or because of an 
audit opinion described under Sec. 668.171(d); or
    (ii) The institution is not financially responsible because of a 
condition of past performance, as provided under Sec. 668.174(a), and 
the institution demonstrates to the Secretary that it has satisfied or 
resolved that condition.
    (2) Under this alternative, the institution must--
    (i) Submit to the Secretary an irrevocable letter of credit that is 
acceptable and payable to the Secretary, for an amount determined by the 
Secretary that is not less than 10 percent of the title IV, HEA program 
funds received by the institution during its most recently completed 
fiscal year, except that this requirement does not apply to a public 
institution;
    (ii) Demonstrate that it was current on its debt payments and has 
met all of its financial obligations, as required under Sec. 668.171 
(b)(3) and (b)(4), for its two most recent fiscal years; and
    (iii) Comply with the provisions under the zone alternative, as 
provided under paragraph (d) (2) and (3) of this section.
    (3) If at the end of the period for which the Secretary 
provisionally certified the institution, the institution is still not 
financially responsible, the Secretary may again permit the institution 
to participate under a provisional certification, but the Secretary--
    (i) May require the institution, or one or more persons or entities 
that exercise substantial control over the institution, as determined 
under Sec. 668.174(b)(1) and (c), or both, to submit to the Secretary 
financial guarantees for an amount determined by the Secretary to be 
sufficient to satisfy any potential liabilities that may arise from the 
institution's participation in the title IV, HEA programs; and
    (ii) May require one or more of the persons or entities that 
exercise substantial control over the institution, as determined under 
Sec. 668.174(b)(1) and (c), to be jointly or severally liable for any 
liabilities that may arise from the institution's participation in the 
title IV, HEA programs.

[[Page 654]]

    (g) Provisional certification alternative for persons or entities 
owing liabilities. (1) The Secretary may permit an institution that is 
not financially responsible because the persons or entities that 
exercise substantial control over the institution owe a liability for a 
violation of a title IV, HEA program requirement, to participate in the 
title IV, HEA programs under a provisional certification only if--
    (i)(A) The persons or entities that exercise substantial control, as 
determined under Sec. 668.174(b)(1) and (c), repay or enter into an 
agreement with the Secretary to repay the applicable portion of that 
liability, as provided under Sec. 668.174(b)(2)(ii); or
    (B) The institution assumes that liability, and repays or enters 
into an agreement with the Secretary to repay that liability;
    (ii) The institution satisfies the general standards and provisions 
of financial responsibility under Sec. 668.171(b) and (d)(1), except 
that institution must demonstrate that it was current on its debt 
payments and has met all of its financial obligations, as required under 
Sec. 668.171 (b)(3) and (b)(4), for its two most recent fiscal years; 
and
    (iii) The institution submits to the Secretary an irrevocable letter 
of credit that is acceptable and payable to the Secretary, for an amount 
determined by the Secretary that is not less than 10 percent of the 
title IV, HEA program funds received by the institution during its most 
recently completed fiscal year.
    (2) Under this alternative, the Secretary--
    (i) Requires the institution to comply with the provisions under the 
zone alternative, as provided under paragraph (d) (2) and (3) of this 
section;
    (ii) May require the institution, or one or more persons or entities 
that exercise substantial control over the institution, or both, to 
submit to the Secretary financial guarantees for an amount determined by 
the Secretary to be sufficient to satisfy any potential liabilities that 
may arise from the institution's participation in the title IV, HEA 
programs; and
    (iii) May require one or more of the persons or entities that 
exercise substantial control over the institution to be jointly or 
severally liable for any liabilities that may arise from the 
institution's participation in the title IV, HEA programs.

(Approved by the Office of Management and Budget under control number 
1840-0537)

(Authority: 20 U.S.C. 1094 and 1099c and section 4 of Pub. L. 95-452, 92 
Stat. 1101-1109)

[62 FR 62877, Nov. 25, 1997, as amended at 63 FR 40348, 40349, July 28, 
1998; 81 FR 76075, Nov. 1, 2016]

    Effective Date Note: At 81 FR 76075, Nov. 1, 2016, Sec. 668.175 was 
amended by revising paragraphs (c) and (d), removing and reserving 
paragraph (e), revising paragraph (f), adding paragraph (h) and revising 
the authority citation, effective July 1, 2019. For the convenience of 
the user, the added and revised text is set forth as follows:



Sec. 668.175  Alternative standards and requirements.

                                * * * * *

    (c) Letter of credit alternative for participating institutions. A 
participating institution that is not financially responsible either 
because it does not satisfy one or more of the standards of financial 
responsibility under Sec. 668.171(b) through (g), or because of an audit 
opinion described under Sec. 668.171(j), qualifies as a financially 
responsible institution by submitting an irrevocable letter of credit or 
other form of financial protection specified by the Secretary in a 
notice published in the Federal Register, that is acceptable and payable 
to the Secretary, for an amount determined by the Secretary that is not 
less than one-half of the title IV, HEA program funds received by the 
institution during its most recently completed fiscal year.
    (d) Zone alternative. (1) A participating institution that is not 
financially responsible solely because the Secretary determines that its 
composite score under Sec. 668.172 is less than 1.5 may participate in 
the title IV, HEA programs as a financially responsible institution for 
no more than three consecutive years, beginning with the year in which 
the Secretary determines that the institution qualifies under this 
alternative.
    (i)(A) An institution qualifies initially under this alternative if, 
based on the institution's audited financial statement for its most 
recently completed fiscal year, the Secretary determines that its 
composite score is in the range from 1.0 to 1.4; and
    (B) An institution continues to qualify under this alternative if, 
based on the institution's audited financial statement for each of its 
subsequent two fiscal years, the Secretary determines that the 
institution's composite score is in the range from 1.0 to 1.4.

[[Page 655]]

    (ii) An institution that qualified under this alternative for three 
consecutive years, or for one of those years, may not seek to qualify 
again under this alternative until the year after the institution 
achieves a composite score of at least 1.5, as determined by the 
Secretary.
    (2) Under the zone alternative, the Secretary--
    (i) Requires the institution to make disbursements to eligible 
students and parents, and to otherwise comply with the provisions, under 
either the heightened cash monitoring or reimbursement payment method 
described in Sec. 668.162;
    (ii) Requires the institution to provide timely information 
regarding any of the following oversight and financial events--
    (A) Any event that causes the institution, or related entity as 
defined in Accounting Standards Codification (ASC) 850, to realize any 
liability that was noted as a contingent liability in the institution's 
or related entity's most recent audited financial statement; or
    (B) Any losses that are unusual in nature or infrequently occur, or 
both, as defined in accordance with Accounting Standards Update (ASU) 
No. 2015-01 and ASC 225;
    (iii) May require the institution to submit its financial statement 
and compliance audits earlier than the time specified under 
Sec. 668.23(a)(4); and
    (iv) May require the institution to provide information about its 
current operations and future plans.
    (3) Under the zone alternative, the institution must--
    (i) For any oversight or financial event described in paragraph 
(d)(2)(ii) of this section for which the institution is required to 
provide information, in accordance with procedures established by the 
Secretary, notify the Secretary no later than 10 days after that event 
occurs; and
    (ii) As part of its compliance audit, require its auditor to express 
an opinion on the institution's compliance with the requirements under 
the zone alternative, including the institution's administration of the 
payment method under which the institution received and disbursed title 
IV, HEA program funds.
    (4) If an institution fails to comply with the requirements under 
paragraph (d)(2) or (3) of this section, the Secretary may determine 
that the institution no longer qualifies under this alternative.

                                * * * * *

    (f) Provisional certification alternative. (1) The Secretary may 
permit an institution that is not financially responsible to participate 
in the title IV, HEA programs under a provisional certification for no 
more than three consecutive years if, as determined annually by the 
Secretary--
    (i) The institution is not financially responsible because it does 
not satisfy the general standards under Sec. 668.171(b)(1) or (3), its 
recalculated composite score under Sec. 668.171(c)(2) is less than 1.0, 
is subject to an action or event under Sec. 668.171(d), (e), (f),or (g) 
or because of an audit opinion described in Sec. 668.171(i); or
    (ii) The institution is not financially responsible because of a 
condition of past performance, as provided under Sec. 668.174(a), and 
the institution demonstrates to the Secretary that it has satisfied or 
resolved that condition.
    (2) Under this alternative, the institution must--
    (i) Provide to the Secretary an irrevocable letter of credit that is 
acceptable and payable to the Secretary, agree to a set-aside under 
paragraph (h) of this section, or, at the Secretary's discretion, 
provide another form of financial protection specified by the Secretary 
in a notice published in the Federal Register, for an amount determined 
by the Secretary under paragraph (f)(4) of this section, except that 
this requirement does not apply to a public institution; and
    (ii) Comply with the provisions under the zone alternative, as 
provided under paragraph (d)(2) and (3).
    (3) If at the end of the period for which the Secretary 
provisionally certified the institution, the institution is still not 
financially responsible, the Secretary--
    (i) May permit the institution to participate under a provisional 
certification, but--
    (A) May require the institution, or one or more persons or entities 
that exercise substantial control over the institution, as determined 
under Sec. 668.174(b)(1) and (c), or both, to provide to the Secretary 
financial protection for an amount determined by the Secretary under 
paragraph (f)(4) of this section; and
    (B) May require one or more of the persons or entities that exercise 
substantial control over the institution, as determined under 
Sec. 668.174(b)(1) and (c), to be jointly or severally liable for any 
liabilities that may arise from the institution's participation in the 
title IV, HEA programs; and
    (ii) May permit the institution to continue to participate under a 
provisional certification but requires the institution to provide, or 
continue to provide, the financial protection resulting from an event 
described in Sec. 668.171(c) through (g) until the institution meets the 
requirements of paragraph (f)(5) of this section.
    (4)(i) The institution must provide to the Secretary the financial 
protection described under paragraph (f)(2)(i) in an amount that, 
together with the amount of any financial protection that the 
institution has already provided if that protection covers the period

[[Page 656]]

described in paragraph (f)(5) of this section, equals, for a composite 
score calculated under Sec. 668.172, a composite score recalculated 
under Sec. 668.171(c)(2), or for any other reason that the institution 
is not financially responsible--
    (A) Ten percent of the total amount of title IV, HEA program funds 
received by the institution during its most recently completed fiscal 
year; and
    (B) Any additional amount that the Secretary demonstrates is needed 
under paragraph (f)(4)(ii) of this section.
    (ii) The Secretary determines the amount specified in paragraph 
(f)(4)(i)(B) of this section that must be provided by the institution in 
addition to the amount specified in paragraph (f)(4)(i)(A) of this 
section, and must ensure that the total amount of financial protection 
provided under paragraph (f)(4)(i) of this section is sufficient to 
fully cover any estimated losses. The Secretary may reduce the amount 
required under paragraph (f)(4)(i)(B) only if an institution 
demonstrates that this amount is unnecessary to protect, or is contrary 
to, the Federal interest.
    (5) The Secretary maintains the full amount of the financial 
protection provided by the institution under paragraph (f)(4) of this 
section until the Secretary first determines that the institution has--
    (i) A composite score of 1.0 or greater based on the review of the 
audited financial statements for the fiscal year in which all losses 
from any event described in Sec. 668.171(c), (d), (e), (f), or (g) on 
which financial protection was required have been fully recognized; or
    (ii) A recalculated composite score of 1.0 or greater, and any event 
or condition described in Sec. 668.171(d), (e), (f), or (g) has ceased 
to exist.

                                * * * * *

    (h) Set-aside. If an institution does not provide a letter of credit 
or financial protection acceptable to the Secretary for the amount 
required under paragraph (d) or (f) of this section within 45 days of 
the Secretary's request, the Secretary offsets the amount of title IV, 
HEA program funds that an institution is eligible to receive in a manner 
that ensures that, no later than the end of a nine-month period, the 
total amount offset equals the amount of financial protection the 
institution would otherwise provide. The Secretary uses the funds to 
satisfy the debt and liabilities owed to the Secretary that are not 
otherwise paid directly by the institution, and provides to the 
institution any funds not used for this purpose during the period for 
which the financial protection was required, or provides the institution 
any remaining funds if the institution subsequently submits the 
financial protection originally required under paragraph (d) or (f) of 
this section.

                                * * * * *

(Authority: 20 U.S.C. 1094 and 1099c)



Sec. 668.176  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice will not 
be affected thereby.

(Authority: 20 U.S.C. 1094, 1099c)

[81 FR 76076, Nov. 1, 2016]

[[Page 657]]



    Sec. Appendix A to Subpart L of Part 668--Ratio Methodology for 
                        Proprietary Institutions
[GRAPHIC] [TIFF OMITTED] TR25NO97.014


[[Page 658]]


[GRAPHIC] [TIFF OMITTED] TR25NO97.015


[[Page 659]]


[GRAPHIC] [TIFF OMITTED] TR25NO97.016


[62 FR 62882, Nov. 25, 1997. Redesignated at 65 FR 65650, Nov. 1, 2000]

[[Page 660]]



Sec. Appendix B to Subpart L of Part 668--Ratio Methodology for Private 
                         Non-Profit Institutions
[GRAPHIC] [TIFF OMITTED] TC15NO91.218


[[Page 661]]


[GRAPHIC] [TIFF OMITTED] TR25NO97.018


[[Page 662]]


[GRAPHIC] [TIFF OMITTED] TR25NO97.019


[62 FR 62885, Nov. 25, 1997, as amended at 63 FR 40349, July 28, 1998. 
Redesignated at 65 FR 65650, Nov. 1, 2000]

[[Page 663]]



   Sec. Appendix C to Subpart L of Part 668- Balance Sheet and Income 
         Statement Adjustments for Recalculating Composite Score
[GRAPHIC] [TIFF OMITTED] TR01NO16.001


[[Page 664]]


[GRAPHIC] [TIFF OMITTED] TR01NO16.002


    Effective Date Note: At 81 FR 76076, Nov. 1, 2016, appendix C to 
subpart L of part 668 was added, effective July 1, 2019.



                 Subpart M_Two Year Cohort Default Rates

    Source: 65 FR 65638, Nov. 1, 2000, unless otherwise noted.



Sec. 668.181  Purpose of this subpart.

    (a) General. Your cohort default rate is a measure we use to 
determine your eligibility to participate in various Title IV, HEA 
programs. We may also use it for determining your eligibility for 
exemptions, such as those for certain disbursement requirements under 
the FFEL and Direct Loan Programs. This subpart applies solely to 
cohorts, as defined in Secs. 668.182(a) and 668.183(b), for fiscal years 
through 2011. For these cohorts, this subpart describes how cohort 
default rates are calculated, some of the consequences of cohort default 
rates, and how you may request changes to your cohort default rates or 
appeal their consequences. Under this subpart, you submit a 
``challenge'' after you receive your draft cohort default rate, and you 
request an ``adjustment'' or ``appeal'' after your official cohort 
default rate is published.

[[Page 665]]

    (b) Cohort Default Rates. Notwithstanding anything to the contrary 
in this subpart, we will issue annually two sets of draft and official 
cohort default rates for fiscal years 2009, 2010, and 2011. For each of 
these years, you will receive one set of draft and official cohort 
default rates under this subpart and another set of draft and official 
cohort default rates under subpart N of this part.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

[74 FR 55649, Oct. 28, 2009]



Sec. 668.182  Definitions of terms used in this subpart.

    We use the following definitions in this subpart:
    (a) Cohort. Your cohort is a group of borrowers used to determine 
your cohort default rate. The method for identifying the borrowers in a 
cohort is provided in Sec. 668.183(b).
    (b) Data manager. (1) For FFELP loans held by a guaranty agency or 
lender, the guaranty agency is the data manager.
    (2) For FFELP loans that we hold, we are the data manager.
    (3) For Direct Loan Program loans, the Direct Loan Servicer, as 
defined in 34 CFR 685.102, is the data manager.
    (c) Days. In this subpart, ``days'' means calendar days.
    (d) Default. A borrower is considered to be in default for cohort 
default rate purposes under the rules in Sec. 668.183(c).
    (e) Draft cohort default rate. Your draft cohort default rate is a 
rate we issue, for your review, before we issue your official cohort 
default rate. A draft cohort default rate is used only for the purposes 
described in Sec. 668.185.
    (f) Entering repayment. (1) Except as provided in paragraphs (f)(2) 
and (f)(3) of this section, loans are considered to enter repayment on 
the dates described in 34 CFR 682.200 (under the definition of 
``repayment period'') and in 34 CFR 685.207.
    (2) A Federal SLS loan is considered to enter repayment--
    (i) At the same time the borrower's Federal Stafford loan enters 
repayment, if the borrower received the Federal SLS loan and the Federal 
Stafford loan during the same period of continuous enrollment; or
    (ii) In all other cases, on the day after the student ceases to be 
enrolled at an institution on at least a half-time basis in an 
educational program leading to a degree, certificate, or other 
recognized educational credential.
    (3) For the purposes of this subpart, a loan is considered to enter 
repayment on the date that a borrower repays it in full, if the loan is 
paid in full before the loan enters repayment under paragraphs (f)(1) or 
(f)(2) of this section.
    (g) Fiscal year. A fiscal year begins on October 1 and ends on the 
following September 30. A fiscal year is identified by the calendar year 
in which it ends.
    (h) Loan record detail report. The loan record detail report is a 
report that we produce. It contains the data used to calculate your 
draft or official cohort default rate.
    (i) Official cohort default rate. Your official cohort default rate 
is the cohort default rate that we publish for you under Sec. 668.186. 
Cohort default rates calculated under this subpart are not related in 
any way to cohort default rates that are calculated for the Federal 
Perkins Loan Program.
    (j) We. We are the Department, the Secretary, or the Secretary's 
designee.
    (k) You. You are an institution.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.183  Calculating and applying cohort default rates.

    (a) General. This section describes the four steps that we follow to 
calculate and apply your cohort default rate for a fiscal year:
    (1) First, under paragraph (b) of this section, we identify the 
borrowers in your cohort for the fiscal year. If the total number of 
borrowers in that cohort is fewer than 30, we also identify the 
borrowers in your cohorts for the 2 most recent prior fiscal years.
    (2) Second, under paragraph (c) of this section, we identify the 
borrowers in the cohort (or cohorts) who are considered to be in 
default. If more than one cohort will be used to calculate your cohort 
default rate, we identify

[[Page 666]]

defaulted borrowers separately for each cohort.
    (3) Third, under paragraph (d) of this section, we calculate your 
cohort default rate.
    (4) Fourth, we apply your cohort default rate to all of your 
locations--
    (i) As you exist on the date you receive the notice of your official 
cohort default rate; and
    (ii) From the date on which you receive the notice of your official 
cohort default rate until you receive our notice that the cohort default 
rate no longer applies.
    (b) Identify the borrowers in a cohort. (1) Except as provided in 
paragraph (b)(3) of this section, your cohort for a fiscal year consists 
of all of your current and former students who, during that fiscal year, 
entered repayment on any Federal Stafford loan, Federal SLS loan, Direct 
Subsidized loan, or Direct Unsubsidized loan that they received to 
attend your institution, or on the portion of a loan made under the 
Federal Consolidation Loan Program or the Federal Direct Consolidation 
Loan Program (as defined in 34 CFR 685.102) that is used to repay those 
loans.
    (2) A borrower may be included in more than one of your cohorts and 
may be included in the cohorts of more than one institution in the same 
fiscal year.
    (3) A TEACH Grant that has been converted to a Federal Direct 
Unsubsidized Loan is not considered for the purpose of calculating and 
applying cohort default rates.
    (c) Identify the borrowers in a cohort who are in default. (1) 
Except as provided in paragraph (c)(2) of this section, for the purposes 
of this subpart a borrower in a cohort for a fiscal year is considered 
to be in default if--
    (i) Before the end of the following fiscal year, the borrower 
defaults on any FFELP loan that was used to include the borrower in the 
cohort or on any Federal Consolidation Loan Program loan that repaid a 
loan that was used to include the borrower in the cohort (however, a 
borrower is not considered to be in default unless a claim for insurance 
has been paid on the loan by a guaranty agency or by us);
    (ii) Before the end of the following fiscal year, the borrower fails 
to make an installment payment, when due, on any Direct Loan Program 
loan that was used to include the borrower in the cohort or on any 
Federal Direct Consolidation Loan Program loan that repaid a loan that 
was used to include the borrower in the cohort, and the borrower's 
failure persists for 360 days (or for 270 days, if the borrower's first 
day of delinquency was before October 7, 1998);
    (iii) Before the end of the following fiscal year, you or your 
owner, agent, contractor, employee, or any other affiliated entity or 
individual make a payment to prevent a borrower's default on a loan that 
is used to include the borrower in that cohort: or
    (iv) Before the end of the following fiscal year, the borrower fails 
to make an installment payment, when due, on a Federal Stafford Loan 
that is held by the Secretary or a Federal Consolidation Loan that is 
held by the Secretary and was used to repay a Federal Stafford Loan, if 
such Federal Stafford Loan or Federal Consolidation Loan was used to 
include the borrower in the cohort, and the borrower's failure persists 
for 360 days.
    (2) A borrower is not considered to be in default based on a loan 
that is, before the end of the fiscal year immediately following the 
fiscal year in which it entered repayment--
    (i) Rehabilitated under 34 CFR 682.405 or 34 CFR 685.211(e); or
    (ii) Repurchased by a lender because the claim for insurance was 
submitted or paid in error.
    (d) Calculate the cohort default rate. Except as provided in 
Sec. 668.184, if there are--
    (1) Thirty or more borrowers in your cohort for a fiscal year, your 
cohort default rate is the percentage that is derived by dividing--
    (i) The number of borrowers in the cohort who are in default, as 
determined under paragraph (c) of this section; by
    (ii) The number of borrowers in the cohort, as determined under 
paragraph (b) of this section.
    (2) Fewer than 30 borrowers in your cohort for a fiscal year, your 
cohort default rate is the percentage that is derived by dividing--
    (i) The total number of borrowers in that cohort and in the two most 
recent

[[Page 667]]

prior cohorts who are in default, as determined for each cohort under 
paragraph (c) of this section; by
    (ii) The total number of borrowers in that cohort and the two most 
recent prior cohorts, as determined for each cohort under paragraph (b) 
of this section.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1070g, 1082, 1085, 1094, 1099c)

[65 FR 65638, Nov. 1, 2000, as amended at 67 FR 67075, Nov. 1, 2002; 73 
FR 35494, June 23, 2008; 74 FR 55649, Oct. 28, 2009]



Sec. 668.184  Determining cohort default rates for institutions that
have undergone a change in status.

    (a) General. (1) Except as provided under 34 CFR 600.32(d), if you 
undergo a change in status identified in this section, your cohort 
default rate is determined under this section.
    (2) In determining cohort default rates under this section, the date 
of a merger, acquisition, or other change in status is the date the 
change occurs.
    (3) A change in status may affect your eligibility to participate in 
Title IV, HEA programs under Sec. 668.187 or Sec. 668.188.
    (4) If another institution's cohort default rate is applicable to 
you under this section, you may challenge, request an adjustment, or 
submit an appeal for the cohort default rate under the same requirements 
that would be applicable to the other institution under Secs. 668.185 
and 668.189.
    (b) Acquisition or merger of institutions. If your institution 
acquires, or was created by the merger of, one or more institutions that 
participated independently in the Title IV, HEA programs immediately 
before the acquisition or merger--
    (1) For the cohort default rates published before the date of the 
acquisition or merger, your cohort default rates are the same as those 
of your predecessor that had the highest total number of borrowers 
entering repayment in the two most recent cohorts used to calculate 
those cohort default rates; and
    (2) Beginning with the first cohort default rate published after the 
date of the acquisition or merger, your cohort default rates are 
determined by including the applicable borrowers from each institution 
involved in the acquisition or merger in the calculation under 
Sec. 668.183.
    (c) Acquisition of branches or locations. If you acquire a branch or 
a location from another institution participating in the Title IV, HEA 
programs--
    (1) The cohort default rates published for you before the date of 
the change apply to you and to the newly acquired branch or location;
    (2) Beginning with the first cohort default rate published after the 
date of the change, your cohort default rates for the next 3 fiscal 
years are determined by including the applicable borrowers from your 
institution and the other institution (including all of its locations) 
in the calculation under Sec. 668.183;
    (3) After the period described in paragraph (c)(2) of this section, 
your cohort default rates do not include borrowers from the other 
institution in the calculation under Sec. 668.183; and
    (4) At all times, the cohort default rate for the institution from 
which you acquired the branch or location is not affected by this change 
in status.
    (d) Branches or locations becoming institutions. If you are a branch 
or location of an institution that is participating in the Title IV, HEA 
programs, and you become a separate, new institution for the purposes of 
participating in those programs--
    (1) The cohort default rates published before the date of the change 
for your former parent institution are also applicable to you;
    (2) Beginning with the first cohort default rate published after the 
date of the change, your cohort default rates for the next 3 fiscal 
years are determined by including the applicable borrowers from your 
institution and your former parent institution (including all of its 
locations) in the calculation under Sec. 668.183; and
    (3) After the period described in paragraph (d)(2) of this section, 
your cohort default rates do not include borrowers

[[Page 668]]

from your former parent institution in the calculation under 
Sec. 668.183.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

[65 FR 65638, Nov. 1, 2000, as amended at 74 FR 55649, Oct. 28, 2009; 74 
FR 55947, Oct. 29, 2009]



Sec. 668.185  Draft cohort default rates and your ability to challenge
before official cohort default rates are issued.

    (a) General. (1) We notify you of your draft cohort default rate 
before your official cohort default rate is calculated. Our notice 
includes the loan record detail report for the draft cohort default 
rate.
    (2) Regardless of the number of borrowers included in your cohort, 
your draft cohort default rate is always calculated using data for that 
fiscal year alone, using the method described in Sec. 668.183(d)(1).
    (3) Your draft cohort default rate and the loan record detail report 
are not considered public information and may not be otherwise 
voluntarily released to the public by a data manager.
    (4) Any challenge you submit under this section and any response 
provided by a data manager must be in a format acceptable to us. This 
acceptable format is described in the ``Cohort Default Rate Guide'' that 
we provide to you. If your challenge does not comply with the 
requirements in the ``Cohort Default Rate Guide,'' we may deny your 
challenge.
    (b) Incorrect data challenges. (1) You may challenge the accuracy of 
the data included on the loan record detail report by sending a 
challenge to the relevant data manager, or data managers, within 45 days 
after you receive the data. Your challenge must include--
    (i) A description of the information in the loan record detail 
report that you believe is incorrect; and
    (ii) Documentation that supports your contention that the data are 
incorrect.
    (2) Within 30 days after receiving your challenge, the data manager 
must send you and us a response that--
    (i) Addresses each of your allegations of error; and
    (ii) Includes the documentation that supports the data manager's 
position.
    (3) If your data manager concludes that draft data in the loan 
record detail report are incorrect, and we agree, we use the corrected 
data to calculate your cohort default rate.
    (4) If you fail to challenge the accuracy of data under this 
section, you cannot contest the accuracy of those data in an uncorrected 
data adjustment, under Sec. 668.190, or in an erroneous data appeal, 
under Sec. 668.192.
    (c) Participation rate index challenges. (1)(i) You may challenge an 
anticipated loss of eligibility under Sec. 668.187(a)(1), based on one 
cohort default rate over 40 percent, if your participation rate index 
for that cohort's fiscal year is equal to or less than 0.06015.
    (ii) You may challenge an anticipated loss of eligibility under 
Sec. 668.187(a)(2), based on three cohort default rates of 25 percent or 
greater, if your participation rate index is equal to or less than 
0.0375 for any of those three cohorts' fiscal years.
    (2) For a participation rate index challenge, your participation 
rate index is calculated as described in Sec. 668.195(b), except that--
    (i) The draft cohort default rate is considered to be your most 
recent cohort default rate; and
    (ii) If the cohort used to calculate your draft cohort default rate 
included fewer than 30 borrowers, you may calculate your participation 
rate index for that fiscal year using either your most recent draft 
cohort default rate or the average rate that would be calculated for 
that fiscal year, using the method described in Sec. 668.183(d)(2).
    (3) You must send your participation rate index challenge, including 
all supporting documentation, to us within 45 days after you receive 
your draft cohort default rate.
    (4) We notify you of our determination on your participation rate 
index challenge before your official cohort default rate is published.
    (5) If we determine that you qualify for continued eligibility based 
on your participation rate index challenge, you will not lose 
eligibility under Sec. 668.187 when your next official cohort default

[[Page 669]]

rate is published. A successful challenge that is based on your draft 
cohort default rate does not excuse you from any other loss of 
eligibility. However, if your successful challenge of a loss of 
eligibility under paragraph (c)(1)(ii) of this section is based on a 
prior, official cohort default rate, and not on your draft cohort 
default rate, we also excuse you from any subsequent loss of 
eligibility, under Sec. 668.187(a)(2), that would be based on that 
official cohort default rate.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

[65 FR 65638, Nov. 1, 2000, as amended at 74 FR 55649, Oct. 28, 2009]



Sec. 668.186  Notice of your official cohort default rate.

    (a) We electronically notify you of your cohort default rate after 
we calculate it, by sending you an eCDR notification package to the 
destination point you designate. After we send our notice to you, we 
publish a list of cohort default rates calculated under this subpart for 
all institutions.
    (b) If you have one or more borrowers entering repayment or are 
subject to sanctions, or if the Department believes you will have an 
official cohort default rate calculated as an average rate, you will 
receive a loan record detail report as part of your eCDR notification 
package.
    (c) You have five business days, from the transmission date for eCDR 
notification packages as posted on the Department's Web site, to report 
any problem with receipt of the electronic transmission of your eCDR 
notification package.
    (d) Except as provided in paragraph (e) of this section, timelines 
for submitting challenges, adjustments, and appeals begin on the sixth 
business day following the transmission date for eCDR notification 
packages that is posted on the Department's Web site.
    (e) If you timely report a problem with the receipt of the 
electronic transmission of your eCDR notification package under 
paragraph (c) of this section and the Department agrees that the problem 
with transmission was not caused by you, the Department will extend the 
challenge, appeal and adjustment deadlines and timeframes to account for 
a retransmission of your eCDR notification package after the technical 
problem is resolved.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)

[74 FR 55649, Oct. 28, 2009]



Sec. 668.187  Consequences of cohort default rates on your ability to
participate in Title IV, HEA programs.

    (a) End of participation. (1) Except as provided in paragraph (e) of 
this section, you lose your eligibility to participate in the FFEL and 
Direct Loan programs 30 days after you receive our notice that your most 
recent cohort default rate is greater than 40 percent.
    (2) Except as provided in paragraphs (d) and (e) of this section, 
you lose your eligibility to participate in the FFEL, Direct Loan, and 
Federal Pell Grant programs 30 days after you receive our notice that 
your three most recent cohort default rates are each 25 percent or 
greater.
    (b) Length of period of ineligibility. Your loss of eligibility 
under this section continues--
    (1) For the remainder of the fiscal year in which we notify you that 
you are subject to a loss of eligibility; and
    (2) For the next 2 fiscal years.
    (c) Using a cohort default rate more than once. The use of a cohort 
default rate as a basis for a loss of eligibility under this section 
does not preclude its use as a basis for--
    (1) Any concurrent or subsequent loss of eligibility under this 
section; or
    (2) Any other action by us.
    (d) Continuing participation in Pell. If you are subject to a loss 
of eligibility under paragraph (a)(2) of this section, based on three 
cohort default rates of 25 percent or greater, you may continue to 
participate in the Federal Pell Grant Program if we determine that you--
    (1) Were ineligible to participate in the FFEL and Direct Loan 
programs before October 7, 1998, and your eligibility was not 
reinstated;

[[Page 670]]

    (2) Requested in writing, before October 7, 1998, to withdraw your 
participation in the FFEL and Direct Loan programs, and you were not 
later reinstated; or
    (3) Have not certified an FFELP loan or originated a Direct Loan 
Program loan on or after July 7, 1998.
    (e) Requests for adjustments and appeals. (1) A loss of eligibility 
under this section does not take effect while your request for 
adjustment or appeal, as listed in Sec. 668.189(a), is pending, provided 
your request for adjustment or appeal is complete, timely, accurate, and 
in the required format.
    (2) Eligibility continued under paragraph (e)(1) of this section 
ends if we determine that none of the requests for adjustments and 
appeals you have submitted qualify you for continued eligibility under 
Sec. 668.189. Loss of eligibility takes effect on the date that you 
receive notice of our determination on your last pending request for 
adjustment or appeal.
    (3) You do not lose eligibility under this section if we determine 
that your request for adjustment or appeal meets all requirements of 
this subpart and qualifies you for continued eligibility under 
Sec. 668.189.
    (4) To avoid liabilities you might otherwise incur under paragraph 
(f) of this section, you may choose to suspend your participation in the 
FFEL and Direct Loan programs during the adjustment or appeal process.
    (f) Liabilities during the adjustment or appeal process. If you 
continued to participate in the FFEL or Direct Loan Program under 
paragraph (e)(1) of this section, and we determine that none of your 
requests for adjustments or appeals qualify you for continued 
eligibility--
    (1) For any FFEL or Direct Loan Program loan that you certified and 
delivered or originated and disbursed more than 30 days after you 
received the notice of your cohort default rate, we estimate the amount 
of interest, special allowance, reinsurance, and any related or similar 
payments we make or are obligated to make on those loans;
    (2) We exclude from this estimate any amount attributable to funds 
that you delivered or disbursed more than 45 days after you submitted 
your completed appeal to us;
    (3) We notify you of the estimated amount; and
    (4) Within 45 days after you receive our notice of the estimated 
amount, you must pay us that amount, unless--
    (i) You file an appeal under the procedures established in subpart H 
of this part (for the purposes of subpart H of this part, our notice of 
the estimate is considered to be a final program review determination); 
or
    (ii) We permit a longer repayment period.
    (g) Regaining eligibility. If you lose your eligibility to 
participate in a program under this section, you may not participate in 
that program until--
    (1) The period described in paragraph (b) of this section has ended;
    (2) You pay any amount owed to us under this section or are meeting 
that obligation under an agreement acceptable to us;
    (3) You submit a new application for participation in the program;
    (4) We determine that you meet all of the participation requirements 
in effect at the time of your application; and
    (5) You and we enter into a new program participation agreement.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)

[74 FR 55650, Oct. 28, 2009]



Sec. 668.188  Preventing evasion of the consequences of cohort default 
rates.

    (a) General. You are subject to a loss of eligibility that has 
already been imposed against another institution as a result of cohort 
default rates if--
    (1) You and the ineligible institution are both parties to a 
transaction that results in a change of ownership, a change in control, 
a merger, a consolidation, an acquisition, a change of name, a change of 
address, any change that results in a location becoming a freestanding 
institution, a purchase or sale, a transfer of assets, an assignment, a 
change of identification number, a contract for services, an addition or 
closure of one or more locations or branches or educational programs, or

[[Page 671]]

any other change in whole or in part in institutional structure or 
identity;
    (2) Following the change described in paragraph (a)(1) of this 
section, you offer an educational program at substantially the same 
address at which the ineligible institution had offered an educational 
program before the change; and
    (3) There is a commonality of ownership or management between you 
and the ineligible institution, as the ineligible institution existed 
before the change.
    (b) Commonality of ownership or management. For the purposes of this 
section, a commonality of ownership or management exists if, at each 
institution, the same person (as defined in 34 CFR 600.31) or members of 
that person's family, directly or indirectly--
    (1) Holds or held a managerial role; or
    (2) Has or had the ability to affect substantially the institution's 
actions, within the meaning of 34 CFR 600.21.
    (c) Teach-outs. Notwithstanding paragraph (b)(1) of this section, a 
commonality of management does not exist if you are conducting a teach-
out under a teach-out agreement as defined in 34 CFR 602.3 and 
administered in accordance with 34 CFR 602.24(c), and--
    (1)(i) Within 60 days after the change described in this section, 
you send us the names of the managers for each facility undergoing the 
teach-out as it existed before the change and for each facility as it 
exists after you believe that the commonality of management has ended; 
and
    (ii) We determine that the commonality of management, as described 
in paragraph (b)(1) of this section, has ended; or
    (2)(i) Within 30 days after you receive our notice that we have 
denied your submission under paragraph (c)(1)(i) of this section, you 
make the management changes we request and send us a list of the names 
of the managers for each facility undergoing the teach-out as it exists 
after you make those changes; and
    (ii) We determine that the commonality of management, as described 
in paragraph (b)(1) of this section, has ended.
    (d) Initial determination. We encourage you to contact us before 
undergoing a change described in this section. If you write to us, 
providing the information we request, we will provide a written initial 
determination of the anticipated change's effect on your eligibility.
    (e) Notice of accountability. (1) We notify you in writing if, in 
response to your notice or application filed under 34 CFR 600.20 or 
600.21, we determine that you are subject to a loss of eligibility, 
under paragraph (a) of this section, that has been imposed against 
another institution.
    (2) Our notice also advises you of the scope and duration of your 
loss of eligibility. The loss of eligibility applies to all of your 
locations from the date you receive our notice until the expiration of 
the period of ineligibility applicable to the other institution.
    (3) If you are subject to a loss of eligibility under this section 
that has already been imposed against another institution, you may only 
request an adjustment or submit an appeal for the loss of eligibility 
under the same requirements that would be applicable to the other 
institution under Sec. 668.189.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

[65 FR 65638, Nov. 1, 2000, as amended at 74 FR 55650, Oct. 28, 2009]



Sec. 668.189  General requirements for adjusting official cohort default
rates and for appealing their consequences.

    (a) Remaining eligible. You do not lose eligibility under 
Sec. 668.187 if--
    (1) We recalculate your cohort default rate, and it is below the 
percentage threshold for the loss of eligibility as the result of--
    (i) An uncorrected data adjustment submitted under this section and 
Sec. 668.190;
    (ii) A new data adjustment submitted under this section and 
Sec. 668.191;
    (iii) An erroneous data appeal submitted under this section and 
Sec. 668.192; or
    (iv) A loan servicing appeal submitted under this section and 
Sec. 668.193; or
    (2) You meet the requirements for--

[[Page 672]]

    (i) An economically disadvantaged appeal submitted under this 
section and Sec. 668.194;
    (ii) A participation rate index appeal submitted under this section 
and Sec. 668.195;
    (iii) An average rates appeal submitted under this section and 
Sec. 668.196; or
    (iv) A thirty-or-fewer borrowers appeal submitted under this section 
and Sec. 668.197.
    (b) Limitations on your ability to dispute your cohort default rate. 
(1) You may not dispute the calculation of a cohort default rate except 
as described in this subpart.
    (2) You may not request an adjustment or appeal a cohort default 
rate, under Sec. 668.190, Sec. 668.191, Sec. 668.192, or Sec. 668.193, 
more than once.
    (3) You may not request an adjustment or appeal a cohort default 
rate, under Sec. 668.190, Sec. 668.191, Sec. 668.192, or Sec. 668.193, 
if you previously lost your eligibility to participate in a Title IV, 
HEA program, under Sec. 668.187, based entirely or partially on that 
cohort default rate.
    (c) Content and format of requests for adjustments and appeals. We 
may deny your request for adjustment or appeal if it does not meet the 
following requirements:
    (1) All appeals, notices, requests, independent auditor's opinions, 
management's written assertions, and other correspondence that you are 
required to send under this subpart must be complete, timely, accurate, 
and in a format acceptable to us. This acceptable format is described in 
the ``Cohort Default Rate Guide'' that we provide to you.
    (2) Your completed request for adjustment or appeal must include--
    (i) All of the information necessary to substantiate your request 
for adjustment or appeal; and
    (ii) A certification by your chief executive officer, under penalty 
of perjury, that all the information you provide is true and correct.
    (d) Our copies of your correspondence. Whenever you are required by 
this subpart to correspond with a party other than us, you must send us 
a copy of your correspondence within the same time deadlines. However, 
you are not required to send us copies of documents that you received 
from us originally.
    (e) Requirements for data managers' responses. (1) Except as 
otherwise provided in this subpart, if this subpart requires a data 
manager to correspond with any party other than us, the data manager 
must send us a copy of the correspondence within the same time 
deadlines.
    (2) If a data manager sends us correspondence under this subpart 
that is not in a format acceptable to us, we may require the data 
manager to revise that correspondence's format, and we may prescribe a 
format for that data manager's subsequent correspondence with us.
    (f) Our decision on your request for adjustment or appeal. (1) We 
determine whether your request for an adjustment or appeal is in 
compliance with this subpart.
    (2) In making our decision for an adjustment, under Sec. 668.190 or 
Sec. 668.191, or an appeal, under Sec. 668.192 or Sec. 668.193--
    (i) We presume that the information provided to you by a data 
manager is correct unless you provide substantial evidence that shows 
the information is not correct; and
    (ii) If we determine that a data manager did not provide the 
necessary clarifying information or legible records in meeting the 
requirements of this subpart, we presume that the evidence that you 
provide to us is correct unless it is contradicted or otherwise proven 
to be incorrect by information we maintain.
    (3) Our decision is based on the materials you submit under this 
subpart. We do not provide an oral hearing.
    (4) We notify you of our decision--
    (i) If you request an adjustment or appeal because you are subject 
to a loss of eligibility under Sec. 668.187, within 45 days after we 
receive your completed request for an adjustment or appeal; or
    (ii) In all other cases, except for appeals submitted under 
Sec. 668.192(a) to avoid provisional certification, before we notify you 
of your next official cohort default rate.
    (5) You may not seek judicial review of our determination of a 
cohort default rate until we issue our decision

[[Page 673]]

on all pending requests for adjustments or appeals for that cohort 
default rate.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.190  Uncorrected data adjustments.

    (a) Eligibility. You may request an uncorrected data adjustment for 
your most recent cohort of borrowers, used to calculate your most recent 
official cohort default rate, if in response to your challenge under 
Sec. 668.185(b), a data manager agreed correctly to change the data, but 
the changes are not reflected in your official cohort default rate.
    (b) Deadlines for requesting an uncorrected data adjustment. You 
must send us a request for an uncorrected data adjustment, including all 
supporting documentation, within 30 days after you receive your loan 
record detail report from us.
    (c) Determination. We recalculate your cohort default rate, based on 
the corrected data, and electronically correct the rate that is publicly 
released, if we determine that--
    (1) In response to your challenge under Sec. 668.185(b), a data 
manager agreed to change the data;
    (2) The changes described in paragraph (c)(1) of this section are 
not reflected in your official cohort default rate; and
    (3) We agree that the data are incorrect.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)

[74 FR 55650, Oct. 28, 2009]



Sec. 668.191  New data adjustments.

    (a) Eligibility. You may request a new data adjustment for your most 
recent cohort of borrowers, used to calculate your most recent official 
cohort default rate, if--
    (1) A comparison of the loan record detail reports that we provide 
to you for the draft and official cohort default rates shows that the 
data have been newly included, excluded, or otherwise changed; and
    (2) You identify errors in the data described in paragraph (a)(1) of 
this section that are confirmed by the data manager.
    (b) Deadlines for requesting a new data adjustment. (1) You must 
send to the relevant data manager, or data managers, and us a request 
for a new data adjustment, including all supporting documentation, 
within 15 days after you receive your loan record detail report from us.
    (2) Within 20 days after receiving your request for a new data 
adjustment, the data manager must send you and us a response that--
    (i) Addresses each of your allegations of error; and
    (ii) Includes the documentation used to support the data manager's 
position.
    (3) Within 15 days after receiving a guaranty agency's notice that 
we hold an FFELP loan about which you are inquiring, you must send us 
your request for a new data adjustment for that loan. We respond to your 
request as set forth under paragraph (b)(2) of this section.
    (4) Within 15 days after receiving incomplete or illegible records 
or data from a data manager, you must send a request for replacement 
records or clarification of data to the data manager and us.
    (5) Within 20 days after receiving your request for replacement 
records or clarification of data, the data manager must--
    (i) Replace the missing or illegible records;
    (ii) Provide clarifying information; or
    (iii) Notify you and us that no clarifying information or additional 
or improved records are available.
    (6) You must send us your completed request for a new data 
adjustment, including all supporting documentation--
    (i) Within 30 days after you receive the final data manager's 
response to your request or requests; or
    (ii) If you are also filing an erroneous data appeal or a loan 
servicing appeal, by the latest of the filing dates required in 
paragraph (b)(6)(i) of this section or in Sec. 668.192(b)(6)(i) or 
Sec. 668.193(c)(10)(i).
    (c) Determination. If we determine that incorrect data were used to 
calculate your cohort default rate, we recalculate your cohort default 
rate

[[Page 674]]

based on the correct data and electronically correct the rate that is 
publicly released.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)

[74 FR 55651, Oct. 28, 2009]



Sec. 668.192  Erroneous data appeals.

    (a) Eligibility. Except as provided in Sec. 668.189(b), you may 
appeal the calculation of a cohort default rate upon which a loss of 
eligibility, under Sec. 668.187, or provisional certification, under 
Sec. 668.16(m), is based if--
    (1) You dispute the accuracy of data that you previously challenged 
on the basis of incorrect data, under Sec. 668.185(b); or
    (2) A comparison of the loan record detail reports that we provide 
to you for the draft and official cohort default rates shows that the 
data have been newly included, excluded, or otherwise changed, and you 
dispute the accuracy of that data.
    (b) Deadlines for submitting an appeal. (1) You must send a request 
for verification of data errors to the relevant data manager, or data 
managers, and to us within 15 days after you receive the notice of your 
loss of eligibility or provisional certification. Your request must 
include a description of the information in the cohort default rate data 
that you believe is incorrect and all supporting documentation that 
demonstrates the error.
    (2) Within 20 days after receiving your request for verification of 
data errors, the data manager must send you and us a response that--
    (i) Addresses each of your allegations of error; and
    (ii) Includes the documentation used to support the data manager's 
position.
    (3) Within 15 days after receiving a guaranty agency's notice that 
we hold an FFELP loan about which you are inquiring, you must send us 
your request for verification of that loan's data errors. Your request 
must include a description of the information in the cohort default rate 
data that you believe is incorrect and all supporting documentation that 
demonstrates the error. We respond to your request under paragraph 
(b)(2) of this section.
    (4) Within 15 days after receiving incomplete or illegible records 
or data, you must send a request for replacement records or 
clarification of data to the data manager and us.
    (5) Within 20 days after receiving your request for replacement 
records or clarification of data, the data manager must--
    (i) Replace the missing or illegible records;
    (ii) Provide clarifying information; or
    (iii) Notify you and us that no clarifying information or additional 
or improved records are available.
    (6) You must send your completed appeal to us, including all 
supporting documentation--
    (i) Within 30 days after you receive the final data manager's 
response to your request; or
    (ii) If you are also requesting a new data adjustment or filing a 
loan servicing appeal, by the latest of the filing dates required in 
paragraph (b)(6)(i) of this section or in Sec. 668.191(b)(6)(i) or 
Sec. 668.193(c)(10)(i).
    (c) Determination. If we determine that incorrect data were used to 
calculate your cohort default rate, we recalculate your cohort default 
rate based on the correct data and electronically correct the rate that 
is publicly released.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

[65 FR 65638, Nov. 1, 2000, as amended at 74 FR 55651, Oct. 28, 2009]



Sec. 668.193  Loan servicing appeals.

    (a) Eligibility. Except as provided in Sec. 668.189(b), you may 
appeal, on the basis of improper loan servicing or collection, the 
calculation of--
    (1) Your most recent cohort default rate; or
    (2) Any cohort default rate upon which a loss of eligibility under 
Sec. 668.187 is based.
    (b) Improper loan servicing. For the purposes of this section, a 
default is considered to have been due to improper loan servicing or 
collection only if the borrower did not make a payment on the loan and 
you prove that the FFEL Program lender or the Direct

[[Page 675]]

Loan Servicer, as defined in 34 CFR 685.102, failed to perform one or 
more of the following activities, if that activity applies to the loan:
    (1) Send at least one letter (other than the final demand letter) 
urging the borrower to make payments on the loan;
    (2) Attempt at least one phone call to the borrower;
    (3) Send a final demand letter to the borrower;
    (4) For a Direct Loan Program loan only, document that skip tracing 
was performed if the Direct Loan Servicer determined that it did not 
have the borrower's current address; and
    (5) For an FFELP loan only--
    (i) Submit a request for preclaims or default aversion assistance to 
the guaranty agency; and
    (ii) Submit a certification or other documentation that skip tracing 
was performed to the guaranty agency.
    (c) Deadlines for submitting an appeal. (1) If the loan record 
detail report was not included with your official cohort default rate 
notice, you must request it within 15 days after you receive the notice 
of your official cohort default rate.
    (2) You must send a request for loan servicing records to the 
relevant data manager, or data managers, and to us within 15 days after 
you receive your loan record detail report from us. If the data manager 
is a guaranty agency, your request must include a copy of the loan 
record detail report.
    (3) Within 20 days after receiving your request for loan servicing 
records, the data manager must--
    (i) Send you and us a list of the borrowers in your representative 
sample, as described in paragraph (d) of this section (the list must be 
in social security number order, and it must include the number of 
defaulted loans included in the cohort for each listed borrower);
    (ii) Send you and us a description of how your representative sample 
was chosen; and
    (iii) Either send you copies of the loan servicing records for the 
borrowers in your representative sample and send us a copy of its cover 
letter indicating that the records were sent, or send you and us a 
notice of the amount of its fee for providing copies of the loan 
servicing records.
    (4) The data manager may charge you a reasonable fee for providing 
copies of loan servicing records, but it may not charge more than $10 
per borrower file. If a data manager charges a fee, it is not required 
to send the documents to you until it receives your payment of the fee.
    (5) If the data manager charges a fee for providing copies of loan 
servicing records, you must send payment in full to the data manager 
within 15 days after you receive the notice of the fee.
    (6) If the data manager charges a fee for providing copies of loan 
servicing records, and--
    (i) You pay the fee in full and on time, the data manager must send 
you, within 20 days after it receives your payment, a copy of all loan 
servicing records for each loan in your representative sample (the 
copies are provided to you in hard copy format unless the data manager 
and you agree that another format may be used), and it must send us a 
copy of its cover letter indicating that the records were sent; or
    (ii) You do not pay the fee in full and on time, the data manager 
must notify you and us of your failure to pay the fee and that you have 
waived your right to challenge the calculation of your cohort default 
rate based on the data manager's records. We accept that determination 
unless you prove that it is incorrect.
    (7) Within 15 days after receiving a guaranty agency's notice that 
we hold an FFELP loan about which you are inquiring, you must send us 
your request for the loan servicing records for that loan. We respond to 
your request under paragraph (c)(3) of this section.
    (8) Within 15 days after receiving incomplete or illegible records, 
you must send a request for replacement records to the data manager and 
us.
    (9) Within 20 days after receiving your request for replacement 
records, the data manager must either--
    (i) Replace the missing or illegible records; or
    (ii) Notify you and us that no additional or improved copies are 
available.
    (10) You must send your appeal to us, including all supporting 
documentation--
    (i) Within 30 days after you receive the final data manager's 
response to

[[Page 676]]

your request for loan servicing records; or
    (ii) If you are also requesting a new data adjustment or filing an 
erroneous data appeal, by the latest of the filing dates required in 
paragraph (c)(10)(i) of this section or in Sec. 668.191(b)(6)(i) or 
Sec. 668.192(b)(6)(i).
    (d) Representative sample of records. (1) To select a representative 
sample of records, the data manager first identifies all of the 
borrowers for whom it is responsible and who had loans that were 
considered to be in default in the calculation of the cohort default 
rate you are appealing.
    (2) From the group of borrowers identified under paragraph (d)(1) of 
this section, the data manager identifies a sample that is large enough 
to derive an estimate, acceptable at a 95 percent confidence level with 
a plus or minus 5 percent confidence interval, for use in determining 
the number of borrowers who should be excluded from the calculation of 
the cohort default rate due to improper loan servicing or collection.
    (e) Loan servicing records. Loan servicing records are the 
collection and payment history records--
    (1) Provided to the guaranty agency by the lender and used by the 
guaranty agency in determining whether to pay a claim on a defaulted 
loan; or
    (2) Maintained by our Direct Loan Servicer that are used in 
determining your cohort default rate.
    (f) Determination. (1) We determine the number of loans, included in 
your representative sample of loan servicing records, that defaulted due 
to improper loan servicing or collection, as described in paragraph (b) 
of this section.
    (2) Based on our determination, we use a statistically valid 
methodology to exclude the corresponding percentage of borrowers from 
both the numerator and denominator of the calculation of your cohort 
default rate, and electronically correct the rate that is publicly 
released.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

[65 FR 65638, Nov. 1, 2000, as amended at 67 FR 67075, Nov. 1, 2002; 74 
FR 55651, Oct. 28, 2009]



Sec. 668.194  Economically disadvantaged appeals.

    (a) Eligibility. As described in this section, you may appeal a 
notice of a loss of eligibility under Sec. 668.187 if an independent 
auditor's opinion certifies that your low income rate is two-thirds or 
more and--
    (1) You offer an associate, baccalaureate, graduate, or professional 
degree, and your completion rate is 70 percent or more; or
    (2) You do not offer an associate, baccalaureate, graduate, or 
professional degree, and your placement rate is 44 percent or more.
    (b) Low income rate. (1) Your low income rate is the percentage of 
your students, as described in paragraph (b)(2) of this section, who--
    (i) For an award year that overlaps the 12-month period selected 
under paragraph (b)(2) of this section, have an expected family 
contribution, as defined in 34 CFR 690.2, that is equal to or less than 
the largest expected family contribution that would allow a student to 
receive one-half of the maximum Federal Pell Grant award, regardless of 
the student's enrollment status or cost of attendance; or
    (ii) For a calendar year that overlaps the 12-month period selected 
under paragraph (b)(2) of this section, have an adjusted gross income 
that, when added to the adjusted gross income of the student's parents 
(if the student is a dependent student) or spouse (if the student is a 
married independent student), is less than the amount listed in the 
Department of Health and Human Services poverty guidelines for the size 
of the student's family unit.
    (2) The students who are used to determine your low income rate 
include only students who were enrolled on at least a half-time basis in 
an eligible program at your institution during any part of a 12-month 
period that ended during the 6 months immediately preceding the cohort's 
fiscal year.
    (c) Completion rate. (1) Your completion rate is the percentage of 
your students, as described in paragraph (c)(2) of this section, who--
    (i) Completed the educational programs in which they were enrolled;
    (ii) Transferred from your institution to a higher level educational 
program;

[[Page 677]]

    (iii) Remained enrolled and are making satisfactory progress toward 
completion of their educational programs at the end of the same 12-month 
period used to calculate the low income rate; or
    (iv) Entered active duty in the Armed Forces of the United States 
within 1 year after their last date of attendance at your institution.
    (2) The students who are used to determine your completion rate 
include only regular students who were--
    (i) Initially enrolled on a full-time basis in an eligible program; 
and
    (ii) Originally scheduled to complete their programs during the same 
12-month period used to calculate the low income rate.
    (d) Placement rate. (1) Except as provided in paragraph (d)(2) of 
this section, your placement rate is the percentage of your students, as 
described in paragraphs (d)(3) and (d)(4) of this section, who--
    (i) Are employed, in an occupation for which you provided training, 
on the date following 1 year after their last date of attendance at your 
institution;
    (ii) Were employed for at least 13 weeks, in an occupation for which 
you provided training, between the date they enrolled at your 
institution and the first date that is more than a year after their last 
date of attendance at your institution; or
    (iii) Entered active duty in the Armed Forces of the United States 
within 1 year after their last date of attendance at your institution.
    (2) For the purposes of this section, a former student is not 
considered to have been employed based on any employment by your 
institution.
    (3) The students who are used to determine your placement rate 
include only former students who--
    (i) Were initially enrolled in an eligible program on at least a 
half-time basis;
    (ii) Were originally scheduled, at the time of enrollment, to 
complete their educational programs during the same 12-month period used 
to calculate the low income rate; and
    (iii) Remained in the program beyond the point at which a student 
would have received a 100 percent tuition refund from you.
    (4) A student is not included in the calculation of your placement 
rate if that student, on the date that is 1 year after the student's 
originally scheduled completion date, remains enrolled in the same 
program and is making satisfactory progress.
    (e) Scheduled to complete. In calculating a completion or placement 
rate under this section, the date on which a student is originally 
scheduled to complete a program is based on--
    (1) For a student who is initially enrolled full-time, the amount of 
time specified in your enrollment contract, catalog, or other materials 
for completion of the program by a full-time student; or
    (2) For a student who is initially enrolled less than full-time, the 
amount of time that it would take the student to complete the program if 
the student remained at that level of enrollment throughout the program.
    (f) Deadline for submitting an appeal. (1) Within 30 days after you 
receive the notice of your loss of eligibility, you must send us your 
management's written assertion, as described in the Cohort Default Rate 
Guide.
    (2) Within 60 days after you receive the notice of your loss of 
eligibility, you must send us the independent auditor's opinion 
described in paragraph (g) of this section.
    (g) Independent auditor's opinion. (1) The independent auditor's 
opinion must state whether your management's written assertion, as you 
provided it to the auditor and to us, meets the requirements for an 
economically disadvantaged appeal and is fairly stated in all material 
respects.
    (2) The engagement that forms the basis of the independent auditor's 
opinion must be an examination-level compliance attestation engagement 
performed in accordance with--
    (i) The American Institute of Certified Public Accountant's (AICPA) 
Statement on Standards for Attestation Engagements, Compliance 
Attestation (AICPA, Professional Standards, vol. 1, AT sec. 500), as 
amended (these standards may be obtained by calling the AICPA's order 
department, at 1-888-777-7077); and

[[Page 678]]

    (ii) Government Auditing Standards issued by the Comptroller General 
of the United States.
    (h) Determination. You do not lose eligibility under Sec. 668.187 
if--
    (1) Your independent auditor's opinion agrees that you meet the 
requirements for an economically disadvantaged appeal; and
    (2) We determine that the independent auditor's opinion and your 
management's written assertion--
    (i) Meet the requirements for an economically disadvantaged appeal; 
and
    (ii) Are not contradicted or otherwise proven to be incorrect by 
information we maintain, to an extent that would render the independent 
auditor's opinion unacceptable.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.195  Participation rate index appeals.

    (a) Eligibility. (1) You may appeal a notice of a loss of 
eligibility under Sec. 668.187(a)(1), based on one cohort default rate 
over 40 percent, if your participation rate index for that cohort's 
fiscal year is equal to or less than 0.06015.
    (2) You may appeal a notice of a loss of eligibility under 
Sec. 668.187(a)(2), based on three cohort default rates of 25 percent or 
greater, if your participation rate index is equal to or less than 
0.0375 for any of those three cohorts' fiscal years.
    (b) Calculating your participation rate index. (1) Except as 
provided in paragraph (b)(2) of this section, your participation rate 
index for a fiscal year is determined by multiplying your cohort default 
rate for that fiscal year by the percentage that is derived by 
dividing--
    (i) The number of students who received an FFELP or a Direct Loan 
Program loan to attend your institution during a period of enrollment, 
as defined in 34 CFR 682.200 or 685.102, that overlaps any part of a 12-
month period that ended during the 6 months immediately preceding the 
cohort's fiscal year, by
    (ii) The number of regular students who were enrolled at your 
institution on at least a half-time basis during any part of the same 
12-month period.
    (2) If your cohort default rate for a fiscal year is calculated as 
an average rate under Sec. 668.183(d)(2), you may calculate your 
participation rate index for that fiscal year using either that average 
rate or the cohort default rate that would be calculated for the fiscal 
year alone using the method described in Sec. 668.183(d)(1).
    (c) Deadline for submitting an appeal. You must send us your appeal 
under this section, including all supporting documentation, within 30 
days after you receive the notice of your loss of eligibility.
    (d) Determination. (1) You do not lose eligibility under 
Sec. 668.187 if we determine that you meet the requirements for a 
participation rate index appeal.
    (2) If we determine that your participation rate index for a fiscal 
year is equal to or less than 0.0375, under paragraph (d)(1) of this 
section, we also excuse you from any subsequent loss of eligibility 
under Sec. 668.187(a)(2) that would be based on the official cohort 
default rate for that fiscal year.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.196  Average rates appeals.

    (a) Eligibility. (1) You may appeal a notice of a loss of 
eligibility under Sec. 668.187(a)(1), based on one cohort default rate 
over 40 percent, if that cohort default rate is calculated as an average 
rate under Sec. 668.183(d)(2).
    (2) You may appeal a notice of a loss of eligibility under 
Sec. 668.187(a)(2), based on three cohort default rates of 25 percent or 
greater, if at least two of those cohort default rates--
    (i) Are calculated as average rates under Sec. 668.183(d)(2); and
    (ii) Would be less than 25 percent if calculated for the fiscal year 
alone using the method described in Sec. 668.183(d)(1).
    (b) Deadline for submitting an appeal. (1) Before notifying you of 
your official cohort default rate, we make an initial determination 
about whether you qualify for an average rates appeal. If we determine 
that you qualify, we notify you of that determination at the same

[[Page 679]]

time that we notify you of your official cohort default rate.
    (2) If you disagree with our initial determination, you must send us 
your average rates appeal, including all supporting documentation, 
within 30 days after you receive the notice of your loss of eligibility.
    (c) Determination. You do not lose eligibility under Sec. 668.187 if 
we determine that you meet the requirements for an average rates appeal.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)

[65 FR 65638, Nov. 1, 2000, as amended at 74 FR 55651, Oct. 28, 2009]



Sec. 668.197  Thirty-or-fewer borrowers appeals.

    (a) Eligibility. You may appeal a notice of a loss of eligibility 
under Sec. 668.187 if 30 or fewer borrowers, in total, are included in 
the 3 most recent cohorts of borrowers used to calculate your cohort 
default rates.
    (b) Deadline for submitting an appeal. (1) Before notifying you of 
your official cohort default rate, we make an initial determination 
about whether you qualify for a thirty-or-fewer borrowers appeal. If we 
determine that you qualify, we notify you of that determination at the 
same time that we notify you of your official cohort default rate.
    (2) If you disagree with our initial determination, you must send us 
your thirty-or-fewer borrowers appeal, including all supporting 
documentation, within 30 days after you receive the notice of your loss 
of eligibility.
    (c) Determination. You do not lose eligibility under Sec. 668.187 if 
we determine that you meet the requirements for a thirty-or-fewer 
borrowers appeal.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority: 20 U.S.C. 1082, 1085, 1094, 1099c)



                     Subpart N_Cohort Default Rates

    Source: 74 FR 55651, Oct. 28, 2009, unless otherwise noted.



Sec. 668.200  Purpose of this subpart.

    (a) General. Your cohort default rate is a measure we use to 
determine your eligibility to participate in various Title IV, HEA 
programs. We may also use it for determining your eligibility for 
exemptions, such as those for certain disbursement requirements under 
the FFEL and Direct Loan Programs. This subpart applies solely to 
cohorts, as defined in Secs. 668.201(a) and 668.202(b), for fiscal years 
2009 and later. For these cohorts, this subpart describes how cohort 
default rates are calculated, some of the consequences of cohort default 
rates, and how you may request changes to your cohort default rates or 
appeal their consequences. Under this subpart, you submit a 
``challenge'' after you receive your draft cohort default rate, and you 
request an ``adjustment'' or ``appeal'' after your official cohort 
default rate is published.
    (b) Cohort Default Rates. Notwithstanding anything to the contrary 
in this subpart, we will issue annually two sets of draft and official 
cohort default rates for fiscal years 2009, 2010, and 2011. For each of 
these years, you will receive one set of draft and official cohort 
default rates under this subpart and another set of draft and official 
cohort default rates under subpart M of this part.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.201  Definitions of terms used in this subpart.

    We use the following definitions in this subpart:
    (a) Cohort. Your cohort is a group of borrowers used to determine 
your cohort default rate. The method for identifying the borrowers in a 
cohort is provided in Sec. 668.202(b).
    (b) Data manager. (1) For FFELP loans held by a guaranty agency or 
lender, the guaranty agency is the data manager.
    (2) For FFELP loans that we hold, we are the data manager.
    (3) For Direct Loan Program loans, the Direct Loan Servicer, as 
defined in 34 CFR 685.102, is the data manager.
    (c) Days. In this subpart, ``days'' means calendar days.
    (d) Default. A borrower is considered to be in default for cohort 
default rate purposes under the rules in Sec. 668.202(c).
    (e) Draft cohort default rate. Your draft cohort default rate is a 
rate we

[[Page 680]]

issue, for your review, before we issue your official cohort default 
rate. A draft cohort default rate is used only for the purposes 
described in Sec. 668.204.
    (f) Entering repayment. (1) Except as provided in paragraphs (f)(2) 
and (f)(3) of this section, loans are considered to enter repayment on 
the dates described in 34 CFR 682.200 (under the definition of 
``repayment period'') and in 34 CFR 685.207.
    (2) A Federal SLS loan is considered to enter repayment--
    (i) At the same time the borrower's Federal Stafford loan enters 
repayment, if the borrower received the Federal SLS loan and the Federal 
Stafford loan during the same period of continuous enrollment; or
    (ii) In all other cases, on the day after the student ceases to be 
enrolled at an institution on at least a half-time basis in an 
educational program leading to a degree, certificate, or other 
recognized educational credential.
    (3) For the purposes of this subpart, a loan is considered to enter 
repayment on the date that a borrower repays it in full, if the loan is 
paid in full before the loan enters repayment under paragraphs (f)(1) or 
(f)(2) of this section.
    (g) Fiscal year. A fiscal year begins on October 1 and ends on the 
following September 30. A fiscal year is identified by the calendar year 
in which it ends.
    (h) Loan record detail report. The loan record detail report is a 
report that we produce. It contains the data used to calculate your 
draft or official cohort default rate.
    (i) Official cohort default rate. Your official cohort default rate 
is the cohort default rate that we publish for you under Sec. 668.205. 
Cohort default rates calculated under this subpart are not related in 
any way to cohort default rates that are calculated for the Federal 
Perkins Loan Program.
    (j) We. We are the Department, the Secretary, or the Secretary's 
designee.
    (k) You. You are an institution.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.202  Calculating and applying cohort default rates.

    (a) General. This section describes the four steps that we follow to 
calculate and apply your cohort default rate for a fiscal year:
    (1) First, under paragraph (b) of this section, we identify the 
borrowers in your cohort for the fiscal year. If the total number of 
borrowers in that cohort is fewer than 30, we also identify the 
borrowers in your cohorts for the 2 most recent prior fiscal years.
    (2) Second, under paragraph (c) of this section, we identify the 
borrowers in the cohort (or cohorts) who are considered to be in default 
by the end of the second fiscal year following the fiscal year those 
borrowers entered repayment. If more than one cohort will be used to 
calculate your cohort default rate, we identify defaulted borrowers 
separately for each cohort.
    (3) Third, under paragraph (d) of this section, we calculate your 
cohort default rate.
    (4) Fourth, we apply your cohort default rate to all of your 
locations--
    (i) As you exist on the date you receive the notice of your official 
cohort default rate; and
    (ii) From the date on which you receive the notice of your official 
cohort default rate until you receive our notice that the cohort default 
rate no longer applies.
    (b) Identify the borrowers in a cohort. (1) Except as provided in 
paragraph (b)(3) of this section, your cohort for a fiscal year consists 
of all of your current and former students who, during that fiscal year, 
entered repayment on any Federal Stafford loan, Federal SLS loan, Direct 
Subsidized loan, or Direct Unsubsidized loan that they received to 
attend your institution, or on the portion of a loan made under the 
Federal Consolidation Loan Program or the Federal Direct Consolidation 
Loan Program (as defined in 34 CFR 685.102) that is used to repay those 
loans.
    (2) A borrower may be included in more than one of your cohorts and 
may be included in the cohorts of more than one institution in the same 
fiscal year.
    (3) A TEACH Grant that has been converted to a Federal Direct 
Unsubsidized Loan is not considered for the purpose of calculating and 
applying cohort default rates.

[[Page 681]]

    (c) Identify the borrowers in a cohort who are in default. (1) 
Except as provided in paragraph (c)(2) of this section, a borrower in a 
cohort for a fiscal year is considered to be in default if, before the 
end of the second fiscal year following the fiscal year the borrower 
entered repayment--
    (i) The borrower defaults on any FFELP loan that was used to include 
the borrower in the cohort or on any Federal Consolidation Loan Program 
loan that repaid a loan that was used to include the borrower in the 
cohort (however, a borrower is not considered to be in default unless a 
claim for insurance has been paid on the loan by a guaranty agency or by 
us);
    (ii) The borrower fails to make an installment payment, when due, on 
any Direct Loan Program loan that was used to include the borrower in 
the cohort or on any Federal Direct Consolidation Loan Program loan that 
repaid a loan that was used to include the borrower in the cohort, and 
the borrower's failure persists for 360 days (or for 270 days, if the 
borrower's first day of delinquency was before October 7, 1998);
    (iii) You or your owner, agent, contractor, employee, or any other 
affiliated entity or individual make a payment to prevent a borrower's 
default on a loan that is used to include the borrower in that cohort; 
or
    (iv) The borrower fails to make an installment payment, when due, on 
a Federal Stafford Loan that is held by the Secretary or a Federal 
Consolidation Loan that is held by the Secretary and that was used to 
repay a Federal Stafford Loan, if such Federal Stafford Loan or Federal 
Consolidation was used to include the borrower in the cohort, and the 
borrower's failure persists for 360 days.
    (2) A borrower is not considered to be in default based on a loan 
that is, before the end of the second fiscal year following the fiscal 
year in which it entered repayment--
    (i) Rehabilitated under 34 CFR 682.405 or 34 CFR 685.211(e); or
    (ii) Repurchased by a lender because the claim for insurance was 
submitted or paid in error.
    (d) Calculate the cohort default rate. Except as provided in 
Sec. 668.203, if there are--
    (1)(i) Thirty or more borrowers in your cohort for a fiscal year, 
your cohort default rate is the percentage that is calculated by--
    (ii) Dividing the number of borrowers in the cohort who are in 
default, as determined under paragraph (c) of this section by the number 
of borrowers in the cohort, as determined under paragraph (b) of this 
section.
    (2)(i) Fewer than 30 borrowers in your cohort for a fiscal year, 
your cohort default rate is the percentage that is calculated by--
    (ii) Dividing the total number of borrowers in that cohort and in 
the two most recent prior cohorts who are in default, as determined for 
each cohort under paragraph (c) of this section by the total number of 
borrowers in that cohort and the two most recent prior cohorts, as 
determined for each cohort under paragraph (b) of this section.

(Authority:20 U.S.C. 1070g, 1082, 1085, 1094, 1099c)



Sec. 668.203  Determining cohort default rates for institutions that
have undergone a change in status.

    (a) General. (1) Except as provided under 34 CFR 600.32(d), if you 
undergo a change in status identified in this section, your cohort 
default rate is determined under this section.
    (2) In determining cohort default rates under this section, the date 
of a merger, acquisition, or other change in status is the date the 
change occurs.
    (3) A change in status may affect your eligibility to participate in 
Title IV, HEA programs under Sec. 668.206 or Sec. 668.207.
    (4) If another institution's cohort default rate is applicable to 
you under this section, you may challenge, request an adjustment, or 
submit an appeal for the cohort default rate under the same requirements 
that would be applicable to the other institution under Secs. 668.204 
and 668.208.
    (b) Acquisition or merger of institutions. If your institution 
acquires, or was created by the merger of, one or more institutions that 
participated independently in the Title IV, HEA programs immediately 
before the acquisition or merger--

[[Page 682]]

    (1) For the cohort default rates published before the date of the 
acquisition or merger, your cohort default rates are the same as those 
of your predecessor that had the highest total number of borrowers 
entering repayment in the two most recent cohorts used to calculate 
those cohort default rates; and
    (2) Beginning with the first cohort default rate published after the 
date of the acquisition or merger, your cohort default rates are 
determined by including the applicable borrowers from each institution 
involved in the acquisition or merger in the calculation under 
Sec. 668.202.
    (c) Acquisition of branches or locations. If you acquire a branch or 
a location from another institution participating in the Title IV, HEA 
programs--
    (1) The cohort default rates published for you before the date of 
the change apply to you and to the newly acquired branch or location;
    (2) Beginning with the first cohort default rate published after the 
date of the change, your cohort default rates for the next 3 fiscal 
years are determined by including the applicable borrowers from your 
institution and the other institution (including all of its locations) 
in the calculation under Sec. 668.202;
    (3) After the period described in paragraph (c)(2) of this section, 
your cohort default rates do not include borrowers from the other 
institution in the calculation under Sec. 668.202; and
    (4) At all times, the cohort default rate for the institution from 
which you acquired the branch or location is not affected by this change 
in status.
    (d) Branches or locations becoming institutions. If you are a branch 
or location of an institution that is participating in the Title IV, HEA 
programs, and you become a separate, new institution for the purposes of 
participating in those programs--
    (1) The cohort default rates published before the date of the change 
for your former parent institution are also applicable to you;
    (2) Beginning with the first cohort default rate published after the 
date of the change, your cohort default rates for the next 3 fiscal 
years are determined by including the applicable borrowers from your 
institution and your former parent institution (including all of its 
locations) in the calculation under Sec. 668.202; and
    (3) After the period described in paragraph (d)(2) of this section, 
your cohort default rates do not include borrowers from your former 
parent institution in the calculation under Sec. 668.202.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.204  Draft cohort default rates and your ability to challenge
before official cohort default rates are issued.

    (a) General. (1) We notify you of your draft cohort default rate 
before your official cohort default rate is calculated. Our notice 
includes the loan record detail report for the draft cohort default 
rate.
    (2) Regardless of the number of borrowers included in your cohort, 
your draft cohort default rate is always calculated using data for that 
fiscal year alone, using the method described in Sec. 668.202(d)(1).
    (3) Your draft cohort default rate and the loan record detail report 
are not considered public information and may not be otherwise 
voluntarily released to the public by a data manager.
    (4) Any challenge you submit under this section and any response 
provided by a data manager must be in a format acceptable to us. This 
acceptable format is described in the ``Cohort Default Rate Guide'' that 
we provide to you. If your challenge does not comply with the 
requirements in the ``Cohort Default Rate Guide,'' we may deny your 
challenge.
    (b) Incorrect data challenges. (1) You may challenge the accuracy of 
the data included on the loan record detail report by sending a 
challenge to the relevant data manager, or data managers, within 45 days 
after you receive the data. Your challenge must include--
    (i) A description of the information in the loan record detail 
report that you believe is incorrect; and
    (ii) Documentation that supports your contention that the data are 
incorrect.
    (2) Within 30 days after receiving your challenge, the data manager 
must send you and us a response that--

[[Page 683]]

    (i) Addresses each of your allegations of error; and
    (ii) Includes the documentation that supports the data manager's 
position.
    (3) If your data manager concludes that draft data in the loan 
record detail report are incorrect, and we agree, we use the corrected 
data to calculate your cohort default rate.
    (4) If you fail to challenge the accuracy of data under this 
section, you cannot contest the accuracy of those data in an uncorrected 
data adjustment, under Sec. 668.209, or in an erroneous data appeal, 
under Sec. 668.211.
    (c) Participation rate index challenges. (1)(i) You may challenge an 
anticipated loss of eligibility under Sec. 668.206(a)(1), based on one 
cohort default rate over 40 percent, if your participation rate index 
for that cohort's fiscal year is equal to or less than 0.0832.
    (ii) Subject to Sec. 668.208(b), you may challenge a potential loss 
of eligibility under Sec. 668.206(a)(2), based on any cohort default 
rate that is less than or equal to 40 percent, but greater than or equal 
to 30 percent, for any of the three most recently calculated fiscal 
years, if your participation rate index is equal to or less than 0.0625 
for that cohort's fiscal year.
    (iii) You may challenge a potential placement on provisional 
certification under Sec. 668.16(m)(2)(i), based on any cohort default 
rate that fails to satisfy the standard of administrative capability in 
Sec. 668.16(m)(1)(ii), if your participation rate index is equal to or 
less than 0.0625 for that cohort's fiscal year.
    (2) For a participation rate index challenge, your participation 
rate index is calculated as described in Sec. 668.214(b), except that--
    (i) The draft cohort default rate is considered to be your most 
recent cohort default rate; and
    (ii) If the cohort used to calculate your draft cohort default rate 
included fewer than 30 borrowers, you may calculate your participation 
rate index for that fiscal year using either your most recent draft 
cohort default rate or the average rate that would be calculated for 
that fiscal year, using the method described in Sec. 668.202(d)(2).
    (3) You must send your participation rate index challenge, including 
all supporting documentation, to us within 45 days after you receive 
your draft cohort default rate.
    (4) We notify you of our determination on your participation rate 
index challenge before your official cohort default rate is published.
    (5) If we determine that you qualify for continued eligibility or 
full certification based on your participation rate index challenge, you 
will not lose eligibility under Sec. 668.206 or be placed on provisional 
certification under Sec. 668.16(m)(2)(i) when your next official cohort 
default rate is published. Unless that next official cohort default rate 
is less than or equal to your draft cohort default rate, a successful 
challenge that is based on your draft cohort default rate does not 
excuse you from any other loss of eligibility or placement on 
provisional certification. However, if your successful challenge under 
paragraph (c)(1)(ii) or (iii) of this section is based on a prior, 
official cohort default rate, and not on your draft cohort default rate, 
or if the next official cohort default rate published is less than or 
equal to the draft rate you successfully challenged, we also excuse you 
from any subsequent loss of eligibility, under Sec. 668.206(a)(2), or 
placement on provisional certification, under Sec. 668.16(m)(2)(i), that 
would be based on that official cohort default rate.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)

[74 FR 55651, Oct. 28, 2009, as amended at 78 FR 65804, Nov. 1, 2013; 80 
FR 67236, Oct. 30, 2015]



Sec. 668.205  Notice of your official cohort default rate.

    (a) We electronically notify you of your cohort default rate after 
we calculate it, by sending you an eCDR notification package to the 
destination point you designate. After we send our notice to you, we 
publish a list of cohort default rates for all institutions.
    (b) If you had one or more borrowers entering repayment in the 
fiscal year for which the rate is calculated, or are subject to 
sanctions, or if the Department believes you will have an official 
cohort default rate calculated as an average rate, you will receive a 
loan record detail report as part of your eCDR notification package.

[[Page 684]]

    (c) You have five business days, from the transmission date for eCDR 
notification packages as posted on the Department's Web site, to report 
any problem with receipt of the electronic transmission of your eCDR 
notification package.
    (d) Except as provided in paragraph (e) of this section, timelines 
for submitting challenges, adjustments, and appeals begin on the sixth 
business day following the transmission date for eCDR notification 
packages that is posted on the Department's Web site.
    (e) If you timely report a problem with transmission of your eCDR 
notification package under paragraph (c) of this section and the 
Department agrees that the problem with transmission was not caused by 
you, the Department will extend the challenge, appeal and adjustment 
deadlines and timeframes to account for a retransmission of your eCDR 
notification package after the technical problem is resolved.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.206  Consequences of cohort default rates on your ability to
participate in Title IV, HEA programs.

    (a) End of participation. (1) Except as provided in paragraph (e) of 
this section, you lose your eligibility to participate in the FFEL and 
Direct Loan programs 30 days after you receive our notice that your most 
recent cohort default rate for fiscal year 2011 or later is greater than 
40 percent.
    (2) Except as provided in paragraphs (d) and (e) of this section, 
you lose your eligibility to participate in the FFEL, Direct Loan, and 
Federal Pell Grant programs 30 days after you receive our notice that 
your three most recent cohort default rates are each 30 percent or 
greater.
    (b) Length of period of ineligibility. Your loss of eligibility 
under this section continues--
    (1) For the remainder of the fiscal year in which we notify you that 
you are subject to a loss of eligibility; and
    (2) For the next 2 fiscal years.
    (c) Using a cohort default rate more than once. The use of a cohort 
default rate as a basis for a loss of eligibility under this section 
does not preclude its use as a basis for--
    (1) Any concurrent or subsequent loss of eligibility under this 
section; or
    (2) Any other action by us.
    (d) Continuing participation in Pell. If you are subject to a loss 
of eligibility under paragraph (a)(2) of this section, based on three 
cohort default rates of 30 percent or greater, you may continue to 
participate in the Federal Pell Grant Program if we determine that you--
    (1) Were ineligible to participate in the FFEL and Direct Loan 
programs before October 7, 1998, and your eligibility was not 
reinstated;
    (2) Requested in writing, before October 7, 1998, to withdraw your 
participation in the FFEL and Direct Loan programs, and you were not 
later reinstated; or
    (3) Have not certified an FFELP loan or originated a Direct Loan 
Program loan on or after July 7, 1998.
    (e) Requests for adjustments and appeals. (1) A loss of eligibility 
under this section does not take effect while your request for 
adjustment or appeal, as listed in Sec. 668.208(a), is pending, provided 
your request for adjustment or appeal is complete, timely, accurate, and 
in the required format.
    (2) Eligibility continued under paragraph (e)(1) of this section 
ends if we determine that none of the requests for adjustments and 
appeals you have submitted qualify you for continued eligibility under 
Sec. 668.208. Loss of eligibility takes effect on the date that you 
receive notice of our determination on your last pending request for 
adjustment or appeal.
    (3) You do not lose eligibility under this section if we determine 
that your request for adjustment or appeal meets all requirements of 
this subpart and qualifies you for continued eligibility under 
Sec. 668.208.
    (4) To avoid liabilities you might otherwise incur under paragraph 
(f) of this section, you may choose to suspend your participation in the 
FFEL and Direct Loan programs during the adjustment or appeal process.
    (f) Liabilities during the adjustment or appeal process. If you 
continued to participate in the FFEL or Direct Loan Program under 
paragraph (e)(1) of this section, and we determine that none of

[[Page 685]]

your requests for adjustments or appeals qualify you for continued 
eligibility--
    (1) For any FFEL or Direct Loan Program loan that you certified and 
delivered or originated and disbursed more than 30 days after you 
received the notice of your cohort default rate, we estimate the amount 
of interest, special allowance, reinsurance, and any related or similar 
payments we make or are obligated to make on those loans;
    (2) We exclude from this estimate any amount attributable to funds 
that you delivered or disbursed more than 45 days after you submitted 
your completed appeal to us;
    (3) We notify you of the estimated amount; and
    (4) Within 45 days after you receive our notice of the estimated 
amount, you must pay us that amount, unless--
    (i) You file an appeal under the procedures established in subpart H 
of this part (for the purposes of subpart H of this part, our notice of 
the estimate is considered to be a final program review determination); 
or
    (ii) We permit a longer repayment period.
    (g) Regaining eligibility. If you lose your eligibility to 
participate in a program under this section, you may not participate in 
that program until--
    (1) The period described in paragraph (b) of this section has ended;
    (2) You pay any amount owed to us under this section or are meeting 
that obligation under an agreement acceptable to us;
    (3) You submit a new application for participation in the program;
    (4) We determine that you meet all of the participation requirements 
in effect at the time of your application; and
    (5) You and we enter into a new program participation agreement.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.207  Preventing evasion of the consequences of cohort default
rates.

    (a) General. You are subject to a loss of eligibility that has 
already been imposed against another institution as a result of cohort 
default rates if--
    (1) You and the ineligible institution are both parties to a 
transaction that results in a change of ownership, a change in control, 
a merger, a consolidation, an acquisition, a change of name, a change of 
address, any change that results in a location becoming a freestanding 
institution, a purchase or sale, a transfer of assets, an assignment, a 
change of identification number, a contract for services, an addition or 
closure of one or more locations or branches or educational programs, or 
any other change in whole or in part in institutional structure or 
identity;
    (2) Following the change described in paragraph (a)(1) of this 
section, you offer an educational program at substantially the same 
address at which the ineligible institution had offered an educational 
program before the change; and
    (3) There is a commonality of ownership or management between you 
and the ineligible institution, as the ineligible institution existed 
before the change.
    (b) Commonality of ownership or management. For the purposes of this 
section, a commonality of ownership or management exists if, at each 
institution, the same person (as defined in 34 CFR 600.31) or members of 
that person's family, directly or indirectly--
    (1) Holds or held a managerial role; or
    (2) Has or had the ability to affect substantially the institution's 
actions, within the meaning of 34 CFR 600.21.
    (c) Teach-outs. Notwithstanding paragraph (b)(1) of this section, a 
commonality of management does not exist if you are conducting a teach-
out under a teach-out agreement as defined in 34 CFR 602.3 and 
administered in accordance with 34 CFR 602.24(c), and--
    (1)(i) Within 60 days after the change described in this section, 
you send us the names of the managers for each facility undergoing the 
teach-out as it existed before the change and for each facility as it 
exists after you believe that the commonality of management has ended; 
and
    (ii) We determine that the commonality of management, as described 
in paragraph (b)(1) of this section, has ended; or

[[Page 686]]

    (2)(i) Within 30 days after you receive our notice that we have 
denied your submission under paragraph (c)(1)(i) of this section, you 
make the management changes we request and send us a list of the names 
of the managers for each facility undergoing the teach-out as it exists 
after you make those changes; and
    (ii) We determine that the commonality of management, as described 
in paragraph (b)(1) of this section, has ended.
    (d) Initial determination. We encourage you to contact us before 
undergoing a change described in this section. If you write to us, 
providing the information we request, we will provide a written initial 
determination of the anticipated change's effect on your eligibility.
    (e) Notice of accountability. (1) We notify you in writing if, in 
response to your notice or application filed under 34 CFR 600.20 or 
600.21, we determine that you are subject to a loss of eligibility, 
under paragraph (a) of this section, that has been imposed against 
another institution.
    (2) Our notice also advises you of the scope and duration of your 
loss of eligibility. The loss of eligibility applies to all of your 
locations from the date you receive our notice until the expiration of 
the period of ineligibility applicable to the other institution.
    (3) If you are subject to a loss of eligibility under this section 
that has already been imposed against another institution, you may only 
request an adjustment or submit an appeal for the loss of eligibility 
under the same requirements that would be applicable to the other 
institution under Sec. 668.208.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.208  General requirements for adjusting official cohort 
default rates and for appealing their consequences.

    (a) Remaining eligible. You do not lose eligibility under 
Sec. 668.206 if--
    (1) We recalculate your cohort default rate, and it is below the 
percentage threshold for the loss of eligibility as the result of--
    (i) An uncorrected data adjustment submitted under this section and 
Sec. 668.209;
    (ii) A new data adjustment submitted under this section and 
Sec. 668.210;
    (iii) An erroneous data appeal submitted under this section and 
Sec. 668.211; or
    (iv) A loan servicing appeal submitted under this section and 
Sec. 668.212; or
    (2) You meet the requirements for--
    (i) An economically disadvantaged appeal submitted under this 
section and Sec. 668.213;
    (ii) A participation rate index challenge or appeal submitted under 
this section and Sec. 668.204 or Sec. 668.214;
    (iii) An average rates appeal submitted under this section and 
Sec. 668.215; or
    (iv) A thirty-or-fewer borrowers appeal submitted under this section 
and Sec. 668.216.
    (b) Limitations on your ability to dispute your cohort default rate. 
(1) You may not dispute the calculation of a cohort default rate except 
as described in this subpart or in Sec. 668.16(m)(2).
    (2) You may not challenge, request an adjustment to, or appeal a 
draft or official cohort default rate, under Sec. 668.204, Sec. 668.209, 
Sec. 668.210, Sec. 668.211, Sec. 668.212, or Sec. 668.214, more than 
once on that cohort default rate.
    (3) You may not challenge, request an adjustment to, or appeal a 
draft or official cohort default rate, under Sec. 668.204, Sec. 668.209, 
Sec. 668.210, Sec. 668.211, Sec. 668.212, or Sec. 668.214, if you 
previously lost your eligibility to participate in a Title IV, HEA 
program, under Sec. 668.206, or were placed on provisional certification 
under Sec. 668.16(m)(2)(i), based entirely or partially on that cohort 
default rate.
    (c) Content and format of requests for adjustments and appeals. We 
may deny your request for adjustment or appeal if it does not meet the 
following requirements:
    (1) All appeals, notices, requests, independent auditor's opinions, 
management's written assertions, and other correspondence that you are 
required to send under this subpart must be complete, timely, accurate, 
and in a format acceptable to us. This acceptable format is described in 
the ``Cohort Default Rate Guide'' that we provide to you.

[[Page 687]]

    (2) Your completed request for adjustment or appeal must include--
    (i) All of the information necessary to substantiate your request 
for adjustment or appeal; and
    (ii) A certification by your chief executive officer, under penalty 
of perjury, that all the information you provide is true and correct.
    (d) Our copies of your correspondence. Whenever you are required by 
this subpart to correspond with a party other than us, you must send us 
a copy of your correspondence within the same time deadlines. However, 
you are not required to send us copies of documents that you received 
from us originally.
    (e) Requirements for data managers' responses. (1) Except as 
otherwise provided in this subpart, if this subpart requires a data 
manager to correspond with any party other than us, the data manager 
must send us a copy of the correspondence within the same time 
deadlines.
    (2) If a data manager sends us correspondence under this subpart 
that is not in a format acceptable to us, we may require the data 
manager to revise that correspondence's format, and we may prescribe a 
format for that data manager's subsequent correspondence with us.
    (f) Our decision on your request for adjustment or appeal. (1) We 
determine whether your request for an adjustment or appeal is in 
compliance with this subpart.
    (2) In making our decision for an adjustment, under Sec. 668.209 or 
Sec. 668.210, or an appeal, under Sec. 668.211 or Sec. 668.212--
    (i) We presume that the information provided to you by a data 
manager is correct unless you provide substantial evidence that shows 
the information is not correct; and
    (ii) If we determine that a data manager did not provide the 
necessary clarifying information or legible records in meeting the 
requirements of this subpart, we presume that the evidence that you 
provide to us is correct unless it is contradicted or otherwise proven 
to be incorrect by information we maintain.
    (3) Our decision is based on the materials you submit under this 
subpart. We do not provide an oral hearing.
    (4) We notify you of our decision--
    (i) If you request an adjustment or appeal because you are subject 
to a loss of eligibility under Sec. 668.206 or potential placement on 
provisional certification under Sec. 668.16(m)(2)(i) or file an 
economically disadvantaged appeal under Sec. 668.213(a)(2), within 45 
days after we receive your completed request for an adjustment or 
appeal; or
    (ii) In all other cases, except for appeals submitted under 
Sec. 668.211(a) following placement on provisional certification, before 
we notify you of your next official cohort default rate.
    (5) You may not seek judicial review of our determination of a 
cohort default rate until we issue our decision on all pending requests 
for adjustments or appeals for that cohort default rate.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)

[74 FR 55651, Oct. 28, 2009, as amended at 80 FR 67236, Oct. 30, 2015]



Sec. 668.209  Uncorrected data adjustments.

    (a) Eligibility. You may request an uncorrected data adjustment for 
your most recent cohort of borrowers, used to calculate your most recent 
official cohort default rate, if in response to your challenge under 
Sec. 668.204(b), a data manager agreed correctly to change the data, but 
the changes are not reflected in your official cohort default rate.
    (b) Deadlines for requesting an uncorrected data adjustment. You 
must send us a request for an uncorrected data adjustment, including all 
supporting documentation, within 30 days after you receive your loan 
record detail report from us.
    (c) Determination. We recalculate your cohort default rate, based on 
the corrected data, and electronically correct the rate that is publicly 
released if we determine that--
    (1) In response to your challenge under Sec. 668.204(b), a data 
manager agreed to change the data;
    (2) The changes described in paragraph (c)(1) of this section are 
not reflected in your official cohort default rate; and

[[Page 688]]

    (3) We agree that the data are incorrect.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.210  New data adjustments.

    (a) Eligibility. You may request a new data adjustment for your most 
recent cohort of borrowers, used to calculate your most recent official 
cohort default rate, if--
    (1) A comparison of the loan record detail reports that we provide 
to you for the draft and official cohort default rates shows that the 
data have been newly included, excluded, or otherwise changed; and
    (2) You identify errors in the data described in paragraph (a)(1) of 
this section that are confirmed by the data manager.
    (b) Deadlines for requesting a new data adjustment. (1) You must 
send to the relevant data manager, or data managers, and us a request 
for a new data adjustment, including all supporting documentation, 
within 15 days after you receive your loan record detail report from us.
    (2) Within 20 days after receiving your request for a new data 
adjustment, the data manager must send you and us a response that--
    (i) Addresses each of your allegations of error; and
    (ii) Includes the documentation used to support the data manager's 
position.
    (3) Within 15 days after receiving a guaranty agency's notice that 
we hold an FFELP loan about which you are inquiring, you must send us 
your request for a new data adjustment for that loan. We respond to your 
request as set forth under paragraph (b)(2) of this section.
    (4) Within 15 days after receiving incomplete or illegible records 
or data from a data manager, you must send a request for replacement 
records or clarification of data to the data manager and us.
    (5) Within 20 days after receiving your request for replacement 
records or clarification of data, the data manager must--
    (i) Replace the missing or illegible records;
    (ii) Provide clarifying information; or
    (iii) Notify you and us that no clarifying information or additional 
or improved records are available.
    (6) You must send us your completed request for a new data 
adjustment, including all supporting documentation--
    (i) Within 30 days after you receive the final data manager's 
response to your request or requests; or
    (ii) If you are also filing an erroneous data appeal or a loan 
servicing appeal, by the latest of the filing dates required in 
paragraph (b)(6)(i) of this section or in Sec. 668.211(b)(6)(i) or 
Sec. 668.212(c)(10)(i).
    (c) Determination. If we determine that incorrect data were used to 
calculate your cohort default rate, we recalculate your cohort default 
rate based on the correct data and make electronic corrections to the 
rate that is publicly released.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.211  Erroneous data appeals.

    (a) Eligibility. Except as provided in Sec. 668.208(b), you may 
appeal the calculation of a cohort default rate upon which a loss of 
eligibility, under Sec. 668.206, or provisional certification, under 
Sec. 668.16(m), is based if--
    (1) You dispute the accuracy of data that you previously challenged 
on the basis of incorrect data, under Sec. 668.204(b); or
    (2) A comparison of the loan record detail reports that we provide 
to you for the draft and official cohort default rates shows that the 
data have been newly included, excluded, or otherwise changed, and you 
dispute the accuracy of that data.
    (b) Deadlines for submitting an appeal. (1) You must send a request 
for verification of data errors to the relevant data manager, or data 
managers, and to us within 15 days after you receive the notice of your 
loss of eligibility or provisional certification. Your request must 
include a description of the information in the cohort default rate data 
that you believe is incorrect and all supporting documentation that 
demonstrates the error.

[[Page 689]]

    (2) Within 20 days after receiving your request for verification of 
data errors, the data manager must send you and us a response that--
    (i) Addresses each of your allegations of error; and
    (ii) Includes the documentation used to support the data manager's 
position.
    (3) Within 15 days after receiving a guaranty agency's notice that 
we hold an FFELP loan about which you are inquiring, you must send us 
your request for verification of that loan's data errors. Your request 
must include a description of the information in the cohort default rate 
data that you believe is incorrect and all supporting documentation that 
demonstrates the error. We respond to your request as set forth under 
paragraph (b)(2) of this section.
    (4) Within 15 days after receiving incomplete or illegible records 
or data, you must send a request for replacement records or 
clarification of data to the data manager and us.
    (5) Within 20 days after receiving your request for replacement 
records or clarification of data, the data manager must--
    (i) Replace the missing or illegible records;
    (ii) Provide clarifying information; or
    (iii) Notify you and us that no clarifying information or additional 
or improved records are available.
    (6) You must send your completed appeal to us, including all 
supporting documentation--
    (i) Within 30 days after you receive the final data manager's 
response to your request; or
    (ii) If you are also requesting a new data adjustment or filing a 
loan servicing appeal, by the latest of the filing dates required in 
paragraph (b)(6)(i) of this section or in Sec. 668.210(b)(6)(i) or 
Sec. 668.212(c)(10)(i).
    (c) Determination. If we determine that incorrect data were used to 
calculate your cohort default rate, we recalculate your cohort default 
rate based on the correct data and electronically correct the rate that 
is publicly released.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.212  Loan servicing appeals.

    (a) Eligibility. Except as provided in Sec. 668.208(b), you may 
appeal, on the basis of improper loan servicing or collection, the 
calculation of--
    (1) Your most recent cohort default rate; or
    (2) Any cohort default rate upon which a loss of eligibility under 
Sec. 668.206 is based.
    (b) Improper loan servicing. For the purposes of this section, a 
default is considered to have been due to improper loan servicing or 
collection only if the borrower did not make a payment on the loan and 
you prove that the FFEL Program lender or the Direct Loan Servicer, as 
defined in 34 CFR 685.102, failed to perform one or more of the 
following activities, if that activity applies to the loan:
    (1) Send at least one letter (other than the final demand letter) 
urging the borrower to make payments on the loan.
    (2) Attempt at least one phone call to the borrower.
    (3) Send a final demand letter to the borrower.
    (4) For a Direct Loan Program loan only, document that skip tracing 
was performed if the Direct Loan Servicer determined that it did not 
have the borrower's current address.
    (5) For an FFELP loan only--
    (i) Submit a request for preclaims or default aversion assistance to 
the guaranty agency; and
    (ii) Submit a certification or other documentation that skip tracing 
was performed to the guaranty agency.
    (c) Deadlines for submitting an appeal. (1) If the loan record 
detail report was not included with your official cohort default rate 
notice, you must request it within 15 days after you receive the notice 
of your official cohort default rate.
    (2) You must send a request for loan servicing records to the 
relevant data manager, or data managers, and to us within 15 days after 
you receive your loan record detail report from us. If the data manager 
is a guaranty agency, your request must include a copy of the loan 
record detail report.
    (3) Within 20 days after receiving your request for loan servicing 
records, the data manager must--

[[Page 690]]

    (i) Send you and us a list of the borrowers in your representative 
sample, as described in paragraph (d) of this section (the list must be 
in social security number order, and it must include the number of 
defaulted loans included in the cohort for each listed borrower);
    (ii) Send you and us a description of how your representative sample 
was chosen; and
    (iii) Either send you copies of the loan servicing records for the 
borrowers in your representative sample and send us a copy of its cover 
letter indicating that the records were sent, or send you and us a 
notice of the amount of its fee for providing copies of the loan 
servicing records.
    (4) The data manager may charge you a reasonable fee for providing 
copies of loan servicing records, but it may not charge more than $10 
per borrower file. If a data manager charges a fee, it is not required 
to send the documents to you until it receives your payment of the fee.
    (5) If the data manager charges a fee for providing copies of loan 
servicing records, you must send payment in full to the data manager 
within 15 days after you receive the notice of the fee.
    (6) If the data manager charges a fee for providing copies of loan 
servicing records, and--
    (i) You pay the fee in full and on time, the data manager must send 
you, within 20 days after it receives your payment, a copy of all loan 
servicing records for each loan in your representative sample (the 
copies are provided to you in hard copy format unless the data manager 
and you agree that another format may be used), and it must send us a 
copy of its cover letter indicating that the records were sent; or
    (ii) You do not pay the fee in full and on time, the data manager 
must notify you and us of your failure to pay the fee and that you have 
waived your right to challenge the calculation of your cohort default 
rate based on the data manager's records. We accept that determination 
unless you prove that it is incorrect.
    (7) Within 15 days after receiving a guaranty agency's notice that 
we hold an FFELP loan about which you are inquiring, you must send us 
your request for the loan servicing records for that loan. We respond to 
your request under paragraph (c)(3) of this section.
    (8) Within 15 days after receiving incomplete or illegible records, 
you must send a request for replacement records to the data manager and 
us.
    (9) Within 20 days after receiving your request for replacement 
records, the data manager must either--
    (i) Replace the missing or illegible records; or
    (ii) Notify you and us that no additional or improved copies are 
available.
    (10) You must send your appeal to us, including all supporting 
documentation--
    (i) Within 30 days after you receive the final data manager's 
response to your request for loan servicing records; or
    (ii) If you are also requesting a new data adjustment or filing an 
erroneous data appeal, by the latest of the filing dates required in 
paragraph (c)(10)(i) of this section or in Sec. 668.210(b)(6)(i) or 
Sec. 668.211(b)(6)(i).
    (d) Representative sample of records. (1) To select a representative 
sample of records, the data manager first identifies all of the 
borrowers for whom it is responsible and who had loans that were 
considered to be in default in the calculation of the cohort default 
rate you are appealing.
    (2) From the group of borrowers identified under paragraph (d)(1) of 
this section, the data manager identifies a sample that is large enough 
to derive an estimate, acceptable at a 95 percent confidence level with 
a plus or minus 5 percent confidence interval, for use in determining 
the number of borrowers who should be excluded from the calculation of 
the cohort default rate due to improper loan servicing or collection.
    (e) Loan servicing records. Loan servicing records are the 
collection and payment history records--
    (1) Provided to the guaranty agency by the lender and used by the 
guaranty agency in determining whether to pay a claim on a defaulted 
loan; or
    (2) Maintained by our Direct Loan Servicer that are used in 
determining your cohort default rate.
    (f) Determination. (1) We determine the number of loans, included in 
your representative sample of loan servicing

[[Page 691]]

records, that defaulted due to improper loan servicing or collection, as 
described in paragraph (b) of this section.
    (2) Based on our determination, we use a statistically valid 
methodology to exclude the corresponding percentage of borrowers from 
both the numerator and denominator of the calculation of your cohort 
default rate, and electronically correct the rate that is publicly 
released.

(Approved by the Office of Management and Budget under control number 
1845-0022)

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.213  Economically disadvantaged appeals.

    (a) General. As provided in this section you may appeal--
    (1) A notice of a loss of eligibility under Sec. 668.206; or
    (2) A notice of a second successive official cohort default rate 
calculated under this subpart that is equal to or greater than 30 
percent but less than or equal to 40 percent, potentially subjecting you 
to provisional certification under Sec. 668.16(m)(2)(i).
    (b) Eligibility. You may appeal under this section if an independent 
auditor's opinion certifies that your low income rate is two-thirds or 
more and--
    (1) You offer an associate, baccalaureate, graduate, or professional 
degree, and your completion rate is 70 percent or more; or
    (2) You do not offer an associate, baccalaureate, graduate, or 
professional degree, and your placement rate is 44 percent or more.
    (c) Low income rate. (1) Your low income rate is the percentage of 
your students, as described in paragraph (c)(2) of this section, who--
    (i) For an award year that overlaps the 12-month period selected 
under paragraph (c)(2) of this section, have an expected family 
contribution, as defined in 34 CFR 690.2, that is equal to or less than 
the largest expected family contribution that would allow a student to 
receive one-half of the maximum Federal Pell Grant award, regardless of 
the student's enrollment status or cost of attendance; or
    (ii) For a calendar year that overlaps the 12-month period selected 
under paragraph (c)(2) of this section, have an adjusted gross income 
that, when added to the adjusted gross income of the student's parents 
(if the student is a dependent student) or spouse (if the student is a 
married independent student), is less than the amount listed in the 
Department of Health and Human Services poverty guidelines for the size 
of the student's family unit.
    (2) The students who are used to determine your low income rate 
include only students who were enrolled on at least a half-time basis in 
an eligible program at your institution during any part of a 12-month 
period that ended during the 6 months immediately preceding the cohort's 
fiscal year.
    (d) Completion rate. (1) Your completion rate is the percentage of 
your students, as described in paragraph (d)(2) of this section, who--
    (i) Completed the educational programs in which they were enrolled;
    (ii) Transferred from your institution to a higher level educational 
program;
    (iii) Remained enrolled and are making satisfactory progress toward 
completion of their educational programs at the end of the same 12-month 
period used to calculate the low income rate; or
    (iv) Entered active duty in the Armed Forces of the United States 
within 1 year after their last date of attendance at your institution.
    (2) The students who are used to determine your completion rate 
include only regular students who were--
    (i) Initially enrolled on a full-time basis in an eligible program; 
and
    (ii) Originally scheduled to complete their programs during the same 
12-month period used to calculate the low income rate.
    (e) Placement rate. (1) Except as provided in paragraph (e)(2) of 
this section, your placement rate is the percentage of your students, as 
described in paragraphs (e)(3) and (e)(4) of this section, who--
    (i) Are employed, in an occupation for which you provided training, 
on the date following 1 year after their last date of attendance at your 
institution;
    (ii) Were employed for at least 13 weeks, in an occupation for which 
you provided training, between the date they enrolled at your 
institution and the first date that is more than a year

[[Page 692]]

after their last date of attendance at your institution; or
    (iii) Entered active duty in the Armed Forces of the United States 
within 1 year after their last date of attendance at your institution.
    (2) For the purposes of this section, a former student is not 
considered to have been employed based on any employment by your 
institution.
    (3) The students who are used to determine your placement rate 
include only former students who--
    (i) Were initially enrolled in an eligible program on at least a 
half-time basis;
    (ii) Were originally scheduled, at the time of enrollment, to 
complete their educational programs during the same 12-month period used 
to calculate the low income rate; and
    (iii) Remained in the program beyond the point at which a student 
would have received a 100 percent tuition refund from you.
    (4) A student is not included in the calculation of your placement 
rate if that student, on the date that is 1 year after the student's 
originally scheduled completion date, remains enrolled in the same 
program and is making satisfactory progress.
    (f) Scheduled to complete. In calculating a completion or placement 
rate under this section, the date on which a student is originally 
scheduled to complete a program is based on--
    (1) For a student who is initially enrolled full-time, the amount of 
time specified in your enrollment contract, catalog, or other materials 
for completion of the program by a full-time student; or
    (2) For a student who is initially enrolled less than full-time, the 
amount of time that it would take the student to complete the program if 
the student remained at that level of enrollment throughout the program.
    (g) Deadline for submitting an appeal. (1) Within 30 days after you 
receive the notice of your loss of eligibility or of a rate described in 
paragraph (a)(2) of this section, you must send us your management's 
written assertion, as described in the Cohort Default Rate Guide.
    (2) Within 60 days after you receive the notice of your loss of 
eligibility or of a rate described in paragraph (a)(2) of this section, 
you must send us the independent auditor's opinion described in 
paragraph (h) of this section.
    (h) Independent auditor's opinion. (1) The independent auditor's 
opinion must state whether your management's written assertion, as you 
provided it to the auditor and to us, meets the requirements for an 
economically disadvantaged appeal and is fairly stated in all material 
respects.
    (2) The engagement that forms the basis of the independent auditor's 
opinion must be an examination-level compliance attestation engagement 
performed in accordance with--
    (i) The American Institute of Certified Public Accountants' (AICPA) 
Statement on Standards for Attestation Engagements, Compliance 
Attestation (AICPA, Professional Standards, vol. 1, AT sec. 500), as 
amended (these standards may be obtained by calling the AICPA's order 
department, at 1-888-777-7077); and
    (ii) Government Auditing Standards issued by the Comptroller General 
of the United States.
    (i) Determination. You do not lose eligibility under Sec. 668.206, 
and we do not provisionally certify you under Sec. 668.16(m)(2)(i), if--
    (1) Your independent auditor's opinion agrees that you meet the 
requirements for an economically disadvantaged appeal; and
    (2) We determine that the independent auditor's opinion and your 
management's written assertion--
    (i) Meet the requirements for an economically disadvantaged appeal; 
and
    (ii) Are not contradicted or otherwise proven to be incorrect by 
information we maintain, to an extent that would render the independent 
auditor's opinion unacceptable.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)

[74 FR 55651, Oct. 28, 2009, as amended at 76 FR 52272, Aug. 22, 2011]



Sec. 668.214  Participation rate index appeals.

    (a) Eligibility. (1) You do not lose eligibility under 
Sec. 668.206(a)(1), based on one cohort default rate over 40 percent, if 
you bring an appeal in accordance with this section that demonstrates 
that your participation rate index for

[[Page 693]]

that cohort's fiscal year is equal to or less than 0.0832.
    (2) Subject to Sec. 668.208(b), you do not lose eligibility under 
Sec. 668.206(a)(2) if you bring an appeal in accordance with this 
section that demonstrates that your participation rate index for any of 
the three most recent cohorts' fiscal years is equal to or less than 
0.0625.
    (3) Subject to Sec. 668.208(b), you are not placed on provisional 
certification under Sec. 668.16(m)(2)(i) based on two cohort default 
rates that fail to satisfy the standard of administrative capability in 
Sec. 668.16(m)(1)(ii) if you bring an appeal in accordance with this 
section that demonstrates that your participation rate index for either 
of those two cohorts' fiscal years is equal to or less than 0.0625.
    (b) Calculating your participation rate index. (1) Except as 
provided in paragraph (b)(2) of this section, your participation rate 
index for a fiscal year is determined by multiplying your cohort default 
rate for that fiscal year by the percentage that is derived by 
dividing--
    (i) The number of students who received an FFELP or a Direct Loan 
Program loan to attend your institution during a period of enrollment, 
as defined in 34 CFR 682.200 or 685.102, that overlaps any part of a 12-
month period that ended during the 6 months immediately preceding the 
cohort's fiscal year, by
    (ii) The number of regular students who were enrolled at your 
institution on at least a half-time basis during any part of the same 
12-month period.
    (2) If your cohort default rate for a fiscal year is calculated as 
an average rate under Sec. 668.202(d)(2), you may calculate your 
participation rate index for that fiscal year using either that average 
rate or the cohort default rate that would be calculated for the fiscal 
year alone using the method described in Sec. 668.202(d)(1).
    (c) Deadline for submitting an appeal. You must send us your appeal 
under this section, including all supporting documentation, within 30 
days after you receive--
    (1) Notice of your loss of eligibility; or
    (2) Notice under Sec. 668.205 of a cohort default rate that equals 
or exceeds 30 percent but is less than or equal to 40 percent.
    (d) Determination. (1) You do not lose eligibility under 
Sec. 668.206 and we do not place you on provisional certification, if we 
determine that you meet the requirements for a participation rate index 
appeal.
    (2) If we determine that your participation rate index for a fiscal 
year is equal to or less than 0.0832 or 0.0625, as applicable, under 
paragraph (d)(1) of this section, we also excuse you from any subsequent 
loss of eligibility under Sec. 668.206(a)(2) or placement on provisional 
certification under Sec. 668.16(m)(2)(i) that would be based on the 
official cohort default rate for that fiscal year.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)

[74 FR 55651, Oct. 28, 2009, as amended at 78 FR 65804, Nov. 1, 2013; 80 
FR 67236, Oct. 30, 2015]



Sec. 668.215  Average rates appeals.

    (a) Eligibility. (1) You may appeal a notice of a loss of 
eligibility under Sec. 668.206(a)(1), based on one cohort default rate 
over 40 percent, if that cohort default rate is calculated as an average 
rate under Sec. 668.202(d)(2).
    (2) You may appeal a notice of a loss of eligibility under 
Sec. 668.206(a)(2), based on three cohort default rates of 30 percent or 
greater, if at least two of those cohort default rates--
    (i) Are calculated as average rates under Sec. 668.202(d)(2); and
    (ii) Would be less than 30 percent if calculated for the fiscal year 
alone using the method described in Sec. 668.202(d)(1).
    (b) Deadline for submitting an appeal. (1) Before notifying you of 
your official cohort default rate, we make an initial determination 
about whether you qualify for an average rates appeal. If we determine 
that you qualify, we notify you of that determination at the same time 
that we notify you of your official cohort default rate.
    (2) If you disagree with our initial determination, you must send us 
your average rates appeal, including all supporting documentation, 
within 30 days after you receive the notice of your loss of eligibility.
    (c) Determination. You do not lose eligibility under Sec. 668.206 if 
we determine

[[Page 694]]

that you meet the requirements for an average rates appeal.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.216  Thirty-or-fewer borrowers appeals.

    (a) Eligibility. You may appeal a notice of a loss of eligibility 
under Sec. 668.206 if 30 or fewer borrowers, in total, are included in 
the 3 most recent cohorts of borrowers used to calculate your cohort 
default rates.
    (b) Deadline for submitting an appeal. (1) Before notifying you of 
your official cohort default rate, we make an initial determination 
about whether you qualify for a thirty-or-fewer borrowers appeal. If we 
determine that you qualify, we notify you of that determination at the 
same time that we notify you of your official cohort default rate.
    (2) If you disagree with our initial determination, you must send us 
your thirty-or-fewer borrowers appeal, including all supporting 
documentation, within 30 days after you receive the notice of your loss 
of eligibility.
    (c) Determination. You do not lose eligibility under Sec. 668.206 if 
we determine that you meet the requirements for a thirty-or-fewer 
borrowers appeal.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. 668.217  Default prevention plans.

    (a) First year. (1) If your cohort default rate is equal to or 
greater than 30 percent you must establish a default prevention task 
force that prepares a plan to--
    (i) Identify the factors causing your cohort default rate to exceed 
the threshold;
    (ii) Establish measurable objectives and the steps you will take to 
improve your cohort default rate;
    (iii) Specify the actions you will take to improve student loan 
repayment, including counseling students on repayment options; and
    (iv) Submit your default prevention plan to us.
    (2) We will review your default prevention plan and offer technical 
assistance intended to improve student loan repayment.
    (b) Second year. (1) If your cohort default rate is equal to or 
greater than 30 percent for two consecutive fiscal years, you must 
revise your default prevention plan and submit it to us for review.
    (2) We may require you to revise your default prevention plan or 
specify actions you need to take to improve student loan repayment.

(Authority:20 U.S.C. 1082, 1085, 1094, 1099c)



Sec. Appendix A to Subpart N of Part 668--Sample Default Prevention Plan

    This appendix is provided as a sample plan for those institutions 
developing a default prevention plan in accordance with Sec. 668.217(a). 
It describes some measures you may find helpful in reducing the number 
of students that default on Federally funded loans. These are not the 
only measures you could implement when developing a default prevention 
plan.

                  I. Core Default Reduction Strategies

    1. Establish your default prevention team by engaging your chief 
executive officer and relevant senior executive officials and enlisting 
the support of representatives from offices other than the financial aid 
office. Consider including individuals and organizations independent of 
your institution that have experience in preventing title IV loan 
defaults.
    2. Consider your history, resources, dollars in default, and targets 
for default reduction to determine which activities will result in the 
most benefit to you and your students.
    3. Define evaluation methods and establish a data collection system 
for measuring and verifying relevant default prevention statistics, 
including a statistical analysis of the borrowers who default on their 
loans.
    4. Identify and allocate the personnel, administrative, and 
financial resources appropriate to implement the default prevention 
plan.
    5. Establish annual targets for reductions in your rate.
    6. Establish a process to ensure the accuracy of your rate.

               II. Additional Default Reduction Strategies

    1. Enhance the borrower's understanding of his or her loan repayment 
responsibilities through counseling and debt management activities.
    2. Enhance the enrollment retention and academic persistence of 
borrowers through counseling and academic assistance.
    3. Maintain contact with the borrower after he or she leaves your 
institution by using activities such as skip tracing to locate the 
borrower.

[[Page 695]]

    4. Track the borrower's delinquency status by obtaining reports from 
data managers and FFEL Program lenders.
    5. Enhance student loan repayments through counseling the borrower 
on loan repayment options and facilitating contact between the borrower 
and the data manager or FFEL Program lender.
    6. Assist a borrower who is experiencing difficulty in finding 
employment through career counseling, job placement assistance, and 
facilitating unemployment deferments.
    7. Identify and implement alternative financial aid award policies 
and develop alternative financial resources that will reduce the need 
for student borrowing in the first 2 years of academic study.

                 III. Statistics for Measuring Progress

    1. The number of students enrolled at your institution during each 
fiscal year.
    2. The average amount borrowed by a student each fiscal year.
    3. The number of borrowers scheduled to enter repayment each fiscal 
year.
    4. The number of enrolled borrowers who received default prevention 
counseling services each fiscal year.
    5. The average number of contacts that you or your agent had with a 
borrower who was in deferment or forbearance or in repayment status 
during each fiscal year.
    6. The number of borrowers at least 60 days delinquent each fiscal 
year.
    7. The number of borrowers who defaulted in each fiscal year.
    8. The type, frequency, and results of activities performed in 
accordance with the default prevention plan.



     Subpart O_Financial Assistance for Students With Intellectual 
                              Disabilities

    Source: 74 FR 55947, Oct. 29, 2009, unless otherwise noted.



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:
    (a) 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.
    (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.
    (b) Student with an intellectual disability means a student--

[[Page 696]]

    (1) With 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.

[74 FR 55947, Oct. 29, 2009, as amended at 82 FR 31913, July 11, 2017]



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

[[Page 697]]

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)

Subpart P [Reserved]



               Subpart Q_Gainful Employment (GE) Programs

    Source: 79 FR 65007, Oct. 31, 2014, unless otherwise noted.



Sec. 668.401  Scope and purpose.

    This subpart applies to an educational program offered by an 
eligible institution that prepares students for gainful employment in a 
recognized occupation, and establishes the rules and procedures under 
which--
    (a) The Secretary determines that the program is eligible for title 
IV, HEA program funds;
    (b) An institution reports information about the program to the 
Secretary; and
    (c) An institution discloses information about the program to 
students and prospective students.

(Authority: 20 U.S.C. 1001, 1002, 1088, 1231a)



Sec. 668.402  Definitions.

    The following definitions apply to this subpart.
    Annual earnings rate. The percentage of a GE program's annual loan 
payment compared to the annual earnings of the students who completed 
the program, as calculated under Sec. 668.404.
    Classification of instructional program (CIP) code. A taxonomy of 
instructional program classifications and descriptions developed by the 
U.S. Department of Education's National Center for Education Statistics 
(NCES). The CIP code for a program is six digits.
    Cohort period. The two-year cohort period or the four-year cohort 
period, as applicable, during which those students who complete a 
program are identified in order to assess their loan debt and earnings. 
The Secretary uses the two-year cohort period when the number of 
students completing the program is 30 or more. The Secretary uses the 
four-year cohort period when the number of students completing the 
program in the two-year cohort period is less than 30 and when the 
number of students completing the program in the four-year cohort period 
is 30 or more.
    Credential level. The level of the academic credential awarded by an 
institution to students who complete the program. For the purposes of 
this subpart, the undergraduate credential levels are: Undergraduate 
certificate or diploma, associate degree, bachelor's degree, and post-
baccalaureate certificate; and the graduate credential levels are 
graduate certificate (including a postgraduate certificate), master's 
degree, doctoral degree, and first-professional degree (e.g., MD, DDS, 
JD).
    Debt-to-earnings rates (D/E rates). The discretionary income rate 
and annual earnings rate as calculated under Sec. 668.404.
    Discretionary income rate. The percentage of a GE program's annual 
loan payment compared to the discretionary income of the students who 
completed the program, as calculated under Sec. 668.404.
    Four-year cohort period. The cohort period covering four consecutive 
award years that are--
    (1) The third, fourth, fifth, and sixth award years prior to the 
award year for which the D/E rates are calculated pursuant to 
Sec. 668.404. For example, if D/E rates are calculated for award year 
2014-2015, the four-year cohort period is award years 2008-2009, 2009-
2010, 2010-2011, and 2011-2012; or
    (2) For a program whose students are required to complete a medical 
or dental internship or residency, the sixth, seventh, eighth, and ninth 
award years prior to the award year for which the D/E rates are 
calculated. For example, if D/E rates are calculated for award year 
2014-2015, the four-year cohort period is award years 2005-2006, 2006-
2007, 2007-2008, and 2008-2009. For this purpose, a required medical or 
dental internship or residency is a supervised training program that--
    (i) Requires the student to hold a degree as a doctor of medicine or 
osteopathy, or a doctor of dental science;
    (ii) Leads to a degree or certificate awarded by an institution of 
higher

[[Page 698]]

education, a hospital, or a health care facility that offers post-
graduate training; and
    (iii) Must be completed before the student may be licensed by a 
State and board certified for professional practice or service.
    Gainful employment program (GE program). An educational program 
offered by an institution under Sec. 668.8(c)(3) or (d) and identified 
by a combination of the institution's six-digit Office of Postsecondary 
Education ID (OPEID) number, the program's six-digit CIP code as 
assigned by the institution or determined by the Secretary, and the 
program's credential level.
    Length of the program. The amount of time in weeks, months, or years 
that is specified in the institution's catalog, marketing materials, or 
other official publications for a student to complete the requirements 
needed to obtain the degree or credential offered by the program.
    Metropolitan Statistical Area (MSA). The Metropolitan Statistical 
Area as published by the U.S. Office of Management and Budget and 
available at www.census.gov/population/metro/ or its successor site.
    Poverty Guideline. The Poverty Guideline for a single person in the 
continental United States as published by the U.S. Department of Health 
and Human Services and available at http://aspe.hhs.gov/poverty or its 
successor site.
    Prospective student. An individual who has contacted an eligible 
institution for the purpose of requesting information about enrolling in 
a GE program or who has been contacted directly by the institution or by 
a third party on behalf of the institution about enrolling in a GE 
program.
    Student. An individual who received title IV, HEA program funds for 
enrolling in the GE program.
    Title IV loan. A loan authorized under the Federal Perkins Loan 
Program (Perkins Loan), the Federal Family Education Loan Program (FFEL 
Loan), or the William D. Ford Direct Loan Program (Direct Loan).
    Two-year cohort period. The cohort period covering two consecutive 
award years that are--
    (1) The third and fourth award years prior to the award year for 
which the D/E rates are calculated pursuant to Sec. 668.404. For 
example, if D/E rates are calculated for award year 2014-2015, the two-
year cohort period is award years 2010-2011 and 2011-2012; or
    (2) For a program whose students are required to complete a medical 
or dental internship or residency, the sixth and seventh award years 
prior to the award year for which the D/E rates are calculated. For 
example, if D/E rates are calculated for award year 2014-2015, the two-
year cohort period is award years 2007-2008 and 2008-2009. For this 
purpose, a required medical or dental internship or residency is a 
supervised training program that--
    (i) Requires the student to hold a degree as a doctor of medicine or 
osteopathy, or as a doctor of dental science;
    (ii) Leads to a degree or certificate awarded by an institution of 
higher education, a hospital, or a health care facility that offers 
post-graduate training; and
    (iii) Must be completed before the student may be licensed by a 
State and board certified for professional practice or service.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.403  Gainful employment program framework.

    (a) General. A program provides training that prepares students for 
gainful employment in a recognized occupation if the program--
    (1) Satisfies the applicable certification requirements in 
Sec. 668.414; and
    (2) Is not an ineligible program under the D/E rates measure.
    (b) Debt-to-earnings rates (D/E rates). For each award year and for 
each eligible GE program offered by an institution, the Secretary 
calculates two D/E rates, the discretionary income rate and the annual 
earnings rate, using the procedures in Secs. 668.404 through 668.406.
    (c) Outcomes of the D/E rates measure. (1) A GE program is 
``passing'' the D/E rates measure if--
    (i) Its discretionary income rate is less than or equal to 20 
percent; or
    (ii) Its annual earnings rate is less than or equal to eight 
percent.
    (2) A GE program is ``failing'' the D/E rates measure if--

[[Page 699]]

    (i) Its discretionary income rate is greater than 30 percent or the 
income for the denominator of the rate (discretionary earnings) is 
negative or zero; and
    (ii) Its annual earnings rate is greater than 12 percent or the 
denominator of the rate (annual earnings) is zero.
    (3) A GE program is ``in the zone'' for the purpose of the D/E rates 
measure if it is not a passing GE program and its--
    (i) Discretionary income rate is greater than 20 percent but less 
than or equal to 30 percent; or
    (ii) Annual earnings rate is greater than eight percent but less 
than or equal to 12 percent.
    (4) For the purpose of the D/E rates measure, subject to paragraph 
(c)(5) of this section, a GE program becomes ineligible if the program 
either--
    (i) Is failing the D/E rates measure in two out of any three 
consecutive award years for which the program's D/E rates are 
calculated; or
    (ii) Has a combination of zone and failing D/E rates for four 
consecutive award years for which the program's D/E rates are 
calculated.
    (5) If the Secretary does not calculate or issue D/E rates for a 
program for an award year, the program receives no result under the D/E 
rates measure for that award year and remains in the same status under 
the D/E rates measure as the previous award year; provided that if the 
Secretary does not calculate D/E rates for the program for four or more 
consecutive award years, the Secretary disregards the program's D/E 
rates for any award year prior to the four-year period in determining 
the program's eligibility.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.404  Calculating D/E rates.

    (a) General. Except as provided in paragraph (f) of this section, 
for each award year, the Secretary calculates D/E rates for a GE program 
as follows:
    (1) Discretionary income rate = annual loan payment/(the higher of 
the mean or median annual earnings^(1.5  Poverty Guideline)). For the 
purposes of this paragraph, the Secretary applies the Poverty Guideline 
for the calendar year immediately following the calendar year for which 
annual earnings are obtained under paragraph (c) of this section.
    (2) Annual earnings rate = annual loan payment/the higher of the 
mean or median annual earnings.
    (b) Annual loan payment. The Secretary calculates the annual loan 
payment for a GE program by--
    (1)(i) Determining the median loan debt of the students who 
completed the program during the cohort period, based on the lesser of 
the loan debt incurred by each student as determined under paragraph 
(d)(1) of this section and the total amount for tuition and fees and 
books, equipment, and supplies for each student as determined under 
paragraph (d)(2) of this section;
    (ii) Removing, if applicable, the appropriate number of highest loan 
debts as described in Sec. 668.405(e)(2); and
    (iii) Calculating the median of the remaining amounts.
    (2) Amortizing the median loan debt--
    (i)(A) Over a 10-year repayment period for a program that leads to 
an undergraduate certificate, a post-baccalaureate certificate, an 
associate degree, or a graduate certificate;
    (B) Over a 15-year repayment period for a program that leads to a 
bachelor's degree or a master's degree; or
    (C) Over a 20-year repayment period for a program that leads to a 
doctoral or first-professional degree; and
    (ii) Using an annual interest rate that is the average of the annual 
statutory interest rates on Federal Direct Unsubsidized Loans that were 
in effect during--
    (A) The three-year period prior to the end of the cohort period, for 
undergraduate certificate programs, post-baccalaureate certificate 
programs, and associate degree programs. For these programs, the 
Secretary uses the Federal Direct Unsubsidized Loan interest rate 
applicable to undergraduate students;
    (B) The three-year period prior to the end of the cohort period, for 
graduate certificate programs and master's degree programs. For these 
programs, the Secretary uses the Federal Direct Unsubsidized Loan 
interest rate applicable to graduate students;
    (C) The six-year period prior to the end of the cohort period, for 
bachelor's

[[Page 700]]

degree programs. For these programs, the Secretary uses the Federal 
Direct Unsubsidized Loan interest rate applicable to undergraduate 
students; and
    (D) The six-year period prior to the end of the cohort period, for 
doctoral programs and first professional degree programs. For these 
programs, the Secretary uses the Federal Direct Unsubsidized Loan 
interest rate applicable to graduate students.

    Note to paragraph (b)(2)(ii): For example, for an undergraduate 
certificate program, if the two-year cohort period is award years 2010-
2011 and 2011-2012, the interest rate would be the average of the 
interest rates for the years from 2009-2010 through 2011-2012.

    (c) Annual earnings. (1) The Secretary obtains from the Social 
Security Administration (SSA), under Sec. 668.405, the most currently 
available mean and median annual earnings of the students who completed 
the GE program during the cohort period and who are not excluded under 
paragraph (e) of this section; and
    (2) The Secretary uses the higher of the mean or median annual 
earnings to calculate the D/E rates.
    (d) Loan debt and assessed charges. (1) In determining the loan debt 
for a student, the Secretary includes--
    (i) The amount of title IV loans that the student borrowed (total 
amount disbursed less any cancellations or adjustments) for enrollment 
in the GE program (Federal PLUS Loans made to parents of dependent 
students, Direct PLUS Loans made to parents of dependent students, and 
Direct Unsubsidized Loans that were converted from TEACH Grants are not 
included);
    (ii) Any private education loans as defined in 34 CFR 601.2, 
including private education loans made by the institution, that the 
student borrowed for enrollment in the program and that were required to 
be reported by the institution under Sec. 668.411; and
    (iii) The amount outstanding, as of the date the student completes 
the program, on any other credit (including any unpaid charges) extended 
by or on behalf of the institution for enrollment in any GE program 
attended at the institution that the student is obligated to repay after 
completing the GE program, including extensions of credit described in 
clauses (1) and (2) of the definition of, and excluded from, the term 
``private education loan'' in 34 CFR 601.2;
    (2) The Secretary attributes all of the loan debt incurred by the 
student, and attributes the amount reported for the student under 
Sec. 668.411(a)(2)(iv) and (v), for enrollment in any--
    (i) Undergraduate GE program at the institution to the highest 
credentialed undergraduate GE program subsequently completed by the 
student at the institution as of the end of the most recently completed 
award year prior to the calculation of the draft D/E rates under this 
section; and
    (ii) Graduate GE program at the institution to the highest 
credentialed graduate GE program completed by the student at the 
institution as of the end of the most recently completed award year 
prior to the calculation of the draft D/E rates under this section; and
    (3) The Secretary excludes any loan debt incurred by the student for 
enrollment in programs at other institutions. However, the Secretary may 
include loan debt incurred by the student for enrollment in GE programs 
at other institutions if the institution and the other institutions are 
under common ownership or control, as determined by the Secretary in 
accordance with 34 CFR 600.31.
    (e) Exclusions. The Secretary excludes a student from both the 
numerator and the denominator of the D/E rates calculation if the 
Secretary determines that--
    (1) One or more of the student's title IV loans were in a military-
related deferment status at any time during the calendar year for which 
the Secretary obtains earnings information under paragraph (c) of this 
section;
    (2) One or more of the student's title IV loans are under 
consideration by the Secretary, or have been approved, for a discharge 
on the basis of the student's total and permanent disability, under 34 
CFR 674.61, 682.402, or 685.212;
    (3) The student was enrolled in any other eligible program at the 
institution or at another institution during the calendar year for which 
the Secretary obtains earnings information under paragraph (c) of this 
section;
    (4) For undergraduate GE programs, the student completed a higher

[[Page 701]]

credentialed undergraduate GE program at the institution subsequent to 
completing the program as of the end of the most recently completed 
award year prior to the calculation of the draft D/E rates under this 
section;
    (5) For graduate GE programs, the student completed a higher 
credentialed graduate GE program at the institution subsequent to 
completing the program as of the end of the most recently completed 
award year prior to the calculation of the draft D/E rates under this 
section; or
    (6) The student died.
    (f) D/E rates not issued. The Secretary does not issue draft or 
final D/E rates for a GE program under Sec. 668.405 if--
    (1) After applying the exclusions in paragraph (e) of this section, 
fewer than 30 students completed the program during the two-year cohort 
period and fewer than 30 students completed the program during the four-
year cohort period; or
    (2) SSA does not provide the mean and median earnings for the 
program as provided under paragraph (c) of this section.
    (g) Transition period. (1) The transition period is determined by 
the length of the GE program for which the Secretary calculates D/E 
rates under this subpart. The transition period is--
    (i) The first five award years for which the Secretary calculates D/
E rates under this subpart if the length of the program is one year or 
less;
    (ii) The first six award years for which the Secretary calculates D/
E rates under this subpart if the length of the program is between one 
and two years; and
    (iii) The first seven award years for which the Secretary calculates 
D/E rates if the length of the program is more than two years.
    (2) If a GE program is failing or in the zone based on its draft D/E 
rates for any award year during the transition period, the Secretary 
calculates transitional draft D/E rates for that award year by using--
    (i) The median loan debt of the students who completed the program 
during the most recently completed award year; and
    (ii) The earnings used to calculate the draft D/E rates under 
paragraph (c) of this section.
    (3) For any award year for which the Secretary calculates 
transitional draft D/E rates for a program, the Secretary determines the 
final D/E rates for the program based on the lower of the draft or 
transitional draft D/E rates.
    (4) An institution may challenge or appeal the draft or transitional 
draft D/E rates, or both, under the procedures in Sec. 668.405 and 
Sec. 668.406, respectively.

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094)



Sec. 668.405  Issuing and challenging D/E rates.

    (a) Overview. For each award year, the Secretary determines the D/E 
rates for a GE program at an institution by--
    (1) Creating a list of the students who completed the program during 
the cohort period and providing the list to the institution, as provided 
in paragraph (b) of this section;
    (2) Allowing the institution to correct the information about the 
students on the list, as provided in paragraph (c) of this section;
    (3) Obtaining from SSA the mean and median annual earnings of the 
students on the list, as provided in paragraph (d) of this section;
    (4) Calculating draft D/E rates and providing them to the 
institution, as provided in paragraph (e) of this section;
    (5) Allowing the institution to challenge the median loan debt used 
to calculate the draft D/E rates, as provided in paragraph (f) of this 
section;
    (6) Calculating final D/E rates and providing them to the 
institution, as provided in paragraph (g) of this section; and
    (7) Allowing the institution to appeal the final D/E rates as 
provided in Sec. 668.406.
    (b) Creating the list of students. (1) The Secretary selects the 
students to be included on the list by--
    (i) Identifying the students who completed the program during the 
cohort period from the data provided by the institution under 
Sec. 668.411; and
    (ii) Indicating which students would be removed from the list under 
Sec. 668.404(e) and the specific reason for the exclusion.

[[Page 702]]

    (2) The Secretary provides the list to the institution and states 
which cohort period was used to select the students.
    (c) Institutional corrections to the list. (1) The Secretary 
presumes that the list of students and the identity information for 
those students are correct unless, as set forth in procedures 
established by the Secretary, the institution provides evidence to the 
contrary satisfactory to the Secretary. The institution bears the burden 
of proof that the list is incorrect.
    (2) No later than 45 days after the date the Secretary provides the 
list to the institution, the institution may--
    (i) Provide evidence showing that a student should be included on or 
removed from the list pursuant to Sec. 668.404(e); or
    (ii) Correct or update a student's identity information and the 
student's program attendance information.
    (3) After the 45-day period expires, the institution may no longer 
seek to correct the list of students or revise the identity or program 
information of those students included on the list.
    (4) The Secretary considers the evidence provided by the institution 
and either accepts the correction or notifies the institution of the 
reasons for not accepting the correction. If the Secretary accepts the 
correction, the Secretary uses the corrected information to create the 
final list. The Secretary provides the institution with the final list 
and indicates the cohort period or cohort periods used to create the 
final list.
    (d) Obtaining earnings data. The Secretary submits the final list to 
SSA. For the purposes of this section, SSA returns to the Secretary--
    (1) The mean and median annual earnings of the students on the list 
whom SSA has matched to SSA earnings data, in aggregate and not in 
individual form; and
    (2) The number, but not the identities, of students on the list that 
SSA could not match.
    (e) Calculating draft D/E rates. (1)(i) If the SSA earnings data 
includes reports from records of earnings on at least 30 students, the 
Secretary uses the higher of the mean or median annual earnings provided 
by SSA to calculate draft D/E rates for a GE program, as provided in 
Sec. 668.404.
    (ii) If the SSA earnings data includes reports from records of 
earnings on fewer than 30 but at least 10 students, the Secretary uses 
the earnings provided by SSA only for the purpose of disclosure under 
Sec. 668.412(a)(13).
    (2) If SSA reports that it was unable to match one or more of the 
students on the final list, the Secretary does not include in the 
calculation of the median loan debt the same number of students with the 
highest loan debts as the number of students whose earnings SSA did not 
match. For example, if SSA is unable to match three students out of 100 
students, the Secretary orders by amount the debts of the 100 listed 
students and excludes from the D/E rates calculation the three largest 
loan debts.
    (3)(i) The Secretary notifies the institution of the draft D/E rates 
for the program and provides the mean and median annual earnings 
obtained from SSA and the individual student loan information used to 
calculate the rates, including the loan debt that was used in the 
calculation for each student.
    (ii) The draft D/E rates and the data described in paragraphs (b) 
through (e) of this section are not considered public information.
    (f) Institutional challenges to draft D/E rates. (1) The Secretary 
presumes that the loan debt information used to calculate the median 
loan debt for the program under Sec. 668.404 is correct unless the 
institution provides evidence satisfactory to the Secretary, as provided 
in paragraph (f)(2) of this section, that the information is incorrect. 
The institution bears the burden of proof to show that the loan debt 
information is incorrect and to show how it should be corrected.
    (2) No later than 45 days after the Secretary notifies an 
institution of the draft D/E rates for a program, the institution may 
challenge the accuracy of the loan debt information that the Secretary 
used to calculate the median loan debt for the program under 
Sec. 668.404 by submitting evidence, in a format and through a process 
determined by the Secretary, that demonstrates that the median loan debt

[[Page 703]]

calculated by the Secretary is incorrect.
    (3) In a challenge under this section, the Secretary does not 
consider--
    (i) Any objection to the mean or median annual earnings that SSA 
provided to the Secretary;
    (ii) More than one challenge to the student-specific data on which 
draft D/E rates are based for a program for an award year; or
    (iii) Any challenge that is not timely submitted.
    (4) The Secretary considers the evidence provided by an institution 
challenging the median loan debt and notifies the institution of whether 
the challenge is accepted or the reasons why the challenge is not 
accepted.
    (5) If the information from an accepted challenge changes the median 
loan debt of the program, the Secretary recalculates the program's draft 
D/E rates.
    (6) Except as provided under Sec. 668.406, an institution that does 
not timely challenge the draft D/E rates for a program waives any 
objection to those rates.
    (g) Final D/E rates. (1) After expiration of the 45-day period and 
subject to resolution of any challenge under paragraph (f) of this 
section, a program's draft D/E rates constitute its final D/E rates.
    (2) The Secretary informs the institution of the final D/E rates for 
each of its GE programs by issuing the notice of determination described 
in Sec. 668.409(a).
    (3) After the Secretary provides the notice of determination to the 
institution, the Secretary may publish the final D/E rates for the 
program.
    (h) Conditions for corrections and challenges. An institution must 
ensure that any material that it submits to make any correction or 
challenge under this section is complete, timely, accurate, and in a 
format acceptable to the Secretary and consistent with any instructions 
provided to the institution with the notice of its draft D/E rates and 
the notice of determination.

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094)



Sec. 668.406  D/E rates alternate earnings appeals.

    (a) General. If a GE program is failing or in the zone under the D/E 
rates measure, an institution may file an alternate earnings appeal to 
request recalculation of the program's most recent final D/E rates 
issued by the Secretary. The alternate earnings must be from the same 
calendar year for which the Secretary obtained earnings data from SSA to 
calculate the final D/E rates under Sec. 668.404.
    (b) Basis for appeals. (1) The institution may use alternate 
earnings from an institutional survey conducted under paragraph (c) of 
this section, or from a State-sponsored data system under paragraph (d) 
of this section, to recalculate the program's final D/E rates and file 
an appeal if by using the alternate earnings--
    (i) For a program that was failing the D/E rates measure, the 
program is passing or in the zone with respect to the D/E rates measure; 
or
    (ii) For a program that was in the zone for the purpose of the D/E 
rates measure, the program is passing the D/E rates measure.
    (2) When submitting its appeal of the final D/E rates, the 
institution must--
    (i) Use the annual loan payment used in the calculation of the final 
D/E rates; and
    (ii) Use the higher of the mean or median alternate earnings.
    (3) The institution must include in its appeal the alternate 
earnings of all the students who completed the program during the same 
cohort period that the Secretary used to calculate the final D/E rates 
under Sec. 668.404 or a comparable cohort period, provided that the 
institution may elect--
    (i) If conducting an alternate earnings survey, to exclude from the 
survey, in accordance with the standards established by NCES, all or 
some of the students excluded from the D/E rates calculation under 
Sec. 668.404(e); or
    (ii) If obtaining annual earnings data from one or more State-
sponsored data systems, and in accordance with paragraph (d)(2) of this 
section, to exclude from the list of students submitted to the 
administrator of the State-administered data system all or some of the

[[Page 704]]

students excluded from the D/E rates calculation under Sec. 668.404(e).
    (c) Survey requirements for appeals. An institution must--
    (1) In accordance with the standards included on an Earnings Survey 
Form developed by NCES, conduct a survey to obtain annual earnings 
information of the students described in paragraph (b)(3) of this 
section. The Secretary will publish in the Federal Register the Earnings 
Survey Form that will include a pilot-tested universe survey as well as 
the survey standards. An institution is not required to use the Earnings 
Survey Form but, in conducting a survey under this section, must adhere 
to the survey standards and present to the survey respondent in the same 
order and same manner the same survey items, included in the Earnings 
Survey Form; and
    (2) Submit to the Secretary as part of its appeal--
    (i) A certification signed by the institution's chief executive 
officer attesting that the survey was conducted in accordance with the 
survey standards in the Earnings Survey Form, and that the mean or 
median earnings used to recalculate the D/E rates was accurately 
determined from the survey results;
    (ii) An examination-level attestation engagement report prepared by 
an independent public accountant or independent governmental auditor, as 
appropriate, that the survey was conducted in accordance with the 
requirements set forth in the NCES Earnings Survey Form. The attestation 
must be conducted in accordance with the attestation standards contained 
in the Government Accountability Office's Government Auditing Standards 
promulgated by the Comptroller General of the United States (available 
at www.gao.gov/yellowbook/overview or its successor site), and with 
procedures for attestations contained in guides developed by and 
available from the Department of Education's Office of Inspector 
General; and
    (iii) Supporting documentation requested by the Secretary.
    (d) State-sponsored data system requirements for appeals. An 
institution must--
    (1) Obtain annual earnings data from one or more State-sponsored 
data systems by submitting a list of the students described in paragraph 
(b)(3) of this section to the administrator of each State-sponsored data 
system used for the appeal;
    (2) Demonstrate that annual earnings data were obtained for more 
than 50 percent of the number of students in the cohort period not 
excluded pursuant to paragraph (b)(3) of this section, and that number 
of students must be 30 or more; and
    (3) Submit as part of its appeal--
    (i) A certification signed by the institution's chief executive 
officer attesting that it accurately used the State-provided earnings 
data to recalculate the D/E rates; and
    (ii) Supporting documentation requested by the Secretary.
    (e) Appeals procedure. (1) For any appeal under this section, in 
accordance with procedures established by the Secretary and provided in 
the notice of draft D/E rates under Sec. 668.405 and the notice of 
determination under Sec. 668.409, the institution must--
    (i) Notify the Secretary of its intent to submit an appeal no 
earlier than the date that the Secretary provides the institution the 
draft D/E rates under Sec. 668.405(e)(3), but no later than 14 days 
after the date the Secretary issues the notice of determination under 
Sec. 668.409(a) informing the institution of the final D/E rates under 
Sec. 668.405(g); and
    (ii) Submit the recalculated D/E rates, all certifications, and 
specified supporting documentation related to the appeal no later than 
60 days after the date the Secretary issues the notice of determination.
    (2) An institution that timely submits an appeal that meets the 
requirements of this section is not subject to any consequences under 
Sec. 668.410 based on the D/E rates under appeal while the Secretary 
considers the appeal. If the Secretary has published final D/E rates 
under Sec. 668.405(g), the program's final D/E rates will be annotated 
to indicate that they are under appeal.
    (3) An institution that does not submit a timely appeal waives its 
right to appeal the GE program's failing or zone D/E rates for the 
relevant award year.

[[Page 705]]

    (f) Appeals determinations. (1) Appeals denied. If the Secretary 
denies an appeal, the Secretary notifies the institution of the reasons 
for denying the appeal, and the program's final D/E rates previously 
issued in the notice of determination under Sec. 668.409(a) remain the 
final D/E rates for the program for the award year.
    (2) Appeals granted. If the Secretary grants the appeal, the 
Secretary notifies the institution that the appeal is granted, that the 
recalculated D/E rates are the new final D/E rates for the program for 
the award year, and of any consequences of the recalculated rates under 
Sec. 668.410. If the Secretary has published final D/E rates under 
Sec. 668.405(g), the program's published rates will be updated to 
reflect the new final D/E rates.
    (g) Conditions for alternate earnings appeals. An institution must 
ensure that any material that it submits to make an appeal under this 
section is complete, timely, accurate, and in a format acceptable to the 
Secretary and consistent with any instructions provided to the 
institution with the notice of determination.

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094)



Secs. 668.407-408  [Reserved]



Sec. 668.409  Final determination of the D/E rates measure.

    (a) Notice of determination. For each award year for which the 
Secretary calculates a D/E rates measure for a GE program, the Secretary 
issues a notice of determination informing the institution of the 
following:
    (1) The final D/E rates for the program as determined under 
Sec. 668.404, Sec. 668.405, and, if applicable, Sec. 668.406;
    (2) The final determination by the Secretary of whether the program 
is passing, failing, in the zone, or ineligible, as described in 
Sec. 668.403, and the consequences of that determination;
    (3) Whether the program could become ineligible based on its final 
D/E rates for the next award year for which D/E rates are calculated for 
the program;
    (4) Whether the institution is required to provide the student 
warning under Sec. 668.410(a); and
    (5) If the program's final D/E rates are failing or in the zone, 
instructions on how it may make an alternate earnings appeal pursuant to 
Sec. 668.406.
    (b) Effective date of Secretary's final determination. The 
Secretary's determination as to the D/E rates measure is effective on 
the date that is specified in the notice of determination. The 
determination, including, as applicable, the determination with respect 
to an appeal under Sec. 668.406, constitutes the final decision of the 
Secretary with respect to the D/E rates measure and the Secretary 
provides for no further appeal of that determination.

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094)



Sec. 668.410  Consequences of the D/E rates measure.

    (a) Student warning--(1) Events requiring a warning to students and 
prospective students. The institution must provide a warning with 
respect to a GE program to students and to prospective students for any 
year for which the Secretary notifies an institution that the program 
could become ineligible based on its final D/E rates measure for the 
next award year.
    (2) Content of warning. Unless otherwise specified by the Secretary 
in a notice published in the Federal Register, the warning must--
    (i) State that: ``This program has not passed standards established 
by the U.S. Department of Education. The Department based these 
standards on the amounts students borrow for enrollment in this program 
and their reported earnings. If in the future the program does not pass 
the standards, students who are then enrolled may not be able to use 
federal student grants or loans to pay for the program, and may have to 
find other ways, such as private loans, to pay for the program.''; and
    (ii) Refer students and prospective students to (and include a link 
for) College Navigator, its successor site, or another similar Federal 
resource, for information about other similar programs.
    (iii) For warnings provided to enrolled students--
    (A) Describe the academic and financial options available to 
students to continue their education in another

[[Page 706]]

program at the institution, including whether the students could 
transfer credits earned in the program to another program at the 
institution and which course credits would transfer, in the event that 
the program loses eligibility for title IV, HEA program funds;
    (B) Indicate whether or not the institution will--
    (1) Continue to provide instruction in the program to allow students 
to complete the program; and
    (2) Refund the tuition, fees, and other required charges paid to the 
institution by, or on behalf of, students for enrollment in the program; 
and
    (C) Explain whether the students could transfer credits earned in 
the program to another institution.
    (3) Consumer testing. The Secretary will conduct consumer testing to 
determine how to make the student warning as meaningful as possible.
    (4) Alternative languages. To the extent practicable, the 
institution must provide alternatives to the English-language student 
warning for those students and prospective students for whom English is 
not their first language.
    (5) Delivery to students. (i) An institution must provide the 
warning required under this section in writing to each student enrolled 
in the program no later than 30 days after the date of the Secretary's 
notice of determination under Sec. 668.409 by--
    (A) Hand-delivering the warning as a separate document to the 
student individually or as part of a group presentation; or
    (B) Sending the warning to the primary email address used by the 
institution for communicating with the student about the program.
    (ii) If the institution sends the warning by email, the institution 
must--
    (A) Ensure that the warning is the only substantive content in the 
email;
    (B) Receive electronic or other written acknowledgement from the 
student that the student has received the email;
    (C) Send the warning using a different address or method of delivery 
if the institution receives a response that the email could not be 
delivered; and
    (D) Maintain records of its efforts to provide the warnings required 
by this section.
    (6) Delivery to prospective students -- (i) General. An institution 
must provide any warning required under this section to each prospective 
student or to each third party acting on behalf of the prospective 
student at the first contact about the program between the institution 
and the student or the third party acting on behalf of the student by--
    (A) Hand-delivering the warning as a separate document to the 
prospective student or third party individually, or as part of a group 
presentation;
    (B) Sending the warning to the primary email address used by the 
institution for communicating with the prospective student or third 
party about the program;
    (C) Providing the prospective student or third party a copy of the 
disclosure template as required by Sec. 668.412(e) that includes the 
student warning required by this section; or
    (D) Providing the warning orally to the student or third party if 
the contact is by telephone.
    (ii) Special warning requirements before enrolling a prospective 
student. (A) Before an institution enrolls, registers, or enters into a 
financial commitment with a prospective student with respect to the 
program, the institution must provide any warning required under this 
section to the prospective student in the manner prescribed in paragraph 
(a)(6)(i)(A) through (C) of this section.
    (B) An institution may not enroll, register, or enter into a 
financial commitment with the prospective student with respect to the 
program earlier than--
    (1) Three business days after the institution first provides the 
student warning to the prospective student; or
    (2) If more than 30 days have passed from the date the institution 
first provided the student warning to the prospective student, three 
business days after the institution provides another warning as required 
by this paragraph.
    (iii) Email delivery and acknowledgement. If the institution sends 
the warning to the prospective student or the third party by email, 
including by providing the prospective student or third

[[Page 707]]

party an electronic copy of the disclosure template, the institution 
must--
    (A) Ensure that the warning is the only substantive content in the 
email;
    (B) Receive electronic or other written acknowledgement from the 
prospective student or third party that the student or third party has 
received the email;
    (C) Send the warning using a different address or method of delivery 
if the institution receives a response that the email could not be 
delivered; and
    (D) Maintain records of its efforts to provide the warning required 
under this section.
    (7) Disclosure template. Within 30 days of receiving notice from the 
Secretary that the institution must provide a student warning for the 
program, the institution must update the disclosure template described 
in Sec. 668.412 to include the warning in paragraph (a)(2) of this 
section or such other warning specified by the Secretary in a notice 
published in the Federal Register.
    (b) Restrictions--(1) Ineligible program. Except as provided in 
Sec. 668.26(d), an institution may not disburse title IV, HEA program 
funds to students enrolled in an ineligible program.
    (2) Period of ineligibility. (i) An institution may not seek to 
reestablish the eligibility of a failing or zone program that it 
discontinued voluntarily, reestablish the eligibility of a program that 
is ineligible under the D/E rates measure, or establish the eligibility 
of a program that is substantially similar to the discontinued or 
ineligible program, until three years following the date specified in 
the notice of determination informing the institution of the program's 
ineligibility or the date the institution discontinued the failing or 
zone program.
    (ii) An institution may not seek to reestablish the eligibility of a 
program that it discontinued voluntarily after receiving draft D/E rates 
that are failing or in the zone, or establish the eligibility of a 
program that is substantially similar to the discontinued program, 
until--
    (A) Final D/E rates that are passing are issued for the program for 
that award year; or
    (B) If the final D/E rates for the program for that award year are 
failing or in the zone, three years following the date the institution 
discontinued the program.
    (iii) For the purposes of this section, an institution voluntarily 
discontinues a program on the date the institution provides written 
notice to the Secretary that it relinquishes the title IV, HEA program 
eligibility of that program.
    (iv) For the purposes of this subpart, a program is substantially 
similar to another program if the two programs share the same four-digit 
CIP code. The Secretary presumes a program is not substantially similar 
to another program if the two programs have different four-digit CIP 
codes but the institution must provide an explanation of how the new 
program is not substantially similar to the ineligible or voluntarily 
discontinued program with its certification under Sec. 668.414.
    (3) Restoring eligibility. An ineligible program, or a failing or 
zone program that an institution voluntarily discontinues, remains 
ineligible until the institution establishes the eligibility of that 
program under Sec. 668.414(c).

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094, 1099c)



Sec. 668.411  Reporting requirements for GE programs.

    (a) In accordance with procedures established by the Secretary, an 
institution must report--
    (1) For each student enrolled in a GE program during an award year 
who received title IV, HEA program funds for enrolling in that program--
    (i) Information needed to identify the student and the institution;
    (ii) The name, CIP code, credential level, and length of the 
program;
    (iii) Whether the program is a medical or dental program whose 
students are required to complete an internship or residency, as 
described in Sec. 668.402;
    (iv) The date the student initially enrolled in the program;
    (v) The student's attendance dates and attendance status (e.g., 
enrolled, withdrawn, or completed) in the program during the award year; 
and
    (vi) The student's enrollment status (e.g., full-time, three-quarter 
time, half-time, less than half-time) as of the

[[Page 708]]

first day of the student's enrollment in the program;
    (2) If the student completed or withdrew from the GE program during 
the award year--
    (i) The date the student completed or withdrew from the program;
    (ii) The total amount the student received from private education 
loans, as described in Sec. 668.404(d)(1)(ii), for enrollment in the 
program that the institution is, or should reasonably be, aware of;
    (iii) The total amount of institutional debt, as described in 
Sec. 668.404(d)(1)(iii), the student owes any party after completing or 
withdrawing from the program;
    (iv) The total amount of tuition and fees assessed the student for 
the student's entire enrollment in the program; and
    (v) The total amount of the allowances for books, supplies, and 
equipment included in the student's title IV Cost of Attendance (COA) 
for each award year in which the student was enrolled in the program, or 
a higher amount if assessed the student by the institution;
    (3) If the institution is required by its accrediting agency or 
State to calculate a placement rate for either the institution or the 
program, or both, the placement rate for the program, calculated using 
the methodology required by that accrediting agency or State, and the 
name of that accrediting agency or State; and
    (4) As described in a notice published by the Secretary in the 
Federal Register, any other information the Secretary requires the 
institution to report.
    (b)(1) An institution must report the information required under 
paragraphs (a)(1) and (2) of this section no later than--
    (i) July 31, following the date these regulations take effect, for 
the second through seventh award years prior to that date;
    (ii) For medical and dental programs that require an internship or 
residency, July 31, following the date these regulations take effect for 
the second through eighth award years prior to that date; and
    (iii) For subsequent award years, October 1, following the end of 
the award year, unless the Secretary establishes different dates in a 
notice published in the Federal Register.
    (2) An institution must report the information required under 
paragraph (a)(3) of this section on the date and in the manner 
prescribed by the Secretary in a notice published in the Federal 
Register.
    (3) For any award year, if an institution fails to provide all or 
some of the information in paragraph (a) of this section to the extent 
required, the institution must provide to the Secretary an explanation, 
acceptable to the Secretary, of why the institution failed to comply 
with any of the reporting requirements.

(Authority: 20 U.S.C. 1001, 1002, 1088, 1231a)



Sec. 668.412  Disclosure requirements for GE programs.

    (a) Disclosure template. An institution must use the disclosure 
template provided by the Secretary to disclose information about each of 
its GE programs to enrolled and prospective students. The Secretary will 
conduct consumer testing to determine how to make the disclosure 
template as meaningful as possible. The Secretary identifies the 
information that must be included in the template in a notice published 
in the Federal Register. That information may include, but is not 
limited to:
    (1) The primary occupations (by name and SOC code) that the program 
prepares students to enter, along with links to occupational profiles on 
O*NET (www.onetonline.org) or its successor site.
    (2) As calculated by the Secretary under Sec. 668.413, the program's 
completion rates for full-time and less-than-full-time students and the 
program's withdrawal rates.
    (3) The length of the program in calendar time (i.e., weeks, months, 
years).
    (4) The number of clock or credit hours or equivalent, as 
applicable, in the program.
    (5) The total number of individuals enrolled in the program during 
the most recently completed award year.
    (6) As calculated by the Secretary under Sec. 668.413, the loan 
repayment rate

[[Page 709]]

for any one or all of the following groups of students who entered 
repayment on title IV loans during the two-year cohort period:
    (i) All students who enrolled in the program.
    (ii) Students who completed the program.
    (iii) Students who withdrew from the program.
    (7) The total cost of tuition and fees, and the total cost of books, 
supplies, and equipment, that a student would incur for completing the 
program within the length of the program.
    (8) The placement rate for the program, if the institution is 
required by its accrediting agency or State to calculate a placement 
rate either for the program or the institution, or both, using the 
required methodology of that accrediting agency or State.
    (9) Of the individuals enrolled in the program during the most 
recently completed award year, the percentage who received a title IV 
loan or a private loan for enrollment in the program.
    (10) As calculated by the Secretary, the median loan debt as 
determined under Sec. 668.413 of any one or all of the following groups:
    (i) Those students who completed the program during the most 
recently completed award year.
    (ii) Those students who withdrew from the program during the most 
recently completed award year.
    (iii) All of the students described in paragraphs (a)(10)(i) and 
(ii) of this section.
    (11) As provided by the Secretary, the mean or median earnings of 
any one or all of the following groups of students:
    (i) Students who completed the program during the cohort period used 
by the Secretary to calculate the most recent D/E rates for the program 
under this subpart.
    (ii) Students who were in withdrawn status at the end of the cohort 
period used by the Secretary to calculate the most recent D/E rates for 
the program under this subpart.
    (iii) All of the students described in paragraph (a)(11)(i) and (ii) 
of this section.
    (12) As calculated by the Secretary under Sec. 668.413, the most 
recent program cohort default rate.
    (13) As calculated by the Secretary under Sec. 668.404, the most 
recent annual earnings rate.
    (14)(i) Whether the program does or does not satisfy--
    (A) The applicable educational prerequisites for professional 
licensure or certification in each State within the institution's MSA; 
and
    (B) The applicable educational prerequisites for professional 
licensure or certification in any other State for which the institution 
has made a determination regarding such requirements.
    (ii) For any States not described in paragraph (a)(14)(i) of this 
section, a statement that the institution has not made a determination 
with respect to the licensure or certification requirements of those 
States.
    (15) Whether the program is programmatically accredited and the name 
of the accrediting agency.
    (16) A link to the U.S. Department of Education's College Navigator 
Web site, or its successor site, or other similar Federal resource.
    (b) Disclosure updates. (1) In accordance with procedures and 
timelines established by the Secretary, the institution must update at 
least annually the information contained in the disclosure template with 
the most recent data available for each of its GE programs.
    (2) The institution must update the disclosure template to include 
any student warning as required under Sec. 668.410(a)(7).
    (c) Program Web pages. (1) On any Web page containing academic, 
cost, financial aid, or admissions information about a GE program 
maintained by or on behalf of an institution, the institution must 
provide the disclosure template for that program or a prominent, readily 
accessible, clear, conspicuous, and direct link to the disclosure 
template for that program.
    (2) The Secretary may require the institution to modify a Web page 
if it provides a link to the disclosure template and the link is not 
prominent, readily accessible, clear, conspicuous, and direct.
    (d) Promotional materials. (1) All promotional materials made 
available by or on behalf of an institution to prospective students that 
identify a GE

[[Page 710]]

program by name or otherwise promote the program must include--
    (i) The disclosure template in a prominent manner; or
    (ii) Where space or airtime constraints would preclude the inclusion 
of the disclosure template, the Web address (URL) of, or the direct link 
to, the disclosure template, provided that the URL or link is prominent, 
readily accessible, clear, conspicuous, and direct and the institution 
identifies the URL or link as ``Important Information about the 
educational debt, earnings, and completion rates of students who 
attended this program'' or as otherwise specified by the Secretary in a 
notice published in the Federal Register.
    (2) Promotional materials include, but are not limited to, an 
institution's catalogs, invitations, flyers, billboards, and advertising 
on or through radio, television, print media, the Internet, and social 
media.
    (3) The institution must ensure that all promotional materials, 
including printed materials, about a GE program are accurate and current 
at the time they are published, approved by a State agency, or 
broadcast.
    (e) Direct distribution to prospective students. (1) Before a 
prospective student signs an enrollment agreement, completes 
registration, or makes a financial commitment to the institution, the 
institution must provide the prospective student or a third party acting 
on behalf of the prospective student, as a separate document, a copy of 
the disclosure template.
    (2) The disclosure template may be provided to the prospective 
student or third party by--
    (i) Hand-delivering the disclosure template to the prospective 
student or third party individually or as part of a group presentation; 
or
    (ii) Sending the disclosure template to the primary email address 
used by the institution for communicating with the prospective student 
or third party about the program.
    (3) If the institution hand-delivers the disclosure template to the 
prospective student or third party, it must obtain written confirmation 
from the prospective student or third party that the prospective student 
or third party received a copy of the disclosure template.
    (4) If the institution sends the disclosure template to the 
prospective student or third party by email, the institution must--
    (i) Ensure that the disclosure template is the only substantive 
content in the email;
    (ii) Receive electronic or other written acknowledgement from the 
prospective student or third party that the prospective student or third 
party received the email;
    (iii) Send the disclosure template using a different address or 
method of delivery if the institution receives a response that the email 
could not be delivered; and
    (iv) Maintain records of its efforts to provide the disclosure 
template required under this section.
    (f) Disclosure templates by program length, location, or format. (1) 
An institution that offers a GE program in more than one program length 
must publish a separate disclosure template for each length of the 
program. The institution must ensure that each disclosure template 
clearly identifies the applicable length of the program.
    (2) An institution that offers a GE program in more than one 
location or format (e.g., full-time, part-time, accelerated) may publish 
a separate disclosure template for each location or format if doing so 
would result in clearer disclosures under paragraph (a) of this section. 
An institution that chooses to publish separate disclosure templates for 
each location or format must ensure that each disclosure template 
clearly identifies the applicable location or format.
    (3) If an institution publishes a separate disclosure template for 
each length, or for each location or format, of the program, the 
institution must disaggregate, by length of the program, location, or 
format, those disclosures set forth in paragraphs (a)(4) and (5), (a)(7) 
through (9), and (a)(14) and as otherwise provided by the Secretary in a 
notice published in the Federal Register.
    (g) Privacy considerations. An institution may not include on the 
disclosure template any of the disclosures described in paragraphs 
(a)(2), (a)(5), and

[[Page 711]]

(a)(6) or paragraphs (a)(8) through (13) of this section if they are 
based on fewer than 10 students.
    (h) Implementation date. Institutions must comply with the 
requirements of this section beginning January 1, 2017.

(Authority: 20 U.S.C. 1001, 1002, 1088)

[79 FR 65007, Oct. 31, 2014, as amended at 79 FR 71958, Dec. 4, 2014]



Sec. 668.413  Calculating, issuing, and challenging completion rates,
withdrawal rates, repayment rates, median loan debt, mean and median 
earnings, and program cohort default rate.

    (a)(1) General. Under the procedures in this section, the Secretary 
determines the completion rates, withdrawal rates, repayment rates, 
median loan debt, mean and median earnings, and program cohort default 
rate an institution must disclose under Sec. 668.412 for each of its GE 
programs, notifies the institution of that information, and provides the 
institution an opportunity to challenge the calculations.
    (2) Enrollment cohort. (i) Subject to paragraph (a)(2)(ii) of this 
section, for the purpose of calculating the completion and withdrawal 
rates under paragraph (b) of this section, the enrollment cohort is 
comprised of all the students who began enrollment in a GE program 
during an award year. For example, the students who began enrollment in 
a GE program during the 2014-2015 award year constitute the enrollment 
cohort for that award year.
    (ii) A student is excluded from the enrollment cohort for the 
purpose of calculating the completion and withdrawal rates under 
paragraph (b) of this section if, while enrolled in the program, the 
student died or became totally and permanently disabled and was unable 
to continue enrollment on at least a half-time basis, as determined 
under the standards in 34 CFR 685.213.
    (b) Calculating completion rates, withdrawal rates, repayment rates, 
median loan debt, mean and median earnings, and program cohort default 
rate-- (1) Completion rates. For each enrollment cohort, the Secretary 
calculates the completion rates of a GE program as follows:
    (i) For students whose enrollment status is full-time on the first 
day of the student's enrollment in the program:
[GRAPHIC] [TIFF OMITTED] TR04DE14.000

[GRAPHIC] [TIFF OMITTED] TR04DE14.001


[[Page 712]]


    (ii) For students whose enrollment status is less than full-time on 
the first day of the student's enrollment in the program:
[GRAPHIC] [TIFF OMITTED] TR31OC14.066

    (2) Withdrawal rate. For each enrollment cohort, the Secretary 
calculates two withdrawal rates for a GE program as follows:
    (i) The percentage of students in the enrollment cohort who withdrew 
from the program within 100 percent of the length of the program;
    (ii) The percentage of students in the enrollment cohort who 
withdrew from the program within 150 percent of the length of the 
program.
    (3) Loan repayment rate. For an award year, the Secretary calculates 
a loan repayment rate for borrowers not excluded under paragraph 
(b)(3)(vi) of this section who enrolled in a GE program as follows:
[GRAPHIC] [TIFF OMITTED] TR31OC14.067

    (i) Number of borrowers entering repayment. The total number of 
borrowers who entered repayment during the two-year cohort period on 
FFEL or Direct Loans received for enrollment in the program.
    (ii) Number of borrowers paid in full. Of the number of borrowers 
entering repayment, the number who have fully repaid all FFEL or Direct 
Loans received for enrollment in the program.
    (iii) Number of borrowers in active repayment. Of the number of 
borrowers entering repayment, the number who, during the most recently 
completed

[[Page 713]]

award year, made loan payments sufficient to reduce by at least one 
dollar the outstanding balance of each of the borrower's FFEL or Direct 
Loans received for enrollment in the program, including consolidation 
loans that include a FFEL or Direct Loan received for enrollment in the 
program, by comparing the outstanding balance of each loan at the 
beginning and end of the award year.
    (iv) Loan defaults. A borrower who defaulted on a FFEL or Direct 
Loan is not included in the numerator of the loan repayment rate formula 
even if that loan has been paid in full or meets the definition of being 
in active repayment.
    (v) Repayment rates for borrowers who completed or withdrew. The 
Secretary may modify the formula in this paragraph to calculate 
repayment rates for only those borrowers who completed the program or 
for only those borrowers who withdrew from the program.
    (vi) Exclusions. For the award year the Secretary calculates the 
loan repayment rate for a program, the Secretary excludes a borrower 
from the repayment rate calculation if the Secretary determines that--
    (A) One or more of the borrower's FFEL or Direct loans were in a 
military-related deferment status at any time during the most recently 
completed award year;
    (B) One or more of the borrower's FFEL or Direct loans are either 
under consideration by the Secretary, or have been approved, for a 
discharge on the basis of the borrower's total and permanent disability, 
under 34 CFR 682.402 or 685.212;
    (C) The borrower was enrolled in any other eligible program at the 
institution or at another institution during the most recently completed 
award year; or
    (D) The borrower died.
    (4) Median loan debt for students who completed the GE program. For 
the most recently completed award year, the Secretary calculates a 
median loan debt for the students described in Sec. 668.412(a)(10)(i) 
who completed the GE program during the award year. The median is 
calculated on debt described in Sec. 668.404(d)(1).
    (5) Median loan debt for students who withdrew from the GE program. 
For the most recently completed award year, the Secretary calculates a 
median loan debt for the students described in Sec. 668.412(a)(10)(ii) 
who withdrew from the program during the award year. The median is 
calculated on debt described in Sec. 668.404(d)(1).
    (6) Median loan debt for students who completed and withdrew from 
the GE program. For the most recently completed award year, the 
Secretary calculates a median loan debt for the students described in 
Sec. 668.412(a)(10)(iii) who completed the GE program during the award 
year and those students who withdrew from the GE program during the 
award year. The median is calculated on debt described in 
Sec. 668.404(d)(1).
    (7) Mean and median earnings. The Secretary calculates the mean and 
median earnings of a GE program as described in paragraphs (b)(8) 
through (b)(12) of this section.
    (8) Mean and median earnings for students who completed the GE 
program. (i) The Secretary determines the mean and median earnings for 
the students who completed the GE program during the cohort period by--
    (A) Creating a list of the students who completed the program during 
the cohort period and providing it to the institution, as provided in 
paragraph (b)(8)(ii) of this section;
    (B) Allowing the institution to correct the information about the 
students on the list, as provided in paragraph (b)(8)(iii) of this 
section;
    (C) Obtaining from SSA the median annual earnings of the students on 
the list, as provided in paragraph (b)(8)(iv) of this section; and
    (D) Notifying the institution of the median annual earnings for the 
students on the list.
    (ii) Creating the list of students. (A) The Secretary selects the 
students to be included on the list by--
    (1) Identifying the students who were enrolled in the program and 
completed the program during the cohort period from the data provided by 
the institution under Sec. 668.411; and

[[Page 714]]

    (2) Indicating which students would be removed from the list under 
paragraph (b)(11) of this section and the specific reason for the 
exclusion.
    (B) The Secretary provides the list to the institution and states 
which cohort period was used to select the students.
    (iii) Institutional corrections to the list. (A) The Secretary 
presumes that the list of students and the identity information for 
those students are correct unless the institution provides evidence to 
the contrary that is satisfactory to the Secretary. The institution 
bears the burden of proof that the list is incorrect.
    (B) No later than 45 days after the date the Secretary provides the 
list to the institution, the institution may--
    (1) Provide evidence showing that a student should be included on or 
removed from the list pursuant to paragraph (b)(11) of this section or 
otherwise; or
    (2) Correct or update a student's identity information and the 
student's program attendance information.
    (C) After the 45-day period expires, the institution may no longer 
seek to correct the list of students or revise the identity or program 
information of those students included on the list.
    (D) The Secretary considers the evidence provided by the institution 
and either accepts the correction or notifies the institution of the 
reasons for not accepting the correction. If the Secretary accepts the 
correction, the Secretary uses the corrected information to create the 
final list. The Secretary notifies the institution which students are 
included on the final list and the cohort period used to create the 
list.
    (iv) Obtaining earnings data. If the final list includes 10 or more 
students, the Secretary submits the final list to SSA. For the purposes 
of this section, SSA returns to the Secretary--
    (A) The mean and median earnings of the students on the list whom 
SSA has matched to SSA earnings data, in aggregate and not in individual 
form; and
    (B) The number, but not the identities, of students on the list that 
SSA could not match.
    (9) Mean and median earnings for students who withdrew from the 
program. (i) The Secretary determines the mean and median earnings for 
the students who withdrew from the program during the cohort period by--
    (A) Creating a list of the students who were enrolled in the program 
but withdrew from the program during the cohort period and providing it 
to the institution, as provided in paragraph (b)(9)(ii) of this section;
    (B) Allowing the institution to correct the information about the 
students on the list, as provided in paragraph (b)(9)(iii) of this 
section;
    (C) Obtaining from SSA the median annual earnings of the students on 
the list, as provided in paragraph (b)(9)(iv) of this section; and
    (D) Notifying the institution of the median annual earnings for the 
students on the list.
    (ii) Creating the list of students. (A) The Secretary selects the 
students to be included on the list by--
    (1) Identifying the students who were enrolled in the program but 
withdrew from the program during the cohort period from the data 
provided by the institution under Sec. 668.411; and
    (2) Indicating which students would be removed from the list under 
paragraph (b)(11) of this section and the specific reason for the 
exclusion.
    (B) The Secretary provides the list to the institution and states 
which cohort period was used to select the students.
    (iii) Institutional corrections to the list. (A) The Secretary 
presumes that the list of students and the identity information for 
those students are correct unless the institution provides evidence to 
the contrary that is satisfactory to the Secretary, in a format and 
process determined by the Secretary. The institution bears the burden of 
proof that the list is incorrect.
    (B) No later than 45 days after the date the Secretary provides the 
list to the institution, the institution may--
    (1) Provide evidence showing that a student should be included on or 
removed from the list pursuant to paragraph (b)(11) of this section or 
otherwise; or
    (2) Correct or update a student's identity information and the 
student's program attendance information.
    (C) After the 45-day period expires, the institution may no longer 
seek to correct the list of students or revise

[[Page 715]]

the identity or program information of those students included on the 
list.
    (D) The Secretary considers the evidence provided by the institution 
and either accepts the correction or notifies the institution of the 
reasons for not accepting the correction. If the Secretary accepts the 
correction, the Secretary uses the corrected information to create the 
final list. The Secretary notifies the institution which students are 
included on the final list and the cohort period used to create the 
list.
    (iv) Obtaining earnings data. If the final list includes 10 or more 
students, the Secretary submits the final list to SSA. For the purposes 
of this section SSA returns to the Secretary--
    (A) The mean and median earnings of the students on the list whom 
SSA has matched to SSA earnings data, in aggregate and not in individual 
form; and
    (B) The number, but not the identities, of students on the list that 
SSA could not match.
    (10) Mean and median earnings for students who completed and 
withdrew from the program. The Secretary calculates the mean and median 
earnings for both the students who completed the program during the 
cohort period and students who withdrew from the program during the 
cohort period in accordance with paragraphs (b)(8) and (9) of this 
section.
    (11) Exclusions from calculations. The Secretary excludes a student 
from the calculation of the mean and median earnings of a GE program if 
the Secretary determines that--
    (i) One or more of the student's title IV loans were in a military-
related deferment status at any time during the calendar year for which 
the Secretary obtains earnings information under this section;
    (ii) One or more of the student's title IV loans are under 
consideration by the Secretary, or have been approved, for a discharge 
on the basis of the student's total and permanent disability, under 34 
CFR 674.61, 682.402 or 685.212;
    (iii) The student was enrolled in any other eligible program at the 
institution or at another institution during the calendar year for which 
the Secretary obtains earnings information under this section; or
    (iv) The student died.
    (12) Mean and median earnings not calculated. The Secretary does not 
calculate the mean and median earnings for a GE program if SSA does not 
provide the mean and median earnings for the program.
    (13) Program cohort default rate. The Secretary calculates the 
program cohort default rate using the methodology and procedures set 
forth in subpart R of this part.
    (c) Notification to institutions. The Secretary notifies the 
institution of the--
    (1) Draft completion, withdrawal, and repayment rates calculated 
under paragraph (b)(1) through (3) of this section and the information 
the Secretary used to calculate those rates.
    (2) Median loan debt of the students who completed the program, as 
described in paragraph (b)(4) of this section, the students who withdrew 
from the program, as described in paragraph (b)(5) of this section, and 
both the students who completed and withdrew from the program, as 
described in paragraph (b)(6) of this section.
    (3) Mean and median earnings of the students who completed the 
program, as described in paragraph (b)(8) of this section, the students 
who withdrew from the program, as described in paragraph (b)(9) of this 
section, or both the students who completed the program and the students 
who withdrew from the program, as described in paragraph (b)(10) of this 
section, in each case during the cohort period.
    (4) Draft program cohort default rate, as described in paragraph 
(b)(13) of this section.
    (d) Challenges to completion rates, withdrawal rates, repayment 
rates, median loan debt, mean and median earnings, and program cohort 
default rate--(1) Completion rates, withdrawal rates, repayment rates, 
and median loan debt. (i) No later than 45 days after the Secretary 
notifies an institution of a GE program's draft completion rate, 
withdrawal rate, repayment rate, and median loan debt, the institution 
may challenge the accuracy of the information that the Secretary used to 
calculate the draft rates and the draft median loan debt by submitting, 
in a form prescribed by the Secretary, evidence

[[Page 716]]

satisfactory to the Secretary demonstrating that the information was 
incorrect.
    (ii) The Secretary considers any evidence provided by the 
institution challenging the accuracy of the information the Secretary 
used to calculate the rates and the median loan debt and notifies the 
institution whether the challenge is accepted or the reasons the 
challenge is not accepted. If the Secretary accepts the challenge, the 
Secretary uses the corrected data to calculate the rates or median loan 
debt.
    (iii) An institution may challenge the Secretary's calculation of 
the completion rates, withdrawal rates, repayment rates, and median loan 
debt only once for an award year. An institution that does not timely 
challenge the rates or median loan debt waives any objection to the 
rates or median loan debt as stated in the notice.
    (2) Mean and median earnings. The Secretary does not consider any 
challenges to the mean and median earnings calculated under this 
section.
    (3) Program cohort default rate. The Secretary considers any 
challenges to the program cohort default rate under the procedures for 
challenges set forth in subpart R of this part.
    (e) Final calculations--(1) Completion rates, withdrawal rates, 
repayment rates, and median loan debt. (i) After expiration of the 45-
day period, and subject to resolution of any challenge under paragraph 
(d)(1) of this section, a program's draft completion rate, withdrawal 
rate, repayment rate, and median loan debt constitute the final rates 
and median loan debt for that program.
    (ii) The Secretary informs the institution of the final completion 
rate, withdrawal rate, repayment rate, and median loan debt for each of 
its GE programs by issuing a notice of determination.
    (iii) Unless paragraph (g) of this section applies, after the 
Secretary provides the notice of determination, the Secretary may 
publish the final completion rate, withdrawal rate, repayment rate, and 
median loan debt.
    (2) Mean and median earnings. The mean and median earnings of a 
program calculated by the Secretary under this section constitute the 
final mean and median earnings for that program. After the Secretary 
provides the institution with the notice in paragraph (c) of this 
section, the Secretary may publish the final mean and median earnings 
for the program.
    (3) Program cohort default rate. Subject to resolution of any 
challenge under subpart R of this part, a program's program cohort 
default rate calculated by the Secretary under subpart R constitutes the 
official program cohort default rate for that program. After the 
Secretary provides the notice of determination, the Secretary may 
publish the official program cohort default rate.
    (f) Conditions for challenges. An institution must ensure that any 
material that it submits to make any corrections or challenge under this 
section is--
    (1) Complete, timely, accurate, and in a format acceptable to the 
Secretary as described in this subpart and, with respect to program 
cohort default rate, in subpart R of this part; and
    (2) Consistent with any instructions provided to the institution 
with the notice of its draft completion, withdrawal, and repayment 
rates, median loan debt, or program cohort default rate.
    (g) Privacy considerations. The Secretary does not publish a 
determination described in paragraphs (b)(1) through (6), (b)(8) through 
(b)(10), and(b)(13) of this section, and an institution may not disclose 
a determination made by the Secretary or make any disclosures under 
those paragraphs, if the determination is based on fewer than 10 
students.

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094)

[79 FR 65007, Oct. 31, 2014, as amended at 79 FR 71958,71959, Dec. 4, 
2014]



Sec. 668.414  Certification requirements for GE programs.

    (a) Transitional certification for existing programs. (1) Except as 
provided in paragraph (a)(2) of this section, an institution must 
provide to the Secretary no later than December 31 of the year in which 
this regulation takes effect, in accordance with procedures established 
by the Secretary, a certification signed by its most senior executive 
officer that each of its currently

[[Page 717]]

eligible GE programs included on its Eligibility and Certification 
Approval Report meets the requirements of paragraph (d) of this section. 
The Secretary accepts the certification as an addendum to the 
institution's program participation agreement with the Secretary under 
Sec. 668.14.

[, as amended at 79 FR 71958, Dec. 4, 2014]
    (2) If an institution makes the certification in its program 
participation agreement pursuant to paragraph (b) of this section 
between July 1 and December 31 of the year in which this regulation 
takes effect, it is not required to provide the transitional 
certification under this paragraph.
    (b) Program participation agreement certification. As a condition of 
its continued participation in the title IV, HEA programs, an 
institution must certify in its program participation agreement with the 
Secretary under Sec. 668.14 that each of its currently eligible GE 
programs included on its Eligibility and Certification Approval Report 
meets the requirements of paragraph (d) of this section. An institution 
must update the certification within 10 days if there are any changes in 
the approvals for a program, or other changes for a program that make an 
existing certification no longer accurate.
    (c) Establishing eligibility and disbursing funds. (1) An 
institution establishes the eligibility for title IV, HEA program funds 
of a GE program by updating the list of the institution's eligible 
programs maintained by the Department to include that program, as 
provided under 34 CFR 600.21(a)(11)(i). By updating the list of the 
institution's eligible programs, the institution affirms that the 
program satisfies the certification requirements in paragraph (d) of 
this section. Except as provided in paragraph (c)(2) of this section, 
after the institution updates its list of eligible programs, the 
institution may disburse title IV, HEA program funds to students 
enrolled in that program.
    (2) An institution may not update its list of eligible programs to 
include a GE program, or a GE program that is substantially similar to a 
failing or zone program that the institution voluntarily discontinued or 
became ineligible as described in Sec. 668.410(b)(2), that was subject 
to the three-year loss of eligibility under Sec. 668.410(b)(2), until 
that three-year period expires.
    (d) GE program eligibility certifications. An institution certifies 
for each eligible program included on its Eligibility and Certification 
Approval Report, at the time and in the form specified in this section, 
that--
    (1) Each eligible GE program it offers is approved by a recognized 
accrediting agency or is otherwise included in the institution's 
accreditation by its recognized accrediting agency, or, if the 
institution is a public postsecondary vocational institution, the 
program is approved by a recognized State agency for the approval of 
public postsecondary vocational education in lieu of accreditation;
    (2) Each eligible GE program it offers is programmatically 
accredited, if such accreditation is required by a Federal governmental 
entity or by a governmental entity in the State in which the institution 
is located or in which the institution is otherwise required to obtain 
State approval under 34 CFR 600.9;
    (3) For the State in which the institution is located or in which 
the institution is otherwise required to obtain State approval under 34 
CFR 600.9, each eligible program it offers satisfies the applicable 
educational prerequisites for professional licensure or certification 
requirements in that State so that a student who completes the program 
and seeks employment in that State qualifies to take any licensure or 
certification exam that is needed for the student to practice or find 
employment in an occupation that the program prepares students to enter; 
and
    (4) For a program for which the institution seeks to establish 
eligibility for title IV, HEA program funds, the program is not 
substantially similar to a program offered by the institution that, in 
the prior three years, became ineligible for title IV, HEA program funds 
under the D/E rates measure or was failing, or in the zone with respect 
to, the D/E rates measure and was voluntarily discontinued by the 
institution. The institution must include with its certification an 
explanation of how the new program is not substantially

[[Page 718]]

similar to any such ineligible or discontinued program.

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094, 1099c)

[, as amended at 79 FR 71958, Dec. 4, 2014]



Sec. 668.415  Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.

(Authority: 20 U.S.C. 1001, 1002, 1088)



                  Subpart R_Program Cohort Default Rate

    Source: 79 FR 65019, Oct. 31, 2014, unless otherwise noted.



Sec. 668.500  Purpose of this subpart.

    General. The program cohort default rate is a measure of a GE 
program offered by the institution. This subpart describes how program 
cohort default rates are calculated, and how you may request changes to 
your program cohort default rates or appeal the rate. Under this 
subpart, you submit a ``challenge'' after you receive your draft program 
cohort default rate, and you request an ``adjustment'' or ``appeal'' 
after your official program cohort default rate is published.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.501  Definitions of terms used in this subpart.

    We use the following definitions in this subpart:
    Cohort. Your cohort is a group of borrowers used to determine your 
program cohort default rate. The method for identifying the borrowers in 
a cohort is provided in Sec. 668.502(b).
    Data manager.
    (1) For FFELP loans held by a guaranty agency or lender, the 
guaranty agency is the data manager.
    (2) For FFELP loans that we hold, we are the data manager.
    (3) For Direct Loan Program loans, the Secretary's servicer is the 
data manager.
    Days. In this subpart, ``days'' means calendar days.
    Default. A borrower is considered to be in default for program 
cohort default rate purposes under the rules in Sec. 668.502(c).
    Draft program cohort default rate. Your draft program cohort default 
rate is a rate we issue, for your review, before we issue your official 
program cohort default rate. A draft program cohort default rate is used 
only for the purposes described in Sec. 668.504.
    Entering repayment. (1) Except as provided in paragraphs (2) and (3) 
of this definition, loans are considered to enter repayment on the dates 
described in 34 CFR 682.200 (under the definition of ``repayment 
period'') and in 34 CFR 685.207, as applicable.
    (2) A Federal SLS Loan is considered to enter repayment--
    (i) At the same time the borrower's Federal Stafford Loan enters 
repayment, if the borrower received the Federal SLS Loan and the Federal 
Stafford Loan during the same period of continuous enrollment; or
    (ii) In all other cases, on the day after the student ceases to be 
enrolled at an institution on at least a half-time basis in an 
educational program leading to a degree, certificate, or other 
recognized educational credential.
    (3) For the purposes of this subpart, a loan is considered to enter 
repayment on the date that a borrower repays it in full, if the loan is 
paid in full before the loan enters repayment under paragraphs (1) or 
(2) of this definition.
    Fiscal year. A fiscal year begins on October 1 and ends on the 
following September 30. A fiscal year is identified by the calendar year 
in which it ends.
    GE program. An educational program offered by an institution under 
Sec. 668.8(c)(3) or (d) and identified by a combination of the 
institution's six-digit Office of Postsecondary Education ID (OPEID) 
number, the program's six-digit CIP code as assigned by the institution 
or determined by the Secretary, and the program's credential level, as 
defined in Sec. 668.402.
    Loan record detail report. The loan record detail report is a report 
that we produce. It contains the data used to calculate your draft or 
official program cohort default rate.

[[Page 719]]

    Official program cohort default rate. Your official program cohort 
default rate is the program cohort default rate that we publish for you 
under Sec. 668.505.
    We. We are the Department, the Secretary, or the Secretary's 
designee.
    You. You are an institution. We consider each reference to ``you'' 
to apply separately to the institution with respect to each of its GE 
programs.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.502  Calculating program cohort default rates.

    (a) General. This section describes the four steps that we follow to 
calculate your program cohort default rate for a fiscal year:
    (1) First, under paragraph (b) of this section, we identify the 
borrowers in your GE program's cohort for the fiscal year. If the total 
number of borrowers in that cohort is fewer than 10, we also include the 
borrowers in your cohorts for the two most recent prior fiscal years for 
which we have data that identifies those borrowers who entered repayment 
during those fiscal years.
    (2) Second, under paragraph (c) of this section, we identify the 
borrowers in the cohort (or cohorts) who are considered to be in default 
by the end of the second fiscal year following the fiscal year those 
borrowers entered repayment. If more than one cohort will be used to 
calculate your program cohort default rate, we identify defaulted 
borrowers separately for each cohort.
    (3) Third, under paragraph (d) of this section, we calculate your 
program cohort default rate.
    (4) Fourth, we apply your program cohort default rate to your 
program at all of your locations--
    (i) As you exist on the date you receive the notice of your official 
program cohort default rate; and
    (ii) From the date on which you receive the notice of your official 
program cohort default rate until you receive our notice that the 
program cohort default rate no longer applies.
    (b) Identify the borrowers in a cohort. (1) Except as provided in 
paragraph (b)(3) of this section, your cohort for a fiscal year consists 
of all of your current and former students who, during that fiscal year, 
entered repayment on any Federal Stafford Loan, Federal SLS Loan, Direct 
Subsidized Loan, or Direct Unsubsidized Loan that they received to 
attend the GE program, or on the portion of a loan made under the 
Federal Consolidation Loan Program or the Federal Direct Consolidation 
Loan Program that is used to repay those loans.
    (2) A borrower may be included in more than one of your cohorts and 
may be included in the cohorts of more than one institution in the same 
fiscal year.
    (3) A TEACH Grant that has been converted to a Federal Direct 
Unsubsidized Loan is not considered for the purpose of calculating and 
applying program cohort default rates.
    (c) Identify the borrowers in a cohort who are in default. (1) 
Except as provided in paragraph (c)(2) of this section, a borrower in a 
cohort for a fiscal year is considered to be in default if, before the 
end of the second fiscal year following the fiscal year the borrower 
entered repayment--
    (i) The borrower defaults on any FFELP loan that was used to include 
the borrower in the cohort or on any Federal Consolidation Loan Program 
loan that repaid a loan that was used to include the borrower in the 
cohort (however, a borrower is not considered to be in default on a 
FFELP loan unless a claim for insurance has been paid on the loan by a 
guaranty agency or by us);
    (ii) The borrower fails to make an installment payment, when due, on 
any Direct Loan Program loan that was used to include the borrower in 
the cohort or on any Federal Direct Consolidation Loan Program loan that 
repaid a loan that was used to include the borrower in the cohort, and 
the borrower's failure persists for 360 days;
    (iii) You or your owner, agent, contractor, employee, or any other 
affiliated entity or individual make a payment to prevent a borrower's 
default on a loan that is used to include the borrower in that cohort; 
or
    (iv) The borrower fails to make an installment payment, when due, on 
a Federal Stafford Loan that is held by the Secretary or a Federal 
Consolidation Loan that is held by the Secretary and that was used to 
repay a Federal Stafford Loan, if such Federal Stafford Loan or Federal 
Consolidation Loan

[[Page 720]]

was used to include the borrower in the cohort, and the borrower's 
failure persists for 360 days.
    (2) A borrower is not considered to be in default based on a loan 
that is, before the end of the second fiscal year following the fiscal 
year in which it entered repayment--
    (i) Rehabilitated under 34 CFR 682.405 or 34 CFR 685.211(e); or
    (ii) Repurchased by a lender because the claim for insurance was 
submitted or paid in error.
    (d) Calculate the program cohort default rate. Except as provided in 
Sec. 668.503, if there are--
    (1)(i) Ten or more borrowers in your cohort for a fiscal year, your 
program cohort default rate is the percentage that is calculated by--
    (ii) Dividing the number of borrowers in the cohort who are in 
default, as determined under paragraph (c) of this section, by the 
number of borrowers in the cohort, as determined under paragraph (b) of 
this section.
    (2) Fewer than 10 borrowers in your cohort for a fiscal year, your 
program cohort default rate is the percentage that is calculated by--
    (i) For the first two years we attempt to calculate program cohort 
default rates under this part for a program, dividing the total number 
of borrowers in that program's cohort and in the two most recent prior 
cohorts for which we have data to identify the individuals comprising 
the cohort who are in default, as determined for each program's cohort 
under paragraph (c) of this section, by the total number of borrowers in 
that program cohort and the two most recent prior cohorts for which we 
have data to identify the individuals comprising the cohort, as 
determined for each program cohort under paragraph (b) of this section.
    (ii) For other fiscal years, by dividing the total number of 
borrowers in that program cohort and in the two most recent prior 
program cohorts who are in default, as determined for each program 
cohort under paragraph (c) of this section, by the total number of 
borrowers in that program cohort and the two most recent prior program 
cohorts as determined for each program cohort under paragraph (b) of 
this section.
    (iii) If we identify a total of fewer than ten borrowers under 
paragraph (d)(2) of this section, we do not calculate a draft program 
cohort default rate for that fiscal year.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.503  Determining program cohort default rates for GE programs
at institutions that have undergone a change in status.

    (a) General. (1) If you undergo a change in status identified in 
this section, the program cohort default rate of a GE program you offer 
is determined under this section.
    (2) In determining program cohort default rates under this section, 
the date of a merger, acquisition, or other change in status is the date 
the change occurs.
    (3) [Reserved]
    (4) If the program cohort default rate of a program offered by 
another institution is applicable to you under this section with respect 
to a program you offer, you may challenge, request an adjustment, or 
submit an appeal for the program cohort default rate under the same 
requirements that would be applicable to the other institution under 
Secs. 668.504 and 668.508.
    (b) Acquisition or merger of institutions. If you offer a GE program 
and your institution acquires, or was created by the merger of, one or 
more institutions that participated independently in the title IV, HEA 
programs immediately before the acquisition or merger and that offered 
the same GE program, as identified by its 6-digit CIP code and 
credential level--
    (1) Those program cohort default rates published for a GE program 
offered by any of these institutions before the date of the acquisition 
or merger are attributed to the GE program after the merger or 
acquisition; and
    (2) Beginning with the first program cohort default rate published 
after the date of the acquisition or merger, the program cohort default 
rates for that GE program are determined by including in the calculation 
under Sec. 668.502 the borrowers who were enrolled in that GE program 
from each institution that offered that program and that was involved in 
the acquisition or merger.

[[Page 721]]

    (c) [Reserved]
    (d) Branches or locations becoming institutions. If you are a branch 
or location of an institution that is participating in the title IV, HEA 
programs, and you become a separate, new institution for the purposes of 
participating in those programs--
    (1) The program cohort default rates published for a GE program 
before the date of the change for your former parent institution are 
also applicable to you when you offer that program;
    (2) Beginning with the first program cohort default rate published 
after the date of the change, the program cohort default rates for a GE 
program for the next three fiscal years are determined by including the 
applicable borrowers who were enrolled in the GE program from your 
institution and from your former parent institution (including all of 
its locations) in the calculation under Sec. 668.502.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.504  Draft program cohort default rates and your ability to
challenge before official program cohort default rates are issued.

    (a) General. (1) We notify you of the draft program cohort default 
rate of a GE program before the official program cohort default rate of 
the GE program is calculated. Our notice includes the loan record detail 
report for the draft program cohort default rate.
    (2) Except as provided in Sec. 668.502(d)(2)(i), regardless of the 
number of borrowers included in the program cohort, the draft program 
cohort default rate of a GE program is always calculated using data for 
that fiscal year alone, using the method described in 
Sec. 668.502(d)(1).
    (3) The draft program cohort default rate of a GE program and the 
loan record detail report are not considered public information and may 
not be otherwise voluntarily released to the public by a data manager.
    (4) Any challenge you submit under this section and any response 
provided by a data manager must be in a format acceptable to us. This 
acceptable format is described in materials that we provide to you. If 
your challenge does not comply with these requirements, we may deny your 
challenge.
    (b) Incorrect data challenges. (1) You may challenge the accuracy of 
the data included on the loan record detail report by sending a 
challenge to the relevant data manager, or data managers, within 45 days 
after you receive the data. Your challenge must include--
    (i) A description of the information in the loan record detail 
report that you believe is incorrect; and
    (ii) Documentation that supports your contention that the data are 
incorrect.
    (2) Within 30 days after receiving your challenge, the data manager 
must send you and us a response that--
    (i) Addresses each of your allegations of error; and
    (ii) Includes the documentation that supports the data manager's 
position.
    (3) If your data manager concludes that draft data in the loan 
record detail report are incorrect, and we agree, we use the corrected 
data to calculate your program cohort default rate.
    (4) If you fail to challenge the accuracy of data under this 
section, you cannot contest the accuracy of those data in an uncorrected 
data adjustment under Sec. 668.509, or in an erroneous data appeal, 
under Sec. 668.511.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.505  Notice of the official program cohort default rate of
a GE program.

    (a) We notify you of the official program cohort default rate of a 
GE program after we calculate it. After we send our notice to you, we 
publish a list of GE program cohort default rates for all institutions.
    (b) If one or more borrowers who were enrolled in a GE program 
entered repayment in the fiscal year for which the rate is calculated, 
you will receive a loan record detail report as part of your 
notification package for that program.
    (c) You have five business days, from the date of our notification, 
as posted on the Department's Web site, to report any problem with 
receipt of the notification package.
    (d) Except as provided in paragraph (e), timelines for submitting, 
adjustments, and appeals begin on the sixth business day following the 
date of the

[[Page 722]]

notification package that is posted on the Department's Web site.
    (e) If you timely report a problem with receipt of your notification 
package under paragraph (c) of this section and the Department agrees 
that the problem was not caused by you, the Department will extend the 
challenge, appeal, and adjustment deadlines and timeframes to account 
for a re-notification package.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.506  [Reserved]



Sec. 668.507  Preventing evasion of program cohort default rates.

    In calculating the program cohort default rate of a GE program, the 
Secretary may include loan debt incurred by the borrower for enrolling 
in GE programs at other institutions if the institution and the other 
institutions are under common ownership or control, as determined by the 
Secretary in accordance with 34 CFR 600.31.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.508  General requirements for adjusting and appealing official
program cohort default rates.

    (a) [Reserved]
    (b) Limitations on your ability to dispute a program cohort default 
rate. (1) You may not dispute the calculation of a program cohort 
default rate except as described in this subpart.
    (2) You may not request an adjustment, or appeal a program cohort 
default rate, under Sec. 668.509, Sec. 668.510, Sec. 668.511, or 
Sec. 668.512, more than once.
    (c) Content and format of requests for adjustments and appeals. We 
may deny your request for adjustment or appeal if it does not meet the 
following requirements:
    (1) All appeals, notices, requests, independent auditor's opinions, 
management's written assertions, and other correspondence that you are 
required to send under this subpart must be complete, timely, accurate, 
and in a format acceptable to us. This acceptable format is described in 
materials that we provide to you.
    (2) Your completed request for adjustment or appeal must include--
    (i) All of the information necessary to substantiate your request 
for adjustment or appeal; and
    (ii) A certification by your chief executive officer, under penalty 
of perjury, that all the information you provide is true and correct.
    (d) Our copies of your correspondence. Whenever you are required by 
this subpart to correspond with a party other than us, you must send us 
a copy of your correspondence within the same time deadlines. However, 
you are not required to send us copies of documents that you received 
from us originally.
    (e) Requirements for data managers' responses. (1) Except as 
otherwise provided in this subpart, if this subpart requires a data 
manager to correspond with any party other than us, the data manager 
must send us a copy of the correspondence within the same time 
deadlines.
    (2) If a data manager sends us correspondence under this subpart 
that is not in a format acceptable to us, we may require the data 
manager to revise that correspondence's format, and we may prescribe a 
format for that data manager's subsequent correspondence with us.
    (f) Our decision on your request for adjustment or appeal. (1) We 
determine whether your request for an adjustment or appeal is in 
compliance with this subpart.
    (2) In making our decision for an adjustment, under Sec. 668.509 or 
Sec. 668.510, or an appeal, under Sec. 668.511 or Sec. 668.512--
    (i) We presume that the information provided to you by a data 
manager is correct unless you provide substantial evidence that shows 
the information is not correct; and
    (ii) If we determine that a data manager did not provide the 
necessary clarifying information or legible records in meeting the 
requirements of this subpart, we presume that the evidence that you 
provide to us is correct unless it is contradicted or otherwise proven 
to be incorrect by information we maintain.
    (3) Our decision is based on the materials you submit under this 
subpart. We do not provide an oral hearing.
    (4) We notify you of our decision before we notify you of your next 
official program cohort default rate.

[[Page 723]]

    (5) You may not seek judicial review of our determination of a 
program cohort default rate until we issue our decision on all pending 
requests for adjustments or appeals for that program cohort default 
rate.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.509  Uncorrected data adjustments.

    (a) Eligibility. You may request an uncorrected data adjustment for 
a GE program's most recent cohort of borrowers used to calculate the 
most recent official program cohort default rate if, in response to your 
challenge under Sec. 668.504(b), a data manager agreed correctly to 
change the data, but the changes are not reflected in your official 
program cohort default rate.
    (b) Deadlines for requesting an uncorrected data adjustment. You 
must send us a request for an uncorrected data adjustment, including all 
supporting documentation, within 30 days after you receive your loan 
record detail report from us.
    (c) Determination. We recalculate your program cohort default rate, 
based on the corrected data, and correct the rate that is publicly 
released, if we determine that--
    (1) In response to your challenge under Sec. 668.504(b), a data 
manager agreed to change the data;
    (2) The changes described in paragraph (c)(1) are not reflected in 
your official program cohort default rate; and
    (3) We agree that the data are incorrect.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.510  New data adjustments.

    (a) Eligibility. You may request a new data adjustment for the most 
recent program cohort of borrowers, used to calculate the most recent 
official program cohort default rate for a GE program, if--
    (1) A comparison of the loan record detail reports that we provide 
to you for the draft and official program cohort default rates shows 
that the data have been newly included, excluded, or otherwise changed; 
and
    (2) You identify errors in the data described in paragraph (a)(1) 
that are confirmed by the data manager.
    (b) Deadlines for requesting a new data adjustment. (1) You must 
send to the relevant data manager, or data managers, and us a request 
for a new data adjustment, including all supporting documentation, 
within 15 days after you receive your loan record detail report from us.
    (2) Within 20 days after receiving your request for a new data 
adjustment, the data manager must send you and us a response that--
    (i) Addresses each of your allegations of error; and
    (ii) Includes the documentation used to support the data manager's 
position.
    (3) Within 15 days after receiving a guaranty agency's notice that 
we hold an FFELP loan about which you are inquiring, you must send us 
your request for a new data adjustment for that loan. We respond to your 
request as set forth under paragraph (b)(2) of this section.
    (4) Within 15 days after receiving incomplete or illegible records 
or data from a data manager, you must send a request for replacement 
records or clarification of data to the data manager and us.
    (5) Within 20 days after receiving your request for replacement 
records or clarification of data, the data manager must--
    (i) Replace the missing or illegible records;
    (ii) Provide clarifying information; or
    (iii) Notify you and us that no clarifying information or additional 
or improved records are available.
    (6) You must send us your completed request for a new data 
adjustment, including all supporting documentation--
    (i) Within 30 days after you receive the final data manager's 
response to your request or requests; or
    (ii) If you are also filing an erroneous data appeal or a loan 
servicing appeal, by the latest of the filing dates required in 
paragraph (b)(6)(i) of this section or in Sec. 668.511(b)(6)(i) or 
Sec. 668.512(c)(10)(i).
    (c) Determination. If we determine that incorrect data were used to 
calculate your program cohort default

[[Page 724]]

rate, we recalculate your program cohort default rate based on the 
correct data and make corrections to the rate that is publicly released.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.511  Erroneous data appeals.

    (a) Eligibility. Except as provided in Sec. 668.508(b), you may 
appeal the calculation of a program cohort default rate if--
    (1) You dispute the accuracy of data that you previously challenged 
on the basis of incorrect data under Sec. 668.504(b); or
    (2) A comparison of the loan record detail reports that we provide 
to you for the draft and official program cohort default rates shows 
that the data have been newly included, excluded, or otherwise changed, 
and you dispute the accuracy of that data.
    (b) Deadlines for submitting an appeal. (1) You must send a request 
for verification of data errors to the relevant data manager, or data 
managers, and to us within 15 days after you receive the notice of your 
official program cohort default rate. Your request must include a 
description of the information in the program cohort default rate data 
that you believe is incorrect and all supporting documentation that 
demonstrates the error.
    (2) Within 20 days after receiving your request for verification of 
data errors, the data manager must send you and us a response that--
    (i) Addresses each of your allegations of error; and
    (ii) Includes the documentation used to support the data manager's 
position.
    (3) Within 15 days after receiving a guaranty agency's notice that 
we hold an FFELP loan about which you are inquiring, you must send us 
your request for verification of that loan's data errors. Your request 
must include a description of the information in the program cohort 
default rate data that you believe is incorrect and all supporting 
documentation that demonstrates the error. We respond to your request as 
set forth under paragraph (b)(2).
    (4) Within 15 days after receiving incomplete or illegible records 
or data, you must send a request for replacement records or 
clarification of data to the data manager and us.
    (5) Within 20 days after receiving your request for replacement 
records or clarification of data, the data manager must--
    (i) Replace the missing or illegible records;
    (ii) Provide clarifying information; or
    (iii) Notify you and us that no clarifying information or additional 
or improved records are available.
    (6) You must send your completed appeal to us, including all 
supporting documentation--
    (i) Within 30 days after you receive the final data manager's 
response to your request; or
    (ii) If you are also requesting a new data adjustment or filing a 
loan servicing appeal, by the latest of the filing dates required in 
paragraph (b)(6)(i) or in Sec. 668.510(b)(6)(i) or 
Sec. 668.512(c)(10)(i).
    (c) Determination. If we determine that incorrect data were used to 
calculate your program cohort default rate, we recalculate your program 
cohort default rate based on the correct data and correct the rate that 
is publicly released.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Sec. 668.512  Loan servicing appeals.

    (a) Eligibility. Except as provided in Sec. 668.508(b), you may 
appeal, on the basis of improper loan servicing or collection, the 
calculation of the most recent program cohort default rate for a GE 
program.
    (b) Improper loan servicing. For the purposes of this section, a 
default is considered to have been due to improper loan servicing or 
collection only if the borrower did not make a payment on the loan and 
you prove that the responsible party failed to perform one or more of 
the following activities, if that activity applies to the loan:
    (1) Send at least one letter (other than the final demand letter) 
urging the borrower to make payments on the loan.
    (2) Attempt at least one phone call to the borrower.
    (3) Send a final demand letter to the borrower.

[[Page 725]]

    (4) For a FFELP loan held by us or for a Direct Loan Program loan, 
document that skip tracing was performed if the applicable servicer 
determined that it did not have the borrower's current address.
    (5) For an FFELP loan only--
    (i) Submit a request for preclaims or default aversion assistance to 
the guaranty agency; and
    (ii) Submit a certification or other documentation that skip tracing 
was performed to the guaranty agency.
    (c) Deadlines for submitting an appeal. (1) If the loan record 
detail report was not included with your official program cohort default 
rate notice, you must request it within 15 days after you receive the 
notice of your official program cohort default rate.
    (2) You must send a request for loan servicing records to the 
relevant data manager, or data managers, and to us within 15 days after 
you receive your loan record detail report from us. If the data manager 
is a guaranty agency, your request must include a copy of the loan 
record detail report.
    (3) Within 20 days after receiving your request for loan servicing 
records, the data manager must--
    (i) Send you and us a list of the borrowers in your representative 
sample, as described in paragraph (d) of this section (the list must be 
in Social Security number order, and it must include the number of 
defaulted loans included in the program cohort for each listed 
borrower);
    (ii) Send you and us a description of how your representative sample 
was chosen; and
    (iii) Either send you copies of the loan servicing records for the 
borrowers in your representative sample and send us a copy of its cover 
letter indicating that the records were sent, or send you and us a 
notice of the amount of its fee for providing copies of the loan 
servicing records.
    (4) The data manager may charge you a reasonable fee for providing 
copies of loan servicing records, but it may not charge more than $10 
per borrower file. If a data manager charges a fee, it is not required 
to send the documents to you until it receives your payment of the fee.
    (5) If the data manager charges a fee for providing copies of loan 
servicing records, you must send payment in full to the data manager 
within 15 days after you receive the notice of the fee.
    (6) If the data manager charges a fee for providing copies of loan 
servicing records, and--
    (i) You pay the fee in full and on time, the data manager must send 
you, within 20 days after it receives your payment, a copy of all loan 
servicing records for each loan in your representative sample (the 
copies are provided to you in hard copy format unless the data manager 
and you agree that another format may be used), and it must send us a 
copy of its cover letter indicating that the records were sent; or
    (ii) You do not pay the fee in full and on time, the data manager 
must notify you and us of your failure to pay the fee and that you have 
waived your right to challenge the calculation of your program cohort 
default rate based on the data manager's records. We accept that 
determination unless you prove that it is incorrect.
    (7) Within 15 days after receiving a guaranty agency's notice that 
we hold an FFELP loan about which you are inquiring, you must send us 
your request for the loan servicing records for that loan. We respond to 
your request under paragraph (c)(3) of this section.
    (8) Within 15 days after receiving incomplete or illegible records, 
you must send a request for replacement records to the data manager and 
us.
    (9) Within 20 days after receiving your request for replacement 
records, the data manager must either--
    (i) Replace the missing or illegible records; or
    (ii) Notify you and us that no additional or improved copies are 
available.
    (10) You must send your appeal to us, including all supporting 
documentation--
    (i) Within 30 days after you receive the final data manager's 
response to your request for loan servicing records; or
    (ii) If you are also requesting a new data adjustment or filing an 
erroneous data appeal, by the latest of the filing dates required in 
paragraph (c)(10)(i) of this section or in Sec. 668.510(b)(6)(i) or 
Sec. 668.511(b)(6)(i).

[[Page 726]]

    (d) Representative sample of records. (1) To select a representative 
sample of records, the data manager first identifies all of the 
borrowers for whom it is responsible and who had loans that were 
considered to be in default in the calculation of the program cohort 
default rate you are appealing.
    (2) From the group of borrowers identified under paragraph (d)(1) of 
this section, the data manager identifies a sample that is large enough 
to derive an estimate, acceptable at a 95 percent confidence level with 
a plus or minus 5 percent confidence interval, for use in determining 
the number of borrowers who should be excluded from the calculation of 
the program cohort default rate due to improper loan servicing or 
collection.
    (e) Loan servicing records. Loan servicing records are the 
collection and payment history records--
    (1) Provided to the guaranty agency by the lender and used by the 
guaranty agency in determining whether to pay a claim on a defaulted 
loan; or
    (2) Maintained by our servicer that are used in determining your 
program cohort default rate.
    (f) Determination. (1) We determine the number of loans, based on 
the loans included in your representative sample of loan servicing 
records, that defaulted due to improper loan servicing or collection, as 
described in paragraph (b) of this section.
    (2) Based on our determination, we use a statistically valid 
methodology to exclude the corresponding percentage of borrowers from 
both the numerator and denominator of the calculation of the program 
cohort default rate for the GE program, and correct the rate that is 
publicly released.

(Authority: 20 U.S.C. 1001, 1002, 1088)



Secs. 668.513-668.515  [Reserved]



Sec. 668.516  Fewer-than-ten-borrowers determinations.

    We calculate an official program cohort default rate regardless of 
the number of borrowers included in the applicable cohort or cohorts. 
However, an institution may not disclose an official program cohort 
default rate under Sec. 668.412(a)(12) or otherwise, if the number of 
borrowers in the applicable cohorts is fewer than ten.

(Authority: 20 U.S.C. 1001, 1002, 1088)



PART 669_LANGUAGE RESOURCE CENTERS PROGRAM--Table of Contents



                            Subpart A_General

Sec.
669.1  What is the Language Resource Centers Program?
669.2  Who is eligible to receive assistance under this program?
669.3  What activities may the Secretary fund?
669.4  What regulations apply?
669.5  What definitions apply?

Subpart B [Reserved]

             Subpart C_How Does the Secretary Make a Grant?

669.20  How does the Secretary evaluate an application?
669.21  What selection criteria does the Secretary use?
669.22  What priorities may the Secretary establish?

           Subpart D_What Conditions Must Be Met by a Grantee?

669.30  What are allowable equipment costs?

    Authority: 20 U.S.C. 1123, unless otherwise noted.

    Source: 55 FR 2773, Jan. 26, 1990, unless otherwise noted.



                            Subpart A_General



Sec. 669.1  What is the Language Resource Centers Program?

    The Language Resource Centers Program makes awards, through grants 
or contracts, for the purpose of establishing, strengthening, and 
operating centers that serve as resources for improving the nation's 
capacity for teaching and learning foreign languages effectively.

(Authority: 20 U.S.C. 1123)



Sec. 669.2  Who is eligible to receive assistance under this program?

    An institution of higher education or a combination of institutions 
of higher

[[Page 727]]

education is eligible to receive an award under this part.

(Authority: 20 U.S.C. 1123)



Sec. 669.3  What activities may the Secretary fund?

    Centers funded under this part must carry out activities to improve 
the teaching and learning of foreign languages. These activities must 
include effective dissemination efforts, whenever appropriate, and may 
include--
    (a) The conduct and dissemination of research on new and improved 
methods for teaching foreign languages, including the use of advanced 
educational technology;
    (b) The development and dissemination of new materials for teaching 
foreign languages, to reflect the results of research on effective 
teaching strategies;
    (c) The development, application, and dissemination of performance 
testing that is appropriate for use in an educational setting to be used 
as a standard and comparable measurement of skill levels in foreign 
languages;
    (d) The training of teachers in the administration and 
interpretation of foreign language performance tests, the use of 
effective teaching strategies, and the use of new technologies;
    (e) A significant focus on the teaching and learning needs of the 
less commonly taught languages, including an assessment of the strategic 
needs of the United States, the determination of ways to meet those 
needs nationally, and the publication and dissemination of instructional 
materials in the less commonly taught languages;
    (f) The development and dissemination of materials designed to serve 
as a resource for foreign language teachers at the elementary and 
secondary school levels; and
    (g) The operation of intensive summer language institutes to train 
advanced foreign language students, to provide professional development, 
and to improve language instruction through preservice and inservice 
language training for teachers.

(Authority: 20 U.S.C. 1123)

[64 FR 7741, Feb. 16, 1999]



Sec. 669.4  What regulations apply?

    The following regulations apply to this program:
    (a) The regulations in 34 CFR part 655.
    (b) The regulations in this part 669.

(Authority: 20 U.S.C. 1123)

[58 FR 32577, June 10, 1993]



Sec. 669.5  What definitions apply?

    The following definitions apply to this part:
    (a) The definitions in 34 CFR 655.4.
    (b) ``Language Resource Center'' means a coordinated concentration 
of educational research and training resources for improving the 
nation's capacity to teach and learn foreign languages.

(Authority: 20 U.S.C. 1123)

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make a Grant?



Sec. 669.20  How does the Secretary evaluate an application?

    The Secretary evaluates an application for an award on the basis of 
the criteria contained in Secs. 669.21 and 669.22. The Secretary informs 
applicants of the maximum possible score for each criterion in the 
application package or in a notice published in the Federal Register.

(Authority: 20 U.S.C. 1123)

[70 FR 13377, Mar. 21, 2005]



Sec. 669.21  What selection criteria does the Secretary use?

    The Secretary evaluates an application on the basis of the criteria 
in this section.
    (a) Plan of operation. (See 34 CFR 655.31(a))
    (b) Quality of key personnel. (See 34 CFR 655.31(b))
    (c) Budget and cost-effectiveness. (See 34 CFR 655.31(c))
    (d) Evaluation plan. (See 34 CFR 655.31 (d))
    (e) Adequacy of resources. (See 34 CFR 655.31(e))

[[Page 728]]

    (f) Need and potential impact. The Secretary reviews each 
application to determine--
    (1) The extent to which the proposed materials or activities are 
needed in the foreign languages on which the project focuses;
    (2) The extent to which the proposed materials may be used 
throughout the United States; and
    (3) The extent to which the proposed work or activity may contribute 
significantly to strengthening, expanding, or improving programs of 
foreign language study in the United States.
    (g) Likelihood of achieving results. The Secretary reviews each 
application to determine--
    (1) The quality of the outlined methods and procedures for preparing 
the materials; and
    (2) The extent to which plans for carrying out activities are 
practicable and can be expected to produce the anticipated results.
    (h) Description of final form of results. The Secretary reviews each 
application to determine the degree of specificity and the 
appropriateness of the description of the expected results from the 
project.
    (i) Priorities. If, under the provisions of Sec. 669.22, the 
application notice specifies priorities for this program, the Secretary 
determines the degrees to which the priorities are served.

(Approved by the Office of Management and Budget under control number 
1840-0608)

(Authority: 20 U.S.C. 1123)

[55 FR 2773, Jan. 26, 1990, as amended at 58 FR 32577, June 10, 1993; 70 
FR 13377, Mar. 21, 2005]



Sec. 669.22  What priorities may the Secretary establish?

    (a) The Secretary may each year select funding priorities from among 
the following:
    (1) Categories of allowable activities described in Sec. 669.3.
    (2) Specific foreign languages for study or materials development.
    (3) Levels of education, for example, elementary, secondary, 
postsecondary, or teacher education.
    (b) The Secretary announces any priorities in the application notice 
published in the Federal Register.

(Authority: 20 U.S.C. 1123)



           Subpart D_What Conditions Must Be Met by a Grantee?



Sec. 669.30  What are allowable equipment costs?

    Equipment costs may not exceed fifteen percent of the grant amount.

(Authority: 20 U.S.C. 1123)



PART 673_GENERAL PROVISIONS FOR THE FEDERAL PERKINS LOAN PROGRAM,
FEDERAL WORK-STUDY PROGRAM, AND FEDERAL SUPPLEMENTAL EDUCATIONAL
OPPORTUNITY GRANT PROGRAM--Table of Contents



                       Subpart A_Purpose and Scope

Sec.
673.1  Purpose.
673.2  Applicability of regulations.

  Subpart B_General Provisions for the Federal Perkins Loan, FWS, and 
                             FSEOG Programs

673.3  Application.
673.4  Allocation and reallocation.
673.5  Overaward.
673.6  Coordination with BIA grants.
673.7  Administrative cost allowance.

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

    Source: 61 FR 60393, Nov. 27, 1996, unless otherwise noted.



                       Subpart A_Purpose and Scope



Sec. 673.1  Purpose.

    This part governs the following three programs authorized by title 
IV of the Higher Education Act of 1965, as amended (HEA) that 
participating institutions administer:
    (a) The Federal Perkins Loan Program, which encourages the making of 
loans by institutions to needy undergraduate and graduate students to 
help pay for their cost of education.
    (b) The Federal Work-Study (FWS) Program, which encourages the part-

[[Page 729]]

time employment of undergraduate and graduate students who need the 
income to help pay for their cost of education and which encourages FWS 
recipients to participate in community service activities.
    (c) The Federal Supplemental Educational Opportunity Grant (FSEOG) 
Program, which encourages the providing of grants to exceptionally needy 
undergraduate students to help pay for their cost of education.

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



Sec. 673.2  Applicability of regulations.

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

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



  Subpart B_General Provisions for the Federal Perkins Loan, FWS, and 
                             FSEOG Programs



Sec. 673.3  Application.

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

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



Sec. 673.4  Allocation and reallocation.

    (a) Allocation and reallocation of Federal Perkins Loan funds. (1) 
The Secretary allocates Federal capital contributions to institutions 
participating in the Federal Perkins Loan Program in accordance with 
section 462 of the HEA.
    (2) The Secretary reallocates Federal capital contributions to 
institutions participating in the Federal Perkins Loan Program by--
    (i) Reallocating 80 percent of the total funds available in 
accordance with section 462(j) of the HEA; and
    (ii) Reallocating 20 percent of the total funds available in a 
manner that best carries out the purposes of the Federal Perkins Loan 
Program.
    (b) Allocation and reallocation of FWS funds. The Secretary 
allocates and reallocates funds to institutions participating in the FWS 
Program in accordance with section 442 of the HEA.
    (c) Allocation and reallocation of FSEOG funds. (1) The Secretary 
allocates funds to institutions participating in the FSEOG program in 
accordance with section 413D of the HEA.
    (2) The Secretary reallocates funds to institutions participating in 
the FSEOG Program in a manner that best carries out the purposes of the 
FSEOG Program.
    (d) General allocation and reallocation--(1) Categories. As used in 
section 462 (Federal Perkins Loan Program), section 442 (FWS Program), 
and section 413D (FSEOG Program) of the HEA, ``Eligible institutions 
offering comparable programs of instruction'' means institutions that 
are being compared with the applicant institution and that fall within 
one of the following six categories:
    (i) Cosmetology.
    (ii) Business.
    (iii) Trade/Technical.
    (iv) Art Schools.
    (v) Other Proprietary Institutions.
    (vi) Non-Proprietary Institutions.
    (2) Payments to institutions. The Secretary allocates funds for a 
specific period of time. The Secretary provides an institution its 
allocation in accordance with the payment methods described in 34 CFR 
668.162.
    (3) Unexpended funds. (i) If an institution returns more than 10 
percent of its Federal Perkins Loan, FWS, or FSEOG allocation for an 
award year, the Secretary reduces the institution's allocation for that 
program for the second succeeding award year by the dollar amount 
returned.

[[Page 730]]

    (ii) The Secretary may waive the provision of paragraph (d)(3)(i) of 
this section for a specific institution if the Secretary finds that 
enforcement would be contrary to the interests of the program.
    (iii) The Secretary considers enforcement of paragraph (d)(3)(i) of 
this section to be contrary to the interest of the program only if the 
institution returns more than 10 percent of its allocation due to 
circumstances beyond the institution's control that are not expected to 
recur.
    (e) Anticipated collections of Federal Perkins Loan funds. (1) For 
the purposes of calculating an institution's share of any excess 
allocation of Federal Perkins Loan funds, an institution's anticipated 
collections are equal to the amount that was collected by the 
institution during the second year preceding the beginning of the award 
period multiplied by 1.21.
    (2) The Secretary may waive the provision of paragraph (e)(1) of 
this section for any institution that has a cohort default rate that 
does not exceed 7.5 percent.
    (f) Authority to expend FWS funds. Except as specifically provided 
in 34 CFR 675.18 (b), (c), and (f), an institution may not use funds 
allocated or reallocated for an award year--
    (1) To meet FWS wage obligations incurred with regard to an award of 
FWS employment made for any other award year; or
    (2) To satisfy any other obligation incurred after the end of the 
designated award year.
    (g) Authority to expend FSEOG funds. Except as specifically provided 
in 34 CFR 668.164(g), an institution shall not use funds allocated or 
reallocated for an award year--
    (1) To make FSEOG disbursements to students in any other award year; 
or
    (2) To satisfy any other obligation incurred after the end of the 
designated award year.

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



Sec. 673.5  Overaward.

    (a) Overaward prohibited--(1) Federal Perkins Loan and FSEOG 
Programs. An institution may only award or disburse a Federal Perkins 
loan or an FSEOG to a student if that loan or the FSEOG, combined with 
the other estimated financial assistance the student receives, does not 
exceed the student's financial need.
    (2) FWS Program. An institution may only award FWS employment to a 
student if the award, combined with the other estimated financial 
assistance the student receives, does not exceed the student's financial 
need.
    (b) Awarding and disbursement. (1) When awarding and disbursing a 
Federal Perkins loan or an FSEOG or awarding FWS employment to a 
student, the institution shall take into account those amounts of 
estimated financial assistance it--
    (i) Can reasonably anticipate at the time it awards Federal Perkins 
Loan funds, an FSEOG, or FWS funds to the student;
    (ii) Makes available to its students; or
    (iii) Otherwise knows about.
    (2) If a student receives amounts of estimated financial assistance 
at any time during the award period that were not considered in 
calculating the Federal Perkins Loan amount or the FWS or FSEOG award, 
and the total amount of estimated financial assistance including the 
loan, the FSEOG, or the prospective FWS wages exceeds the student's 
need, the overaward is the amount that exceeds need.
    (c) Estimated financial assistance. (1) Except as provided in 
paragraphs (c)(2) and (c)(3) of this section, the Secretary considers 
that ``estimated financial assistance'' includes, but is not limited to, 
any--
    (i) Funds a student is entitled to receive from a Federal Pell 
Grant;
    (ii) William D. Ford Federal Direct Loans;
    (iii) Federal Family Education Loans;
    (iv) Long-term need-based loans, including Federal Perkins loans;
    (v) Grants, including FSEOGs, State grants, Academic Competitiveness 
Grants, and National SMART Grants;
    (vi) Scholarships, including athletic scholarships;
    (vii) Waivers of tuition and fees;
    (viii) Fellowships or assistantships, except non-need-based 
employment portions of such awards;

[[Page 731]]

    (ix) Except as provided in paragraph (c)(2)(v) of this section, 
veterans' education benefits;
    (x) National service education awards or post-service benefits paid 
for the cost of attendance under title I of the National and Community 
Service Act of 1990 (AmeriCorps);
    (xi) Net earnings from need-based employment;
    (xii) Insurance programs for the student's education; and
    (xiii) Any educational benefits paid because of enrollment in a 
postsecondary education institution, or to cover postsecondary education 
expenses.
    (2) The Secretary does not consider as estimated financial 
assistance--
    (i) Any portion of the estimated financial assistance described in 
paragraph (c)(1) of this section that is included in the calculation of 
the student's expected family contribution (EFC);
    (ii) Earnings from non-need-based employment;
    (iii) Those amounts used to replace EFC, including the amounts of 
any TEACH Grants, unsubsidized Federal Stafford or Direct Loans, Federal 
PLUS or Federal Direct PLUS Loans, and non-federal non-need-based loans, 
including private, state-sponsored, and institutional loans. However, if 
the sum of the amounts received that are being used to replace the 
student's EFC actually exceed the EFC, the excess amount must be treated 
as estimated financial assistance;
    (iv) Assistance not received under a title IV, HEA program, if that 
assistance is designated to offset all or a portion of a specific 
component of the cost of attendance and that amount is excluded from the 
cost of attendance as well. If that assistance is excluded from either 
estimated financial assistance or cost of attendance, that amount must 
be excluded from both;
    (v) Federal veterans' education benefits paid under--
    (A) Chapter 103 of title 10, United States Code (Senior Reserve 
Officers' Training Corps);
    (B) Chapter 106A of title 10, United States Code (Educational 
Assistance for Persons Enlisting for Active Duty);
    (C) Chapter 1606 of title 10, United States Code (Selected Reserve 
Educational Assistance Program);
    (D) Chapter 1607 of title 10, United States Code (Educational 
Assistance Program for Reserve Component Members Supporting Contingency 
Operations and Certain Other Operations);
    (E) Chapter 30 of title 38, United States Code (All-Volunteer Force 
Educational Assistance Program, also known as the ``Montgomery GI Bill--
active duty'');
    (F) Chapter 31 of title 38, United States Code (Training and 
Rehabilitation for Veterans with Service-Connected Disabilities);
    (G) Chapter 32 of title 38, United States Code (Post-Vietnam Era 
Veterans' Educational Assistance Program);
    (H) Chapter 33 of title 38, United States Code (Post 9/11 
Educational Assistance);
    (I) Chapter 35 of title 38, United States Code (Survivors' and 
Dependents' Educational Assistance Program);
    (J) Section 903 of the Department of Defense Authorization Act, 1981 
(10 U.S.C. 2141 note) (Educational Assistance Pilot Program);
    (K) Section 156(b) of the ``Joint Resolution making further 
continuing appropriations and providing for productive employment for 
the fiscal year 1983, and for other purposes'' (42 U.S.C. 402 note) 
(Restored Entitlement Program for Survivors, also known as ``Quayle 
benefits'');
    (L) The provisions of chapter 3 of title 37, United States Code, 
related to subsistence allowances for members of the Reserve Officers 
Training Corps; and
    (M) Any program that the Secretary may determine is covered by 
section 480(c)(2) of the HEA; and
    (vi) Iraq and Afghanistan Service Grants made under section 420R of 
the HEA.
    (3) The institution may also exclude as estimated financial 
assistance any portion of a subsidized Federal Stafford or Direct Loan 
that is equal to or less than the amount of a student's national service 
education awards or post service benefits paid for the cost of 
attendance under title I of the National

[[Page 732]]

and Community Service Act of 1990 (AmeriCorps).
    (d) Treatment of estimated financial assistance in excess of need--
General. An institution shall take the following steps if it learns that 
a student has received additional amounts of estimated financial 
assistance not included in the calculation of Federal Perkins Loan, FWS, 
or FSEOG eligibility that would result in the student's total amount of 
estimated financial assistance exceeding his or her financial need by 
more than $300:
    (1) The institution shall decide whether the student has increased 
financial need that was unanticipated when it awarded financial aid to 
the student. If the student demonstrates increased financial need and 
the total amount of estimated financial assistance does not exceed this 
increased need by more than $300, no further action is necessary.
    (2) If the student's total amount of estimated financial assistance 
still exceeds his or her need by more than $300, as recalculated 
pursuant to paragraph (d)(1) of this section, the institution shall 
cancel any undisbursed loan or grant (other than a Federal Pell Grant).
    (3) Federal Perkins loan and FSEOG overpayment. If the student's 
total amount of estimated financial assistance still exceeds his or her 
need by more than $300, after the institution takes the steps required 
in paragraphs (d)(1) and (2) of this section, the institution shall 
consider the amount by which the estimated financial assistance amount 
exceeds the student's financial need by more than $300 as an 
overpayment.
    (e) Termination of FWS employment. (1) An institution may fund a 
student's FWS employment with FWS funds only until the amount of the FWS 
award has been earned or until the student's financial need, as 
recalculated under paragraph (d)(1) of this section, is met.
    (2) Notwithstanding the provisions of paragraph (e)(1) of this 
section, an institution may provide additional FWS funding to a student 
whose need has been met until that student's cumulative earnings from 
all need-based employment occurring subsequent to the time his or her 
financial need has been met exceed $300.
    (f) Liability for and recovery of Federal Perkins loans and FSEOG 
overpayments. (1) Except as provided in paragraphs (f)(2) and (f)(3) of 
this section, a student is liable for any Federal Perkins loan or FSEOG 
overpayment made to him or her. An FSEOG overpayment for purposes of 
this paragraph does not include the non-Federal share of an FSEOG award 
if an institution meets its FSEOG matching share by the individual 
recipient method or the aggregate method.
    (2) The institution is liable for a Federal Perkins loan or FSEOG 
overpayment if the overpayment occurred because the institution failed 
to follow the procedures in this part or 34 CFR parts 668, 674, or 676. 
The institution shall restore an amount equal to the overpayment and any 
administrative cost allowance claimed on that amount to its loan fund 
for a Federal Perkins loan overpayment or to its FSEOG account for an 
FSEOG overpayment.
    (3) A student is not liable for, and the institution is not required 
to attempt recovery of, a Federal Perkins loan or FSEOG overpayment, nor 
is the institution required to refer an FSEOG overpayment to the 
Secretary, if the overpayment--
    (i) Is less than $25; and
    (ii) Is neither a remaining balance nor a result of the application 
of the overaward threshold in paragraph (d) of this section.
    (4)(i) Except as provided in paragraph (f)(3) of this section, if an 
institution makes a Federal Perkins loan or FSEOG overpayment for which 
it is not liable, it shall promptly send a written notice to the student 
requesting repayment of the overpayment amount. The notice must state 
that failure to make that repayment, or to make arrangements 
satisfactory to the holder of the overpayment debt to pay the 
overpayment, makes the student ineligible for further title IV, HEA 
program funds until final resolution of the overpayment.
    (ii) If a student objects to the institution's Federal Perkins loan 
or FSEOG overpayment determination on the grounds that it is erroneous, 
the institution shall consider any information

[[Page 733]]

provided by the student and determine whether the objection is 
warranted.
    (5) Except as provided in paragraph (f)(3) of this section, if a 
student fails to repay an FSEOG overpayment or make arrangements 
satisfactory to the holder of the overpayment debt to repay the FSEOG 
overpayment after the institution has taken the action required by 
paragraph (f)(4) of this section, the institution must refer the FSEOG 
overpayment to the Secretary for collection purposes in accordance with 
procedures required by the Secretary. After referring the FSEOG 
overpayment to the Secretary under this section, the institution need 
make no further effort to recover the overpayment.

(Approved by the Office of Management and Budget under control number 
1845-0019)

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

[61 FR 60393, Nov. 17, 1996, as amended at 64 FR 58292, Oct. 28, 1999; 
67 FR 67075, Nov. 1, 2002; 71 FR 45696, Aug. 9, 2006; 71 FR 64397, Nov. 
1, 2006; 73 FR 35494, June 23, 2008; 74 FR 55986, Oct. 29, 2009]



Sec. 673.6  Coordination with BIA grants.

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

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

[61 FR 60393, Nov. 27, 1996, as amended at 71 FR 45697, Aug. 9, 2006]



Sec. 673.7  Administrative cost allowance.

    (a) An institution participating in the Federal Perkins Loan, FWS, 
or FSEOG programs is entitled to an administrative cost allowance for an 
award year if it advances funds under the Federal Perkins Loan Program, 
provides FWS employment, or awards grants under the FSEOG Program to 
students in that year.
    (b) An institution may charge the administrative cost allowance 
calculated in accordance with paragraph (c) of this section for an award 
year against-(1) The Federal Perkins Loan Fund, if the institution 
advances funds under the Federal Perkins Loan Program to students in 
that award year;
    (2) The FWS allocation, if the institution provides FWS employment 
to students in that award year; and
    (3) The FSEOG allocation, if the institution awards grants to 
students under the FSEOG program in that award year.
    (c) For any award year, the amount of the administrative costs 
allowance equals--
    (1) Five percent of the first $2,750,000 of the institution's total 
expenditures to students in that award year under

[[Page 734]]

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

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



PART 674_FEDERAL PERKINS LOAN PROGRAM--Table of Contents



    Note: An asterisk (*) indicates provisions that are common to parts 
674, 675, and 676. The use of asterisks will assure participating 
institutions that a provision of one regulation is identical to the 
corresponding provisions in the other two.

                      Subpart A_General Provisions

Sec.
674.1  Purpose and identification of common provisions.
674.2  Definitions.
674.3-674.4  [Reserved]
674.5  Federal Perkins Loan program cohort default rate and penalties.
674.6-674.7  [Reserved]
674.8  Program participation agreement.
674.9  Student eligibility.
674.10  Selection of students for loans.
674.11  [Reserved]
674.12  Loan maximums.
674.13  Reimbursement to the Fund.
674.14-674.15  [Reserved]
674.16  Making and disbursing loans.
674.17  Federal interest in allocated funds--transfer of Fund.
674.18  Use of funds.
674.19  Fiscal procedures and records.
674.20  Compliance with equal credit opportunity requirements.

                        Subpart B_Terms of Loans

674.31  Promissory note.
674.32  Special terms: loans to less than half-time student borrowers.
674.33  Repayment.
674.34  Deferment of repayment--Federal Perkins loans, NDSLs and Defense 
          loans.
674.35  Deferment of repayment--Federal Perkins loans made before July 
          1, 1993.
674.36  Deferment of repayment--NDSLs made on or after October 1, 1980, 
          but before July 1, 1993.
674.37  Deferment of repayment--NDSLs made before October 1, 1980 and 
          Defense loans.
674.38  Deferment procedures.
674.39  Loan rehabilitation.
674.40  Treatment of loan repayments where cancellation, loan 
          repayments, and minimum monthly repayments apply.

                         Subpart C_Due Diligence

674.41  Due diligence--general requirements.
674.42  Contact with the borrower.
674.43  Billing procedures.
674.44  Address searches.
674.45  Collection procedures.
674.46  Litigation procedures.
674.47  Costs chargeable to the Fund.

[[Page 735]]

674.48  Use of contractors to perform billing and collection or other 
          program activities.
674.49  Bankruptcy of borrower.
674.50  Assignment of defaulted loans to the United States.

                       Subpart D_Loan Cancellation

674.51  Special definitions.
674.52  Cancellation procedures.
674.53  Teacher cancellation--Federal Perkins, NDSL and Defense loans.
674.54  [Reserved]
674.55  Teacher cancellation--Defense loans.
674.56  Employment cancellation--Federal Perkins, NDSL and Defense 
          loans.
674.57  Cancellation for law enforcement or corrections officer 
          service--Federal Perkins, NDSL and Defense loans.
674.58  Cancellation for service in an early childhood education 
          program.
674.59  Cancellation for military service.
674.60  Cancellation for volunteer service--Perkins loans, NDSLs and 
          Defense loans.
674.61  Discharge for death or disability.
674.62  No cancellation for prior service--no repayment refunded.
674.63  Reimbursement to institutions for loan cancellation.
674.64  Discharge of student loan indebtedness for survivors of victims 
          of the September 11, 2001, attacks.

Appendixes A-D to Part 674 [Reserved]
Appendix E to Part 674--Examples for Computing Maximum Penalty Charges 
          (6 Months Unpaid Overdue Payments) on Direct Loans Made for 
          Periods of Enrollment before January 1, 1986

    Authority: 20 U.S.C. 1070g, 1087aa-1087hh; Pub. L. 111-256, 124 
Stat. 2643; unless otherwise noted.

    Editorial Note: Nomenclature changes to part 674 appear at 65 FR 
18002, 18003, Apr. 6, 2000.



                      Subpart A_General Provisions

    Source: 52 FR 45747, Dec. 1, 1987, unless otherwise noted.



Sec. 674.1  Purpose and identification of common provisions.

    (a) The Federal Perkins Loan Program provides low-interest loans to 
financially needy students attending institutions of higher education to 
help them pay their educational costs.
    (b)(1) The Federal Perkins Loan Program, authorized by title IV-E of 
the Higher Education Act of 1965, as amended, and previously named the 
National Direct Student Loan (NDSL) Program, is a continuation of the 
National Defense Loan Program authorized by title II of the National 
Defense Education Act of 1958. All rights, privileges, duties, 
functions, and obligations existing under title II before the enactment 
of title IV-E continue to exist.
    (2) The Secretary considers any student loan fund established under 
title IV-E to include the assets of an institution's student loan fund 
established under title II.
    *(c) Provisions in these regulations that are common to all campus-
based programs are identified with an asterisk.
    (d) Provisions in these regulations that refer to ``loans'' or 
``student loans'' apply to all loans made under title IV-E of the HEA or 
title II of the National Defense Education Act.

(Authority: 20 U.S.C. 1087aa-1087hh; Pub. L. 92-318, sec. 137(d)(1))

[52 FR 45747, Dec. 1, 1987, as amended at 57 FR 32344, July 21, 1992; 59 
FR 61415, Nov. 29, 1994; 64 FR 18002, Apr. 6, 2000]



Sec. 674.2  Definitions.

    (a) The definitions of the following terms used in this part are set 
forth in subpart A of the Student Assistance General Provisions, 34 CFR 
part 668:

Academic Competitiveness Grant (ACG) Program
Academic year
Award year
Defense loan
Enrolled
Expected family contribution (EFC)
Federal Family Education Loan (FFEL) programs
Federal Pell Grant
Federal Perkins loan
Federal Perkins Loan Program
Federal PLUS Program
Federal SLS Program
Federal Supplemental Educational Opportunity Grant (FSEOG) Program
Federal Work-Study (FWS) Program
Full-time student
Graduate or professional student
Half-time student
HEA
National Defense Student Loan Program
National Direct Student Loan (NDSL) Program
National Science and Mathematics Access to Retain Talent Grant (National 
SMART Grant) Program
Payment period
Secretary

[[Page 736]]

Teacher Education Assistance for College and Higher Education (TEACH) 
Grant Program
TEACH Grant
Undergraduate student

    (b) The Secretary defines other terms used in this part as follows:
    Default: The failure of a borrower to make an installment payment 
when due or to comply with other terms of the promissory note or written 
repayment agreement.
    Enter repayment: The day following the expiration of the initial 
grace period or the day the borrower waives the initial grace period. 
This date does not change if a forbearance, deferment, or cancellation 
is granted after the borrower enters repayment.
    Federal capital contribution (FCC): Federal funds allocated or 
reallocated to an institution for deposit into the institution's Fund 
under section 462 of the HEA.
    *Financial need: The difference between a student's cost of 
attendance and his or her EFC.
    Fund (Federal Perkins Loan Fund): A fund established and maintained 
according to Sec. 674.8.
    Initial grace period: That period which immediately follows a period 
of enrollment and immediately precedes the date of the first required 
repayment on a loan. This period is generally nine months for Federal 
Perkins loans, Defense loans, and NDSLs made before October 1, 1980, and 
six months for other Direct loans.
    *Institution of higher education (institution): A public or private 
nonprofit institution of higher education, a proprietary institution of 
higher education, or a postsecondary vocational institution.
    Institutional capital contribution (ICC): Institutional funds 
contributed to establish or maintain a Fund.
    Making of a loan: When the institution makes the first disbursement 
of a loan to a student for an award year.
    Master Promissory Note (MPN): A promissory note under which the 
borrower may receive loans for a single award year or multiple award 
years.
    National credit bureau: Any one of the national credit bureaus with 
which the Secretary has an agreement.
    *Need-based employment: Employment provided by an institution itself 
or by another entity to a student who has demonstrated to the 
institution or the entity (through standards or methods it establishes) 
a financial need for the earnings from that employment for the purpose 
of defraying educational costs of attendance for the award year for 
which the employment is provided.
    Post-deferment grace period: That period of six consecutive months 
which immediately follows the end of certain periods of deferment and 
precedes the date on which the borrower is required to resume repayment 
on a loan.
    Satisfactory repayment arrangement: (1) For purposes of regaining 
eligibility for grant, loan, or work assistance under title IV of the 
HEA, to the extent that the borrower is otherwise eligible, the making 
of six on-time, consecutive, voluntary, full monthly payments on a 
defaulted loan. ``On-time'' means a payment made within 20 days of the 
scheduled due date. A borrower may obtain the benefit of this paragraph 
with respect to renewed eligibility once.
    (2) Voluntary payments are payments made directly by the borrower, 
and do not include payments obtained by income tax offset, garnishment, 
or income or asset execution.
    (3) A borrower has not used the one opportunity to renew eligibility 
for title IV assistance if the borrower makes six consecutive, on-time, 
voluntary, full monthly payments under an agreement to rehabilitate a 
defaulted loan, but does not receive additional title IV assistance 
prior to defaulting on that loan again.
    Student loan: For this part means an NDSL Loan, Defense Loan, or a 
Federal Perkins Loan.
    Total monthly gross income: The gross amount of income received by 
the borrower from employment (either full-

[[Page 737]]

time or part-time) and from other sources.

(Authority: 20 U.S.C. 1070g, 1094)

[52 FR 45747, Dec. 1, 1987, as amended at 53 FR 52580, Dec. 28, 1988; 57 
FR 32344, July 21, 1992; 59 FR 61404, 61415, Nov. 30, 1994; 60 FR 61814, 
Dec. 1, 1995; 61 FR 60608, Nov. 29, 1996; 64 FR 58308, Oct. 28, 1999; 65 
FR 18002, Apr. 6, 2000; 67 FR 67076, Nov. 1, 2002; 69 FR 12276, Mar. 16, 
2004; 71 FR 38003, July 3, 2006; 72 FR 62030, Nov. 1, 2007; 73 FR 35494, 
June 23, 2008; 78 FR 65804, Nov. 1, 2013]



Secs. 674.3-674.4  [Reserved]



Sec. 674.5  Federal Perkins Loan program cohort default rate and penalties.

    (a) Default penalty. If an institution's cohort default rate meets 
the following levels, a default penalty is imposed on the institution as 
follows:
    (1) FCC reduction. If the institution's cohort default rate equals 
or exceeds 25 percent, the institution's FCC is reduced to zero.
    (2) Ineligibility. For award year 2000-2001 and succeeding award 
years, an institution with a cohort default rate that equals or exceeds 
50 percent for each of the three most recent years for which cohort 
default rate data are available is ineligible to participate in the 
Federal Perkins Loan Program. Following a review of that data and upon 
notification by the Secretary, an institution is ineligible to 
participate for the award year, or the remainder of the award year, in 
which the determination is made and the two succeeding award years. An 
institution may appeal a notification of ineligibility from the 
Secretary within 30 days of its receipt.
    (i) Appeal procedures--(A) Inaccurate calculation. An institution 
may appeal a notice of ineligibility based upon the submission of 
erroneous data by the institution, the correction of which would result 
in a recalculation that reduces the institution's cohort default rate to 
below 50 percent for any of the three award years used to make a 
determination of ineligibility. The Secretary considers the edit 
process, by which an institution adjusts the cohort default rate data 
that it submits to the Secretary on its Fiscal Operations Report, to 
constitute the procedure to appeal a determination of ineligibility 
based on a claim of erroneous data.
    (B) Small number of borrowers entering repayment. An institution may 
appeal a notice of ineligibility if, on average, 10 or fewer borrowers 
enter repayment for the three most recent award years used by the 
Secretary to make a determination of ineligibility.
    (C) Decision of the Secretary. The Secretary issues a decision on an 
appeal within 45 days of the institution's submission of a complete, 
accurate, and timely appeal. An institution may continue to participate 
in the program until the Secretary issues a decision on the 
institution's appeal.
    (ii) Liquidation of an institution's Perkins Loan portfolio. Within 
90 days of receiving a notification of ineligibility or, if the 
institution appeals, within 90 days of the Secretary's decision to deny 
the appeal, the institution must--
    (A) Liquidate its revolving student loan fund by making a capital 
distribution of the liquid assets of the Fund according to section 
466(c) of the HEA; and
    (B) Assign any outstanding loans in the institution's portfolio to 
the Secretary in accordance with Sec. 674.50.
    (iii) Effective date. The provisions of paragraph (a)(2) of this 
section are effective with the cohort default rate calculated as of June 
30, 2001.
    (b) Cohort default rate. (1) The term ``cohort default rate'' means, 
for any award year in which 30 or more current and former students at 
the institution enter repayment on a loan received for attendance at the 
institution, the percentage of those current and former students who 
enter repayment in that award year on the loans received for attendance 
at that institution who default before the end of the following award 
year.
    (2) For any award year in which less than 30 current and former 
students at the institution enter repayment on a loan received for 
attendance at the institution, the ``cohort default rate'' means the 
percentage of those current and former students who entered repayment on 
loans received for attendance at that institution in any of the three 
most recent award years and who defaulted on those loans before the end 
of the award year immediately following the year in which they entered 
repayment.

[[Page 738]]

    (c) Defaulted loans to be included in the cohort default rate. For 
purposes of calculating the cohort default rate under paragraph (b) of 
this section--
    (1) A borrower must be included only if the borrower's default has 
persisted for at least--
    (i) 240 consecutive days for loans repayable in monthly 
installments; or
    (ii) 270 consecutive days for loans repayable in quarterly 
installments;
    (2) A loan is considered to be in default if a payment is made by 
the institution of higher education, its owner, agency, contractor, 
employee, or any other entity or individual affiliated with the 
institution, in order to avoid default by the borrower;
    (3)(i) In determining the number of borrowers who default before the 
end of the following award year, a loan is excluded if the borrower 
has--
    (A) Voluntarily made six consecutive monthly payments;
    (B) Voluntarily made all payments currently due;
    (C) Repaid the full amount due, including any interest, late fees, 
and collection costs that have accrued on the loan;
    (D) Received a deferment or forbearance based on a condition that 
predates the borrower reaching a 240- or 270-day past due status; or
    (E) Rehabilitated the loan after becoming 240- or 270-days past due.
    (ii) A loan is considered canceled and also excluded from an 
institution's cohort default rate calculation if the loan is--
    (A) Discharged due to death or permanent and total disability;
    (B) Discharged in bankruptcy;
    (C) Discharged due to a closed school;
    (D) Repaid in full in accordance with Sec. 674.33(e) or Sec. 674(h); 
or
    (E) Assigned to and conditionally discharged by the Secretary in 
accordance with Sec. 674.61(b).
    (iii) For the purpose of this section, funds obtained by income tax 
offset, garnishment, income or asset execution, or pursuant to a 
judgment are not considered voluntary.
    (4) In the case of a student who has attended and borrowed at more 
than one institution, the student and his or her subsequent repayment or 
default are attributed to the institution for attendance at which the 
student received the loan that entered repayment in the award year.
    (d) Locations of the institution. (1) A cohort default rate of an 
institution applies to all locations of the institution as it exists on 
the first day of the award year for which the rate is calculated.
    (2) A cohort default rate of an institution applies to all locations 
of the institution from the date the institution is notified of that 
rate until the institution is notified by the Secretary that the rate no 
longer applies.
    (3) For an institution that changes status from a location of one 
institution to a free-standing institution, the Secretary determines the 
cohort default rate based on the institution's status as of July 1 of 
the award year for which a cohort default rate is being calculated.
    (4)(i) For an institution that changes status from a free-standing 
institution to a location of another institution, the Secretary 
determines the cohort default rate based on the combined number of 
students who enter repayment during the applicable award year and the 
combined number of students who default during the applicable award 
years from both the former free-standing institution and the other 
institution. This cohort default rate applies to the new consolidated 
institution and all of its current locations.
    (ii) For free-standing institutions that merge, the Secretary 
determines the cohort default rate based on the combined number of 
students who enter repayment during the applicable award year and the 
combined number of students who default during the applicable award 
years from both of the institutions that are merging. This cohort 
default rate applies to the new, consolidated institution.
    (iii) For an institution that changes status from a location of one 
institution to a location of another institution, the Secretary 
determines the cohort default rate based on the combined number of 
students who enter repayment during the applicable award year and the 
number of students who default during the applicable award years from 
both of the institutions in

[[Page 739]]

their entirety, not limited solely to the respective locations.
    (5) For an institution that has a change in ownership that results 
in a change in control, the Secretary determines the cohort default rate 
based on the combined number of students who enter repayment during the 
applicable award year and the combined number of students who default 
during the applicable award years from the institution under both the 
old and new control.

(Authority: 20 U.S.C. 1087bb)

[59 FR 61405, Nov. 30, 1994, as amended at 60 FR 61814, Dec. 1, 1995; 64 
FR 58308, Oct. 28, 1999; 65 FR 65690, Nov. 1, 2000; 68 FR 75428, Dec. 
31, 2003]



Secs. 674.6-674.7  [Reserved]



Sec. 674.8  Program participation agreement.

    To participate in the Federal Perkins Loan program, an institution 
shall enter into a participation agreement with the Secretary. The 
agreement provides that the institution shall use the funds it receives 
solely for the purposes specified in this part and shall administer the 
program in accordance with the Act, this part and the Student Assistance 
General Provisions regulations, 34 CFR part 668. The agreement further 
specifically provides, among other things, that--
    (a) The institution shall establish and maintain a Fund and shall 
deposit into the Fund--
    (1) FCC received under this subpart;
    (2) Except as provided in paragraph (a)(1) of Sec. 674.7--
    (i) ICC equal to at least three-seventeenths of the FCC described in 
paragraph (a)(1) of this section in award year 1993-94; and
    (ii) ICC equal to at least one-third of the FCC described in 
paragraph (a)(1) of this section in award year 1994-95 and succeeding 
award years;
    (3) ICC equal to the amount of FCC described in paragraph (a)(1) of 
Sec. 674.7 for an institution that has been granted permission by the 
Secretary to participate in the ELO under the Federal Perkins Loan 
program;
    (4) Payments of principal, interest, late charges, penalty charges, 
and collection costs on loans from the Fund;
    (5) Payments to the institution as the result of loan cancellations 
under section 465(b) of the Act;
    (6) Any other earnings on assets of the Fund, including the interest 
earnings of the funds listed in paragraphs (a)(1) through (4) of this 
section net of bank charges incurred with regard to Fund assets 
deposited in interest-bearing accounts; and
    (7) Proceeds of short-term no-interest loans made to the Fund in 
anticipation of collections or receipt of FCC.
    (b) The institution shall use the money in the Fund only for--
    (1) Making loans to students;
    (2) Administrative expenses as provided for in 34 CFR 673.7;
    (3) Capital distributions provided for in section 466 of the Act;
    (4) Litigation costs (see Sec. 674.47);
    (5) Other collection costs, agreed to by the Secretary in connection 
with the collection of principal, interest, and late charges on a loan 
made from the Fund (see Sec. 674.47); and
    (6) Repayment of any short-term, no-interest loans made to the Fund 
by the institution in anticipation of collections or receipt of FCC.
    (c) The institution shall submit an annual report to the Secretary 
containing information that determines its cohort default rate that 
includes--
    (1) For institutions in which 30 or more of its current or former 
students first entered repayment in an award year--
    (i) The total number of borrowers who first entered repayment in the 
award year; and
    (ii) The number of those borrowers in default by the end of the 
following award year; or
    (2) For institutions in which less than 30 of its current or former 
students entered repayment in an award year--
    (i) The total number of borrowers who first entered repayment in any 
of the three most recent award years; and
    (ii) The number of those borrowers in default before the end of the 
award year immediately following the year in which they entered 
repayment.
    (d)(1) If an institution determines not to service or collect a 
loan, the institution may assign its rights to the loan

[[Page 740]]

to the United States without recompense at the beginning of a repayment 
period.
    (2) If a loan is in default despite due diligence on the part of the 
institution in collecting the loan, the institution may assign its 
rights to the loan to the United States without recompense.
    (3) The institution shall, at the request of the Secretary, assign 
its rights to a loan to the United States without recompense if--
    (i) The amount of outstanding principal is $100.00 or more;
    (ii) The loan has been in default, as defined in Sec. 674.5(c)(1), 
for seven or more years; and
    (iii) A payment has not been received on the loan in the preceding 
twelve months, unless payments were not due because the loan was in a 
period of authorized forbearance or deferment.
    (e) To assist institutions in collecting outstanding loans, the 
Secretary provides to an institution the names and addresses of 
borrowers or other information relevant to collection which is available 
to the Secretary.
    (f) The institution shall provide the loan information required by 
section 463A of the HEA to a borrower.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 1087cc, 1087cc-1, 1094)

[52 FR 45747, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 
FR 32344, July 21, 1992; 59 FR 61407, 61415, Nov. 30, 1994; 61 FR 60396, 
Nov. 27, 1996; 64 FR 58315, Oct. 28, 1999; 72 FR 61996, Nov. 1, 2007]



Sec. 674.9  Student eligibility.

    A student at an institution of higher education is eligible to 
receive a loan under the Federal Perkins Loan program for an award year 
if the student--
    (a) Meets the relevant eligibility requirements contained in 34 CFR 
part 668;
    (b) Is enrolled or accepted for enrollment as an undergraduate, 
graduate, or professional student at the institution, whether or not 
engaged in a program of study abroad approved for credit by the home 
institution;
    (c) Has financial need as determined in accordance with part F of 
title IV of the HEA. A member of a religious order (an order, community, 
society, agency, or organization) who is pursuing a course of study at 
an institution of higher education is considered to have no financial 
need if that religious order-
    (1) Has as its primary objective the promotion of ideals and beliefs 
regarding a Supreme Being;
    (2) Requires its members to forego monetary or other support 
substantially beyond the support it provides; and
    (3) Directs the member to pursue the course of study or provides 
subsistence support to its members;
    (d) Has received for that award year, if an undergraduate student--
    (1) A SAR as a result of applying for a grant under the Federal Pell 
Grant Program; or
    (2) A preliminary determination of eligibility or ineligibility for 
a Federal Pell Grant by the institution's financial aid administrator 
after applying for a SAR with a Federal Pell Grant Processor;
    (e) Is willing to repay the loan. Failure to meet payment 
obligations on a previous loan is evidence that the student is unwilling 
to repay the loan;
    (f) Provides to the institution a driver's license number, if any, 
at the time of application for the loan;
    (g) In the case of a borrower whose prior loan under title IV of the 
Act or whose TEACH Grant service obligation was discharged after a final 
determination of total and permanent disability--
    (1) Obtains a certification from a physician that the borrower is 
able to engage in substantial gainful activity;
    (2) Signs a statement acknowledging that any new Federal Perkins 
Loan the borrower receives cannot be discharged in the future on the 
basis of any present impairment, unless that condition substantially 
deteriorates; and
    (3) If the borrower receives a new Federal Perkins Loan within three 
years of the date that any previous title IV loan or TEACH Grant service 
obligation was discharged due to a total and permanent disability in 
accordance with Sec. 674.61(b)(3)(i), 34 CFR 682.402(c), 34 CFR 685.213, 
or 34 CFR 686.42(b) based on a discharge request received on or after 
July 1, 2010, resumes repayment on the previously

[[Page 741]]

discharged loan in accordance with Sec. 674.61(b)(5), 34 CFR 
682.402(c)(5), or 34 CFR 685.213(b)(4), or acknowledges that he or she 
is once again subject to the terms of the TEACH Grant agreement to serve 
before receiving the new loan.
    (h) In the case of a borrower whose previous loan under title IV of 
the HEA was conditionally discharged after an initial determination that 
the borrower was totally and permanently disabled based on a discharge 
request received prior to July 1, 2010, the borrower must--
    (1) Comply with the requirements of paragraphs (g)(1) and (g)(2) of 
this section; and
    (2) Sign a statement acknowledging that--
    (i) The loan that has been conditionally discharged prior to a final 
determination of total and permanent disability cannot be discharged in 
the future on the basis of any impairment present when the borrower 
applied for a total and permanent disability discharge or when a new 
loan is made, unless that impairment substantially deteriorates; and
    (ii) Collection activity will resume on any loan in a conditional 
discharge period.
    (i) Does not have any loans under title IV of the HEA on which 
collection activity has been suspended based on a conditional 
determination that the borrower was totally and permanently disabled. If 
a borrower applies for a loan under title IV of the HEA during the 
conditional discharge period, the suspension of collection activity must 
be ended before the borrower becomes eligible to receive any additional 
loans.
    (j) In the case of a borrower who is in default on a Federal Perkins 
Loan, NDSL or Defense loan, satisfies one of the conditions contained in 
Sec. 674.5(c)(3)(i) or (ii) except that--
    (1) For purposes of this section, voluntary payments made by the 
borrower under paragraph (i) of this section are payments made directly 
by the borrower; and
    (2) Voluntary payments do not include payments obtained by Federal 
offset, garnishment, or income or asset execution.
    (k) In the case of a borrower who is in default on an FFEL Program 
or a Direct Loan Program loan, makes satisfactory repayment arrangements 
as defined in 34 CFR 682.200(b) or 685.102(b) on the defaulted loan, as 
determined by the loan holder; and
    (l) For purposes of this section, reaffirmation means the 
acknowledgment of the loan by the borrower in a legally binding manner. 
The acknowledgement may include, but is not limited to, the borrower--
    (1) Signing a new promissory note or new repayment agreement; or
    (2) Making a payment on the loan.

(Authority: 20 U.S.C. 1087aa, 1087dd, and 1091)

[52 FR 45747, Dec. 1, 1987, as amended at 59 FR 61407, 61415, Nov. 30, 
1994; 60 FR 34167, June 30, 1995; 62 FR 50847, Sept. 26, 1997; 64 FR 
58309, Oct. 28, 1999; 65 FR 65690, Nov. 1, 2000; 66 FR 44006, Aug. 21, 
2001; 67 FR 67076, Nov. 1, 2002; 71 FR 45697, Aug. 9, 2006; 74 FR 55986, 
Oct. 29, 2009; 78 FR 65805, Nov. 1, 2013]



Sec. 674.10  Selection of students for loans.

    (a)(1) An institution shall make loans under this part reasonably 
available, to the extent of available funds, to all students eligible 
under Sec. 674.9 but shall give priority to those students with 
exceptional financial need.
    (2) The institution shall define exceptional financial need for the 
purpose of the priority described in paragraph (a)(1) of this section 
and shall develop procedures for implementing that priority.
    (b) If an institution's allocation of Federal Capital Contribution 
is directly or indirectly based in part on the financial need 
demonstrated by students attending the institution as less-than-full-
time or independent students, a reasonable portion of the dollar amount 
of loans made under this part must be offered to those students.
    (c) The institution shall establish selection procedures and these 
procedures must be--
    (1) In writing;
    (2) Uniformly applied; and
    (3) Maintained in the institution's files.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 1087cc and 1087dd)

[52 FR 45747, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 
FR 61407, Nov. 30, 1994; 64 FR 58292, 58315, Oct. 28, 1999]

[[Page 742]]



Sec. 674.11  [Reserved]



Sec. 674.12  Loan maximums.

    (a) The maximum annual amount of Federal Perkins Loans and NDSLs an 
eligible student may borrow is--
    (1) $5,500 for a student who is enrolled in a program of 
undergraduate education; and
    (2) $8,000 for a graduate or professional student.
    (b) The aggregate unpaid principal amount of all Federal Perkins 
Loans and NDSLs received by an eligible student may not exceed--
    (1) $27,500 for a student who has successfully completed two years 
of a program leading to a bachelor's degree but who has not received the 
degree;
    (2) $60,000 for a graduate or professional student; and
    (3) $11,000 for any other student.
    (c) The maximum annual amounts described in paragraph (a) of this 
section and the aggregate maximum amounts described in paragraph (b) of 
this section may be exceeded by 20 percent if the student is engaged in 
a program of study abroad that is approved for credit by the home 
institution at which the student is enrolled and that has reasonable 
costs in excess of the home institution's cost of attendance.
    (d) For each student, the maximum annual amounts described in 
paragraphs (a) and (c) of this section, and the aggregate maximum 
amounts described in paragraphs (b) and (c) of this section, include any 
amounts borrowed previously by the student under title IV, part E of the 
HEA at any institution.

(Authority: 20 U.S.C. 1087dd)

[59 FR 61407, Nov. 30, 1994, as amended at 64 FR 58309, Oct. 28, 1999; 
74 FR 55660, Oct. 28, 2009]



Sec. 674.13  Reimbursement to the Fund.

    (a) The Secretary may require an institution to reimburse its Fund 
in an amount equal to that portion of the outstanding balance of--
    (1) A loan disbursed by the institution to a borrower in excess of 
the amount that the borrower was eligible to receive, as determined on 
the basis of information the institution had, or should have had, at the 
time of disbursement; or
    (2) Except as provided in paragraph (b) of this section, a defaulted 
loan with regard to which the institution failed--
    (i) To record or retain the loan note in accordance with the 
requirements of this part;
    (ii) To record advances on the loan note in accordance with the 
requirements of this part; or
    (iii) To exercise due diligence in collecting in accordance with the 
requirements of this part.
    (b) The Secretary does not require an institution to reimburse its 
Fund for the portion of the outstanding balance of a defaulted loan 
described in paragraph (a)(2) of this section--
    (1) That the institution--
    (i) Recovers from the borrower or endorser; or
    (ii) Demonstrates, to the Secretary's satisfaction, would not have 
been collected from the borrower even if the institution complied in a 
timely manner with the due diligence requirements of subpart C of this 
part; or
    (2) On which the institution obtains a judgment.
    (c) An institution that is required to reimburse its Fund under 
paragraph (a) of this section shall also reimburse the Fund for the 
amount of the administrative cost allowance claimed by the institution 
for that portion of the loans to be reimbursed.
    (d) An institution that reimburses its Fund under paragraph (a) of 
this section thereby acquires for its own account all the right, title 
and interest of the Fund in the loan for which reimbursement has been 
made.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 1087dd-1087hh)

[52 FR 45747, Dec. 1, 1987, as amended at 59 FR 61407, Nov. 30, 1994; 64 
FR 58315, Oct. 28, 1999; 65 FR 65614, Nov. 1, 2000]



Secs. 674.14-674.15  [Reserved]



Sec. 674.16  Making and disbursing loans.

    (a)(1) Before an institution makes its first disbursement to a 
student, the student shall sign the promissory note and the institution 
shall provide the

[[Page 743]]

student with the following information:
    (i) The name of the institution and the address to which 
communications and payments should be sent.
    (ii) The principal amount of the loan and a statement that the 
institution will report the amount of the loan to a national credit 
bureau at least annually.
    (iii) The stated interest rate on the loan.
    (iv) The yearly and cumulative maximum amounts that may be borrowed.
    (v) An explanation of when repayment of the loan will begin and when 
the borrower will be obligated to pay interest that accrues on the loan.
    (vi) The minimum and maximum repayment terms which the institution 
may impose and the minimum monthly repayment required.
    (vii) A statement of the total cumulative balance owed by the 
student to that institution, and an estimate of the monthly payment 
amount needed to repay that balance.
    (viii) Special options the borrowers may have for loan consolidation 
or other refinancing of the loan.
    (ix) The borrower's right to prepay all or part of the loan, at any 
time, without penalty, and a summary of the circumstances in which 
repayment of the loan or interest that accrues on the loan may be 
deferred or canceled including a brief notice of the Department of 
Defense program for repayment of loans on the basis of specified 
military service.
    (x) A definition of default and the consequences to the borrower, 
including a statement that the institution may report the default to a 
national credit bureau.
    (xi) The effect of accepting the loan on the eligibility of the 
borrower for other forms of student assistance.
    (xii) The amount of any charges collected by the institution at or 
prior to the disbursement of the loan and any deduction of such charges 
from the proceeds of the loan or paid separately by the borrower.
    (xiii) Any cost that may be assessed on the borrower in the 
collection of the loan including late charges and collection and 
litigation costs.
    (2) The institution shall provide the information in paragraph 
(a)(1) of this section to the borrower in writing--
    (i) As part of the written application material;
    (ii) As part of the promissory note; or
    (iii) On a separate written form.
    (b)(1) Except as provided in paragraphs (c) and (f) of this section, 
an institution shall advance in each payment period a portion of a loan 
awarded for a full academic year.
    (2) The institution shall determine the amount advanced each payment 
period by the following fraction:
[GRAPHIC] [TIFF OMITTED] TC15NO91.026

Where Loan Amount = the total loan awarded for an academic year and N = 
          the number of payment periods that the institution expects the 
          student will attend in that year.

    (3) An institution may advance funds, within each payment period, at 
such time and in such amounts as it determines best meets the student's 
needs.
    (c) If a student incurs uneven costs or estimated financial 
assistance amounts during an academic year and needs additional funds in 
a particular payment period, the institution may disburse loan funds to 
the student for those uneven costs.
    (d)(1) The institution shall disburse funds to a student or the 
student's account in accordance with 34 CFR 668.164.
    (2) The institution shall ensure that each loan is supported by a 
legally enforceable promissory note as proof of the borrower's 
indebtedness.
    (3) If the institution uses a Master Promissory Note (MPN), the 
institution's ability to make additional loans based on that MPN will 
automatically expire upon the earliest of--
    (i) The date the institution receives written notification from the 
borrower requesting that the MPN no longer be used as the basis for 
additional loans;
    (ii) Twelve months after the date the borrower signed the MPN if no 
disbursements are made by the institution under that MPN; or
    (iii) Ten years from the date the borrower signed the MPN or the 
date the institution receives the MPN, except

[[Page 744]]

that a remaining portion of a loan may be disbursed after this date.
    (e) The institution shall advance funds to a student in accordance 
with the provisions of Sec. 668.164.
    (f)(1) The institution shall return to the Fund any amount advanced 
to a student who, before the first day of classes--
    (i) Officially or unofficially withdraws; or
    (ii) Is expelled.
    (2) A student who does not begin class attendance is deemed to have 
withdrawn.
    (g) An institutional official may not, without prior approval from 
the Secretary, obtain a student's power of attorney to endorse any check 
used to disburse loan funds.
    (h)(1) An institution must report to at least one national credit 
bureau--
    (i) The amount and the date of each disbursement;
    (ii) Information concerning the repayment and collection of the loan 
until the loan is paid in full; and
    (iii) The date the loan was repaid, canceled, or discharged for any 
reason.
    (2) An institution must promptly report any changes to information 
previously reported on a loan to the same credit bureaus to which the 
information was previously reported.
    (i) [Reserved]
    (j) The institution must report enrollment and loan status 
information, or any Title IV loan-related information required by the 
Secretary, to the Secretary by the deadline date established by the 
Secretary.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 1987cc, 1087cc-1, 1087dd, 1091 and 1094)

[52 FR 45747, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 
FR 61408, Nov. 30, 1994; 59 FR 61722, Dec. 1, 1994; 60 FR 34433, June 
30, 1995; 60 FR 61814, Dec. 1, 1995; 61 FR 60608, Nov. 29, 1996; 64 FR 
58309, Oct. 28, 1999; 67 FR 67076, Nov. 1, 2002; 71 FR 45697, Aug. 9, 
2006; 72 FR 61996, 62030, Nov. 1, 2007]



Sec. 674.17  Federal interest in allocated funds--transfer of Fund.

    (a) If an institution responsible for a Federal Perkins Loan fund 
closes or no longer wants to participate in the program, the Secretary 
directs the institution to take the following steps to protect the 
outstanding loans and the Federal interest in that Fund:
    (1) A capital distribution of the liquid assets of the Fund 
according to section 466(c) of the Act.
    (2) The assignment of the outstanding loans to the United States.
    (b) An institution that assigns outstanding loans under this 
paragraph relinquishes its interest in those loans.

(Authority: 20 U.S.C. 1087cc, 1087ff), and (1087hh)

[52 FR 45747, Dec. 1, 1987, as amended at 59 FR 61415, Nov. 30, 1994; 60 
FR 61814, Dec. 1, 1995; 67 FR 67076, Nov. 1, 2002]



Sec. 674.18  Use of funds.

    (a) General. An institution shall deposit the funds it receives 
under the Federal Perkins Loan program into its Fund. It may use these 
funds only for making loans and the other activities specified in 
Sec. 674.8(b).
    (b) Transfer of funds. (1) An institution may transfer up to 25 
percent of the sum of its initial and supplemental Federal Perkins Loan 
allocations for an award year to the Federal Work-Study program or 
Federal Supplemental Educational Opportunity Grant program, or to both.
    (2) An institution may transfer up to the total of the sum of its 
initial and supplemental Federal Perkins Loan allocations for an award 
year to the Work-Colleges program.
    (3) An institution shall use transferred funds according to the 
requirements of the program to which they are transferred.
    (4) An institution shall report any transferred funds on the Fiscal 
Operations Report required under Sec. 674.19(d).
    (5) An institution shall transfer back to the Federal Perkins Loan 
program any funds unexpended at the end of the award year that it 
transferred to the FWS program, the FSEOG program, or the Work-Colleges 
program from the Federal Perkins Loan program.

(Authority: 20 U.S.C. 1087cc, 1087dd, and 1096)

[52 FR 45747, Dec. 1, 1987, as amended at 57 FR 32345, July 21, 1992; 59 
FR 61408, 61415, Nov. 30, 1994; 61 FR 60396, Nov. 27, 1996]

[[Page 745]]



Sec. 674.19  Fiscal procedures and records.

    (a) Fiscal procedures. (1) In administering its Federal Perkins Loan 
program, an institution shall establish and maintain an internal control 
system of checks and balances that ensures that no office can both 
authorize payments and disburse funds to students.
    (2)(i) A separate bank account for Federal funds is not required, 
except as provided in paragraph (b) of this section.
    (ii) An institution shall notify any bank in which it deposits 
Federal funds of the accounts into which those funds are deposited by--
    (A) Ensuring that the name of the account clearly discloses the fact 
that Federal funds are deposited in the account; or
    (B) Notifying the bank, in writing, of the names of the accounts in 
which it deposits Federal funds. The institution shall retain a copy of 
this notice in its files.
    (3)(i) The institution shall ensure that the cash balances of the 
accounts into which it deposits Federal Perkins Loan Fund cash assets do 
not fall below the amount of Fund cash assets deposited in those 
accounts but not yet expended on authorized purposes in accordance with 
applicable title IV HEA program requirements, as determined from the 
records of the institution.
    (ii) If the cash balances of the accounts at any time fall below the 
amount described in paragraph (a)(3)(i) of this section, the institution 
is deemed to make any subsequent deposits into the accounts of funds 
derived from other sources with the intent to restore to that amount 
those Fund assets previously withdrawn from those accounts. To the 
extent that these institutional deposits restore the amount previously 
withdrawn, they are deemed to be Fund assets.
    (b) Account for Perkins Loan Fund. An institution shall maintain the 
funds it receives under this part in accordance with the requirements in 
Sec. 668.163.
    (c) Deposit of ICC into Fund. An institution shall deposit its ICC 
into its Fund prior to or at the same time it deposits any FCC.
    (d) Records and reporting. (1) An institution shall establish and 
maintain program and fiscal records that are reconciled at least 
monthly.
    (2) Each year an institution shall submit a Fiscal Operations Report 
plus other information the Secretary requires. The institution shall 
insure that the information reported is accurate and shall submit it on 
the form and at the time specified by the Secretary.
    (e) Retention of records--(1) Records. An institution shall follow 
the record retention and examination provisions in this part and in 34 
CFR 668.24.
    (2) Loan records. (i) An institution shall retain a record of 
disbursements for each loan made to a borrower on a Master Promissory 
Note (MPN). This record must show the date and amount of each 
disbursement.
    (ii) For any loan signed electronically, an institution must 
maintain an affidavit or certification regarding the creation and 
maintenance of the institution's electronic MPN or promissory note, 
including the institution's authentication and signature process in 
accordance with the requirements of Sec. 674.50(c)(12).
    (iii) An institution shall maintain a repayment history for each 
borrower. This repayment history must show the date and amount of each 
repayment over the life of the loan. It must also indicate the amount of 
each repayment credited to principal, interest, collection costs, and 
either penalty or late charges.
    (3) Period of retention of disbursement records, electronic 
authentication and signature records, and repayment records.
    (i) An institution shall retain disbursement and electronic 
authentication and signature records for each loan made using an MPN for 
at least three years from the date the loan is canceled, repaid, or 
otherwise satisfied.
    (ii) An institution shall retain repayment records, including 
cancellation and deferment requests for at least three years from the 
date on which a loan is assigned to the Secretary, canceled or repaid.
    (4) Manner of retention of promissory notes and repayment schedules. 
An institution shall keep the original promissory notes and repayment 
schedules until the loans are satisfied. If required to release original 
documents in order

[[Page 746]]

to enforce the loan, the institution must retain certified true copies 
of those documents.
    (i) An institution shall keep the original paper promissory note or 
original paper MPN and repayment schedules in a locked, fireproof 
container.
    (ii) If a promissory note was signed electronically, the institution 
must store it electronically and the promissory note must be retrievable 
in a coherent format. An original electronically signed MPN must be 
retained by the institution for 3 years after all the loans made on the 
MPN are satisfied.
    (iii) After the loan obligation is satisfied, the institution shall 
return the original or a true and exact copy of the note marked ``paid 
in full'' to the borrower, or otherwise notify the borrower in writing 
that the loan is paid in full, and retain a copy for the prescribed 
period.
    (iv) An institution shall maintain separately its records pertaining 
to cancellations of Defense, NDSL, and Federal Perkins Loans.
    (v) Only authorized personnel may have access to the loan documents.
    (f) Enrollment reporting process. (1) Upon receipt of an enrollment 
report from the Secretary, an institution must update all information 
included in the report and return the report to the Secretary--
    (i) In the manner and format prescribed by the Secretary; and
    (ii) Within the timeframe specified by the Secretary.
    (2) Unless it expects to submit its next updated enrollment report 
to the Secretary within the next 60 days, an institution must notify the 
Secretary within 30 days after the date the school discovers that--
    (i) A loan under title IV of the HEA was made to a student who was 
enrolled or accepted for enrollment at the institution, and the student 
has ceased to be enrolled on at least a half-time basis or failed to 
enroll on at least a half-time basis for the period for which the loan 
was intended; or
    (ii) A student who is enrolled at the institution and who received a 
loan under title IV of the HEA has changed his or her permanent address.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 1087cc, 1087hh, 1094, and 1232f)

[52 FR 45747, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 
FR 32345, July 21, 1992; 59 FR 61408, 61415, Nov. 30, 1994; 59 FR 61722, 
Dec. 1, 1994; 60 FR 61814, Dec. 1, 1995; 61 FR 60492, Nov. 27, 1996; 62 
FR 50847, Sept. 26, 1997; 64 FR 58315, Oct. 28, 1999; 67 FR 67076, Nov. 
1, 2002; 72 FR 61996, Nov. 1, 2007; 78 FR 65805, Nov. 1, 2013]



Sec. 674.20  Compliance with equal credit opportunity requirements.

    (a) In making a loan, an institution shall comply with the equal 
credit opportunity requirements of Regulation B (12 CFR part 202).
    (b) The Secretary considers the Federal Perkins Loan program to be a 
credit assistance program authorized by Federal law for the benefit of 
an economically disadvantaged class of persons within the meaning of 12 
CFR 202.8(a)(1). Therefore, the institution may request a loan applicant 
to disclose his or her marital status, income from alimony, child 
support, and spouse's income and signature.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 1087aa-1087hh)

[52 FR 45747, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 
FR 61415, Nov. 30, 1994; 64 FR 58315, Oct. 28, 1999]



                        Subpart B_Terms of Loans

    Source: 52 FR 45754, Dec. 1, 1987, unless otherwise noted.



Sec. 674.31  Promissory note.

    (a) Promissory note. (1) An institution may use only the promissory 
note that the Secretary provides. The institution may make only 
nonsubstantive changes, such as changes to the type style or font, or 
the addition of items such as the borrower's driver's license number, to 
this note.
    (2)(i) The institution shall print the note on one page, front and 
back; or
    (ii) The institution may print the note on more than one page if--

[[Page 747]]

    (A) The note requires the signature of the borrower on each page; or
    (B) Each page of the note contains both the total number of pages in 
the complete note as well as the number of each page, e.g., page 1 of 4, 
page 2 of 4, etc.
    (iii) The promissory note must state the exact amount of the minimum 
monthly repayment amount if the institution chooses the option under 
Sec. 674.33(b).
    (b) Provisions of the promissory note--(1) Interest. The promissory 
note must state that--
    (i) The rate of interest on the loan is 5 percent per annum on the 
unpaid balance; and
    (ii) No interest shall accrue before the repayment period begins, 
during certain deferment periods as provided by this subpart, or during 
the grace period following those deferments.
    (2) Repayment. (i) Except as otherwise provided in Sec. 674.32, the 
promissory note must state that the repayment period--
    (A) For NDSLs made on or after October 1, 1980, begins 6 months 
after the borrower ceases to be at least a half-time regular student at 
an institution of higher education or a comparable institution outside 
the U.S. approved for this purpose by the Secretary, and normally ends 
10 years later;
    (B) For NDSLs made before October 1, 1980 and Federal Perkins Loans, 
begins 9 months after the borrower ceases to be at least a half-time 
regular student at an institution of higher education or a comparable 
institution outside the U.S. approved for this purpose by the Secretary, 
and normally ends 10 years later;
    (C) For purposes of establishing the beginning of the repayment 
period for NDSL or Perkins loans, the 6- and 9-month grace periods 
referenced in paragraph (b)(2)(i) of this section exclude any period 
during which a borrower who is a member of a reserve component of the 
Armed Forces named in section 10101 of Title 10, United States Code is 
called or ordered to active duty for a period of more than 30 days. Any 
single excluded period may not exceed three years and includes the time 
necessary for the borrower to resume enrollment at the next available 
regular enrollment period. Any Direct or Perkins loan borrower who is in 
a grace period when called or ordered to active duty as specified in 
this paragraph is entitled to a new 6- or 9-month grace period upon 
completion of the excluded period.
    (D) May begin earlier at the borrower's request; and
    (E) May vary because of minimum monthly repayments (see 
Sec. 674.33(b)), extensions of repayment (see Sec. 674.33(c)), 
forbearance (see Sec. 674.33(d)), or deferments (see Secs. 674.34, 
674.35, and 674.36);
    (ii) The promissory note must state that the borrower shall repay 
the loan--
    (A) In equal quarterly, bimonthly, or monthly amounts, as the 
institution chooses; or
    (B) In graduated installments if the borrower requests a graduated 
repayment schedule, the institution submits the schedule to the 
Secretary for approval, and the Secretary approves it.
    (3) Cancellation. The promissory note must state that the unpaid 
principal, interest, collection costs, and either penalty or late 
charges on the loan are canceled upon the death or permanent and total 
disability of the borrower.
    (4) Prepayment. The promissory note must state that--
    (i) The borrower may prepay all or part of the loan at any time 
without penalty;
    (ii) The institution shall use amounts repaid during the academic 
year in which the loan was made to reduce the original loan amount and 
not consider these amounts to be prepayments;
    (iii) If the borrower repays amounts during the academic year in 
which the loan was made and the initial grace period ended, only those 
amounts in excess of the amount due for any repayment period shall be 
treated as prepayments; and
    (iv) If, in an academic year other than that described in paragraph 
(b)(4)(iii) of this section, a borrower repays more than the amount due 
for any repayment period, the institution shall use the excess to prepay 
the principal unless the borrower designates it as an advance payment of 
the next regular installment.

[[Page 748]]

    (5) Late charge. (i) An institution shall state in the promissory 
note that the institution will assess a late charge if the borrower does 
not--
    (A) Repay all or part of a scheduled repayment when due; or
    (B) File a timely request for cancellation or deferment with the 
institution. This request must include sufficient evidence to enable the 
institution to determine whether the borrower is entitled to a 
cancellation or deferment.
    (ii)(A) The amount of the late charge on a Federal Perkins Loan or 
an NDSL Loan made to cover the cost of attendance for a period of 
enrollment that began on or after January 1, 1986 must be determined in 
accordance with Sec. 674.43(b) (2), (3) and (4).
    (B) The amount of the late or penalty charge on an NDSL made for 
periods of enrollment that began before January 1, 1986 may be--
    (1) For each overdue payment on a loan payable in monthly 
installments, a maximum monthly charge of $1 for the first month and $2 
for each additional month.
    (2) For each overdue payment on a loan payable in bimonthly 
installments, a maximum bimonthly charge of $3.
    (3) For each overdue payment on a loan payable in quarterly 
installments, a maximum charge per quarter of $6. (See appendix E of 
this part)
    (iii) The institution may--
    (A) Add either the penalty or late charge to the principal the day 
after the scheduled repayment was due; or
    (B) Include it with the next scheduled repayment after the borrower 
receives notice of the late charge.
    (6) Security and endorsement. The promissory note must state that 
the loan shall be made without security and endorsement.
    (7) Assignment. The promissory note must state that a note may only 
be assigned to--
    (i) The United States or an institution approved by the Secretary; 
or
    (ii) An institution to which the borrower has transferred if that 
institution is participating in the Federal Perkins Loan program.
    (8) Acceleration. The promissory note must state that an institution 
may demand immediate repayment of the entire loan, including any late 
charges, collection costs and accrued interest, if the borrower does 
not--
    (i) Make a scheduled repayment on time; or
    (ii) File cancellation or deferment form(s) with the institution on 
time.
    (9) Cost of collection. The promissory note must state that the 
borrower shall pay all attorney's fees and other loan collection costs 
and charges.
    (10) Disclosure of information. The promissory note must state 
that--
    (i) The institution must disclose to at least one national credit 
bureau the amount of the loan made to the borrower, along with other 
relevant information.
    (ii) If the borrower defaults on the loan, the institution shall 
disclose that the borrower has defaulted on the loan, along with other 
relevant information, to the same national credit bureau to which it 
originally reported the loan; and
    (iii) If the borrower defaults on the loan and the loan is assigned 
to the Secretary for collection, the Secretary may disclose to a 
national credit bureau that the borrower has defaulted on the loan, 
along with other relevant information.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 1087dd)

[52 FR 45754, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 
FR 32345, July 21, 1992; 59 FR 61408, 61415, Nov. 30, 1994; 60 FR 61814, 
Dec. 1, 1995; 62 FR 50848, Sept. 26, 1997; 64 FR 58309, Oct. 28, 1999]



Sec. 674.32  Special terms: loans to less than half-time student borrowers.

    (a) The promissory note used with regard to loans to borrowers 
enrolled on a less than half-time basis must state that the repayment 
period begins--
    (1) On the date of the next scheduled installment payment on any 
outstanding loan to the borrower; or
    (2) If the borrower has no outstanding loan, at the earlier of--
    (i) Nine months from the date the loan was made, or
    (ii) The end of a nine-month period that includes the date the loan 
was made and began on the date the borrower ceased to be enrolled as at 
least

[[Page 749]]

a half-time regular student at an institution of higher education or 
comparable institution outside the U.S. approved for this purpose by the 
Secretary.
    (b) The note must otherwise conform to the provisions of 
Sec. 674.31.

(Authority: 20 U.S.C. 1087dd)

[52 FR 45754, Dec. 1, 1987, as amended at 57 FR 32345, July 21, 1992]



Sec. 674.33  Repayment.

    (a) Repayment Plan. (1) The institution shall establish a repayment 
plan before the student ceases to be at least a half-time regular 
student.
    (2) If the last scheduled payment would be $25 or less the 
institution may combine it with the next-to-last repayment.
    (3) If the installment payment for all loans made to a borrower by 
an institution is not a multiple of $5, the institution may round that 
payment to the next highest dollar amount that is a multiple of $5.
    (4) The institution shall apply any payment on a loan in the 
following order:
    (i) Collection costs.
    (ii) Late charges.
    (iii) Accrued interest.
    (iv) Principal.
    (b) Minimum monthly repayment--(1) Minimum monthly repayment option. 
(i) An institution may require a borrower to pay a minimum monthly 
repayment if--
    (A) The promissory note includes a minimum monthly repayment 
provision specifying the amount of the minimum monthly repayment; and
    (B) The monthly repayment of principal and interest for a 10-year 
repayment period is less than the minimum monthly repayment; or
    (ii) An institution may require a borrower to pay a minimum monthly 
repayment if the borrower has received loans with different interest 
rates at the same institution and the total monthly repayment would 
otherwise be less than the minimum monthly repayment.
    (2) Minimum monthly repayment of loans from more than one 
institution. If a borrower has received loans from more than one 
institution and has notified the institution that he or she wants the 
minimum monthly payment determination to be based on payments due to 
other institutions, the following rules apply:
    (i) If the total of the monthly repayments is equal to at least the 
minimum monthly repayment, no institution may exercise a minimum monthly 
repayment option.
    (ii) If only one institution exercises the minimum monthly repayment 
option when the monthly repayment would otherwise be less than the 
minimum repayment option, that institution receives the difference 
between the minimum monthly repayment and the repayment owed to the 
other institution.
    (iii) If each institution exercises the minimum repayment option, 
the minimum monthly repayment must be divided among the institutions in 
proportion to the amount of principal advanced by each institution.
    (3) Minimum monthly repayment of both Defense and NDSL or Federal 
Perkins loans from one or more institutions. If the borrower has 
notified the institution that he or she wants the minimum monthly 
payment determination to be based on payments due to other institutions, 
and if the total monthly repayment is less than $30 and the monthly 
repayment on a Defense loan is less than $15 a month, the amount 
attributed to the Defense loan may not exceed $15 a month.
    (4) Minimum monthly repayment of loans with differing grace periods 
and deferments. If the borrower has received loans with different grace 
periods and deferments, the institution shall treat each note 
separately, and the borrower shall pay the applicable minimum monthly 
payment for a loan that is not in the grace or deferment period.
    (5) Hardship. The institution may reduce the borrower's scheduled 
repayments for a period of not more than one year at a time if--
    (i) It determines that the borrower is unable to make the scheduled 
repayments due to hardship (see Sec. 674.33(c)); and
    (ii) The borrower's scheduled repayment is the minimum monthly 
repayment described in paragraph (b) of this section.

[[Page 750]]

    (6) Minimum monthly repayment rates. For the purposes of this 
section, the minimum monthly repayment rate is--
    (i) $15 for a Defense loan;
    (ii) $30 for an NDSL Loan or for a Federal Perkins loan made before 
October 1, 1992, or for a Federal Perkins loan made on or after October 
1, 1992, to a borrower who, on the date the loan is made, has an 
outstanding balance of principal or interest owing on any loan made 
under this part; or
    (iii) $40 for a Federal Perkins loan made on or after October 1, 
1992, to a borrower who, on the date the loan is made, has no 
outstanding balance of principal or interest owing on any loan made 
under this part.
    (7) The institution shall determine the minimum repayment amount 
under paragraph (b) of this section for loans with repayment installment 
intervals greater than one month by multiplying the amounts in paragraph 
(b) of this section by the number of months in the installment interval.
    (c) Extension of repayment period--(1) Hardship. The institution may 
extend a borrower's repayment period due to prolonged illness or 
unemployment.
    (2) Low-income individual. (i) For Federal Perkins loans and NDSLs 
made on or after October 1, 1980, the institution may extend the 
borrower's repayment period up to 10 additional years beyond the 10-year 
maximum repayment period if the institution determines during the course 
of the repayment period that the borrower is a ``low-income 
individual.'' The borrower qualifies for an extension of the repayment 
period on the basis of low-income status only during the period in which 
the borrower meets the criteria described in paragraph (c)(2)(i) (A) or 
(B) of this section. The term low-income individual means the following:
    (A) For an unmarried borrower without dependents, an individual 
whose total income for the preceding calendar year did not exceed 45 
percent of the Income Protection Allowance for the current award year 
for a family of four with one in college.
    (B) For a borrower with a family that includes the borrower and any 
spouse or legal dependents, an individual whose total family income for 
the preceding calendar year did not exceed 125 percent of the Income 
Protection Allowance for the current award year for a family with one in 
college and equal in size to that of the borrower's family.
    (ii) The institution shall use the Income Protection Allowance 
published annually in accordance with section 478 of the HEA in making 
this determination.
    (iii) The institution shall review the borrower's status annually to 
determine whether the borrower continues to qualify for an extended 
repayment period based on his or her status as a ``low-income 
individual.''
    (iv) Upon determining that a borrower ceases to qualify for an 
extended repayment period under this section, the institution shall 
amend the borrower's repayment schedule. The term of the amended 
repayment schedule may not exceed the number of months remaining on the 
original repayment schedule, provided that the institution may not 
include the time elapsed during any extension of the repayment period 
granted under this section in determining the number of months remaining 
on the original repayment schedule.
    (3) Interest continues to accrue during any extension of a repayment 
period.
    (d) Forbearance. (1) Forbearance means the temporary cessation of 
payments, allowing an extension of time for making payments, or 
temporarily accepting smaller payments than previously were scheduled.
    (2) Upon receipt of a request and supporting documentation, the 
institution shall grant the borrower forbearance of principal and, 
unless otherwise indicated by the borrower, interest renewable at 
intervals of up to 12 months for periods that collectively do not exceed 
three years.
    (3) The terms of forbearance must be agreed upon, in writing, by the 
borrower and the institution. The school confirms this agreement by 
notice to the borrower, and by recording the terms in the borrower's 
file.
    (4) In granting a forbearance under this section, an institution 
shall grant a temporary cessation of payments, unless the borrower 
chooses another form of forbearance subject to paragraph (d)(1) of this 
section.

[[Page 751]]

    (5) An institution shall grant forbearance if--
    (i) The amount of the payments the borrower is obligated to make on 
title IV loans each month (or a proportional share if the payments are 
due less frequently than monthly) is collectively equal to or greater 
than 20 percent of the borrower's total monthly gross income;
    (ii) The institution determines that the borrower should qualify for 
the forbearance due to poor health or for other acceptable reasons; or
    (iii) The Secretary authorizes a period of forbearance due to a 
national military mobilization or other national emergency.
    (6) Before granting a forbearance to a borrower under paragraph 
(d)(5)(i) of this section, the institution shall require the borrower to 
submit at least the following documentation:
    (i) Evidence showing the amount of the most recent total monthly 
gross income received by the borrower; and
    (ii) Evidence showing the amount of the monthly payments owed by the 
borrower for the most recent month for the borrower's title IV loans.
    (7) Interest accrues during any period of forbearance.
    (8) The institution may not include the periods of forbearance 
described in this paragraph in determining the 10-year repayment period.
    (e) Compromise of repayment. (1) An institution may compromise on 
the repayment of a defaulted loan if--
    (i) The institution has fully complied with all due diligence 
requirements specified in subpart C of this part; and
    (ii) The student borrower pays in a single lump-sum payment--
    (A) 90 percent of the outstanding principal balance on the loan 
under this part;
    (B) The interest due on the loan; and
    (C) Any collection fees due on the loan.
    (2) The Federal share of the compromise repayment must bear the same 
relation to the institution's share of the compromise repayment as the 
Federal capital contribution to the institution's loan Fund under this 
part bears to the institution's capital contribution to the Fund.
    (f)(1) Incentive repayment program. An institution may establish the 
following repayment incentives:
    (i) A reduction of no more than one percent of the interest rate on 
a loan on which the borrower has made 48 consecutive, monthly 
repayments.
    (ii) A discount of no more than five percent on the balance owed on 
a loan which the borrower pays in full prior to the end of the repayment 
period.
    (iii) With the Secretary's approval, any other incentive the 
institution determines will reduce defaults and replenish its Fund.
    (2) Limitation on the use of funds. (i) The institution must 
reimburse its Fund, on at least a quarterly basis, for money lost to its 
Fund that otherwise would have been paid by the borrower as a result of 
establishing a repayment incentive under paragraphs (f)(1)(i), (ii) and 
(iii) of this section.
    (ii) An institution may not use Federal funds, including Federal 
funds from the student loan fund, or institutional funds from the 
student loan fund to pay for any repayment incentive authorized by this 
section.
    (g) Closed school discharge--(1) General. (i) The holder of an NDSL 
or a Federal Perkins Loan discharges the borrower's (and any endorser's) 
obligation to repay the loan if the borrower did not complete the 
program of study for which the loan was made because the school at which 
the borrower was enrolled closed.
    (ii) For the purposes of this section--
    (A) A school's closure date is the date that the school ceases to 
provide educational instruction in all programs, as determined by the 
Secretary;
    (B) ``School'' means a school's main campus or any location or 
branch of the main campus; and
    (C) The ``holder'' means the Secretary or the school that holds the 
loan.
    (2) Relief pursuant to discharge. (i) Discharge under this section 
relieves the borrower of any past or present obligation to repay the 
loan and any accrued interest or collection costs with respect to the 
loan.
    (ii) The discharge of a loan under this section qualifies the 
borrower for reimbursement of amounts paid voluntarily

[[Page 752]]

or through enforced collection on the loan.
    (iii) A borrower who has defaulted on a loan discharged under this 
section is not considered to have been in default on the loan after 
discharge, and such a borrower is eligible to receive assistance under 
programs authorized by title IV of the HEA.
    (iv) The Secretary or the school, if the school holds the loan, 
reports the discharge of a loan under this section to all credit bureaus 
to which the status of the loan was previously reported.
    (3) Determination of borrower qualification for discharge by the 
Secretary. The Secretary may discharge the borrower's obligation to 
repay an NDSL or Federal Perkins Loan without an application if the 
Secretary determines that--
    (i) The borrower qualified for and received a discharge on a loan 
pursuant to 34 CFR 682.402(d) (Federal Family Education Loan Program) or 
34 CFR 685.213 (Federal Direct Loan Program), and was unable to receive 
a discharge on an NDSL or Federal Perkins Loan because the Secretary 
lacked the statutory authority to discharge the loan; or
    (ii) Based on information in the Secretary's possession, the 
borrower qualifies for a discharge.
    (4) Borrower qualification for discharge. Except as provided in 
paragraph (g)(3) of this section, in order to qualify for discharge of 
an NDSL or Federal Perkins Loan, a borrower must submit to the holder of 
the loan a written request and sworn statement, and the factual 
assertions in the statement must be true. The statement need not be 
notarized but must be made by the borrower under penalty of perjury. In 
the statement the borrower must--
    (i) State that the borrower--
    (A) Received the proceeds of a loan to attend a school;
    (B) Did not complete the program of study at that school because the 
school closed while the student was enrolled, or the student withdrew 
from the school not more than 120 days before the school closed. The 
Secretary may extend the 120-day period if the Secretary determines that 
exceptional circumstances related to the school's closing justify an 
extension. Exceptional circumstances for this purpose may include, but 
are not limited to: the school's loss of accreditation; The school's 
discontinuation of the majority of its academic programs; action by the 
State to revoke the school's license to operate or award academic 
credentials in the State; or a finding by a State or Federal government 
agency that the school violated State or Federal law; and
    (C) Did not complete and is not in the process of completing the 
program of study through a teachout at another school as defined in 34 
CFR 602.2 and administered in accordance with 34 CFR 602.207(b)(6), by 
transferring academic credit earned at the closed school to another 
school, or by any other comparable means;
    (ii) State whether the borrower has made a claim with respect to the 
school's closing with any third party, such as the holder of a 
performance bond or a tuition recovery program, and, if so, the amount 
of any payment received by the borrower or credited to the borrower's 
loan obligation; and
    (iii) State that the borrower--
    (A) Agrees to provide to the holder of the loan upon request other 
documentation reasonably available to the borrower that demonstrates 
that the borrower meets the qualifications for discharge under this 
section; and
    (B) Agrees to cooperate with the Secretary in enforcement actions in 
accordance with paragraph (g)(6) of this section and to transfer any 
right to recovery against a third party to the Secretary in accordance 
with paragraph (g)(7) of this section.
    (5) Fraudulently obtained loans. A borrower who secured a loan 
through fraudulent means, as determined by the ruling of a court or an 
administrative tribunal of competent jurisdiction, is ineligible for a 
discharge under this section.
    (6) Cooperation by borrower in enforcement actions. (i) In order to 
obtain a discharge under this section, a borrower must cooperate with 
the Secretary in any judicial or administrative proceeding brought by 
the Secretary to recover amounts discharged or to take other enforcement 
action with respect to the conduct on which the discharge was based. At 
the request

[[Page 753]]

of the Secretary and upon the Secretary's tendering to the borrower the 
fees and costs that are customarily provided in litigation to reimburse 
witnesses, the borrower must--
    (A) Provide testimony regarding any representation made by the 
borrower to support a request for discharge;
    (B) Provide any documents reasonably available to the borrower with 
respect to those representations; and
    (C) If required by the Secretary, provide a sworn statement 
regarding those documents and representations.
    (ii) The holder denies the request for a discharge or revokes the 
discharge of a borrower who--
    (A) Fails to provide the testimony, documents, or a sworn statement 
required under paragraph (g)(6)(i) of this section; or
    (B) Provides testimony, documents, or a sworn statement that does 
not support the material representations made by the borrower to obtain 
the discharge.
    (7) Transfer to the Secretary of borrower's right of recovery 
against third parties. (i) In the case of a loan held by the Secretary, 
upon discharge under this section, the borrower is deemed to have 
assigned to and relinquished in favor of the Secretary any right to a 
loan refund (up to the amount discharged) that the borrower may have by 
contract or applicable law with respect to the loan or the enrollment 
agreement for the program for which the loan was received, against the 
school, its principals, its affiliates and their successors, its 
sureties, and any private fund, including the portion of a public fund 
that represents funds received from a private party.
    (ii) The provisions of this section apply notwithstanding any 
provision of State law that would otherwise restrict transfer of those 
rights by the borrower, limit or prevent a transferee from exercising 
those rights, or establish procedures or a scheme of distribution that 
would prejudice the Secretary's ability to recover on those rights.
    (iii) Nothing in this section limits or forecloses the borrower's 
right to pursue legal and equitable relief regarding disputes arising 
from matters unrelated to the discharged NDSL or Federal Perkins Loan.
    (8) Discharge procedures. (i) After confirming the date of a 
school's closure, the holder of the loan identifies any NDSL or Federal 
Perkins Loan borrower who appears to have been enrolled at the school on 
the school closure date or to have withdrawn not more than 120 days 
prior to the closure date.
    (ii) If the borrower's current address is known, the holder of the 
loan mails the borrower a discharge application and an explanation of 
the qualifications and procedures for obtaining a discharge. The holder 
of the loan also promptly suspends any efforts to collect from the 
borrower on any affected loan. The holder of the loan may continue to 
receive borrower payments.
    (iii) In the case of a loan held by the Secretary, if the borrower's 
current address is unknown, the Secretary attempts to locate the 
borrower and determine the borrower's potential eligibility for a 
discharge under this section by consulting with representatives of the 
closed school or representatives of the closed school's third-party 
billing and collection servicers, the school's licensing agency, the 
school accrediting agency, and other appropriate parties. If the 
Secretary learns the new address of a borrower, the Secretary mails to 
the borrower a discharge application and explanation and suspends 
collection, as described in paragraph (g)(8)(ii) of this section.
    (iv) In the case of a loan held by a school, if the borrower's 
current address is unknown, the school attempts to locate the borrower 
and determine the borrower's potential eligibility for a discharge under 
this section by taking steps required to locate the borrower under 
Sec. 674.44.
    (v) If the borrower fails to submit the written request and sworn 
statement described in paragraph (g)(4) of this section within 60 days 
of the holder of the loan's mailing the discharge application, the 
holder of the loan resumes collection and grants forbearance of 
principal and interest for the period during which collection activity 
was suspended.
    (vi) If the holder of the loan determines that a borrower who 
requests a

[[Page 754]]

discharge meets the qualifications for a discharge, the holder of the 
loan notifies the borrower in writing of that determination.
    (vii) In the case of a loan held by the Secretary, if the Secretary 
determines that a borrower who requests a discharge does not meet the 
qualifications for a discharge, the Secretary notifies that borrower, in 
writing, of that determination and the reasons for the determination.
    (viii) In the case of a loan held by a school, if the school 
determines that a borrower who requests a discharge does not meet the 
qualifications for discharge, the school submits that determination and 
all supporting materials to the Secretary for approval. The Secretary 
reviews the materials, makes an independent determination, and notifies 
the borrower in writing of the determination and the reasons for the 
determination.
    (ix) In the case of a loan held by a school and discharged by either 
the school or the Secretary, the school must reimburse its Fund for the 
entire amount of any outstanding principal and interest on the loan, and 
any collection costs charged to the Fund as a result of collection 
efforts on a discharged loan. The school must also reimburse the 
borrower for any amount of principal, interest, late charges or 
collection costs the borrower paid on a loan discharged under this 
section.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority:20 U.S.C. 1087dd)

[52 FR 45754, Dec. 1, 1987, as amended at 57 FR 32345, July 21, 1992; 57 
FR 60706, Dec. 21, 1992; 59 FR 61409, Nov. 30, 1994; 60 FR 61814, Dec. 
1, 1995; 62 FR 50848, Sept. 26, 1997; 64 FR 58309, Oct. 28, 1999; 67 FR 
67076, Nov. 1, 2002; 74 FR 55660, Oct. 28, 2009; 78 FR 65805, Nov. 1, 
2013]

    Effective Date Note: At 81 FR 76078, Nov. 1, 2016, Sec. 674.33 was 
amended by revising paragraph (g)(3), redesignating paragraphs 
(g)(8)(vi) through (ix) as paragraphs (g)(8)(vii) through (x) and adding 
a new paragraph (g)(8)(vi), effective July 1, 2019. For the convenience 
of the user, the added and revised text is set forth as follows:



Sec. 674.33  Repayment.

                                * * * * *

    (g) * * *
    (3) Determination of borrower qualification for discharge by the 
Secretary. (i) The Secretary may discharge the borrower's obligation to 
repay an NDSL or Federal Perkins Loan without an application if the 
Secretary determines that--
    (A) The borrower qualified for and received a discharge on a loan 
pursuant to 34 CFR 682.402(d) (Federal Family Education Loan Program) or 
34 CFR 685.214 (Federal Direct Loan Program), and was unable to receive 
a discharge on an NDSL or Federal Perkins Loan because the Secretary 
lacked the statutory authority to discharge the loan; or
    (B) Based on information in the Secretary's possession, the borrower 
qualifies for a discharge.
    (ii) With respect to schools that closed on or after November 1, 
2013, the Secretary will discharge the borrower's obligation to repay an 
NDSL or Federal Perkins Loan without an application from the borrower if 
the Secretary determines that the borrower did not subsequently re-
enroll in any title IV-eligible institution within a period of three 
years from the date the school closed.

                                * * * * *

    (8) * * *
    (vi) Upon resuming collection on any affected loan, the Secretary 
provides the borrower another discharge application and an explanation 
of the requirements and procedures for obtaining a discharge.



Sec. 674.34  Deferment of repayment--Federal Perkins loans, NDSLs and 
Defense loans.

    (a) The borrower may defer making a scheduled installment repayment 
on a Federal Perkins loan, an NDSL, or a Defense loan, regardless of 
contrary provisions of the borrower's promissory note and regardless of 
the date the loan was made, during periods described in paragraphs (b), 
(c), (d), (e), (f), and (g) of this section.
    (b)(1) The borrower need not repay principal, and interest does not 
accrue, during a period after the commencement or resumption of the 
repayment period on a loan, when the borrower is--
    (i) Enrolled and in attendance as a regular student in at least a 
half-time course of study at an eligible institution;
    (ii) Enrolled and in attendance as a regular student in a course of 
study that is part of a graduate fellowship program approved by the 
Secretary;

[[Page 755]]

    (iii) Engaged in graduate or post-graduate fellowship-supported 
study (such as a Fulbright grant) outside the United States; or
    (iv) Enrolled in a course of study that is part of a rehabilitation 
training program for disabled individuals approved by the Secretary as 
described in paragraph (g) of this section.
    (2) No borrower is eligible for a deferment under paragraph (b)(1) 
of this section while serving in a medical internship or residency 
program, except for a residency program in dentistry.
    (3) The institution of higher education at which the borrower is 
enrolled does not need to be participating in the Federal Perkins Loan 
program for the borrower to qualify for a deferment.
    (4) If a borrower is attending an institution of higher education as 
at least a half-time regular student for a full academic year and 
intends to enroll as at least a half-time regular student in the next 
academic year, the borrower is entitled to a deferment for 12 months.
    (5) If an institution no longer qualifies as an institution of 
higher education, the borrower's deferment ends on the date the 
institution ceases to qualify.
    (c) The borrower of a Federal Perkins loan, an NDSL, or a Defense 
loan need not repay principal, and interest does not accrue, for any 
period during which the borrower is engaged in service described in 
Secs. 674.53, 674.54, 674.55, 674.56, 674.57, 674.58, 674.59, and 
674.60.
    (d) The borrower need not repay principal, and interest does not 
accrue, for any period not to exceed 3 years during which the borrower 
is seeking and unable to find full-time employment.
    (e) The borrower need not repay principal, and interest does not 
accrue, for periods of up to one year at a time (except that a deferment 
under paragraph (e)(4) of this section may be granted for the lesser of 
the borrower's full term of service in the Peace Corps or the borrower's 
remaining period of economic hardship deferment eligibility) that, 
collectively, do not exceed 3 years, during which the borrower is 
suffering an economic hardship, if the borrower provides documentation 
satisfactory to the institution showing that the borrower is within any 
of the categories described in paragraphs (e)(1) through (e)(4) of this 
section.
    (1) Has been granted an economic hardship deferment under either the 
Federal Direct Loan Program or the FFEL programs for the period of time 
for which the borrower has requested an economic hardship deferment for 
his or her Federal Perkins loan.
    (2) Is receiving payment under a Federal or state public assistance 
program, such as Aid to Families with Dependent Children, Supplemental 
Security Income, Food Stamps, or state general public assistance.
    (3) Is working full-time and earning a total monthly gross income 
that does not exceed the greater of--
    (i) The monthly earnings of an individual earning the minimum wage 
described in section 6 of the Fair Labor Standards Act of 1938; or
    (ii) An amount equal to 150 percent of the poverty guideline 
applicable to the borrower's family size as published annually by the 
Department of Health and Human Services pursuant to 42 U.S.C. 9902(2). 
If a borrower is not a resident of a State identified in the poverty 
guidelines, the poverty guideline to be used for the borrower is the 
poverty guideline (for the relevant family size) used for the 48 
contiguous States.
    (4) Is serving as a volunteer in the Peace Corps.
    (5) To qualify for a subsequent period of deferment that begins less 
than one year after the end of a period of deferment under paragraph 
(e)(3) of this section, the institution shall require the borrower to 
submit a copy of the borrower's Federal income tax return if the 
borrower filed a tax return within eight months prior to the date the 
deferment is requested.
    (6)(i) For purposes of paragraph (e)(3) of this section, a borrower 
is considered to be working full-time if the borrower is expected to be 
employed for at least three consecutive months at 30 hours per week.
    (ii) For purposes of paragraph (e)(3)(ii) of this section, family 
size means the number that is determined by counting the borrower, the 
borrower's spouse, and the borrower's children, including unborn 
children who

[[Page 756]]

will be born during the period covered by the deferment, if the children 
receive more than half their support from the borrower. A borrower's 
family size includes other individuals if, at the time the borrower 
requests the economic hardship deferment, the other individuals--
    (A) Live with the borrower; and
    (B) Receive more than half their support from the borrower and will 
continue to receive this support from the borrower for the year the 
borrower certifies family size. Support includes money, gifts, loans, 
housing, food, clothes, car, medical and dental care, and payment of 
college costs.
    (f)(1) To qualify for a deferment for study as part of a graduate 
fellowship program pursuant to paragraph (b)(1)(ii) of this section, a 
borrower must provide the institution with a statement from an 
authorized official of the borrower's graduate fellowship program 
certifying--
    (i) That the borrower holds at least a baccalaureate degree 
conferred by an institution of higher education;
    (ii) That the borrower has been accepted or recommended by an 
institution of higher education for acceptance on a full-time basis into 
an eligible graduate fellowship program; and
    (iii) The borrower's anticipated completion date in the program.
    (2) For purposes of paragraph (b)(1)(ii) of this section, an 
eligible graduate fellowship program is a fellowship program that--
    (i) Provides sufficient financial support to graduate fellows to 
allow for full-time study for at least six months;
    (ii) Requires a written statement from each applicant explaining the 
applicant's objectives before the award of that financial support;
    (iii) Requires a graduate fellow to submit periodic reports, 
projects, or evidence of the fellow's progress; and
    (iv) In the case of a course of study at a foreign university, 
accepts the course of study for completion of the fellowship program.
    (g) To qualify for a deferment for study in a rehabilitation 
training program, pursuant to paragraph (b)(1)(iv) of this section, the 
borrower must be receiving, or be scheduled to receive, services under a 
program designed to rehabilitate disabled individuals and must provide 
the institution with the following documentation:
    (1) A certification from the rehabilitation agency that the borrower 
is either receiving or scheduled to receive rehabilitation training 
services from the agency.
    (2) A certification from the rehabilitation agency that the 
rehabilitation program--
    (i) Is licensed, approved, certified, or otherwise recognized by one 
of the following entities as providing rehabilitation training to 
disabled individuals--
    (A) A State agency with responsibility for vocational rehabilitation 
programs;
    (B) A State agency with responsibility for drug abuse treatment 
programs;
    (C) A State agency with responsibility for mental health services 
programs;
    (D) A State agency with responsibility for alcohol abuse treatment 
programs; or
    (E) The Department of Veterans Affairs; and
    (ii) Provides or will provide the borrower with rehabilitation 
services under a written plan that--
    (A) Is individualized to meet the borrower's needs;
    (B) Specifies the date on which the services to the borrower are 
expected to end; and
    (C) Is structured in a way that requires a substantial commitment by 
the borrower to his or her rehabilitation. The Secretary considers a 
substantial commitment by the borrower to be a commitment of time and 
effort that would normally prevent an individual from engaging in full-
time employment either because of the number of hours that must be 
devoted to rehabilitation or because of the nature of the 
rehabilitation.
    (h) Military service deferment. (1) The borrower need not pay 
principal, and interest does not accrue, on a Federal Perkins Loan, an 
NDSL, or a Defense Loan, for any period during which the borrower is--
    (i) Serving on active duty during a war or other military operation 
or national emergency; or

[[Page 757]]

    (ii) Performing qualifying National Guard duty during a war or other 
military operation or national emergency.
    (2) Serving on active duty during a war or other military operation 
or national emergency means service by an individual who is--
    (i) A Reserve of an Armed Force ordered to active duty under 10 
U.S.C. 12301(a), 12301(g), 12302, 12304, or 12306;
    (ii) A retired member of an Armed Force ordered to active duty under 
10 U.S.C. 688 for service in connection with a war or other military 
operation or national emergency, regardless of the location at which 
such active duty service is performed; or
    (iii) Any other member of an Armed Force on active duty in 
connection with such emergency or subsequent actions or conditions who 
has been assigned to a duty station at a location other than the 
location at which the member is normally assigned.
    (3) Qualifying National Guard duty during a war or other operation 
or national emergency means service as a member of the National Guard on 
full-time National Guard duty, as defined in 10 U.S.C. 101(d)(5), under 
a call to active service authorized by the President or the Secretary of 
Defense for a period of more than 30 consecutive days under 32 U.S.C. 
502(f) in connection with a war, other military operation, or national 
emergency declared by the President and supported by Federal funds.
    (4) As used in this paragraph--
    (i) Active duty means active duty as defined in 10 U.S.C. 101(d)(1) 
except that it does not include active duty for training or attendance 
at a service school;
    (ii) Military operation means a contingency operation as defined in 
10 U.S.C. 101(a)(13); and
    (iii) National emergency means the national emergency by reason of 
certain terrorist attacks declared by the President on September 14, 
2001, or subsequent national emergencies declared by the President by 
reason of terrorist attacks.
    (5) These provisions do not authorize the refunding of any payments 
made by or on behalf of a borrower during a period for which the 
borrower qualified for a military service deferment.
    (6) For a borrower whose active duty service includes October 1, 
2007, or begins on or after that date, the deferment period ends 180 
days after the demobilization date for each period of service described 
in paragraphs (h)(1)(i) and (h)(1)(ii) of this section.
    (7) Without supporting documentation, a military service deferment 
may be granted to an otherwise eligible borrower for a period not to 
exceed 12 months from the date of the qualifying eligible service based 
on a request from the borrower or the borrower's representative.
    (i) Post-active duty student deferment. (1) Effective October 1, 
2007, a borrower of a Federal Perkins loan, an NDSL, or a Defense loan 
serving on active duty military service on that date, or who begins 
serving on or after that date, need not pay principal, and interest does 
not accrue for up to 13 months following the conclusion of the 
borrower's active duty military service and initial grace period if--
    (i) The borrower is a member of the National Guard or other reserve 
component of the Armed Forces of the United States or a member of such 
forces in retired status; and
    (ii) The borrower was enrolled, on at least a half-time basis, in a 
program of instruction at an eligible institution at the time, or within 
six months prior to the time, the borrower was called to active duty.
    (2) As used in paragraph (i)(1) of this section ``Active duty'' 
means active duty as defined in section 101(d)(1) of title 10, United 
States Code, for at least a 30-day period, except that--
    (i) Active duty includes active State duty for members of the 
National Guard under which the Governor activates National Guard 
personnel based on State statute or policy and the activities of the 
National Guard are paid for with State funds;
    (ii) Active duty includes full-time National Guard duty under which 
the Governor is authorized, with the approval of the President or the 
U.S. Secretary of Defense, to order a member to State active duty and 
the activities of the National Guard are paid for with Federal funds;

[[Page 758]]

    (iii) Active duty does not include active duty for training or 
attendance at a service school; and
    (iv) Active duty does not include employment in a full-time, 
permanent position in the National Guard unless the borrower employed in 
such a position is reassigned to active duty under paragraph (i)(2)(i) 
of this section or full-time National Guard duty under paragraph 
(i)(2)(ii) of this section.
    (3) If the borrower returns to enrolled student status, on at least 
a half-time basis, during the 13-month deferment period, the deferment 
expires at the time the borrower returns to enrolled student status, on 
at least a half-time basis.
    (4) If a borrower qualifies for both a military service deferment 
and a post-active duty student deferment under both paragraphs (h) and 
(i) of this section, the 180-day post-demobilization military service 
deferment period and the 13-month post-active duty student deferment 
period apply concurrently.
    (j) The institution may not include the deferment periods described 
in paragraphs (b), (c), (d), (e), (f), (g), (h), and (i) of this section 
and the period described in paragraph (k) of this section in determining 
the 10-year repayment period.
    (k) The borrower need not pay principal and interest does not accrue 
until six months after completion of any period during which the 
borrower is in deferment under paragraphs (b), (c), (d), (e), (f), (g), 
and (h) of this section.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 1087dd)

[59 FR 61410, Nov. 30, 1994, as amended at 60 FR 61815, Dec. 1, 1995; 62 
FR 50848, Sept. 26, 1997; 64 FR 57531, Oct. 25, 1999; 64 FR 58311, Oct. 
28, 1999; 67 FR 67076, Nov. 1, 2002; 71 FR 45697, Aug. 9, 2006; 72 FR 
61996, Nov. 1, 2007; 73 FR 63247, Oct. 23, 2008; 78 FR 65805, Nov. 1, 
2013]



Sec. 674.35  Deferment of repayment--Federal Perkins loans made 
before July 1, 1993.

    (a) The borrower may defer repayment on a Federal Perkins Loan made 
before July 1, 1993, during the periods described in this section.
    (b)(1) The borrower need not repay principal, and interest does not 
accrue, during a period after the commencement or resumption of the 
repayment period on a loan, when the borrower is at least a half-time 
regular student at--
    (i) An institution of higher education; or
    (ii) A comparable institution outside the U.S. approved by the 
Secretary for this purpose.
    (2) The institution of higher education does not need to be 
participating in the Federal Perkins Loan program for the borrower to 
qualify for a deferment.
    (3) If a borrower is attending as at least a half-time regular 
student for a full academic year and intends to enroll as at least a 
half-time regular student in the next academic year, the borrower is 
entitled to deferment for 12 months.
    (4) If an institution no longer qualifies as an institution of 
higher education, the borrower's deferment ends on the date the 
institution ceases to qualify.
    (c) The borrower need not repay principal, and interest does not 
accrue, for any period not to exceed 3 years during which the borrower 
is--
    (1) A member of the U.S. Army, Navy, Air Force, Marines, or Coast 
Guard or an officer in the Commissioned Corps of the U.S. Public Health 
Service (see Sec. 674.59);
    (2) On full-time active duty as a member of the National Oceanic and 
Atmospheric Administration Corps;
    (3) A Peace Corps volunteer (see Sec. 674.60);
    (4) A volunteer under the Domestic Volunteer Service Act of 1973 
(ACTION programs) (see Sec. 674.60);
    (5) A full-time volunteer in service which the Secretary has 
determined is comparable to service in the Peace Corps or under the 
Domestic Volunteer Service Act of 1973 (ACTION programs). The Secretary 
considers that a borrower is providing comparable service if he or she 
satisfies the following five criteria:
    (i) The borrower serves in an organization that is exempt from 
taxation under the provisions of section 501(c)(3) of the Internal 
Revenue Code of 1954.

[[Page 759]]

    (ii) The borrower provides service to low-income persons and their 
communities to assist them in eliminating poverty and poverty-related 
human, social, and environmental conditions.
    (iii) The borrower does not receive compensation that exceeds the 
rate prescribed under section 6 of the Fair Labor Standards Act of 1938 
(the Federal minimum wage), except that the tax-exempt organization may 
provide health, retirement, and other fringe benefits to the volunteer 
that are substantially equivalent to the benefits offered to other 
employees of the organization.
    (iv) The borrower, as part of his or her duties, does not give 
religious instruction, conduct worship service, engage in religious 
proselytizing, or engage in fundraising to support religious activities.
    (v) The borrower has agreed to serve on a full-time basis for a term 
of at least one year.
    (6) Temporarily totally disabled, as established by an affidavit of 
a qualified physician, or unable to secure gainful employment because 
the borrower is providing care, such as continuous nursing or other 
similar services, required by a dependent who is so disabled. As used in 
this paragraph--
    (i) ``Temporarily totally disabled'', with regard to the borrower, 
means the inability by virtue of an injury or illness to attend an 
eligible institution or to be gainfully employed during a reasonable 
period of recovery; and
    (ii) ``Temporarily totally disabled'', with regard to a disabled 
spouse or other dependent of a borrower, means requiring continuous 
nursing or other services from the borrower for a period of at least 
three months because of illness or injury.
    (d)(1) The borrower need not repay principal, and interest does not 
accrue, for a period not to exceed two years during which time the 
borrower is serving an eligible internship.
    (2) An eligible internship is one which--
    (i) Requires the borrower to hold at least a baccalaureate degree 
before beginning the internship; and
    (ii)(A) A State licensing agency requires an individual to complete 
as a prerequisite for certification for professional practice or 
service; or
    (B) Is a part of an internship or residency program leading to a 
degree or certificate awarded by an institution of higher education, a 
hospital, or a health care facility that offers postgraduate training.
    (3) To qualify for an internship deferment as provided in paragraph 
(d)(2)(ii)(A) of this section, the borrower must provide the institution 
with the following certifications:
    (i) A statement from an official of the appropriate State licensing 
agency that successful completion of the internship program is a 
prerequisite for its certification of the individual for professional 
service or practice.
    (ii) A statement from the organization with which the borrower is 
undertaking the internship program certifying--
    (A) That a baccalaureate degree must be attained in order to be 
admitted into the internship program;
    (B) That the borrower has been accepted into its internship program; 
and
    (C) The anticipated dates on which the borrower will begin and 
complete the program.
    (4) To qualify for an internship deferment as provided in paragraph 
(d)(2)(ii)(B) of this section, the borrower must provide the institution 
with a statement from an authorized official of the internship program 
certifying that--
    (i) A baccalaureate degree must be attained in order to be admitted 
into the internship program;
    (ii) The borrower has been accepted into its internship program; and
    (iii) The internship or residency program in which the borrower has 
been accepted leads to a degree or certificate awarded by an institution 
of higher education, a hospital or a health-care facility that offers 
postgraduate training.
    (e) The borrower need not repay principal, and interest does not 
accrue, for a period not in excess of six months--
    (1) During which the borrower is--
    (i) Pregnant, caring for a newborn baby, or caring for a child 
immediately after placement of the child through adoption; and

[[Page 760]]

    (ii) Not attending an eligible institution of higher education or 
gainfully employed; and
    (2) That begins not later than six months after a period in which 
the borrower was at least a half-time regular student at an eligible 
institution.
    (f) The borrower need not repay principal, and interest does not 
accrue, for a period not in excess of one year during which the 
borrower--
    (1) Is a mother of preschool age children;
    (2) Has just entered or reentered the work force; and
    (3) Is being compensated at a rate which is not more than $1.00 over 
the minimum hourly wage established by section 6 of the Fair Labor 
Standards Act of 1938.
    (g) An institution may defer payments of principal and interest, but 
interest shall continue to accrue, if the institution determines this is 
necessary to avoid hardship to the borrower (see Sec. 674.33(c)).
    (h) The institution may not include the deferment periods described 
in paragraphs (b), (c), (d), (e), (f), and (g) of this section and the 
period described in paragraph (i) of this section when determining the 
10-year repayment period.
    (i) The borrower need not repay principal, and interest does not 
accrue, until six months after completion of any period during which the 
borrower is in deferment under paragraphs (b), (c), (d), (e), and (f) of 
this section.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 1087dd)

[52 FR 45754, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 
FR 32345, July 21, 1992; 59 FR 1652, Jan. 12, 1994. Redesignated and 
amended at 59 FR 61410, 61411, Nov. 30, 1994; 62 FR 50848, Sept. 26, 
1997; 64 FR 58315, Oct. 28, 1999]



Sec. 674.36  Deferment of repayment--NDSLs made on or after 
October 1, 1980, but before July 1, 1993.

    (a) The borrower may defer repayment on an NDSL Loan made on or 
after October 1, 1980, but before July 1, 1993, during the periods 
described in this section.
    (b)(1) The borrower need not repay principal, and interest does not 
accrue, during a period after the commencement or resumption of the 
repayment period on a loan, when the borrower is at least a half-time 
regular student at--
    (i) An institution of higher education; or
    (ii) A comparable institution outside the U.S. approved by the 
Secretary for this purpose.
    (2) The institution of higher education does not need to be 
participating in the Federal Perkins Loan program for the borrower to 
qualify for a deferment.
    (3) If a borrower is attending as at least a half-time regular 
student for a full academic year and intends to enroll as at least a 
half-time regular student in the next academic year, the borrower is 
entitled to deferment for 12 months.
    (4) If an institution no longer qualifies as an institution of 
higher education, the borrower's deferment ends on the date the 
institution ceases to qualify.
    (c) The borrower need not repay principal, and interest does not 
accrue, for a period of up to 3 years during which time the borrower 
is--
    (1) A member of the U.S. Army, Navy, Air Force, Marines, or Coast 
Guard or an officer in the Commissioned Corps of the U.S. Public Health 
Service (see Sec. 674.59);
    (2) A Peace Corps volunteer (see Sec. 674.60);
    (3) A volunteer under the Domestic Volunteer Service Act of 1973 
(ACTION programs) (see Sec. 674.60).
    (4) A full-time volunteer in service which the Secretary has 
determined is comparable to service in the Peace Corps or under the 
Domestic Volunteer Service Act of 1973 (ACTION programs). The Secretary 
considers that a borrower is providing comparable service if he or she 
satisfies the following five criteria:
    (i) The borrower serves in an organization that is exempt from 
taxation under the provisions of section 501(c)(3) of the Internal 
Revenue Code of 1954.
    (ii) The borrower provides service to low-income persons and their 
communities to assist them in eliminating proverty and poverty-related 
human, social, and environmental conditions.

[[Page 761]]

    (iii) The borrower does not receive compensation that exceeds the 
rate prescribed under section 6 of the Fair Labor Standards Act of 1938 
(the Federal minimum wage), except that the tax-exempt organization may 
provide health, retirement, and other fringe benefits to the volunteer 
that are substantially equivalent to the benefits offered to other 
employees of the organization.
    (iv) The borrower, as part of his or her duties, does not give 
religious instruction, conduct worship service, engage in religious 
proselytizing, or engage in fundraising to support religious activities.
    (v) The borrower has agreed to serve on a full-time basis for a term 
of at least one year.
    (5)(i) Temporarily totally disabled, as established by an affidavit 
of a qualified physician, or unable to secure gainful employment because 
the borrower is providing care, such as continuous nursing or other 
similar services, required by a spouse who is so disabled.
    (ii) ``Temporarily totally disabled'' with regard to the borrower, 
means the inability by virtue of an injury or illness to attend an 
eligible institution or to be gainfully employed during a reasonable 
period of recovery; and
    (iii) ``Temporarily totally disabled'' with regard to a disabled 
spouse, means requiring continuous nursing or other services from the 
borrower for a period of at least three months because of illness or 
injury.
    (d)(1) The borrower need not repay principal, and interest does not 
accrue, for a period not to exceed two years during which time the 
borrower is serving an eligible internship.
    (2) An eligible internship is an internship--
    (i) That requires the borrower to hold at least a bachelor's degree 
before beginning the internship program; and
    (ii) That the State licensing agency requires the borrower to 
complete before certifying the individual for professional practice or 
service.
    (3) To qualify for an internship deferment, the borrower shall 
provide to the institution the following certifications:
    (i) A statement from an official of the appropriate State licensing 
agency that the internship program meets the provisions of paragraph 
(d)(2) of this section; and
    (ii) A statement from the organization with which the borrower is 
undertaking the internship program certifying--
    (A) The acceptance of the borrower into its internship program; and
    (B) The anticipated dates on which the borrower will begin and 
complete the program.
    (e) An institution may defer payments of principal and interest, but 
interest shall continue to accrue, if the institution determines this is 
necessary to avoid hardship to the borrower (see Sec. 674.33)(c)).
    (f) The institution shall not include the deferment periods 
described in paragraphs (b), (c), (d), and (e) of this section and the 
period described in paragraph (g) of this section when determining the 
10-year repayment period.
    (g) No repayment of principal or interest begins until six months 
after completion of any period during which the borrower is in deferment 
under paragraphs (b), (c), and (d) of this section.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 1087dd)

[52 FR 45754, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 
FR 32345, July 21, 1992; 59 FR 1652, Jan. 12, 1994. Redesignated and 
amended at 59 FR 61410, 61411, Nov. 30, 1994; 62 FR 50848, Sept. 26, 
1997; 64 FR 58315, Oct. 28, 1999]



Sec. 674.37  Deferment of repayment--NDSLs made before 
October 1, 1980 and Defense loans.

    (a) A borrower may defer repayment--
    (1) On an NDSL made before October 1, 1980 during the periods 
described in paragraphs (b) through (e) of this section; and
    (2) On a Defense loan, during the periods described in paragraphs 
(b) through (f) of this section.
    (b)(1) A borrower need not repay principal, and interest does not 
accrue, during a period after the commencement or resumption of the 
repayment period on a loan, when the borrower is

[[Page 762]]

at least a half-time regular student at--
    (i) An institution of higher education; or
    (ii) A comparable institution outside the U.S. approved by the 
Secretary for this purpose.
    (2) The institution of higher education does not need to be 
participating in the Perkins Loan program for the borrower to qualify 
for a deferment.
    (3) If a borrower is attending as at least a half-time regular 
student for a full academic year and intends to enroll as at least half-
time regular student in the next academic year, the borrower is entitled 
to deferment for 12 months.
    (4) If an institution no longer qualifies as an institution of 
higher education, the borrower's deferment ends on the date the 
institution ceases to qualify.
    (c) A borrower need not repay principal, and interest does not 
accrue for a period of up to 3 years during which time the borrower is--
    (1) A member of the U.S. Army, Navy, Air Force, Marines or Coast 
Guard (see Sec. 674.59);
    (2) A Peace Corps volunteer (see Sec. 674.60); or
    (3) A volunteer under the Domestic Volunteer Service Act of 1973 
(ACTION programs) (see Sec. 674.60).
    (d) The institution shall exclude the deferment periods described in 
paragraphs (b), (c), and (e) of this section when determining the 10-
year repayment period.
    (e) An institution may permit the borrower to defer payments of 
principal and interest, but interest shall continue to accrue, if the 
institution determines this is necessary to avoid hardship to the 
borrower (see Sec. 674.33(c)).
    (f) The institution may permit the borrower to defer payment of 
principal and interest, but interest shall continue to accrue, on a 
Defense loan for a total of 3 years after the commencement or resumption 
of the repayment period on a loan, during which he or she is attending 
an institution of higher education as a less-than-half-time regular 
student.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 425, 1087dd)

[52 FR 45754, Dec. 1, 1987, as amended at 57 FR 32345, July 21, 1992; 59 
FR 1652, Jan. 12, 1994. Redesignated at 59 FR 61410, Nov. 30, 1994, as 
amended at 62 FR 50848, Sept. 26, 1997; 64 FR 58315, Oct. 28, 1999]



Sec. 674.38  Deferment procedures.

    (a)(1) Except as provided in paragraph (a)(5) of this section, a 
borrower must request the deferment and provide the institution with all 
information and documents required by the institution by the date that 
the institution establishes.
    (2) After receiving a borrower's written or verbal request, an 
institution may grant a deferment under Secs. 674.34(b)(1)(ii), 
674.34(b)(1)(iii), 674.34(b)(1)(iv), 674.34(d), 674.34(e), 674.34(h), 
and 674.34(i) if the institution is able to confirm that the borrower 
has received a deferment on another Perkins Loan, a FFEL Loan, or a 
Direct Loan for the same reason and the same time period. The 
institution may grant the deferment based on information from the other 
Perkins Loan holder, the FFEL Loan holder or the Secretary or from an 
authoritative electronic database maintained or authorized by the 
Secretary that supports eligibility for the deferment for the same 
reason and the same time period.
    (3) An institution may rely in good faith on the information it 
receives under paragraph (a)(2) of this section when determining a 
borrower's eligibility for a deferment unless the institution, as of the 
date of the determination, has information indicating that the borrower 
does not qualify for the deferment. An institution must resolve any 
discrepant information before granting a deferment under paragraph 
(a)(2) of this section.
    (4) An institution that grants a deferment under paragraph (a)(2) of 
this section must notify the borrower that the deferment has been 
granted and that the borrower has the option to cancel the deferment and 
continue to make payments on the loan.
    (5) In the case of an in school deferment, the institution may grant

[[Page 763]]

the deferment based on student enrollment information showing that a 
borrower is enrolled as a regular student on at least a half-time basis, 
if the institution notifies the borrower of the deferment and of the 
borrower's option to cancel the deferment and continue paying on the 
loan.
    (6) In the case of a military service deferment under 
Secs. 674.34(h) and 674.35(c)(1), a borrower's representative may 
request the deferment on behalf of the borrower. An institution that 
grants a military service deferment based on a request from a borrower's 
representative must notify the borrower that the deferment has been 
granted and that the borrower has the option to cancel the deferment and 
continue to make payments on the loan. The institution may also notify 
the borrower's representative of the outcome of the deferment request.
    (7) If the borrower fails to meet the requirements of paragraph (a) 
(1) of this section, the institution may declare the loan to be in 
default, and may accelerate the loan.
    (b)(1) The institution may grant a deferment to a borrower after it 
has declared a loan to be a default.
    (2) As a condition for a deferment under this paragraph, the 
institution--
    (i) Shall require the borrower to execute a written repayment 
agreement on the loan; and
    (ii) May require the borrower to pay immediately some or all of the 
amounts previously scheduled to be repaid before the date on which the 
institution determined that the borrower had demonstrated that grounds 
for a deferment existed, plus late charges and collection costs.
    (c) If the information supplied by the borrower demonstrates that 
for some or all of the period for which a deferment is requested, the 
borrower had retained in-school status or was within the initial grace 
period on the loan, the institution shall--
    (1) Redetermine the date on which the borrower was required to 
commence repayment on the loan;
    (2) Deduct from the loan balance any interest accrued and late 
charges added before the date on which the repayment period commenced, 
as determined in paragraph (c)(1) of this section; and
    (3) Treat in accordance with paragraph (b) of this section, the 
request for deferment for any remaining portion of the period for which 
deferment was requested.
    (d) The institution must determine the continued eligibility of a 
borrower for a deferment at least annually, except that a borrower 
engaged in service described in Secs. 674.34(e)(6), 674.35(c)(3), 
674.36(c)(2), 674.37(c)(2), and Sec. 674.60(a)(1) must be granted a 
deferment for the lesser of the borrower's full term of service in the 
Peace Corps, or the borrower's remaining period of eligibility for a 
deferment under Sec. 674.34(e), not to exceed 3 years.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 425, 1087dd)

[52 FR 45754, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988. 
Redesignated and amended at 59 FR 61410, 61411, Nov. 30, 1994; 64 FR 
57531, Oct. 25, 1999; 64 FR 58315, Oct. 28, 1999; 72 FR 61996, Nov. 1, 
2007]



Sec. 674.39  Loan rehabilitation.

    (a) Each institution must establish a loan rehabilitation program 
for all borrowers for the purpose of rehabilitating defaulted loans made 
under this part, except for loans for which a judgment has been secured 
or loans obtained by fraud for which the borrower has been convicted of, 
or has pled nolo contendere or guilty to, a crime involving fraud in 
obtaining title IV, HEA program assistance. The institution's loan 
rehabilitation program must provide that--
    (1) A defaulted borrower is notified of the option and consequences 
of rehabilitating a loan; and
    (2) A loan is rehabilitated if the borrower--
    (i) Requests rehabilitation; and
    (ii) Makes a full monthly payment--as determined by the 
institution--within 20 days of the due date, each month for 9 
consecutive months.
    (b) Within 30 days of receiving the borrower's last on-time, 
consecutive, monthly payment, the institution must--
    (1) Return the borrower to regular repayment status;
    (2) Treat the first payment made under the nine consecutive payments

[[Page 764]]

as the first payment under the 10-year repayment maximum; and
    (3) Instruct any credit bureau to which the default was reported to 
remove the default from the borrower's credit history.
    (c) Collection costs on a rehabilitated loan--
    (1) If charged to the borrower, may not exceed 24 percent of the 
unpaid principal and accrued interest as of the date following 
application of the twelfth payment;
    (2) That exceed the amounts specified in paragraph (c)(1) of this 
section, may be charged to an institution's Fund until July 1, 2002 in 
accordance with Sec. 674.47(e)(5); and
    (3) Are not restricted to 24 percent in the event the borrower 
defaults on the rehabilitated loan.
    (d) After rehabilitating a defaulted loan and returning to regular 
repayment status, the borrower regains the balance of the benefits and 
privileges of the promissory note as applied prior to the borrower's 
default on the loan. Nothing in this paragraph prohibits an institution 
from offering the borrower flexible repayment options following the 
borrower's return to regular repayment status on a rehabilitated loan.
    (e) The borrower may rehabilitate a defaulted loan only one time.

(Approved by the Office of Management and Budget under control number 
1845-0023)

[64 FR 58311, Oct. 28, 1999, as amended at 65 FR 65614, Nov. 1, 2000; 67 
FR 67077, Nov. 1, 2002; 71 FR 45698, Aug. 9, 2006; 74 FR 55661, Oct. 28, 
2009; 78 FR 65805, Nov. 1, 2013]

    Editorial Note: At 75 FR 55661, Oct. 28, 2010, Sec. 674.39, was 
amended by revising the authority citation at the end of the section 
however, the amendment could not be incorporated because there was no 
authority citation at the end to revise.



Sec. 674.40  Treatment of loan repayments where cancellation, 
loan repayments, and minimum monthly repayments apply.

    (a) An institution may not exercise the minimum monthly repayment 
provisions on a note when the borrower has received a partial 
cancellation for the period covered by a postponement.
    (b) If a borrower has received Defense, NDSL, and Perkins loans and 
only one can be cancelled, the amount due on the uncancelled loan is the 
amount established in Sec. 674.31(b) (2), loan repayment terms; 
Sec. 674.33(b), minimum repayment rates; or Sec. 674.33(c), extension of 
repayment period.

(Authority: 20 U.S.C. 425 and 1087dd, 1087ee)

[52 FR 45754, Dec. 1, 1987. Redesignated at 59 FR 61410, Nov. 30, 1994]



                         Subpart C_Due Diligence

    Source: 52 FR 45555, Nov. 30, 1987, unless otherwise noted.



Sec. 674.41  Due diligence--general requirements.

    (a) General. Each institution shall exercise due diligence in 
collecting loans by complying with the provisions in this subpart. In 
exercising this responsibility, each institution shall, in addition to 
complying with the specific provisions of this subpart--
    (1) Keep the borrower informed, on a timely basis, of all changes in 
the program that affect his or her rights or responsibilities; and
    (2) Respond promptly to all inquiries from the borrower.
    (3) Provide the borrower with information on the availability of the 
Student Loan Ombudsman's office if the borrower disputes the terms of 
the loan in writing and the institution does not resolve the dispute.
    (b) Coordination of information. An institution shall ensure that 
information available in its offices (including the admissions, 
business, alumni, placement, financial aid and registrar's offices) is 
provided to those offices responsible for billing and collecting loans, 
in a timely manner, as needed to determine--
    (1) The enrollment status of the borrower;
    (2) The expected graduation or termination date of the borrower;
    (3) The date the borrower withdraws, is expelled or ceases 
enrollment on at least a half-time basis; and

[[Page 765]]

    (4) The current name, address, telephone number and Social Security 
number of the borrower.

(Approved by the Office of Management and Budget under control number 
1845-0023)

(Authority: 20 U.S.C. 424, 1087cc)

[52 FR 45555, Nov. 30, 1987, as amended at 59 FR 61411, Nov. 30, 1994; 
64 FR 58312, Oct. 28, 1999]



Sec. 674.42  Contact with the borrower.

    (a) Disclosure of repayment information. The institution must 
disclose the following information in a written statement provided to 
the borrower either shortly before the borrower ceases at least half-
time study at the institution or during the exit interview. If the 
borrower enters the repayment period without the institution's 
knowledge, the institution must provide the required disclosures to the 
borrower in writing immediately upon discovering that the borrower has 
entered the repayment period. The institution must disclose the 
following information:
    (1) The name and address of the institution to which the debt is 
owed and the name and address of the official or servicing agent to whom 
communications should be sent.
    (2) The name and address of the party to which payments should be 
sent.
    (3) The estimated balance owed by the borrower on the date on which 
the repayment period is scheduled to begin.
    (4) The stated interest rate on the loan.
    (5) The repayment schedule for all loans covered by the disclosure 
including the date the first installment payment is due, and the number, 
amount, and frequency of required payments.
    (6) An explanation of any special options the borrower may have for 
loan consolidation or other refinancing of the loan, and a statement 
that the borrower has the right to prepay all or part of the loan at any 
time without penalty.
    (7) A description of the charges imposed for failure of the borrower 
to pay all or part of an installment when due.
    (8) A description of any charges that may be imposed as a 
consequence of default, such as liability for expenses reasonably 
incurred in attempts by the Secretary or the institution to collect on 
the loan.
    (9) The total interest charges which the borrower will pay on the 
loan pursuant to the projected repayment schedule.
    (10) The contact information of a party who, upon request of the 
borrower, will provide the borrower with a copy of his or her signed 
promissory note.
    (11) An explanation that if a borrower is required to make minimum 
monthly repayments, and the borrower has received loans from more than 
one institution, the borrower must notify the institution if he or she 
wants the minimum monthly payment determination to be based on payments 
due to other institutions.
    (b) Exit counseling. (1) An institution must ensure that exit 
counseling is conducted with each borrower either in person, by 
audiovisual presentation, or by interactive electronic means. The 
institution must ensure that exit counseling is conducted shortly before 
the borrower ceases at least half-time study at the institution. As an 
alternative, in the case of a student enrolled in a correspondence 
program or a study-abroad program that the institution approves for 
credit, the borrower may be provided with written counseling material by 
mail within 30 days after the borrower completes the program. If a 
borrower withdraws from the institution without the institution's prior 
knowledge or fails to complete an exit counseling session as required, 
the institution must ensure that exit counseling is provided through 
either interactive electronic means or by mailing counseling materials 
to the borrower at the borrower's last known address within 30 days 
after learning that the borrower has withdrawn from the institution or 
failed to complete exit counseling as required.
    (2) The exit counseling must--
    (i) Inform the student as to the average anticipated monthly 
repayment amount based on the student's indebtedness or on the average 
indebtedness of students who have obtained Perkins loans for attendance 
at the institution or in the borrower's program of study;

[[Page 766]]

    (ii) Explain to the borrower the options to prepay each loan and pay 
each loan on a shorter schedule;
    (iii) Review for the borrower the option to consolidate a Federal 
Perkins Loan, including the consequences of consolidating a Perkins 
Loan. Information on the consequences of loan consolidation must 
include, at a minimum--
    (A) The effects of consolidation on total interest to be paid, fees 
to be paid, and length of repayment;
    (B) The effects of consolidation on a borrower's underlying loan 
benefits, including grace periods, loan forgiveness, cancellation, and 
deferment opportunities;
    (C) The options of the borrower to prepay the loan or to change 
repayment plans; and
    (D) That borrower benefit programs may vary among different lenders;
    (iv) Include debt-management strategies that are designed to 
facilitate repayment;
    (v) Explain the use of a Master Promissory Note;
    (vi) Emphasize to the borrower the seriousness and importance of the 
repayment obligation the borrower is assuming;
    (vii) Describe the likely consequences of default, including adverse 
credit reports, delinquent debt collection procedures under Federal law, 
and litigation;
    (viii) Emphasize that the borrower is obligated to repay the full 
amount of the loan even if the borrower has not completed the program, 
has not completed the program within the regular time for program 
completion, is unable to obtain employment upon completion, or is 
otherwise dissatisfied with or did not receive educational or other 
services that the borrower purchased from the institution;
    (ix) Provide--
    (A) A general description of the terms and conditions under which a 
borrower may obtain full or partial forgiveness or cancellation of 
principal and interest, defer repayment of principal or interest, or be 
granted an extension of the repayment period or a forbearance on a title 
IV loan; and
    (B) A copy, either in print or by electronic means, of the 
information the Secretary makes available pursuant to section 485(d) of 
the HEA;
    (x) Require the borrower to provide current information concerning 
name, address, social security number, references, and driver's license 
number, the borrower's expected permanent address, the address of the 
borrower's next of kin, as well as the name and address of the 
borrower's expected employer;
    (xi) Review for the borrower information on the availability of the 
Student Loan Ombudsman's office;
    (xii) Inform the borrower of the availability of title IV loan 
information in the National Student Loan Data System (NSLDS) and how 
NSLDS can be used to obtain title IV loan status information; and
    (xiii) A general description of the types of tax benefits that may 
be available to borrowers.
    (3) If exit counseling is conducted through interactive electronic 
means, the institution must take reasonable steps to ensure that each 
student borrower receives the counseling materials, and participates in 
and completes the exit counseling.
    (4) The institution must maintain documentation substantiating the 
institution's compliance with this section for each borrower.
    (c) Contact with the borrower during the initial and post deferment 
grace periods. (1)(i) For loans with a nine-month initial grace period 
(NDSLs made before October 1, 1980 and Federal Perkins loans), the 
institution shall contact the borrower three times within the initial 
grace period.
    (ii) For loans with a six-month initial or post deferment grace 
period (loans not described in paragraph (b)(1)(i) of this section), the 
institution shall contact the borrower twice during the grace period.
    (2)(i) The institution shall contact the borrower for the first time 
90 days after the commencement of any grace period. The institution 
shall at this time remind the borrower of his or her responsibility to 
comply with the terms of the loan and shall send the borrower the 
following information:

[[Page 767]]

    (A) The total amount remaining outstanding on the loan account, 
including principal and interest accruing over the remaining life of the 
loan.
    (B) The date and amount of the next required payment.
    (ii) The institution shall contact the borrower the second time 150 
days after the commencement of any grace period. The institution shall 
at this time notify the borrower of the date and amount of the first 
required payment.
    (iii) The institution shall contact a borrower with a nine-month 
initial grace period a third time 240 days after the commencement of the 
grace period, and shall then inform him or her of the date and amount of 
the first required payment.

(Approved by the Office of Management and Budget under control number 
1845-0023)

(Authority: U.S.C. 424, 1087cc, 1087cc-1)

[52 FR 45555, Nov. 30, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 
FR 32346, July 21, 1992; 59 FR 61411, 61415, Nov. 30, 1994; 64 FR 58312, 
Oct. 28, 1999; 67 FR 67077, Nov. 1, 2002; 74 FR 55661, Oct. 28, 2009]



Sec. 674.43  Billing procedures.

    (a) The term billing procedures, as used in this subpart, includes 
that series of actions routinely performed to notify borrowers of 
payments due on their accounts, to remind borrowers when payments are 
overdue, and to demand payment of overdue amounts. An institution shall 
use billing procedures that include at least the following steps:
    (1) If the institution uses a coupon payment system, it shall send 
the coupons to the borrower at least 30 days before the first payment is 
due.
    (2) If the institution does not use a coupon system, it shall send 
to the borrower--
    (i) A written notice giving the name and address of the party to 
which payments are to be sent and a statement of account at least 30 
days before the first payment is due; and
    (ii) A statement of account at least 15 days before the due date of 
each subsequent payment.
    (3) Notwithstanding paragraph (a)(2)(ii) of this section, if the 
borrower elects to make payment by means of an electronic transfer of 
funds from the borrower's bank account, the institution shall send to 
the borrower an annual statement of account.
    (b)(1) An institution shall send a first overdue notice within 15 
days after the due date for a payment if the institution has not 
received--
    (i) A payment:
    (ii) A request for deferment; or
    (iii) A request for postponement or for cancellation.
    (2) Subject to Sec. 674.47(a), the institution may assess a late 
charge for loans made for periods of enrollment beginning on or after 
January 1, 1986, during the period in which the institution takes any 
steps described in this section to secure--
    (i) Any part of an installment payment not made when due, or
    (ii) A request for deferment, cancellation, or postponement of 
repayment on the loan that contains sufficient information to enable the 
institution to determine whether the borrower is entitled to the relief 
requested.
    (3) The institution shall determine the amount of the late charge 
imposed for loans described in paragraph (b)(2) of this section based on 
either--
    (i) Actual costs incurred for actions required under this section to 
secure the required payment or information from the borrower; or
    (ii) The average cost incurred for similar attempts to secure 
payments or information from other borrowers.
    (4) The institution may not require a borrower to pay late charges 
imposed under paragraph (b)(3) of this section in an amount, for each 
late payment or request, exceeding 20 percent of the installment payment 
most recently due.
    (5) The institution--
    (i) Shall determine the amount of the late or penalty charge imposed 
on loans not described in paragraph (b)(2) of this section in accordance 
with Sec. 674.31(b)(5) (See appendix E); and
    (ii) May assess this charge only during the period described in 
paragraph (b)(2) of this section.
    (6) The institution shall notify the borrower of the amount of the 
charge it has imposed, and whether the institution--
    (i) Has added that amount to the principal amount of the loan as of 
the first day on which the installment was due; or

[[Page 768]]

    (ii) Demands payment for that amount in full no later than the due 
date of the next installment.
    (c) If the borrower does not satisfactorily respond to the first 
overdue notice, the institution shall continue to contact the borrower 
as follows, until the borrower makes satisfactory repayment arrangements 
or demonstrates entitlement to deferment, postponement, or cancellation:
    (1) The institution shall send a second overdue notice within 30 
days after the first overdue notice is sent.
    (2) The institution shall send a final demand letter within 15 days 
after the second overdue notice. This letter must inform the borrower 
that unless the institution receives a payment or a request for 
deferment, postponement, or cancellation within 30 days of the date of 
the letter, it will refer the account for collection or litigation, and 
will report the default to a credit bureau.
    (d) Notwithstanding paragraphs (b) and (c) of this section, an 
institution may send a borrower a final demand letter if the institution 
has not within 15 days after the due date received a payment, or a 
request for deferment. postponement, or cancellation, and if--
    (1) The borrower's repayment history has been unsatisfactory, e.g., 
the borrower has previously failed to make payment(s) when due or to 
request deferment, postponement, or cancellation in a timely manner, or 
has previously received a final demand letter; or
    (2) The institution reasonably concludes that the borrower neither 
intends to repay the loan nor intends to seek deferment, postponement, 
or cancellation of the loan.
    (e)(1) An institution that accelerates a loan as provided in 
Sec. 674.31 (i.e., makes the entire outstanding balance of the loan, 
including accrued interest and any applicable late charges, payable 
immediately) shall--
    (i) Provide the borrower, at least 30 days before the effective date 
of the acceleration, written notice of its intention to accelerate; and
    (ii) Provide the borrower on or after the effective date of 
acceleration, written notice of the date on which it accelerated the 
loan and the total amount due on the loan.
    (2) The institution may provide these notices by including them in 
other written notices to the borrower, including the final demand 
letter.
    (f) If the borrower does not respond to the final demand letter 
within 30 days from the date it was sent, the institution shall attempt 
to contact the borrower by telephone before beginning collection 
procedures.
    (g)(1) An institution shall ensure that any funds collected as a 
result of billing the borrower are--
    (i) Deposited in interest-bearing bank accounts that are--
    (A) Insured by an agency of the Federal Government; or
    (B) Secured by collateral of reasonably equivalent value; or
    (ii) Invested in low-risk income-producing securities, such as 
obligations issued or guaranteed by the United States.
    (2) An institution shall exercise the level of care required of a 
fiduciary with regard to these deposits and investments.

(Approved by the Office of Management and Budget under control number 
1845-0023)

(Authority: 20 U.S.C. 424, 1087cc)

[52 FR 45555, Nov. 30, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 
FR 32346, July 21, 1992; 59 FR 61412, Nov. 30, 1994; 64 FR 58315, Oct. 
28, 1999; 67 FR 67077, Nov. 1, 2002]



Sec. 674.44  Address searches.

    (a) If mail, other than unclaimed mail, sent to a borrower is 
returned undelivered, an institution shall take steps to locate the 
borrower. These steps must include--
    (1) Reviews of records in all appropriate institutional offices;
    (2) Reviews of telephone directories or inquiries of information 
operators in the locale of the borrower's last known address; and
    (3) If, after following the procedures in paragraph (a) of this 
section, an institution is still unable to locate a borrower, the 
institution may use the Internal Revenue Service skip-tracing service.
    (b) If an institution is unable to locate a borrower by the means 
described in paragraph (a) of this section, it shall--
    (1) Use its own personnel to attempt to locate the borrower, 
employing and

[[Page 769]]

documenting efforts comparable to commonly accepted commercial skip-
tracing practices; or
    (2) Refer the account to a firm that provides commercial skip-
tracing services.
    (c) If the institution acquires the borrower's address or telephone 
number through the efforts described in this section, it shall use that 
new information to continue its efforts to collect on that borrower's 
account in accordance with the requirements of this subpart.
    (d) If the institution is unable to locate the borrower after 
following the procedures in paragraphs (a) and (b) of this section, the 
institution shall make reasonable attempts to locate the borrower at 
least twice a year until--
    (1) The loan is recovered through litigation;
    (2) The account is assigned to the United States; or
    (3) The account is written off under Sec. 674.47(g).

(Authority: 20 U.S.C. 424, 1087cc)

[52 FR 45555, Nov. 30, 1987, as amended at 59 FR 61412, Nov. 30, 1994]



Sec. 674.45  Collection procedures.

    (a) The term ``collection procedures,'' as used in this subpart, 
includes that series of more intensive efforts, including litigation as 
described in Sec. 674.46, to recover amounts owed from defaulted 
borrowers who do not respond satisfactorily to the demands routinely 
made as part of the institution's billing procedures. If a borrower does 
not satisfactorily respond to the final demand letter or the following 
telephone contact made in accordance with Sec. 674.43(f), the 
institution shall--
    (1) Report the account as being in default to any one national 
credit bureau; and
    (2)(i) Use its own personnel to collect the amount due; or
    (ii) Engage a collection firm to collect the account.
    (b)(1) An institution must report to any national credit bureau to 
which it reported the default, according to the reporting procedures of 
the national credit bureau, any changes to the account status of the 
loan.
    (2) The institution must resolve, within 30 days of its receipt, any 
inquiry from any credit bureau that disputes the completeness or 
accuracy of information reported on the loan.
    (c)(1) If the institution, or the firm it engages, pursues 
collection activity for up to 12 months and does not succeed in 
converting the account to regular repayment status, or the borrower does 
not qualify for deferment, postponement, or cancellation on the loan, 
the institution shall--
    (i) Litigate in accordance with the procedures in Sec. 674.46;
    (ii) Make a second effort to collect the account as follows:
    (A) If the institution first attempted to collect the account using 
its own personnel, it shall refer the account to a collection firm.
    (B) If the institution first attempted to collect the account by 
using a collection firm, it shall either attempt to collect the account 
using institutional personnel, or place the account with a different 
collection firm; or
    (iii) Submit the account for assignment to the Secretary in 
accordance with the procedures set forth in Sec. 674.50.
    (2) If the collection firm retained by the institution does not 
succeed in placing an account into a repayment status described in 
paragraph (c)(1) of this section after 12 months of collection activity, 
the institution shall require the collection firm to return the account 
to the institution.
    (d) If the institution is unable to place the loan in repayment as 
described in paragraph (c)(1) of this section after following the 
procedures in paragraphs (a), (b), and (c) of this section, the 
institution shall continue to make annual attempts to collect from the 
borrower until--
    (1) The loan is recovered through litigation;
    (2) The account is assigned to the United States; or
    (3) The account is written off under Sec. 674.47(g).
    (e)(1) Subject to Sec. 674.47(d), the institution shall assess 
against the borrower all reasonable costs incurred by the institution 
with regard to a loan obligation.
    (2) The institution shall determine the amount of collection costs 
that shall be charged to the borrower for actions required under this 
section, and

[[Page 770]]

Sec. Sec. 674.44, 674.46, 674. 48, and 674.49, based on either--
    (i) Actual costs incurred for these actions with regard to the 
individual borrower's loan; or
    (ii) Average costs incurred for similar actions taken to collect 
loans in similar stages of delinquency.
    (3) For loans placed with a collection firm on or after July 1, 
2008, reasonable collection costs charged to the borrower may not 
exceed--
    (i) For first collection efforts, 30 percent of the amount of 
principal, interest, and late charges collected;
    (ii) For second and subsequent collection efforts, 40 percent of the 
amount of principal, interest, and late charges collected; and
    (iii) For collection efforts resulting from litigation, 40 percent 
of the amount of principal, interest, and late charges collected plus 
court costs.
    (4) The Fund must be reimbursed for collection costs initially 
charged to the Fund and subsequently paid by the borrower.
    (f)(1) An institution shall ensure that any funds collected from the 
borrower are--
    (i) Deposited in interest-bearing bank accounts that are--
    (A) Insured by an agency of the Federal Government; or
    (B) Secured by collateral of reasonably equivalent value; or
    (ii) Invested in low-risk income-producing securities, such as 
obligations issued or guaranteed by the United States.
    (2) An institution shall exercise the level of care required of a 
fiduciary with regard to these deposits and investments.
    (g) Preemption of State law. The provisions of this section preempt 
any State law, including State statutes, regulations, or rules, that 
would conflict with or hinder satisfaction of the requirements or 
frustrate the purposes of this section.
    (h) As part of the collection activities provided for in this 
section, the institution must provide the borrower with information on 
the availability of the Student Loan Ombudsman's office.

(Approved by the Office of Management and Budget under control number 
1845-0023)

(Authority: 20 U.S.C. 424, 1087cc, 1091a)

[52 FR 45555, Nov. 30, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 
FR 32346, July 21, 1992; 59 FR 61412, Nov. 30, 1994; 62 FR 50848, Sept. 
26, 1997; 64 FR 58312, Oct. 28, 1999; 67 FR 67077, Nov. 1, 2002; 72 FR 
61997, Nov. 1, 2007]



Sec. 674.46  Litigation procedures.

    (a)(1) If the collection efforts described in Sec. 674.45 do not 
result in the repayment of a loan, the institution shall determine at 
least once every two years whether--
    (i) The total amount owing on the borrower's account, including 
outstanding principal, accrued interest, collection costs and late 
charges on all of the borrower's Federal Perkins, NDSL and National 
Defense Student Loans held by that institution, is more than $500;
    (ii) The borrower can be located and served with process;
    (iii)(A) The borrower has sufficient assets attachable under State 
law to satisfy a major portion of the oustanding debt; or
    (B) The borrower has income from wages or salary which may be 
garnished under applicable State law sufficient to satisfy a major 
portion of the debt over a reasonable period of time;
    (iv) The borrower does not have a defense that will bar judgment for 
the institution; and
    (v) The expected cost of litigation, including attorney's fees, does 
not exceed the amount which can be recovered from the borrower.
    (2) The institution shall sue the borrower if it determines that the 
conditions in paragraph (a)(1) of this section are met.
    (3) The institution may sue a borrower in default, even if the 
conditions in paragraph (a)(1) of this section are not met.
    (b) The institution shall assess against and attempt to recover from 
the borrower--
    (1) All litigation costs, including attorney's fees, court costs and 
other related costs, to the extent permitted under applicable law; and

[[Page 771]]

    (2) All prior collection costs incurred and not yet paid by the 
borrower.
    (c)(1) An institution shall ensure that any funds collected as a 
result of litigation procedures are--
    (i) Deposited in interest-bearing bank accounts that are--
    (A) Insured by an agency of the Federal Government; or
    (B) Secured by collateral of reasonably equivalent value; or
    (ii) Invested in low-risk income-producing securities, such as 
obligations issued or guaranteed by the United States.
    (2) An institution shall exercise the level of care required of a 
fiduciary with regard to these deposits and investments.
    (d) If the institution is unable to collect the full amount owing on 
the loan after following the procedures set forth in Secs. 674.41 
through 674.46, the institution may--
    (1) Submit the account to the Secretary for assignment in accordance 
with the procedures in Sec. 674.50; or
    (2) With the Secretary's approval, refer the account to the 
Department for collection.

(Authority: 20 U.S.C. 424, 1087cc)

[52 FR 45555, Nov. 30, 1987, as amended at 59 FR 61412, 61415, Nov. 30, 
1994; 67 FR 67077, Nov. 1, 2002]



Sec. 674.47  Costs chargeable to the Fund.

    (a) General: Billing costs. (1) Except as provided in paragraph (c) 
of this section, the institution shall assess against the borrower, in 
accordance with Sec. 674.43(b)(2) the cost of actions taken with regard 
to past-due payments on the loan.
    (2) If the amount recovered from the borrower does not suffice to 
pay the amount of the past-due payments and the penalty or late charges, 
the institution may charge the Fund for only that unpaid portion of the 
cost of telephone calls to the borrower made pursuant to Sec. 674.43 to 
demand payment of overdue amounts on the loan.
    (b) General: Collection costs. (1) Except as provided in paragraph 
(d) of this section, the institution shall assess against the borrower, 
in accordance with Secs. 674.45(e) and 674.46(b), the costs of actions 
taken on the loan obligation pursuant to Secs. 674.44, 674.45, 674.46, 
674.48 and 674.49.
    (2) If the amount recovered from the borrower does not suffice to 
pay the amount on the past-due payments late charges, and these 
collection costs, the institution may charge and Fund the unpaid 
collection costs in accordance with paragraph (e) of this section.
    (c) Waiver: Late charges. The institution may waive late charges 
assessed against a borrower who repays the full amount of the past-due 
payments on a loan.
    (d) Waiver: collection costs. Before filing suit on a loan, the 
institution may waive collection costs as follows:
    (1) The institution may waive the percentage of collection costs 
applicable to the amount then past-due on a loan equal to the percentage 
of that past-due balance that the borrower pays within 30 days after the 
date on which the borrower and the institution enter into a written 
repayment agreement on the loan.
    (2) The institution may waive all collection costs in return for a 
lump-sum payment of the full amount of principal and interest 
outstanding on a loan.
    (e) Limitations on costs charged to the Fund. The institution may 
charge to the Fund the following collection costs waived under paragraph 
(d) of this section or not paid by the borrower:
    (1) A reasonable amount for the cost of a successful address search 
required in Sec. 674.44(b).
    (2) Costs related to the use of credit bureaus as provided in 
Sec. 674.45(b)(1).
    (3) For first collection efforts pursuant to Sec. 674.45(a)(2), an 
amount that does not exceed 30 percent of the amount of principal, 
interest and late charges collected.
    (4) For second collection efforts pursuant to Sec. 674.45(c)(1)(ii), 
an amount that does not exceed 40 percent of the amount of principal, 
interest and late charges collected.
    (5) Until July 1, 2002 on loans rehabilitated pursuant to 
Sec. 674.39, amounts that exceed the amounts specified in 
Sec. 674.39(c)(1) but are less than--
    (i) 30 percent if the loan was rehabilitated while in a first 
collection effort; or

[[Page 772]]

    (ii) 40 percent if the loan was rehabilitated while in a second 
collection effort.
    (6) For collection costs resulting from litigation, including 
attorney's fees, an amount that does not exceed the sum of--
    (i) Court costs specified in 28 U.S.C. 1920;
    (ii) Other costs incurred in bankruptcy proceedings in taking 
actions required or authorized under Sec. 674.49;
    (iii) Costs of other actions in bankruptcy proceedings to the extent 
that those costs, together with costs described in paragraph (e)(5)(ii) 
of this section, do not exceed 40 percent of the total amount of 
judgment obtained on the loan; and
    (iv) 40 percent of the total amount recovered from the borrower in 
any other proceeding.
    (7) If a collection firm agrees to perform or obtain the performance 
of both collection and litigation services on a loan, an amount for both 
functions that does not exceed the sum of 40 percent of the amount of 
principal, interest and late charges collected on the loan, plus court 
costs specified in 28 U.S.C. 1920.
    (f) Records. For audit purposes, an institution shall support the 
amount of collection costs charged to the Fund with appropriate 
documentation, including telephone bills and receipts from collection 
firms. The documentation must be maintained in the institution's files 
as provided in Sec. 674.19.
    (g) Cessation of collection activity of defaulted accounts. An 
institution may cease collection activity on a defaulted account with a 
balance of less than $200, including outstanding principal, accrued 
interest, collection costs, and late charges, if--
    (1) The institution has carried out the due diligence procedures 
described in subpart C of this part with regard to this account; and
    (2) For a period of at least 4 years, the borrower has not made a 
payment on the account, converted the account to regular repayment 
status, or applied for a deferment, postponement, or cancellation on the 
account.
    (h) Write-offs of accounts. (1) Notwithstanding any other provision 
of this subpart, an institution may write off an account, including 
outstanding principal, accrued interest, collection costs, and late 
charges, with a balance of--
    (i) Less than $25; or
    (ii) Less than $50 if, for a period of at least 2 years, the 
borrower has been billed for this balance in accordance with 
Sec. 674.43(a).
    (2) An institution that writes off an account under this paragraph 
may no longer include the amount of the account as an asset of the Fund.
    (3) When the institution writes off an account, the borrower is 
relieved of all repayment obligations.

(Approved by the Office of Management and Budget under control number 
1845-0023)

(Authority: 20 U.S.C. 424, 1087cc)

[52 FR 45555, Nov. 30, 1987, as amended at 57 FR 32346, July 21, 1992; 
57 FR 60706, Dec. 21, 1992; 59 FR 61412, Nov. 30, 1994; 60 FR 61815, 
Dec. 1, 1995; 64 FR 58313, Oct. 28, 1999; 67 FR 67077, Nov. 1, 2002]



Sec. 674.48  Use of contractors to perform billing and collection or
other program activities.

    (a) The institution is responsible for ensuring compliance with the 
billing and collection procedures set forth in this subpart. The 
institution may use employees to perform these duties or may contract 
with other parties to perform them.
    (b) An institution that contracts for performance of any duties 
under this subpart remains responsible for compliance with the 
requirements of this subpart in performing these duties, including 
decisions regarding cancellation, postponement, or deferment of 
repayment, extension of the repayment period, other billing and 
collection matters, and the safeguarding of all funds collected by its 
employees and contractors.
    (c) If an institution uses a billing service to carry out billing 
procedures under Sec. 674.43, the institution shall ensure that the 
service--
    (1) Provides at least quarterly, a statement to the institution 
which shows--
    (i) Its activities with regard to each borrower;
    (ii) Any changes in the borrower's name, address, telephone number, 
and,

[[Page 773]]

if known, any changes to the borrower's Social Security number; and
    (iii) Amounts collected from the borrower;
    (2) Provides at least quarterly, a statement to the institution with 
a listing of its charges for skip-tracing activities and telephone 
calls;
    (3) Does not deduct its fees from the amount is receives from 
borrowers;
    (4)(i) Instructs the borrower to remit payment directly to the 
institution;
    (ii) Instructs the borrower to remit payment to a lock-box 
maintained for the institution; or
    (iii) Deposits those funds received directly from the borrower 
immediately in an institutional trust account that must be an interest-
bearing account if those funds will be held for longer than 45 days; and
    (5) Maintains a fidelity bond or comparable insurance in accordance 
with the requirements in paragraph (f) of this section.
    (d) If the institution uses a collection firm, the institution shall 
ensure that the firm--
    (1)(i) Instructs the borrower to remit payment directly to the 
institution;
    (ii) Instructs the borrower to remit payment to a lockbox maintained 
for the institution; or
    (iii) Deposits those funds received directly from the borrower 
immediately in an institutional trust account that must be an interest-
bearing account if those funds will be held for longer than 45 days, 
after deducting its fees if authorized to do so by the institution; and
    (2) Provides at least quarterly, a statement to the institution 
which shows--
    (i) Its activities with regard to each borrower;
    (ii) Any changes in the borrower's name, address, telephone number 
and, if known, any changes to the borrower's Social Security number;
    (iii) Amounts collected from the borrower; and
    (3) Maintains a fidelity bond or comparable insurance in accordance 
with the requirements in paragraph (f) of this section.
    (e) If an institution uses a billing service to carry out 
Sec. 674.43 (billing procedures), it may not use a collection firm 
that--
    (1) Owns or controls the billing service;
    (2) Is owned or controlled by the billing service; or
    (3) Is owned or controlled by the same corporation, partnership, 
association, or individual that owns or controls the billing service.
    (f)(1) An institution that employs a third party to perform billing 
or collection services required under this subpart shall ensure that the 
party has and maintains in effect a fidelity bond or comparable 
insurance in accordance with the requirements of this paragraph.
    (2) If the institution does not authorize the third party to deduct 
its fees from payments from borrowers, the institution shall ensure that 
the party is bonded or insured in an amount not less than the amount of 
funds that the institution reasonably expects to be repaid over a two-
month period on accounts it refers to the party.
    (3) In the institution authorizes the third party performing 
collection services to deduct its fees from payments from borrowers, the 
institution shall ensure that--
    (i) If the amount of funds that the institution reasonably expects 
to be paid over a two-month period on accounts it refers to the party is 
less than $100,000, the party is bonded or insured in an amount equal to 
the lesser of--
    (A) Ten times the amount of funds that the institution reasonably 
expects to be repaid over a two-month period on accounts it refers to 
the party; or
    (B) The total amount of funds that the party demonstrates will be 
repaid over a two-month period on all accounts of any kind on which it 
performs billing and collection services; and
    (ii) If the amount of funds that the institution reasonably expects 
to be repaid over a two-month period on accounts it refers to the party 
is more than $100,000, the institution shall ensure that the party has 
and maintains in effect a fidelity bond or comparable insurance--
    (A) Naming the institution as beneficiary; and

[[Page 774]]

    (B) In an amount not less than the amount of funds reasonably 
expected to be repaid on accounts referred by the institution to the 
party during a two-month period.
    (4) The institution shall review annually the amount of repayments 
expected to be made on accounts it refers to a third party for billing 
or collection services, and shall ensure that the amount of the fidelity 
bond or insurance coverage maintained continues to meet the requirements 
of this paragraph.

(Approved by the Office of Management and Budget under control number 
1845-0023)

(Authority: 20 U.S.C. 424, 1087cc)

[52 FR 45555, Nov. 30, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 
FR 61412, Nov. 30, 1994; 64 FR 58315, Oct. 28, 1999]



Sec. 674.49  Bankruptcy of borrower.

    (a) General. If an institution receives notice that a borrower has 
filed a petition for relief in bankruptcy, usually by receiving a notice 
of meeting of creditors, the institution and its agents shall 
immediately suspend any collection efforts outside the bankruptcy 
proceeding against the borrower.
    (b) Proof of claim. The institution must file a proof of claim in 
the bankruptcy proceeding unless--
    (1) In the case of a proceeding under chapter 7 of the Bankruptcy 
Code, the notice of meeting of creditors states that the borrower has no 
assets, or
    (2) In the case of a bankruptcy proceeding under either Chapter 7 or 
Chapter 13 of the Bankruptcy Code in which the repayment plan proposes 
that the borrower repay less than the full amount owed on the loan, the 
institution has an authoritative determination by an appropriate State 
official that in the opinion of the State official, the institution is 
an agency of the State and is, on that basis, under applicable State 
law, immune from suit.
    (c) Borrower's request for determination of dischargeability. (1) 
The institution must use due diligence and may assert any defense 
consistent with its status under applicable law to avoid discharge of 
the loan. The institution must follow the procedures in this paragraph 
to respond to a complaint for a determination of dischargeability under 
11 U.S.C. 523(a)(8) on the ground that repayment of the loan would 
impose an undue hardship on the borrower and his or her dependents, 
unless discharge would be more effectively opposed by avoiding that 
action.
    (2) If the petition for relief in bankruptcy was filed before 
October 8, 1998 and more than seven years of the repayment period on the 
loan (excluding any applicable suspension of the repayment period 
defined in 34 CFR 682.402(m)) have passed before the borrower filed the 
petition, the institution may not oppose a determination of 
dischargeability requested under 11 U.S.C. 523(a)(8)(B) on the ground of 
undue hardship.
    (3) In any other case, the institution must determine, on the basis 
of reasonably available information, whether repayment of the loan under 
either the current repayment schedule or any adjusted schedule 
authorized under subpart B or D of this part would impose an undue 
hardship on the borrower and his or her dependents.
    (4) If the institution concludes that repayment would not impose an 
undue hardship, the institution shall determine whether the costs 
reasonably expected to be incurred to oppose discharge will exceed one-
third of the total amount owed on the loan, including principal, 
interest, late charges and collection costs.
    (5) If the expected costs of opposing discharge of such a loan do 
not exceed one-third of the total amount owed on the loan, the 
institution shall--
    (i) Oppose the borrower's request for a determination of 
dischargeability; and
    (ii) If the borrower is in default on the loan, seek a judgment for 
the amount owed on the loan.
    (6) In opposing a request for a determination of dischargeability, 
the institution may compromise a portion of the amount owed on the loan 
if it reasonably determines that the compromise is necessary in order to 
obtain a judgment on the loan.
    (d) Request for determination of non-dischargeability. The 
institution may file a complaint for a determination that a loan 
obligation is not dischargeable and for judgment on the loan if

[[Page 775]]

the institution would have been required under paragraph (c) of this 
section to oppose a request for a determination of dischargeability with 
regard to that loan.
    (e) Chapter 13 repayment plan. (1) The institution shall follow the 
procedures in this paragraph in response to a repayment plan proposed by 
a borrower who has filed for relief under chapter 13 of the Bankruptcy 
Code.
    (2) The institution is not required to respond to a proposed 
repayment plan, if--
    (i) The borrower proposes under the repayment plan to repay all 
principal, interest, late charges and collection costs on the loan; or
    (ii) The repayment plan makes no provision with regard either to the 
loan obligation or to general unsecured claims.
    (3)(i) If the borrower proposes under the repayment plan to repay 
less than the total amount owed on the loan, the institution shall 
determine from its own records and court documents--
    (A) The amount of the loan obligation dischargeable under the plan 
by deducting the total payments on the loan proposed under the plan from 
the total amount owed;
    (B) Whether the plan or the classification of the loan obligation 
under the proposed plan meets the requirements of section 1325 of the 
Code; and
    (C) Whether grounds exist under 11 U.S.C. 1307 to move for 
conversion or dismissal of the chapter 13 case.
    (ii) If the institution reasonably expects that costs of the 
appropriate actions will not exceed one-third of the dischargeable loan 
debt, the institution shall--
    (A) Object to confirmation of a proposed plan that does not meet the 
requirements of 11 U.S.C. 1325; and
    (B) Move to dismiss or convert a case where grounds can be 
established under 11 U.S.C. 1307.
    (4)(i) The institution must monitor the borrower's compliance with 
the requirements of the plan confirmed by the court. If the institution 
determines that the debtor has not made the payments required under the 
plan, or has filed a request for a ``hardship discharge'' under 11 
U.S.C. 1328(b), the institution must determine from its own records and 
information derived from documents filed with the court--
    (A) Whether grounds exist under 11 U.S.C. 1307 to convert or dismiss 
the case; and
    (B) Whether the borrower has demonstrated entitlement to the 
``hardship discharge'' by meeting the requirements of 11 U.S.C. 1328(b).
    (ii) If the institution reasonably expects that costs of the 
appropriate actions, when added to the costs already incurred in taking 
actions authorized under this section, will not exceed one-third of the 
dischargeable loan debt, the institution shall--
    (A) Move to dismiss or convert a case where grounds can be 
established under 11 U.S.C. 1307; or
    (B) Oppose the requested discharge where the debtor has not 
demonstrated that the requirements of 11 U.S.C. 1328(b) are met.
    (f) Resumption of collection from the borrower. The institution 
shall resume billing and collection action prescribed in this subpart 
after--
    (1) The borrower's petition for relief in bankruptcy has been 
dismissed;
    (2) The borrower has received a discharge under 11 U.S.C. 727, 11 
U.S.C. 1141, or 11 U.S.C. 1228, unless--
    (i) The court has found that repayment of the loan would impose an 
undue hardship on the borrower and the dependents of the borrower; or
    (ii)(A) The petition for relief was filed before October 8, 1998;
    (B) The loan entered the repayment period more than seven years 
(excluding any applicable suspension of the repayment period as defined 
by 34 CFR 682.402(m), and
    (C) The loan is not excepted from discharge under other applicable 
provisions of the Code; or
    (3) The borrower has received a discharge under 11 U.S.C. 1328(a) or 
1328(b), unless--
    (i) The court has found that repayment of the loan would impose an 
undue hardship on the borrower and the dependents of the borrower; or
    (ii)(A) The petition for relief was filed before October 8, 1998;
    (B) The loan entered the repayment period more than seven years 
(excluding any application suspension of the repayment period as defined 
by 34 CFR

[[Page 776]]

682.402(m) before the filing of the petition; and
    (C) The borrower's plan approved in the bankruptcy proceeding made 
some provision with regard to either the loan obligation or unsecured 
debts in general.
    (g) Termination of collection and write-off. (1) An institution must 
terminate all collection action and write off a loan if it receives a 
general order of discharge--
    (i) In a bankruptcy in which the borrower filed for relief before 
October 8, 1998, if the loan entered the repayment period more than 
seven years (exclusive of any applicable suspension of the repayment 
period defined by 34 CFR 682.402(m)) from the date on which a petition 
for relief was filed; or
    (ii) In any other case, a judgment that repayment of the debt would 
constitute an undue hardship and that the debt is therefore 
dischargeable.
    (2) If an institution receives a repayment from a borrower after a 
loan has been discharged, it must deposit that payment in its Fund.

(Approved by the Office of Management and Budget under control number 
1845-0023)

(Authority: 20 U.S.C. 424, 1087cc)

[52 FR 45555, Nov. 30, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 
FR 32346, July 21, 1992; 59 FR 1652, Jan. 12, 1994; 59 FR 61412, Nov. 
30, 1994; 64 FR 58313, Oct. 28, 1999; 65 FR 65614, Nov. 1, 2000]



Sec. 674.50  Assignment of defaulted loans to the United States.

    (a) An institution may submit a defaulted loan note to the Secretary 
for assignment to the United States if--
    (1) The institution has been unable to collect on the loan despite 
complying with the diligence procedures, including at least a first 
level collection effort as described in Sec. 674.45(a) and litigation, 
if required under Sec. 674.46(a), to the extent these actions were 
required by regulations in effect on the date the loan entered default;
    (2) The amount of the borrower's account to be assigned, including 
outstanding principal, accrued interest, collection costs and late 
charges is $25.00 or greater; and
    (3) The loan has been accelerated.
    (b) An institution may submit a defaulted note for assignment only 
during the submission period established by the Secretary.
    (c) The Secretary may require an institution to submit the following 
documents for any loan it proposes to assign--
    (1) An assignment form provided by the Secretary and executed by the 
institution, which must include a certification by the institution that 
it has complied with the requirements of this subpart, including at 
least a first level collection effort as described in Sec. 674.45(a) in 
attempting collection on the loan.
    (2) The original promissory note or a certified copy of the original 
note.
    (3) A copy of the repayment schedule.
    (4) A certified copy of any judgment order entered on the loan.
    (5) A complete statement of the payment history.
    (6) Copies of all approved requests for deferment and cancellation.
    (7) A copy of the notice to the borrower of the effective date of 
acceleration and the total amount due on the loan.
    (8) Documentation that the institution has withdrawn the loan from 
any firm that it employed for address search, billing, collection or 
litigation services, and has notified that firm to cease collection 
activity on the loans.
    (9) Copies of all pleadings filed or received by the institution on 
behalf of a borrower who has filed a petition in bankruptcy and whose 
loan obligation is determined to be nondischargeable.
    (10) Documentation that the institution has complied with all of the 
due diligence requirements described in paragraph (a)(1) of this section 
if the institution has a cohort default rate that is equal to or greater 
than 20 percent as of June 30 of the second year preceding the 
submission period.
    (11) A record of disbursements for each loan made to a borrower on 
an MPN that shows the date and amount of each disbursement.
    (12)(i) Upon the Secretary's request with respect to a particular 
loan or loans assigned to the Secretary and evidenced by an 
electronically signed promissory note, the institution that created the 
original electronically signed promissory note must cooperate with the 
Secretary in all activities

[[Page 777]]

necessary to enforce the loan or loans. Such institution must provide--
    (A) An affidavit or certification regarding the creation and 
maintenance of the electronic records of the loan or loans in a form 
appropriate to ensure admissibility of the loan records in a legal 
proceeding. This affidavit or certification may be executed in a single 
record for multiple loans provided that this record is reliably 
associated with the specific loans to which it pertains; and
    (B) Testimony by an authorized official or employee of the 
institution, if necessary, to ensure admission of the electronic records 
of the loan or loans in the litigation or legal proceeding to enforce 
the loan or loans.
    (ii) The affidavit or certification in paragraph (c)(12)(i)(A) of 
this section must include, if requested by the Secretary--
    (A) A description of the steps followed by a borrower to execute the 
promissory note (such as a flowchart);
    (B) A copy of each screen as it would have appeared to the borrower 
of the loan or loans the Secretary is enforcing when the borrower signed 
the note electronically;
    (C) A description of the field edits and other security measures 
used to ensure integrity of the data submitted to the originator 
electronically;
    (D) A description of how the executed promissory note has been 
preserved to ensure that it has not been altered after it was executed;
    (E) Documentation supporting the institution's authentication and 
electronic signature process; and
    (F) All other documentary and technical evidence requested by the 
Secretary to support the validity or the authenticity of the 
electronically signed promissory note.
    (iii) The Secretary may request a record, affidavit, certification 
or evidence under paragraph (a)(6) of this section as needed to resolve 
any factual dispute involving a loan that has been assigned to the 
Secretary including, but not limited to, a factual dispute raised in 
connection with litigation or any other legal proceeding, or as needed 
in connection with loans assigned to the Secretary that are included in 
a Title IV program audit sample, or for other similar purposes. The 
institution must respond to any request from the Secretary within 10 
business days.
    (iv) As long as any loan made to a borrower under a MPN created by 
an institution is not satisfied, the institution is responsible for 
ensuring that all parties entitled to access to the electronic loan 
record, including the Secretary, have full and complete access to the 
electronic loan record.
    (d) Except as provided in paragraph (e) of this section, and subject 
to paragraph (g) of this section, the Secretary accepts an assignment of 
a note described in paragraph (a) of this section and submitted in 
accordance with paragraph (c) of this section.
    (e) The Secretary does not accept assignment of a loan if--
    (1) The institution has not provided the Social Security number of 
the borrower, unless the loan was made before September 13, 1982;
    (2) The borrower has received a discharge in bankruptcy, unless--
    (i) The bankruptcy court has determined that the loan obligation is 
nondischargeable and has entered judgment against the borrower; or
    (ii) A court of competent jurisdiction has entered judgment against 
the borrower on the loan after the entry of the discharge order; or
    (3) The institution has initiated litigation against the borrower, 
unless the judgment has been entered against the borrower and assigned 
to the United States.
    (f)(1) The Secretary provides an institution written notice of the 
acceptance of the assignment of the note. By accepting assignment, the 
Secretary acquires all rights, title, and interest of the institution in 
that loan.
    (2) The institution shall endorse and forward to the Secretary any 
payment received from the borrower after the date on which the Secretary 
accepted the assignment, as noted in the written notice of acceptance.
    (g)(1) The Secretary may determine that a loan assigned to the 
United States is unenforceable in whole or in part because of the acts 
or omissions of the institution or its agent. The Secretary may make 
this determination

[[Page 778]]

with or without a judicial determination regarding the enforceability of 
the loan.
    (2) The Secretary may require the institution to reimburse the Fund 
for that portion of the outstanding balance on a loan assigned to the 
United States which the Secretary determines to be unenforceable because 
of an act or omission of that institution or its agent.
    (3) Upon reimbursement to the Fund by the institution, the Secretary 
shall transfer all rights, title and interest of the United States in 
the loan to the institution for its own account.
    (h) An institution shall consider a borrower whose loan has been 
assigned to the United States for collection to be in default on that 
loan for the purpose of eligibility for title IV financial assistance, 
until the borrower provides the institution confirmation from the 
Secretary that he or she has made satisfactory arrangements to repay the 
loan.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 424, 1087cc)

[52 FR 45555, Nov. 30, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 
FR 32347, July 21, 1992; 57 FR 60707, Dec. 21, 1992; 59 FR 61412, Nov. 
30, 1994; 64 FR 58315, Oct. 28, 1999; 65 FR 65614, Nov. 1, 2000; 67 FR 
67077, Nov. 1, 2002; 72 FR 61997, Nov. 1, 2007; 78 FR 65805, Nov. 1, 
2013]



                       Subpart D_Loan Cancellation

    Source: 52 FR 45758, Dec. 1, 1987, unless otherwise noted.



Sec. 674.51  Special definitions.

    The following definitions apply to this subpart:
    (a) Academic year or its equivalent for elementary and secondary 
schools and special education: (1) One complete school year, or two half 
years from different school years, excluding summer sessions, that are 
complete and consecutive and generally fall within a 12-month period.
    (2) If such a school has a year-round program of instruction, the 
Secretary considers a minimum of nine consecutive months to be the 
equivalent of an academic year.
    (b) Academic year or its equivalent for institutions of higher 
education: A period of time in which a full-time student is expected to 
complete--
    (1) The equivalent of 2 semesters, 2 trimesters, or 3 quarters at an 
institution using credit hours; or
    (2) At least 900 clock hours of training for each program at an 
institution using clock hours.
    (c) Title I Children: Children of ages 5 through 17 who are counted 
under section 1124(c)(1) of the Elementary and Secondary Education Act 
of 1965, as amended.
    (d) Child with a disability: A child or youth from ages 3 through 
21, inclusive, who requires special education and related services 
because he or she has one or more disabilities as defined in section 
602(3) of the Individuals with Disabilities Education Act.
    (e) Community defender organizations: A defender organization 
established in accordance with section 3006A(g)(2)(B) of title 18, 
United States Code.
    (f) Early intervention services: Those services defined in section 
632(4) of the Individuals with Disabilities Education Act that are 
provided to infants and toddlers with disabilities.
    (g) Educational service agency: A regional public multi-service 
agency authorized by State law to develop, manage, and provide services 
or programs to local educational agencies as defined in section 9101 of 
the Elementary and Secondary Education Act of 1965, as amended.
    (h) Elementary school: A school that provides elementary education, 
including education below grade 1, as determined by--
    (1) State law; or
    (2) The Secretary, if the school is not in a State.
    (i) Faculty member at a Tribal College or University: An educator or 
tenured individual who is employed by a Tribal College or University, as 
that term is defined in section 316 of the HEA, to teach, research, or 
perform administrative functions. For purposes of this definition an 
educator may be an instructor, lecturer, lab faculty, assistant 
professor, associate professor, full professor, dean, or academic 
department head.

[[Page 779]]

    (j) Federal public defender organization: A defender organization 
established in accordance with section 3006A(g)(2)(A) of title 18, 
United States Code.
    (k) Firefighter: A firefighter is an individual who is employed by a 
Federal, State, or local firefighting agency to extinguish destructive 
fires; or provide firefighting related services such as--
    (1) Providing community disaster support and, as a first responder, 
providing emergency medical services;
    (2) Conducting search and rescue; or
    (3) Providing hazardous materials mitigation (HAZMAT).
    (l) Handicapped children: Children of ages 3 through 21 inclusive 
who require special education and related services because they are--
    (1) Individuals with intellectual disabilities;
    (2) Hard of hearing;
    (3) Deaf;
    (4) Speech and language impaired;
    (5) Visually handicapped;
    (6) Seriously emotionally disturbed;
    (7) Orthopedically impaired;
    (8) Specific learning disabled; or
    (9) Otherwise health impaired.
    (m) High-risk children: Individuals under the age of 21 who are low-
income or at risk of abuse or neglect, have been abused or neglected, 
have serious emotional, mental, or behavioral disturbances, reside in 
placements outside their homes, or are involved in the juvenile justice 
system.
    (n) Infant or toddler with a disability: An infant or toddler from 
birth to age 2, inclusive, who needs early intervention services for 
specified reasons, as defined in section 632(5)(A) of the Individuals 
with Disabilities Education Act.
    (o) Librarian with a master's degree: A librarian with a master's 
degree is an information professional trained in library or information 
science who has obtained a postgraduate academic degree in library 
science awarded after the completion of an academic program of up to six 
years in duration, excluding a doctorate or professional degree.
    (p) Local educational agency: (1) A public board of education or 
other public authority legally constituted within a State to administer, 
direct, or perform a service function for public elementary or secondary 
schools in a city, county, township, school district, other political 
subdivision of a State; or such combination of school districts of 
counties as are recognized in a State as an administrative agency for 
its public elementary or secondary schools.
    (2) Any other public institution or agency having administrative 
control and direction of a public elementary or secondary school.
    (q) Low-income communities: Communities in which there is a high 
concentration of children eligible to be counted under title I of the 
Elementary and Secondary Education Act of 1965, as amended.
    (r) Medical technician: An allied health professional (working in 
fields such as therapy, dental hygiene, medical technology, or 
nutrition) who is certified, registered, or licensed by the appropriate 
State agency in the State in which he or she provides health care 
services. An allied health professional is someone who assists, 
facilitates, or complements the work of physicians and other specialists 
in the health care system.
    (s) Nurse: A licensed practical nurse, a registered nurse, or other 
individual who is licensed by the appropriate State agency to provide 
nursing services.
    (t) Qualified professional provider of early intervention services: 
A provider of services as defined in section 632 of the Individuals with 
Disabilities Education Act.
    (u) Secondary school: (1) A school that provides secondary 
education, as determined by--
    (i) State law; or
    (ii) The Secretary, if the school is not in a State.
    (2) However, State laws notwithstanding, secondary education does 
not include any education beyond grade 12.
    (v) Speech language pathologist with a master's degree: An 
individual who evaluates or treats disorders that affect a person's 
speech, language, cognition, voice, swallowing and the rehabilitative or 
corrective treatment of physical or cognitive deficits/disorders 
resulting in difficulty with communication, swallowing, or both and has 
obtained a postgraduate academic degree

[[Page 780]]

awarded after the completion of an academic program of up to six years 
in duration, excluding a doctorate or professional degree.
    (w) State education agency: (1) The State board of education; or
    (2) An agency or official designated by the Governor or by State law 
as being primarily responsible for the State supervision of public 
elementary and secondary schools.
    (x) Substantial gainful activity: A level of work performed for pay 
or profit that involves doing significant physical or mental activities, 
or a combination of both.
    (y) Teacher: (1) A teacher is a person who provides--
    (i) Direct classroom teaching;
    (ii) Classroom-type teaching in a non-classroom setting; or
    (iii) Educational services to students directly related to classroom 
teaching such as school librarians or school guidance counselors.
    (2) A supervisor, administrator, researcher, or curriculum 
specialist is not a teacher unless he or she primarily provides direct 
and personal educational services to students.
    (3) An individual who provides one of the following services does 
not qualify as a teacher unless that individual is licensed, certified, 
or registered by the appropriate State education agency for that area in 
which he or she is providing related special educational services, and 
the services provided by the individual are part of the educational 
curriculum for handicapped children:
    (i) Speech and language pathology and audiology;
    (ii) Physical therapy;
    (iii) Occupational therapy;
    (iv) Psychological and counseling services; or
    (v) Recreational therapy.
    (z) Teaching in a field of expertise: The majority of classes taught 
are in the borrower's field of expertise.
    (aa) Total and permanent disability: The condition of an individual 
who--
    (1) Is unable to engage in any substantial gainful activity by 
reason of any medically determinable physical or mental impairment 
that--
    (i) Can be expected to result in death;
    (ii) Has lasted for a continuous period of not less than 60 months; 
or
    (iii) Can be expected to last for a continuous period of not less 
than 60 months; or
    (2) Has been determined by the Secretary of Veterans Affairs to be 
unemployable due to a service-connected disability.
    (bb) Tribal College or University: An institution that--
    (1) Qualifies for funding under the Tribally Controlled Colleges and 
Universities Assistance Act of 1978 (25 U.S.C. 1801 et seq.) or the 
Navajo Community College Assistance Act of 1978 (25 U.S.C. 640a note); 
or
    (2) Is cited in section 532 of the Equity in Education Land Grant 
Status Act of 1994 (7 U.S.C. 301 note).

[52 FR 45758, Dec. 1, 1987, as amended at 59 FR 61412, Nov. 30, 1994; 65 
FR 65690, Nov. 1, 2000; 74 FR 55661, Oct. 28, 2009; 82 FR 31913, July 
11, 2017]



Sec. 674.52  Cancellation procedures.

    (a) Application for cancellation. To qualify for cancellation of a 
loan, a borrower shall submit to the institution to which the loan is 
owed, by the date that the institution establishes, both a written 
request for cancellation and any documentation required by the 
institution to demonstrate that the borrower meets the conditions for 
the cancellation requested.
    (b) Part-time employment. (1) An institution may refuse a request 
for cancellation based on a claim of simultaneously teaching in two or 
more schools or institutions if it cannot determine easily from the 
documentation supplied by the borrower that the teaching is full-time. 
However, it shall grant the cancellation if one school official 
certifies that a teacher worked full-time for a full academic year.
    (2) An institution may refuse a request for cancellation based on a 
claim of simultaneous employment as a nurse or medical technician in two 
or more facilities if it cannot determine easily from the documentation 
supplied by the borrower that the combined employment is full-time. 
However, it shall grant the cancellation if one facility official 
certifies that a nurse or medical technician worked full-time for a full 
year.
    (c) Break in service. (1) If the borrower is unable to complete an 
academic year

[[Page 781]]

of eligible teaching service due to a condition that is covered under 
the Family and Medical Leave Act of 1993 (FMLA) (29 U.S.C. 2601, et 
seq.), the borrower still qualifies for the cancellation if--
    (i) The borrower completes one half of the academic year; and
    (ii) The borrower's employer considers the borrower to have 
fulfilled his or her contract requirements for the academic year for 
purposes of salary increases, tenure, and retirement.
    (2) If the borrower is unable to complete a year of eligible service 
under Secs. 674.56, 674.57, 674.59, or 674.60 due to a condition that is 
covered under the FMLA, the borrower still qualifies for the 
cancellation if the borrower completes at least six consecutive months 
of eligible service.
    (d) Cancellation of a defaulted loan. (1) Except with regard to 
cancellation on account of the death or disability of the borrower, a 
borrower whose defaulted loan has not been accelerated may qualify for a 
cancellation by complying with the requirements of paragraph (a) of this 
section.
    (2) A borrower whose defaulted loan has been accelerated--
    (i) May qualify for a loan cancellation for services performed 
before the date of acceleration; and
    (ii) Cannot qualify for a cancellation for services performed on or 
after the date of acceleration.
    (3) An institution shall grant a request for discharge on account of 
the death or disability of the borrower, or, if the borrower is the 
spouse of an eligible public servant as defined in Sec. 674.64(a)(1), on 
account of the death or disability of the borrower's spouse, without 
regard to the repayment status of the loan.
    (e) Concurrent deferment period. The Secretary considers a Perkins 
Loan, NDSL or Defense Loan borrower's loan deferment under 
Sec. 674.34(c) to run concurrently with any period for which 
cancellation under Secs. 674.53, 674.54, 674.55, 674.56, 674.57, 674.58, 
674.59, and 674.60 is granted.
    (2) For loans made on or after July 1, 1993, the Secretary considers 
a borrower's loan deferment under Sec. 674.34 to run concurrently with 
any period for which a cancellation under Secs. 674.53, 674.56, 674.57, 
or 674.58 is granted.
    (f) National community service. No borrower who has received a 
benefit under subtitle D of title I of the National and Community 
Service Act of 1990 may receive a cancellation under this subpart.
    (g) Switching cancellation categories. A borrower who qualifies for 
a cancellation under one of the cancellation categories in Secs. 674.53, 
674.56, 674.57, or 674.59 receives cancellation of 15 percent of the 
original principal for the first and second years of qualifying service, 
20 percent of the original principal for the third and fourth years of 
qualifying service, and 30 percent of the original principal for the 
fifth year of qualifying service. If, after the first, second, third, or 
fourth complete year of qualifying service--
    (1) The borrower switches to a position that qualifies the borrower 
for cancellation under a different cancellation category under 
Secs. 674.53, 674.56, 674.57, or 674.59, the borrower's cancellation 
rate progression continues from the last year the borrower received a 
cancellation under the former cancellation category; or
    (2) The borrower switches to a position that qualifies the borrower 
for cancellation under a different cancellation category under 
Secs. 674.58 or 674.60, the borrower's cancellation rate progression 
under the new cancellation category begins at the year one cancellation 
rates specified in Secs. 674.58(b) or 674.60(b), respectively.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 425, 1087ee)

[52 FR 45758, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 
FR 61413, Nov. 30, 1994; 62 FR 50848, Sept. 26, 1997; 64 FR 58313, Oct. 
28, 1999; 72 FR 55053, Sept. 28, 2007; 78 FR 65805, Nov. 1, 2013]



Sec. 674.53  Teacher cancellation--Federal Perkins, NDSL and Defense loans.

    (a) Cancellation for full-time teaching in an elementary or 
secondary school serving low-income students. (1)(i) An institution must 
cancel up to 100 percent of the outstanding loan balance on a Federal 
Perkins loan or an NDSL made on or after July 23, 1992, for full-time 
teaching in a public or other nonprofit elementary or secondary school.

[[Page 782]]

    (ii) An institution must cancel up to 100 percent of the outstanding 
loan balance on a Federal Perkins, NDSL or Defense loan made prior to 
July 23, 1992, for teaching service performed on or after October 7, 
1998, if the cancellation benefits provided under this section are not 
included in the terms of the borrower's promissory note.
    (iii) An institution must cancel up to 100 percent of the 
outstanding balance of a Federal Perkins, NDSL, or Defense loan for 
teaching service that includes August 14, 2008, or begins on or after 
that date, at an educational service agency.
    (2) The borrower must be teaching full-time in a public or other 
nonprofit elementary or secondary school that--
    (i) Is in a school district that qualified for funds, in that year, 
under part A of title I of the Elementary and Secondary Education Act of 
1965, as amended; and
    (ii) Has been selected by the Secretary based on a determination 
that more than 30 percent of the school's or educational service 
agency's total enrollment is made up of title I children.
    (3) For each academic year, the Secretary notifies participating 
institutions of the schools and educational service agencies selected 
under paragraph (a) of this section.
    (4)(i) The Secretary selects schools and educational service 
agencies under paragraph (a)(1) of this section based on a ranking by 
the State education agency.
    (ii) The State education agency must base its ranking of the schools 
and educational service agencies on objective standards and methods. 
These standards must take into account the numbers and percentages of 
title I children attending those schools and educational service 
agencies.
    (5) The Secretary considers all elementary and secondary schools 
operated by the Bureau of Indian Affairs (BIA) or operated on Indian 
reservations by Indian tribal groups under contract with BIA to qualify 
as schools serving low-income students.
    (6) A teacher, who performs service in a school or educational 
service agency that meets the requirement of paragraph (a)(1) of this 
section in any year and in a subsequent year fails to meet these 
requirements, may continue to teach in that school or educational 
service agency and will be eligible for loan cancellation pursuant to 
paragraph (a) of this section in subsequent years.
    (7) If a list of eligible institutions in which a teacher performs 
services under paragraph (a)(1) of this section is not available before 
May 1 of any year, the Secretary may use the list for the year preceding 
the year for which the determination is made to make the service 
determination.
    (b) Cancellation for full-time teaching in special education. (1) An 
institution must cancel up to 100 percent of the outstanding balance on 
a borrower's Federal Perkins loan or NDSL loan made on or after July 23, 
1992, for the borrower's service as a full-time special education 
teacher of infants, toddlers, children, or youth with disabilities, in a 
public or other nonprofit elementary or secondary school system.
    (2) An institution must cancel up to 100 percent of the outstanding 
loan balance on a Federal Perkins, NDSL or Defense loan made prior to 
July 23, 1992, for teaching service performed on or after October 7, 
1998, if the cancellation benefits provided under this section are not 
included in the terms of the borrower's promissory note.
    (3) An institution must cancel up to 100 percent of the outstanding 
balance on a borrower's Federal Perkins, NDSL, or Defense loan for a 
borrower's service that includes August 14, 2008, or begins on or after 
that date, as a full-time special education teacher of infants, 
toddlers, children, or youth with disabilities, in an educational 
service agency.
    (c) Cancellation for full-time teaching in fields of expertise. (1) 
An institution must cancel up to 100 percent of the outstanding balance 
on a borrower's Federal Perkins loan or NDSL made on or after July 23, 
1992, for full-time teaching in mathematics, science, foreign languages, 
bilingual education, or any other field of expertise where the State 
education agency determines that there is a shortage of qualified 
teachers.
    (2) An institution must cancel up to 100 percent of the outstanding 
loan balance on a Federal Perkins, NDSL or

[[Page 783]]

Defense loan made prior to July 23, 1992, for teaching service performed 
on or after October 7, 1998, if the cancellation benefits provided under 
this section are not included in the terms of the borrower's promissory 
note.
    (d) Cancellation rates. (1) To qualify for cancellation under 
paragraph (a), (b), or (c) of this section, a borrower must teach full-
time for a complete academic year or its equivalent.
    (2) Cancellation rates are--
    (i) 15 percent of the original principal loan amount plus the 
interest on the unpaid balance accruing during the year of qualifying 
service, for each of the first and second years of full-time teaching;
    (ii) 20 percent of the original principal loan amount, plus the 
interest on the unpaid balance accruing during the year of qualifying 
service, for each of the third and fourth years of full-time teaching; 
and
    (iii) 30 percent of the original principal loan amount, plus the 
interest on the unpaid balance accruing during the year of qualifying 
service, for the fifth year of full-time teaching.
    (e) Teaching in a school system. The Secretary considers a borrower 
to be teaching in a public or other nonprofit elementary or secondary 
school system or an educational service agency only if the borrower is 
directly employed by the school system.
    (f) Teaching children and adults. A borrower who teaches both adults 
and children qualifies for cancellation for this service only if a 
majority of the students whom the borrower teaches are children.

(Authority: 20 U.S.C 1087ee)

[59 FR 61413, Nov. 30, 1994, as amended at 64 FR 58313, Oct. 28, 1999; 
74 FR 55662, Oct. 28, 2009]



Sec. 674.54  [Reserved]



Sec. 674.55  Teacher cancellation--Defense loans.

    (a) Cancellation for full-time teaching. (1) An institution shall 
cancel up to 50 percent of the outstanding balance on a borrower's 
Defense loan for full-time teaching in--
    (i) A public or other nonprofit elementary or secondary school;
    (ii) An institution of higher education; or
    (iii) An overseas Department of Defense elementary or secondary 
school.
    (2) The cancellation rate is 10 percent of the original principal 
loan amount, plus the interest on the unpaid balance accruing during the 
year of qualifying service, for each complete year, or its equivalent, 
of teaching.
    (b) Cancellation for full-time teaching in an elementary or 
secondary school serving low-income students. (1) The institution shall 
cancel up to 100 percent of the outstanding balance on a borrower's 
Defense loan for full-time teaching in a public or other nonprofit 
elementary or secondary school that--
    (i) Is in a school district that qualifies for funds in that year 
under title I of the Elementary and Secondary Education Act of 1965, as 
amended; and
    (ii) Has been selected by the Secretary based on a determination 
that a high concentration of students enrolled at the school are from 
low-income families.
    (2)(i) The Secretary selects schools under paragraph (b)(1) of this 
section based on a ranking by the State education agency.
    (ii) The State education agency shall base its ranking of the 
schools on objective standards and methods. These standards must take 
into account the numbers and percentages of title I children attending 
those schools.
    (3) The Secretary considers all elementary and secondary schools 
operated by the Bureau of Indian Affairs (BIA) or operated on Indian 
reservations by Indian tribal groups under contract with BIA to qualify 
as schools serving low-income students.
    (4) For each academic year, the Secretary notifies participating 
institutions of the schools selected under paragraph (b) of this 
section.
    (5) The cancellation rate is 15 percent of the original principal 
loan amount, plus the interest on the unpaid balance accruing during the 
year of qualifying service, for each complete academic year, or its 
equivalent, of full-time teaching.
    (6) [Reserved]
    (7) Cancellation for full-time teaching under paragraph (b) of this 
section

[[Page 784]]

is available only for teaching beginning with academic year 1966-67.
    (c) Cancellation for full-time teaching of the handicapped. (1) An 
institution shall cancel up to 100 percent of the outstanding balance on 
a borrower's Defense loan, plus interest, for full-time teaching of 
handicapped children in a public or other nonprofit elementary or 
secondary school system.
    (2) The cancellation rate is 15 percent of the original principal 
loan amount, plus the interest on the unpaid balance accruing during the 
year of qualifying service, for each complete academic year, or its 
equivalent, of full-time teaching.
    (3) A borrower qualifies for cancellation under this paragraph only 
if a majority of the students whom the borrower teaches are handicapped 
children.
    (4) Cancellation for full-time teaching under paragraph (c) of this 
section is available only for teaching beginning with the academic year 
1967-68.
    (d) Teaching in a school system. The Secretary considers a borrower 
to be teaching in a public or other nonprofit elementary or secondary 
school system only if the borrower is directly employed by the school 
system.
    (e) Teaching children and adults. A borrower who teaches both adults 
and children qualifies for cancellation for this service only if a 
majority of the students whom the borrower teaches are children.

(Authority: 20 U.S.C. 425(b)(3))

[52 FR 45758, Dec. 1, 1987. Redesignated and amended at 59 FR 61413, 
61414, Nov. 30, 1994]



Sec. 674.56  Employment cancellation--Federal Perkins, NDSL and
Defense loans.

    (a) Cancellation for full-time employment as a nurse or medical 
technician. (1) An institution must cancel up to 100 percent of the 
outstanding balance on a borrower's Federal Perkins or NDSL made on or 
after July 23, 1992, for full-time employment as a nurse or medical 
technician providing health care services.
    (2) An institution must cancel up to 100 percent of the outstanding 
balance on a Federal Perkins, NDSL or Defense loan made prior to July 
23, 1992, for full-time service as a nurse or medical technician 
performed on or after October 7, 1998, if the cancellation benefits 
provided under this section are not included in the borrower's 
promissory note.
    (b) Cancellation for full-time employment in a public or private 
nonprofit child or family service agency. (1) An institution must cancel 
up to 100 percent of the outstanding balance on a borrower's Federal 
Perkins loan or NDSL made on or after July 23, 1992, for service as a 
full-time employee in a public or private nonprofit child or family 
service agency who is providing services directly and exclusively to 
high-risk children who are from low-income communities and the families 
of these children, or who is supervising the provision of services to 
high-risk children who are from low-income communities and the families 
of these children. To qualify for a child or family service 
cancellation, a non-supervisory employee of a child or family service 
agency must be providing services only to high-risk children from low-
income communities and the families of these children. The employee must 
work directly with the high-risk children from low-income communities, 
and the services provided to the children's families must be secondary 
to the services provided to the children.
    (2) An institution must cancel up to 100 percent of the outstanding 
loan balance on a Federal Perkins, NDSL or Defense loan made prior to 
July 23, 1992, for employment in a child or family service agency on or 
after October 7, 1998, if the cancellation benefits provided under this 
section are not included in the terms of the borrower's promissory note.
    (c) Cancellation for service as a qualified professional provider of 
early intervention services. (1) An institution must cancel up to 100 
percent of the outstanding balance on a borrower's Federal Perkins or 
NDSL made on or after July 23, 1992, for the borrower's service as a 
full-time qualified professional provider of early intervention services 
in a public or other nonprofit program under public supervision by the 
lead agency as authorized in section 632 of the Individuals with 
Disabilities Education Act.

[[Page 785]]

    (2) An institution must cancel up to 100 percent of the outstanding 
loan balance on a Federal Perkins, NDSL or Defense loan made prior to 
July 23, 1992 for early intervention service performed on or after 
October 7, 1998, if the cancellation benefits provided under this 
section are not included in the terms of the borrower's promissory note.
    (d) Cancellation for full-time employment as a firefighter to a 
local, State, or Federal fire department or fire district. An 
institution must cancel up to 100 percent of the outstanding balance on 
a borrower's Federal Perkins, NDSL, or Defense loan for service that 
includes August 14, 2008, or begins on or after that date, as a full-
time firefighter.
    (e) Cancellation for full-time employment as a faculty member at a 
Tribal College or University. An institution must cancel up to 100 
percent of the outstanding balance on a borrower's Federal Perkins, 
NDSL, or Defense loan for service that includes August 14, 2008, or 
begins on or after that date, as a full-time faculty member at a Tribal 
College or University.
    (f) Cancellation for full-time employment as a librarian with a 
master's degree. (1) An institution must cancel up to 100 percent of the 
outstanding balance on a borrower's Federal Perkins Loan, NDSL, or 
Defense loan for service that includes August 14, 2008, or begins on or 
after that date, as a full-time librarian, provided that the 
individual--
    (i) Is a librarian with a master's degree; and
    (ii) Is employed in an elementary school or secondary school that is 
eligible for assistance under part A of title I of the Elementary and 
Secondary Education Act of 1965, as amended; or
    (iii) Is employed by a public library that serves a geographic area 
that contains one or more schools eligible for assistance under part A 
of title I of the Elementary and Secondary Education Act of 1965, as 
amended.
    (2) For the purposes of paragraph (f) of this section, the term 
geographic area is defined as the area served by the local school 
district.
    (g) Cancellation for full-time employment as a speech pathologist 
with a master's degree. An institution must cancel up to 100 percent of 
the outstanding balance on a borrower's Federal Perkins Loan, NDSL, or 
Defense loan for full-time employment that includes August 14, 2008, or 
begins on or after that date, as a speech pathologist with a master's 
degree who is working exclusively with schools eligible for funds under 
part A of title I of the Elementary and Secondary Education Act of 1965, 
as amended.
    (h) Cancellation rates. (1) To qualify for cancellation under 
paragraphs (a), (b), (c), (d), (e), (f), and (g) of this section, a 
borrower must work full-time for 12 consecutive months.
    (2) [Reserved]

(Authority: 20 U.S.C. 1087ee)

[59 FR 61414, Nov. 30, 1994, as amended at 64 FR 58314, Oct. 28, 1999; 
72 FR 61997, Nov. 1, 2007; 74 FR 55662, Oct. 28, 2009]



Sec. 674.57  Cancellation for law enforcement or corrections officer
service--Federal Perkins, NDSL, and Defense loans.

    (a)(1) An institution must cancel up to 100 percent of the 
outstanding balance on a borrower's Federal Perkins or NDSL made on or 
after November 29, 1990, for full-time service as a law enforcement or 
corrections officer for an eligible employing agency.
    (2) An institution must cancel up to 100 percent of the outstanding 
loan balance on a Federal Perkins, NDSL, or Defense loan made prior to 
November 29, 1990, for law enforcement or correction officer service 
performed on or after October 7, 1998, if the cancellation benefits 
provided under this section are not included in the terms of the 
borrower's promissory note.
    (3) An eligible employing agency is an agency--
    (i) That is a local, State, or Federal law enforcement or 
corrections agency;
    (ii) That is publicly-funded; and
    (iii) The principal activities of which pertain to crime prevention, 
control, or reduction or the enforcement of the criminal law.
    (4) Agencies that are primarily responsible for enforcement of 
civil, regulatory, or administrative laws are ineligible employing 
agencies.

[[Page 786]]

    (5) A borrower qualifies for cancellation under this section only if 
the borrower is--
    (i) A sworn law enforcement or corrections officer; or
    (ii) A person whose principal responsibilities are unique to the 
criminal justice system.
    (6) To qualify for a cancellation under this section, the borrower's 
service must be essential in the performance of the eligible employing 
agency's primary mission.
    (7) The agency must be able to document the employee's functions.
    (8) A borrower whose principal official responsibilities are 
administrative or supportive does not qualify for cancellation under 
this section.
    (b) An institution must cancel up to 100 percent of the outstanding 
balance of a borrower's Federal Perkins, NDSL, or Defense loan for 
service that includes August 14, 2008, or begins on or after that date, 
as a full-time attorney employed in Federal public defender 
organizations or community defender organizations, established in 
accordance with section 3006A(g)(2) of title 18, U.S.C.
    (c)(1) To qualify for cancellation under paragraph (a) of this 
section, a borrower must work full-time for 12 consecutive months.
    (2) Cancellation rates are--
    (i) 15 percent of the original principal loan amount plus the 
interest on the unpaid balance accruing during the year of qualifying 
service, for each of the first and second years of full-time employment;
    (ii) 20 percent of the original principal loan amount plus the 
interest on the unpaid balance accruing during the year of qualifying 
service, for each of the third and fourth years of full-time employment; 
and
    (iii) 30 percent of the original principal loan amount plus the 
interest on the unpaid balance accruing during the year of qualifying 
service, for the fifth year of full-time employment.

(Authority: 20 U.S.C. 1087ee)

[74 FR 55663, Oct. 28, 2009]



Sec. 674.58  Cancellation for service in an early childhood education
program.

    (a)(1) An institution must cancel up to 100 percent of the 
outstanding balance on a borrower's NDSL or Federal Perkins loan, for 
service as a full-time staff member in a Head Start program.
    (2) An institution must cancel up to 100 percent of the outstanding 
balance on a Defense loan for service as a full-time staff member in a 
Head Start program performed on or after October 7, 1998, if the 
cancellation benefits provided under this section are not included in 
the terms of the borrower's promissory note.
    (3) An institution must cancel up to 100 percent of the outstanding 
balance of a borrower's NDSL, Defense, or Federal Perkins loan for 
service that includes August 14, 2008, or begins on or after that date, 
as a full-time staff member of a pre-kindergarten or childcare program 
that is licensed or regulated by the State.
    (4) The Head Start, pre-kindergarten or child care program in which 
the borrower serves must operate for a complete academic year, or its 
equivalent.
    (5) In order to qualify for cancellation, the borrower's salary may 
not exceed the salary of a comparable employee working in the local 
educational agency of the area served by the local Head Start, pre-
kindergarten or child care program.
    (b) The cancellation rate is 15 percent of the original loan 
principal, plus the interest on the unpaid balance accruing during the 
year of qualifying service, for each complete academic year, or its 
equivalent, of full-time teaching service.
    (c)(1) ``Head Start'' is a preschool program carried out under the 
Head Start Act (subchapter B, chapter 8 of title VI of Pub. L. 97-35, 
the Budget Reconciliation Act of 1981, as amended; formerly authorized 
under section 222(a)(1) of the Economic Opportunity Act of 1964). (42 
U.S.C. 2809 (a) (1))
    (2) A pre-kindergarten program is a State-funded program that serves 
children from birth through age six and addresses the children's 
cognitive (including language, early literacy, and early mathematics), 
social, emotional, and physical development.
    (3) A child care program is a program that is licensed or regulated 
by the State and provides child care services for fewer than 24 hours 
per day per

[[Page 787]]

child, unless care in excess of 24 consecutive hours is needed due to 
the nature of the parents' work.
    (4) ``Full-time staff member'' is a person regularly employed in a 
full-time professional capacity to carry out the educational part of a 
Head Start, pre-kindergarten or child care program.

(Authority: 20 U.S.C. 425)

[52 FR 45758, Dec. 1, 1987. Redesignated and amended at 59 FR 61413, 
61415, Nov. 30, 1994; 64 FR 58314, Oct. 28, 1999; 74 FR 55663, Oct. 28, 
2009]



Sec. 674.59  Cancellation for military service.

    (a) Cancellation on a Defense loan. (1) An institution must cancel 
up to 50 percent of a Defense loan made after April 13, 1970, for the 
borrower's full-time active service starting after June 30, 1970, in the 
U.S. Army, Navy, Air Force, Marine Corps, or Coast Guard.
    (2) The cancellation rate is 12\1/2\ percent of the original loan 
principal, plus the interest on the unpaid balance accruing during the 
year of qualifying service, for the first complete year of qualifying 
service, and for each consecutive year of qualifying service.
    (3) Service for less than a complete year, including any fraction of 
a year beyond a complete year of service, does not qualify for military 
cancellation.
    (b) Cancellation of an NDSL or Perkins loan. (1) An institution must 
cancel up to 50 percent of the outstanding balance on an NDSL or Perkins 
loan for active duty service that ended before August 14, 2008, as a 
member of the U.S. Army, Navy, Air Force, Marine Corps, or Coast Guard 
in an area of hostilities that qualifies for special pay under section 
310 of title 37 of the United States Code.
    (2) The cancellation rate is 12\1/2\ percent of the original loan 
principal, plus the interest on the unpaid balance accruing during the 
year of qualifying service, for each complete year of qualifying 
service.
    (c)(1) An institution must cancel up to 100 percent of the 
outstanding balance on a borrower's Federal Perkins or NDSL loan for a 
borrower's full year of active duty service that includes August 14, 
2008, or begins on or after that date, as a member of the U.S. Army, 
Navy, Air Force, Marine Corps, or Coast Guard in an area of hostilities 
that qualifies for special pay under section 310 of title 37 of the 
United States Code.
    (2) The cancellation rate is 15 percent for the first and second 
year of qualifying service, 20 percent for the third and fourth year of 
qualifying service, and 30 percent for the fifth year of qualifying 
service.
    (d) Service for less than a complete year, including any fraction of 
a year beyond a complete year of service, does not qualify for military 
cancellation.

(Authority:20 U.S.C. 1087ee)

[52 FR 45758, Dec. 1, 1987. Redesignated at 59 FR 61413, Nov. 30, 1994; 
74 FR 55664, Oct. 28, 2009]



Sec. 674.60  Cancellation for volunteer service--Perkins loans,
NDSLs and Defense loans.

    (a)(1) An institution must cancel up to 70 percent of the 
outstanding balance on a Perkins loan, and 70 percent of the outstanding 
balance of an NDSL made on or after October 7, 1998, for service as a 
volunteer under The Peace Corps Act or The Domestic Volunteer Service 
Act of 1973 (ACTION programs).
    (2) An institution must cancel up to 70 percent of the outstanding 
balance on an NDSL or Defense loan for service as a volunteer under The 
Peace Corps Act or The Domestic Volunteer Service Act of 1973 (ACTION 
programs) performed on or after October 7, 1998, if the cancellation 
benefits provided under this section are not included in the terms of 
the borrower's promissory note.
    (b) Cancellation rates are--
    (1) Fifteen percent of the original principal loan amount plus the 
interest on the unpaid balance accruing during the year of qualifying 
service, for each of the first and second twelve-month periods of 
service;
    (2) Twenty percent of the original principal loan amount plus the 
interest on the unpaid balance accruing during the year of qualifying 
service, for each

[[Page 788]]

of the third and fourth twelve-month periods of service.

(Authority: 20 U.S.C. 1087ee)

[52 FR 45758, Dec. 1, 1987, as amended at 57 FR 32347, July 21, 1992. 
Redesignated at 59 FR 61413, Nov. 30, 1994, as amended at 64 FR 58314, 
Oct. 28, 1999]



Sec. 674.61  Discharge for death or disability.

    (a) Death. (1) An institution must discharge the unpaid balance of a 
borrower's Defense, NDSL, or Federal Perkins loan, including interest, 
if the borrower dies. The institution must discharge the loan on the 
basis of--
    (i) An original or certified copy of the death certificate;
    (ii) An accurate and complete photocopy of the original or certified 
copy of the death certificate;
    (iii) An accurate and complete original or certified copy of the 
death certificate that is scanned and submitted electronically or sent 
by facsimile transmission; or
    (iv) Verification of the borrower's death through an authoritative 
Federal or State electronic database approved for use by the Secretary.
    (2) Under exceptional circumstances and on a case-by-case basis, the 
chief financial officer of the institution may approve a discharge based 
upon other reliable documentation of the borrower's death.
    (b) Total and permanent disability as defined in Sec. 674.51(aa)(1). 
(1) General. (i) A borrower's Defense, NDSL, or Perkins loan is 
discharged if the borrower becomes totally and permanently disabled, as 
defined in Sec. 674.51(aa)(1), and satisfies the additional eligibility 
requirements in this section.
    (ii) For purposes of paragraph (b) of this section, a borrower's 
representative or a veteran's representative is a member of the 
borrower's family, the borrower's attorney, or another individual 
authorized to act on behalf of the borrower in connection with the 
borrower's total and permanent disability discharge application. 
References to a ``borrower'' or a ``veteran'' include, if applicable, 
the borrower's representative or the veteran's representative for 
purposes of applying for a total and permanent disability discharge, 
providing notifications or information to the Secretary, and receiving 
notifications from the Secretary.
    (2) Discharge application process for borrowers who have a total and 
permanent disability as defined in Sec. 674.51(aa)(1). (i) If the 
borrower notifies the institution that the borrower claims to be totally 
and permanently disabled as defined in Sec. 674.51(aa)(1), the 
institution must direct the borrower to notify the Secretary of the 
borrower's intent to submit an application for total and permanent 
disability discharge and provide the borrower with the information 
needed for the borrower to notify Secretary.
    (ii) If the borrower notifies the Secretary of the borrower's intent 
to apply for a total and permanent disability discharge, the Secretary--
    (A) Provides the borrower with information needed for the borrower 
to apply for a total and permanent disability discharge;
    (B) Identifies all title IV loans owed by the borrower and notifies 
the lenders of the borrower's intent to apply for a total and permanent 
disability discharge;
    (C) Directs the lenders to suspend efforts to collect from the 
borrower for a period not to exceed 120 days; and
    (D) Informs the borrower that the suspension of collection activity 
described in paragraph (b)(2)(ii)(C) of this section will end after 120 
days and the collection will resume on the loans if the borrower does 
not submit a total and permanent disability discharge application to the 
Secretary within that time.
    (iii) If the borrower fails to submit an application for a total and 
permanent disability discharge to the Secretary within 120 days, 
collection resumes on the borrower's title IV loans.
    (iv) The borrower must submit to the Secretary an application for 
total and permanent disability discharge on a form approved by the 
Secretary. The application must contain--
    (A) A certification by a physician, who is a doctor of medicine or 
osteopathy legally authorized to practice in a State, that the borrower 
is totally and permanently disabled as defined in Sec. 674.51(aa)(1); or

[[Page 789]]

    (B) A Social Security Administration (SSA) notice of award for 
Social Security Disability Insurance (SSDI) or Supplemental Security 
Income (SSI) benefits indicating that the borrower's next scheduled 
disability review will be within five to seven years.
    (v) The borrower must submit the application described in paragraph 
(b)(2)(iv) of this section to the Secretary within 90 days of the date 
the physician certifies the application, if applicable.
    (vi) After the Secretary receives the application described in 
paragraph (b)(2)(iv) of this section, the Secretary notifies the holders 
of the borrower's title IV loans that the Secretary has received a total 
and permanent disability discharge application from the borrower.
    (vii) If the application is incomplete, the Secretary notifies the 
borrower of the missing information and requests the missing information 
from the borrower, the borrower's representative, or the physician who 
provided the certification, as appropriate. The Secretary does not make 
a determination of eligibility until the application is complete.
    (viii) The lender notification described in paragraph (b)(2)(vi) of 
this section directs the borrower's loan holders to suspend collection 
activity or maintain the suspension of collection activity on the 
borrower's title IV loans.
    (ix) After the Secretary receives a disability discharge 
application, the Secretary sends a notice to the borrower that--
    (A) States that the application will be reviewed by the Secretary;
    (B) Informs the borrower that the borrower's lenders will suspend 
collection activity or maintain the suspension of collection activity on 
the borrower's title IV loans while the Secretary reviews the borrower's 
application for discharge; and
    (C) Explains the process for the Secretary's review of total and 
permanent disability discharge applications.
    (3) Secretary's review of the total and permanent disability 
discharge application. (i) If, after reviewing the borrower's completed 
application, the Secretary determines that the physician's certification 
or the SSA notice of award for SSDI or SSI benefits supports the 
conclusion that the borrower is totally and permanently disabled as 
defined in Sec. 674.51(aa)(1), the borrower is considered totally and 
permanently disabled as of the date--
    (A) The physician certified the borrower's application; or
    (B) The Secretary received the SSA notice of award for SSDI or SSI 
benefits.
    (ii) The Secretary may require the borrower to submit additional 
medical evidence if the Secretary determines that the borrower's 
application does not conclusively prove that the borrower is totally and 
permanently disabled as defined in Sec. 674.51(aa)(1). As part of the 
Secretary's review of the borrower's discharge application, the 
Secretary may require and arrange for an additional review of the 
borrower's condition by an independent physician at no expense to the 
borrower.
    (iii) After determining that the borrower is totally and permanently 
disabled as defined in Sec. 674.51(aa)(1), the Secretary notifies the 
borrower and the borrower's lenders that the application for a 
disability discharge has been approved. With this notification, the 
Secretary provides the date the physician certified the borrower's loan 
discharge application or the date the Secretary received the SSA notice 
of award for SSDI or SSI benefits and directs each institution holding a 
Defense, NDSL, or Perkins Loan made to the borrower to assign the loan 
to the Secretary.
    (iv) The institution must assign the loan to the Secretary within 45 
days of the date of the notice described in paragraph (b)(3)(iii) of 
this section.
    (v) After the loan is assigned, the Secretary discharges the 
borrower's obligation to make further payments on the loan and notifies 
the borrower and the institution that the loan has been discharged. The 
notification to the borrower explains the terms and conditions under 
which the borrower's obligation to repay the loan will be reinstated, as 
specified in paragraph (b)(6) of this section. Any payments received 
after the date the physician certified the borrower's loan discharge 
application or the date the Secretary received the SSA notice of award 
for SSDI or

[[Page 790]]

SSI benefits are returned to the person who made the payments on the 
loan in accordance with paragraph (b)(8) of this section.
    (vi) If the Secretary determines that the physician's certification 
or the SSA notice of award for SSDI or SSI benefits provided by the 
borrower does not support the conclusion that the borrower is totally 
and permanently disabled as defined in Sec. 674.51(aa)(1), the Secretary 
notifies the borrower and the institution that the application for a 
disability discharge has been denied. The notification includes--
    (A) The reason or reasons for the denial;
    (B) A statement that the loan is due and payable to the institution 
under the terms of the promissory note and that the loan will return to 
the status that would have existed had the total and permanent 
disability discharge application not been received;
    (C) A statement that the institution will notify the borrower of the 
date the borrower must resume making payments on the loan;
    (D) An explanation that the borrower is not required to submit a new 
total and permanent disability discharge application if the borrower 
requests that the Secretary re-evaluate the application for discharge by 
providing, within 12 months of the date of the notification, additional 
information that supports the borrower's eligibility for discharge; and
    (E) An explanation that if the borrower does not request re-
evaluation of the borrower's prior discharge application within 12 
months of the date of the notification, the borrower must submit a new 
total and permanent disability discharge application to the Secretary if 
the borrower wishes the Secretary to re-evaluate the borrower's 
eligibility for a total and permanent disability discharge.
    (vii) If the borrower requests re-evaluation in accordance with 
paragraph (b)(3)(vi)(D) of this section or submits a new total and 
permanent disability discharge application in accordance with paragraph 
(b)(3)(vi)(E) of this section, the request must include new information 
regarding the borrower's disabling condition that was not provided to 
the Secretary in connection with the prior application at the time the 
Secretary reviewed the borrower's initial application for a total and 
permanent disability discharge.
    (4) Treatment of disbursements made during the period from the date 
of the physician's certification or the date the Secretary received the 
SSA notice of award for SSDI or SSI benefits until the date of 
discharge. If a borrower received a title IV loan or TEACH Grant before 
the date the physician certified the borrower's discharge application or 
before the date the Secretary received the SSA notice of award for SSDI 
or SSI benefits and a disbursement of that loan or grant is made during 
the period from the date of the physician's certification or the date 
the Secretary received the SSA notice of award for SSDI or SSI benefits 
until the date the Secretary grants a discharge under this section, the 
processing of the borrower's loan discharge application will be 
suspended until the borrower ensures that the full amount of the 
disbursement has been returned to the loan holder or to the Secretary, 
as applicable.
    (5) Receipt of new title IV loans or TEACH Grants after the date of 
the physician's certification or after the date the Secretary received 
the SSA notice of award for SSDI or SSI benefits. If a borrower receives 
a disbursement of a new title IV loan or receives a new TEACH Grant made 
on or after the date the physician certified the borrower's discharge 
application or on or after the date the Secretary received the SSA 
notice of award for SSDI or SSI benefits and before the date the 
Secretary grants a discharge under this section, the Secretary denies 
the borrower's discharge request and collection resumes on the 
borrower's loans.
    (6) Conditions for reinstatement of a loan after a total and 
permanent disability discharge. (i) The Secretary reinstates the 
borrower's obligation to repay a loan that was discharged in accordance 
with paragraph (b)(3)(v) of this section if, within three years after 
the date the Secretary granted the discharge, the borrower--
    (A) Has annual earnings from employment that exceed 100 percent of 
the poverty guideline for a family of two, as published annually by the 
United

[[Page 791]]

States Department of Health and Human Services pursuant to 42 U.S.C. 
9902(2);
    (B) Receives a new TEACH Grant or a new loan under the Perkins or 
Direct Loan programs, except for a Direct Consolidation Loan that 
includes loans that were not discharged;
    (C) Fails to ensure that the full amount of any disbursement of a 
title IV loan or TEACH Grant received prior to the discharge date that 
is made is returned to the loan holder or to the Secretary, as 
applicable, within 120 days of the disbursement date; or
    (D) Receives a notice from the SSA indicating that the borrower is 
no longer disabled or that the borrower's continuing disability review 
will no longer be the five- to seven-year period indicated in the SSA 
notice of award for SSDI or SSI benefits.
    (ii) If the borrower's obligation to repay a loan is reinstated, the 
Secretary--
    (A) Notifies the borrower that the borrower's obligation to repay 
the loan has been reinstated;
    (B) Returns the loan to the status that would have existed had the 
total and permanent disability discharge application not been received; 
and
    (C) Does not require the borrower to pay interest on the loan for 
the period from the date the loan was discharged until the date the 
borrower's obligation to repay the loan was reinstated.
    (iii) The Secretary's notification under paragraph (b)(6)(ii)(A) of 
this section will include--
    (A) The reason or reasons for the reinstatement;
    (B) An explanation that the first payment due date on the loan 
following reinstatement will be no earlier than 60 days after the date 
of the notification of reinstatement; and
    (C) Information on how the borrower may contact the Secretary if the 
borrower has questions about the reinstatement or believes that the 
obligation to repay the loan was reinstated based on incorrect 
information.
    (7) Borrower's responsibilities after a total and permanent 
disability discharge. During the three-year period described in 
paragraph (b)(6)(i) of this section, the borrower must--
    (i) Promptly notify the Secretary of any changes in the borrower's 
address or phone number;
    (ii) Promptly notify the Secretary if the borrower's annual earnings 
from employment exceed the amount specified in paragraph (b)(6)(i)(A) of 
this section;
    (iii) Provide the Secretary, upon request, with documentation of the 
borrower's annual earnings from employment on a form approved by the 
Secretary; and
    (iv) Promptly notify the Secretary if the borrower receives a notice 
from the SSA indicating that the borrower is no longer disabled or that 
the borrower's continuing disability review will no longer be the five- 
to seven-year period indicated in the SSA notice of award for SSDI or 
SSI benefits.
    (8) Payments received after the physician's certification of total 
and permanent disability. (i) If the institution receives any payments 
from or on behalf of the borrower on or attributable to a loan that has 
been assigned to the Secretary based on the Secretary's determination of 
eligibility for a total and permanent disability discharge, the 
institution must return the payments to the sender.
    (ii) At the same time that the institution returns the payments, it 
must notify the borrower that there is no obligation to make payments on 
the loan after it has been discharged due to a total and permanent 
disability unless the loan is reinstated in accordance with 
Sec. 674.61(b)(6), or the Secretary directs the borrower otherwise.
    (iii) When the Secretary discharges the loan, the Secretary returns 
to the sender any payments received on the loan after the date the 
borrower became totally and permanently disabled.
    (c) Total and permanent disability discharges for veterans. (1) 
General. A veteran's Defense, NDSL, or Perkins loan will be discharged 
if the veteran is totally and permanently disabled, as defined in 
Sec. 674.51(aa)(2).
    (2) Discharge application process for veterans who have a total and 
permanent disability as defined in Sec. 674.51(aa)(2). (i) If a veteran 
notifies the institution that the veteran claims to be totally and 
permanently disabled as defined in

[[Page 792]]

Sec. 674.51(aa)(2), the institution must direct the veteran to notify 
the Secretary of the veteran's intent to submit an application for a 
total and permanent disability discharge to the Secretary; and provide 
the veteran with the information needed for the veteran to apply for a 
total and permanent disability discharge to the Secretary.
    (ii) If the veteran notifies the Secretary of the veteran's intent 
to apply for a total and permanent disability discharge, the Secretary--
    (A) Provides the veteran with information needed for the veteran to 
apply for a total and permanent disability discharge;
    (B) Identifies all title IV loans owed by the veteran and notifies 
the lenders of the veteran's intent to apply for a total and permanent 
disability discharge;
    (C) Directs the lenders to suspend efforts to collect from the 
borrower for a period not to exceed 120 days; and
    (D) Informs the veteran that the suspension of collection activity 
described in paragraph (c)(2)(ii)(C) of this section will end after 120 
days and collection will resume on the veteran's title IV loans if the 
veteran does not submit a total and permanent disability discharge 
application to the Secretary within that time.
    (iii) If the veteran fails to submit an application for a total and 
permanent disability discharge to the Secretary within 120 days, 
collection resumes on the veteran's title IV loans.
    (iv) The veteran must submit to the Secretary an application for 
total and permanent disability discharge on a form approved by the 
Secretary.
    (v) The application must be accompanied by documentation from the 
Department of Veteran Affairs showing that the Department of Veteran 
Affairs has determined that the veteran is unemployable due to a 
service-connected disability. The veteran will not be required to 
provide any additional documentation related to the veteran's 
disability.
    (vi) After the Secretary receives the application and supporting 
documentation described in paragraphs (c)(2)(iv) and (c)(2)(v) of this 
section, the Secretary notifies the holders of the veteran's title IV 
loans that the Secretary has received a total and permanent disability 
discharge application from the veteran.
    (vii) If the application is incomplete, the Secretary notifies the 
veteran of the missing information and requests the missing information 
from the veteran or the veteran's representative. The Secretary does not 
make a determination of eligibility until the application is complete.
    (viii) The lender notification described in paragraph (c)(2)(vi) of 
this section directs the lenders to suspend collection activity or 
maintain the suspension of collection activity on the borrower's title 
IV loans.
    (ix) After the Secretary receives the disability discharge 
application, the Secretary sends a notice to the veteran that--
    (A) States that the application will be reviewed by the Secretary;
    (B) Informs the veteran that the veteran's lenders will suspend 
collection activity on the veteran's title IV loans while the Secretary 
reviews the borrower's application for a discharge; and
    (C) Explains the process for the Secretary's review of total and 
permanent disability discharge applications.
    (3) Secretary's review of the total and permanent disability 
discharge application. (i) If, after reviewing the veteran's completed 
application, the Secretary determines, based on a review of the 
documentation from the Department of Veterans Affairs, that the veteran 
is totally and permanently disabled as defined in Sec. 674.51(aa)(2), 
the Secretary notifies the veteran and the veteran's lenders that the 
application for disability discharge has been approved. With this 
notification, the Secretary provides the effective date of the 
determination and directs each institution holding a Direct, NDSL, or 
Perkins Loan made to the veteran to discharge the loan.
    (ii) The institution returns any payments received on or after the 
effective date of the determination by the Department of Veterans 
Affairs that the veteran is unemployable due to a service-connected 
disability to the person who made the payments.
    (iii) If the Secretary determines, based on a review of the 
documentation

[[Page 793]]

from the Department of Veterans Affairs, that the veteran is not totally 
and permanently disabled as defined in Sec. 674.51(aa)(2), the Secretary 
notifies the veteran or the veteran's representative, and the 
institution that the application for a disability discharge has been 
denied. The notification includes--
    (A) The reason or reasons for the denial;
    (B) An explanation that the loan is due and payable to the 
institution under the terms of the promissory note and that the loan 
will return to the status that would have existed had the total and 
permanent disability discharge application not been received;
    (C) An explanation that the institution will notify the veteran of 
the date the veteran must resume making payments on the loan;
    (D) An explanation that the veteran is not required to submit a new 
total and permanent disability discharge application if the veteran 
requests that the Secretary re-evaluate the veteran's application for 
discharge by providing, within 12 months of the date of the 
notification, additional documentation from the Department of Veterans 
Affairs that supports the veteran's eligibility for discharge; and
    (E) Information on how the veteran may reapply for a total and 
permanent disability discharge in accordance with the procedures 
described in paragraphs (b)(1) through (b)(8) of this section, if the 
documentation from the Department of Veterans Affairs does not indicate 
that the veteran is totally and permanently disabled as defined in 
Sec. 674.51(aa)(2), but indicates that the veteran may be totally and 
permanently disabled as defined in Sec. 674.51(aa)(1).
    (d) No Federal reimbursement. No Federal reimbursement is made to an 
institution for discharge of loans due to death or disability.
    (e) Retroactive. Discharge for death applies retroactively to all 
Defense, NDSL, and Perkins loans.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 425, 1070g, 1087dd; sec. 130(g)(2) of the 
Education Amendments of 1976, Pub. L. 94-482)

[52 FR 45758, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988. 
Redesignated and amended at 59 FR 61413, 61415, Nov. 30, 1994; 64 FR 
58315, Oct. 28, 1999; 65 FR 65690, Nov. 1, 2000; 66 FR 44007, Aug. 21, 
2001; 72 FR 61998, Nov. 1, 2007; 73 FR 35494, June 23, 2008; 73 FR 
36793, June 30, 2008; 74 FR 55664, Oct. 28, 2009; 74 FR 55987, Oct. 29, 
2009; 77 FR 66125, Nov. 1, 2012; 81 FR 76078, Nov. 1, 2016]



Sec. 674.62  No cancellation for prior service--no repayment refunded.

    (a) No portion of a loan may be cancelled for teaching. Head Start, 
volunteer or military service if the borrower's service is performed--
    (1) During the same period that he or she received the loan; or
    (2) Before the date the loan was disbursed to the borrower.
    (b) The institution shall not refund a repayment made during a 
period for which the borrower qualified for a cancellation unless the 
borrower made the payment due to an institutional error.

(Authority: 20 U.S.C. 425 and 1067ee)

[52 FR 45758, Dec. 1, 1987. Redesignated at 59 FR 61413, Nov. 30, 1994]



Sec. 674.63  Reimbursement to institutions for loan cancellation.

    (a) Reimbursement for Defense loan cancellation. (1) The Secretary 
pays an institution each award year its share of the principal and 
interest canceled under Secs. 674.55 and 674.59(a).
    (2) The institution's share of cancelled principal and interest is 
computed by the following ratio:
[GRAPHIC] [TIFF OMITTED] TC15NO91.027

Where I is the institution's capital contribution to the Fund, and F is 
          the Federal capital contribution to the Fund.

    (b) Reimbursement for NDSL and Federal Perkins loan cancellation. 
The Secretary pays an institution each award year the principal and 
interest canceled from its student loan fund under

[[Page 794]]

Sec. Sec. 674.53, 674.54, 674.56, 674.57, 674.58, 674.59(b), and 674.60. 
The institution shall deposit this amount in its Fund.

(Authority: 20 U.S.C. 428 and 1087ee)

[52 FR 45758, Dec. 1, 1987. Redesignated and amended at 59 FR 61413, 
61415, Nov. 30, 1994]



Sec. 674.64  Discharge of student loan indebtedness for survivors
of victims of the September 11, 2001, attacks.

    (a) Definition of terms. As used in this section--
    (1) Eligible public servant means an individual who--
    (i) Served as a police officer, firefighter, other safety or rescue 
personnel, or as a member of the Armed Forces; and
    (ii)(A) Died due to injuries suffered in the terrorist attacks on 
September 11, 2001; or
    (B) Became permanently and totally disabled due to injuries suffered 
in the terrorist attacks on September 11, 2001.
    (2) Died due to injuries suffered in the terrorist attacks on 
September 11, 2001 means the individual was present at the World Trade 
Center in New York City, New York, at the Pentagon in Virginia, or at 
the Shanksville, Pennsylvania site at the time of or in the immediate 
aftermath of the terrorist-related aircraft crashes on September 11, 
2001, and the individual died as a direct result of these crashes.
    (3) Became permanently and totally disabled due to injuries suffered 
in the terrorist attacks on September 11, 2001 means the individual was 
present at the World Trade Center in New York City, New York, at the 
Pentagon in Virginia, or at the Shanksville, Pennsylvania site at the 
time of or in the immediate aftermath of the terrorist-related aircraft 
crashes on September 11, 2001, and the individual became permanently and 
totally disabled as a direct result of these crashes.
    (i) An individual is considered permanently and totally disabled 
if--
    (A) The disability is the result of a physical injury to the 
individual that was treated by a medical professional within 72 hours of 
the injury having been sustained or within 72 hours of the rescue;
    (B) The physical injury that caused the disability is verified by 
contemporaneous medical records created by or at the direction of the 
medical professional who provided the medical care; and
    (C) The individual is unable to work and earn money due to the 
disability and the disability is expected to continue indefinitely or 
result in death.
    (ii) If the injuries suffered due to the terrorist-related aircraft 
crashes did not make the individual permanently and totally disabled at 
the time of or in the immediate aftermath of the attacks, the individual 
may be considered to be permanently and totally disabled for purposes of 
this section if the individual's medical condition has deteriorated to 
the extent that the individual is permanently and totally disabled.
    (4) Immediate aftermath means, for an eligible public servant, the 
period of time from the aircraft crashes until 96 hours after the 
crashes.
    (5) Present at the World Trade Center in New York City, New York, at 
the Pentagon in Virginia, or at the Shanksville, Pennsylvania site means 
physically present at the time of the terrorist-related aircraft crashes 
or in the immediate aftermath--
    (i) In the buildings or portions of the buildings that were 
destroyed as a result of the terrorist-related aircraft crashes;
    (ii) In any area contiguous to the crash site that was sufficiently 
close to the site that there was a demonstrable risk of physical harm 
resulting from the impact of the aircraft or any subsequent fire, 
explosions, or building collapses. Generally, this includes the 
immediate area in which the impact occurred, fire occurred, portions of 
buildings fell, or debris fell upon and injured persons; or
    (iii) On board American Airlines flights 11 or 77 or United Airlines 
flights 93 or 175 on September 11, 2001.
    (b) September 11 survivors discharge. (1) The obligation of a 
borrower to make any further payments on an eligible Defense, NDSL, or 
Perkins Loan is discharged if the borrower was, at the time of the 
terrorist attacks on September 11, 2001, and currently is, the spouse of 
an eligible public servant, unless the eligible public servant has died. 
If the eligible public servant has died, the borrower must have been the

[[Page 795]]

spouse of the eligible public servant at the time of the terrorist 
attacks on September 11, 2001 and until the date the eligible public 
servant died.
    (2) A Defense, NDSL, or Perkins Loan owed by the spouse of an 
eligible public servant may be discharged under the procedures for a 
discharge in paragraphs (b)(3) through (b)(6) of this section.
    (3) After being notified by the borrower that the borrower claims to 
qualify for a discharge under this section, an institution shall suspend 
collection activity on the borrower's eligible Defense, NDSL, and 
Perkins Loans and promptly request that the borrower submit a request 
for discharge on a form approved by the Secretary.
    (4) If the institution determines that the borrower does not qualify 
for a discharge under this section, or the institution does not receive 
the completed discharge request form from the borrower within 60 days of 
the borrower notifying the institution that the borrower claims to 
qualify for a discharge, the institution shall resume collection and 
shall be deemed to have exercised forbearance of payment of both 
principal and interest from the date the institution was notified by the 
borrower. The institution must notify the borrower that the application 
for the discharge has been denied, provide the basis for the denial, and 
inform the borrower that the institution will resume collection on the 
loan.
    (5) If the institution determines that the borrower qualifies for a 
discharge under this section, the institution shall notify the borrower 
that the loan has been discharged and that there is no further 
obligation to repay the loan. The institution shall return to the sender 
any payments received by the institution after the date the loan was 
discharged.
    (6) A Defense, NDSL, or Perkins Loan owed by an eligible public 
servant may be discharged under the procedures in Sec. 674.61 for a 
discharge based on the death or total and permanent disability of the 
eligible public servant.
    (c) Documentation that an eligible public servant died due to 
injuries suffered in the terrorist attacks on September 11, 2001. (1) 
Documentation that an eligible public servant died due to injuries 
suffered in the terrorist attacks on September 11, 2001 must include--
    (i) A certification from an authorized official that the individual 
was a member of the Armed Forces, or was employed as a police officer, 
firefighter, or other safety or rescue personnel, and was present at the 
World Trade Center in New York City, New York, at the Pentagon in 
Virginia, or at the Shanksville, Pennsylvania site at the time of the 
terrorist-related aircraft crashes or in the immediate aftermath of 
these crashes; and
    (ii) The inclusion of the individual on an official list of the 
individuals who died in the terrorist attacks on September 11, 2001.
    (2) If the individual is not included on an official list of the 
individuals who died in the terrorist attacks on September 11, 2001, the 
borrower must provide--
    (i) The certification described in paragraph (c)(1)(i) of this 
section;
    (ii) An original or certified copy of the individual's death 
certificate; and
    (iii) A certification from a physician or a medical examiner that 
the individual died due to injuries suffered in the terrorist attacks on 
September 11, 2001.
    (3) If the eligible public servant owed a FFEL Program Loan, a 
Direct Loan, or a Perkins Loan at the time of the terrorist attacks on 
September 11, 2001, documentation that the individual's loans were 
discharged by the lender, the Secretary, or the institution due to death 
may be substituted for the original or certified copy of a death 
certificate.
    (4) If the borrower is the spouse of an eligible public servant, and 
has been granted a discharge on a FFEL Program Loan, a Direct Loan, or a 
Perkins Loan held by another institution, because the eligible public 
servant died due to injuries suffered in the terrorist attacks on 
September 11, 2001, documentation of the discharge may be used as an 
alternative to the documentation required in paragraphs (c)(1) through 
(c)(3) of this section.
    (5) Under exceptional circumstances and on a case-by-case basis, the 
determination that an eligible public servant died due to injuries 
suffered in the terrorist attacks on September 11, 2001

[[Page 796]]

may be based on other reliable documentation approved by the chief 
financial officer of the institution.
    (d) Documentation that an eligible public servant became permanently 
and totally disabled due to injuries suffered in the terrorist attacks 
on September 11, 2001. (1) Documentation that an eligible public servant 
became permanently and totally disabled due to injuries suffered in the 
terrorist attacks on September 11, 2001 must include--
    (i) A certification from an authorized official that the individual 
was a member of the Armed Forces or was employed as a police officer, 
firefighter or other safety or rescue personnel, and was present at the 
World Trade Center in New York City, New York, at the Pentagon in 
Virginia, or at the Shanksville, Pennsylvania site at the time of the 
terrorist-related aircraft crashes or in the immediate aftermath of 
these crashes;
    (ii) Copies of contemporaneous medical records created by or at the 
direction of a medical professional who provided medical care to the 
individual within 24 hours of the injury having been sustained or within 
24 hours of the rescue; and
    (iii) A certification by a physician, who is a doctor of medicine or 
osteopathy and legally authorized to practice in a state, that the 
individual became permanently and totally disabled due to injuries 
suffered in the terrorist attacks on September 11, 2001.
    (2) If the borrower is the spouse of an eligible public servant, and 
has been granted a discharge on a FFEL Loan, a Direct Loan, or a Perkins 
Loan held by another institution, because the eligible public servant 
became permanently and totally disabled due to injuries suffered in the 
terrorist attacks on September 11, 2001, documentation of the discharge 
may be used as an alternative to the documentation required in paragraph 
(d)(1) of this section.
    (e) Additional information. (1) An institution may require the 
borrower to submit additional information that the institution deems 
necessary to determine the borrower's eligibility for a discharge under 
this section.
    (2) To establish that the eligible public servant was present at the 
World Trade Center in New York City, New York, at the Pentagon in 
Virginia, or at the Shanksville, Pennsylvania site, such additional 
information may include but is not limited to--
    (i) Records of employment;
    (ii) Contemporaneous records of a federal, state, city, or local 
government agency;
    (iii) An affidavit or declaration of the eligible public servant's 
employer; or
    (iv) A sworn statement (or an unsworn statement complying with 28 
U.S.C. 1746) regarding the presence of the eligible public servant at 
the site.
    (3) To establish that the disability of the eligible public servant 
is due to injuries suffered in the terrorist attacks on September 11, 
2001, such additional information may include but is not limited to--
    (i) Contemporaneous medical records of hospitals, clinics, 
physicians, or other licensed medical personnel;
    (ii) Registries maintained by federal, state, or local governments; 
or
    (iii) Records of all continuing medical treatment.
    (4) To establish the borrower's relationship to the eligible public 
servant, such additional information may include but is not limited to--
    (i) Copies of relevant legal records including court orders, letters 
of testamentary or similar documentation;
    (ii) Copies of wills, trusts, or other testamentary documents; or
    (iii) Copies of approved joint FFEL or Federal Direct Consolidation 
loan applications.
    (f) Limitations on discharge. (1) Only outstanding Defense, NDSL, 
and Perkins Loans for which amounts were owed on September 11, 2001, are 
eligible for discharge under this section.
    (2) Eligibility for a discharge under this section does not qualify 
a borrower for a refund of any payments made on the borrower's Defense, 
NDSL, or Perkins Loans prior to the date the loan was discharged.
    (3) A determination by an institution that an eligible public 
servant became permanently and totally disabled due to injuries suffered 
in the terrorist attacks on September 11, 2001 for purposes of this 
section does not qualify the eligible public servant for a discharge 
based on a total and permanent disability under Sec. 674.61.

[[Page 797]]

    (4) The spouse of an eligible public servant may not receive a 
discharge under this section if the eligible public servant has been 
identified as a participant or conspirator in the terrorist-related 
aircraft crashes on September 11, 2001.

[71 FR 78078, Dec. 28, 2006, as amended at 72 FR 55053, Sept. 28, 2007]



               Sec. Appendixes A-D to Part 674 [Reserved]



  Sec. Appendix E to Part 674--Examples for Computing Maximum Penalty 
  Charges (6 Months Unpaid Overdue Payments) on Direct Loans Made for 
              Periods of Enrollment Before January 1, 1986

----------------------------------------------------------------------------------------------------------------
                                                Installment due dates--Missed payments                 Separate
                                  ------------------------------------------------------------------   monthly
    Monthly repayment schedule                                                                         maximum
                                     Jan. 2     Feb. 2     Mar. 2     Apr. 2     May 2      June 2     penalty
                                                                                                       charges
----------------------------------------------------------------------------------------------------------------
1st Past due installment.........         $1  .........  .........  .........  .........  .........           $1
2nd Past due installment.........  .........    $1 + $2  .........  .........  .........  .........            3
3rd Past due installment.........  .........  .........    $3 + $2  .........  .........  .........            5
4th Past due installment.........  .........  .........  .........    $5 + $2  .........  .........            7
5th Past due installment.........  .........  .........  .........  .........    $7 + $2  .........            9
6th Past due installment.........  .........  .........  .........  .........  .........    $9 + $2           11
                                  ------------------------------------------------------------------------------
    Cumulative maximum subtotals.          1          4          9         16         25         36  ...........
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                                     Installment due dates--Missed     Separate
                                                                                payments              bimonthly
                   Bimonthly repayment schedule                    ---------------------------------   maximum
                                                                                                       penalty
                                                                      Jan. 2     Mar. 2     May 2      charges
----------------------------------------------------------------------------------------------------------------
1st Past due installment..........................................         $3  .........  .........           $3
2nd Past due installment..........................................  .........    $3 + $3  .........            6
3rd Past due installment..........................................  .........  .........    $6 + $3            9
                                                                   ---------------------------------------------
    Cumulative maximum subtotals..................................          3          9         18  ...........
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                            Installment due dates--Missed payments
     Quarterly repayment schedule     --------------------------------------------------    Separate quarterly
                                                Jan. 2                   Apr. 2          maximum penalty charges
----------------------------------------------------------------------------------------------------------------
1st Past due installment.............                       $6  .......................                       $6
2nd Past due installment.............  .......................                  $6 + $6                       12
                                      --------------------------------------------------------------------------
    Cumulative maximum subtotals.....                        6                       18  .......................
----------------------------------------------------------------------------------------------------------------
Note. In the above table of examples, the Cumulative Maximum Subtotal line contains the maximum penalty charges
  that can be assessed on an NDSL borrower for any given installment that was missed on its due date. For
  example, if three borrowers, all on different repayment schedules, owed and missed their first installment
  payment on January 2 and all three made their next payment on April 10, the maximum penalty charges that could
  be assessed each individual borrower would be as follows: $16 to the monthly repayment schedule borrower; $9
  to the bimonthly repayment schedule borrower; and $18 to the quarterly repayment schedule borrower.


[46 FR 5241, Jan. 19, 1981]



PART 675_FEDERAL WORK-STUDY PROGRAMS--Table of Contents



    Note: An asterisk (*) indicates provisions that are common to parts 
674, 675, and 676. The use of asterisks will assure participating 
institutions that a provision of one regulation is identical to the 
corresponding provisions in the other two.

                  Subpart A_Federal Work-Study Program

Sec.
675.1  Purpose and identification of common provisions.
675.2  Definitions.
675.3-675.7  [Reserved]
675.8  Program participation agreement.
675.9  Student eligibility.
675.10  Selection of students for FWS employment.
675.11-675.15  [Reserved]

[[Page 798]]

675.16  Payments to students.
675.17  [Reserved]
675.18  Use of funds.
675.19  Fiscal procedures and records.
675.20  Eligible employers and general conditions and limitation on 
          employment.
675.21  Institutional employment.
675.22  Employment provided by a Federal, State, or local public agency, 
          or a private nonprofit organization.
675.23  Employment provided by a private for-profit organization.
675.24  Establishment of wage rate under FWS.
675.25  Earnings applied to cost of attendance.
675.26  FWS Federal share limitations.
675.27  Nature and source of institutional share.

             Subpart B_Job Location and Development Program

675.31  Purpose.
675.32  Program description.
675.33  Allowable costs.
675.34  Multi-Institutional job location and development programs.
675.35  Agreement.
675.36  Procedures and records.
675.37  Termination and suspension.

                     Subpart C_Work-Colleges Program

675.41  Special definitions.
675.42  Allocation and reallocation.
675.43  Purpose.
675.44  Program description.
675.45  Allowable costs, Federal share, and institutional share.
675.46  Unallowable costs.
675.47  Multi-institutional work-colleges arrangements.
675.48  Agreement.
675.49  Procedures and records.
675.50  Termination and suspension.

Appendix A to Part 675 [Reserved]

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

    Source: 52 FR 45770, Dec. 1, 1987, unless otherwise noted.



                  Subpart A_Federal Work-Study Program



Sec. 675.1  Purpose and identification of common provisions.

    (a) The Federal Work-Study (FWS) program provides part-time 
employment to students attending institutions of higher education who 
need the earnings to help meet their costs of postsecondary education 
and encourages students receiving FWS assistance to participate in 
community service activities.
    *(b) Provisions in these regulations that are common to all campus-
based programs are identified with an asterisk.

(Authority: 42 U.S.C. 2751-2756b)

[52 FR 45770, Dec. 1, 1987, as amended at 59 FR 61416, Nov. 30, 1994]



Sec. 675.2  Definitions.

    (a) The definitions of the following terms used in this part are set 
forth in subpart A of the Student Assistance General Provisions, 34 CFR 
668:

Academic Competitiveness Grant (ACG) Program
Academic year
Award year
Clock hour
Enrolled
Expected family contribution (EFC)
Federal Family Education Loan (FFEL)
Federal Pell Grant Program
Federal Perkins Loan Program
Federal PLUS Program
Federal SLS Program
Federal Supplemental Educational Opportunity Grant (FSEOG) Program
Full-time student
HEA
National Science and Mathematics Access to Retain Talent Grant (National 
SMART Grant) Program
Secretary
Teacher Education Assistance for College and Higher Education (TEACH) 
Grant Program
TEACH Grant

    (b) The Secretary defines other terms used in this part as follows:
    Community services: Services which are identified by an institution 
of higher education, through formal or informal consultation with local 
nonprofit, governmental, and community-based organizations, as designed 
to improve the quality of life for community residents, particularly 
low-income individuals, or to solve particular problems related to their 
needs. These services include--
    (1) Such fields as health care, child care (including child care 
services provided on campus that are open and accessible to the 
community), literacy training, education (including tutorial services), 
welfare, social services, transportation, housing and neighborhood 
improvement, public safety,

[[Page 799]]

emergency preparedness and response, crime prevention and control, 
recreation, rural development, and community improvement;
    (2) Work in service opportunities or youth corps as defined in 
section 101 of the National and Community Service Act of 1990, and 
service in the agencies, institutions and activities designated in 
section 124(a) of that Act;
    (3) Support services to students with disabilities, including 
students with disabilities who are enrolled at the institution; and
    (4) Activities in which a student serves as a mentor for such 
purposes as--
    (i) Tutoring;
    (ii) Supporting educational and recreational activities; and
    (iii) Counseling, including career counseling.
    *Financial need: The difference between a student's cost of 
attendance and his or her EFC.
    Graduate or professional student: A student who--
    (1) Is enrolled in a program or course above the baccalaureate level 
at an institution of higher education or is enrolled in a program 
leading to a first professional degree;
    (2) Has completed the equivalent of at least three years of full-
time study at an institution of higher education, either prior to 
entrance into the program or as part of the program itself; and
    (3) Is not receiving title IV aid as an undergraduate student for 
the same period of enrollment.
    *Institution of higher education (institution). A public or private 
nonprofit institution of higher education, a proprietary institution of 
higher education, or a postsecondary vocational institution.
    * Need-based employment: Employment provided by an institution 
itself or by another entity to a student who has demonstrated to the 
institution or the entity (through standards or methods it establishes) 
a financial need for the earnings from that employment for the purpose 
of defraying educational costs of attendance for the award year for 
which the employment is provided.
    Nonprofit organization: An organization owned and operated by one or 
more nonprofit corporations or associations where no part of the 
organization's net earnings benefits, or may lawfully benefit, any 
private shareholder or entity. An organization may show that it is 
nonprofit by meeting the provisions of Sec. 75.51 of the Education 
Department General Administrative Regulations (EDGAR), 34 CFR 75.51.


(Authority: 20 U.S.C. 1141(c))

    Student services: Services that are offered to students that may 
include, but are not limited to, financial aid, library, peer guidance 
counseling, job placement, assisting an instructor with curriculum-
related activities, security, and social, health, and tutorial services. 
Student services do not have to be direct or involve personal 
interaction with students. For purposes of this definition, facility 
maintenance, cleaning, purchasing, and public relations are never 
considered student services.
    Undergraduate student: A student enrolled at an institution of 
higher education who is in an undergraduate course of study which 
usually does not exceed four academic years, or is enrolled in a four to 
five academic year program designed to lead to a first degree. A student 
enrolled in a program of any other length is considered an undergraduate 
student for only the first four academic years of that program.

(Authority: 20 U.S.C. 1070g, 1087aa-1087ii)

[52 FR 45770, Dec. 1, 1987, as amended at 53 FR 52581, Dec. 28, 1988; 57 
FR 32356, July 21, 1992; 57 FR 60707, Dec. 21, 1992; 59 FR 61416, 61419, 
Nov. 30, 1994; 60 FR 61815, Dec. 1, 1995; 61 FR 60608, Nov. 29, 1996; 64 
FR 58292, Oct. 28, 1999; 67 FR 67078, Nov. 1, 2002; 69 FR 12276, Mar. 
16, 2004; 71 FR 38003, July 3, 2006; 73 FR 35494, June 23, 2008; 74 FR 
55948, Oct. 29, 2009]



Secs. 675.3-675.7  [Reserved]



Sec. 675.8  Program participation agreement.

    To participate in the FWS program, an institution of higher 
education shall enter into a participation agreement with the Secretary. 
The agreement provides that, among other things, the institution shall--
    (a) Use the funds it receives solely for the purposes specified in 
this part;

[[Page 800]]

    (b) Administer the FWS program in accordance with the HEA, the 
provisions of this part, and the Student Assistance General Provisions 
regulations, 34 CFR part 668;
    (c) Make employment under the FWS program reasonably available, to 
the extent of available funds, to all eligible students;
    (d) Award FWS employment, to the maximum extent practicable, that 
will complement and reinforce each recipient's educational program or 
career goals;
    (e) Assure that employment under this part may be used to support 
programs for supportive services to students with disabilities; and
    (f) Inform all eligible students of the opportunity to perform 
community services and consult with local nonprofit, governmental, and 
community-based organizations to identify those opportunities.

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

[52 FR 45770, Dec. 1, 1987, as amended at 59 FR 61416, 61419, Nov. 30, 
1994; 64 FR 58292, Oct. 28, 1999]



Sec. 675.9  Student eligibility.

    A student at an institution of higher education is eligible to 
receive part-time employment under the FWS program for an award year if 
the student--
    (a) Meets the relevant eligibility requirements contained in 34 CFR 
668.32;
    (b) Is enrolled or accepted for enrollment as an undergraduate, 
graduate or professional student at the institution; and
    (c) Has financial need as determined in accordance with part F of 
title IV of the HEA. A member of a religious order (an order, community, 
society, agency, or organization) who is pursuing a course of study at 
an institution of higher education is considered to have no financial 
need if that religious order--
    (1) Has as its primary objective the promotion of ideals and beliefs 
regarding a Supreme Being;
    (2) Requires its members to forego monetary or other support 
substantially beyond the support it provides; and
    (3) Directs the member to pursue the course of study or provides 
subsistence support to its members.

(Authority: 20 U.S.C. 1091; 42 U.S.C. 2752-2753)

[52 FR 45770, Dec. 1, 1987, as amended at 59 FR 61419, Nov. 30, 1994; 62 
FR 50848, Sept. 26, 1997]



Sec. 675.10  Selection of students for FWS employment.

    (a) An institution shall make employment under FWS reasonably 
available, to the extent of available funds, to all eligible students.
    (b) An institution shall establish selection procedures and those 
procedures must be--
    (1) Uniformly applied;
    (2) In writing; and
    (3) Maintained in the institution's files.
    (c) Part-time and independent students. If an institution's 
allocation of FWS funds is directly or indirectly based in part on the 
financial need demonstrated by students attending the institution as 
less-than-full-time or independent students, a reasonable portion of the 
allocation must be offered to those students.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 20 U.S.C. 1091, 42 U.S.C. 2752-2753)

[52 FR 45770, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 
FR 61416, 61419, Nov. 30, 1994; 64 FR 58292, Oct. 28, 1999]



Secs. 675.11-675.15  [Reserved]



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.

[[Page 801]]

    (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 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 occurred 
on the account.
    (d) Student authorizations. (1) Except for the noncash contributions 
allowed under paragraph (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.

[[Page 802]]

    (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)

[74 FR 55948, Oct. 29, 2009]



Sec. 675.17  [Reserved]



Sec. 675.18  Use of funds.

    (a) General. An institution may use its FWS allocation only for--
    (1) Paying the Federal share of FWS wages;
    (2) Paying administrative expenses as provided for in 34 CFR 673.7;
    (3) Meeting the cost of a Work-Colleges program under subpart C;
    (4) Meeting the cost of a Job Location and Development program under 
subpart B; and
    (5) Transferring a portion of its FWS allocation to its FSEOG 
program as described in paragraph (f) of this section.
    (b) Carry forward funds. (1) An institution may carry forward and 
expend in the next award year up to 10 percent of the sum of its initial 
and supplemental FWS allocations for the current award year.
    (2) Before an institution may spend its current year FWS allocation, 
it shall spend any funds carried forward from the previous year.
    (c) Carry back funds. An institution may carry back and expend in 
the previous award year up to 10 percent of the sum of its initial and 
supplemental FWS allocations for the current award year. The 
institution's official allocation letter represents the Secretary's 
approval to carry back funds.
    (d) The institution may use the funds carried forward or carried 
back under paragraphs (c) and (d) of this section, respectively, for 
activities described in paragraph (a) of this section.
    (e) Transfer funds to SEOG. (1) Beginning with the 1993-94 award 
year, an institution may transfer up to 25 percent of the sum of its 
initial and supplemental FWS allocations for an award year to its FSEOG 
program.
    (2) An institution shall use transferred funds according to the 
requirements of the program to which they are transferred.
    (3) An institution shall report any transferred funds on the Fiscal 
Operations Report required under Sec. 675.19(b).
    (f) Carry back funds for summer employment. An institution may carry 
back and expend in the previous award year any portion of its initial 
and supplemental FWS allocations for the current award year to pay 
student wages

[[Page 803]]

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

[[Page 804]]

    (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
    (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, 2756b)

[52 FR 45770, Dec. 1, 1987, as amended at 57 FR 32356, July 21, 1992; 59 
FR 61417, 61419, Nov. 30, 1994; 61 FR 60396, Nov. 27, 1996; 64 FR 58293, 
Oct. 28, 1999; 74 FR 55949, Oct. 29, 2009]



Sec. 675.19  Fiscal procedures and records.

    (a) Fiscal procedures. (1) In administering its FWS program, an 
institution shall establish and maintain an internal control system of 
checks and balances that insures that no office can both authorize 
payments and disburse funds to students.
    (2) If an institution uses a fiscal agent, that agent may perform 
only ministerial acts.
    (3) An institution shall maintain funds received under this part in 
accordance with the requirements in Sec. 668.163.
    (b) Records and reporting. (1) An institution must follow the record 
retention and examination provisions in this part and in 34 CFR 668.24.
    (2) The institution must also establish and maintain program and 
fiscal records that--
    (i) Include a certification by the student's supervisor, an official 
of the institution or off-campus agency, that each student has worked 
and earned the amount being paid. The certification must include or be 
supported by, for students paid on an hourly basis, a time record 
showing the hours each student worked in clock time sequence, or the 
total hours worked per day;
    (ii) Include a payroll voucher containing sufficient information to 
support all payroll disbursements;
    (iii) Include a noncash contribution record to document any payment 
of the institution's share of the student's earnings in the form of 
services and equipment (see Sec. 675.27(a)); and
    (iv) Are reconciled at least monthly.
    (3) Each year an institution shall submit a Fiscal Operations Report 
plus other information the Secretary requires. The institution shall 
insure that the information reported is accurate and shall submit it on 
the form and at the time specified by the Secretary.

(Approved by the Office of Management and Budget under control number 
1845-0535)

(Authority: 42 U.S.C. 2753 and 20 U.S.C. 1094 and 1232f)

[52 FR 45770, Dec. 1, 1987, as amended at 53 FR 30183, Aug. 10, 1988; 53 
FR 49147, Dec. 6, 1988; 59 FR 61419, Nov. 30, 1994; 59 FR 61722, Dec. 1, 
1994; 60 FR 61815, Dec. 1, 1995; 61 FR 60492, Nov. 27, 1996; 62 FR 
50848, Sept. 26, 1997; 65 FR 65676, Nov. 1, 2000]



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

    (a) Eligible FWS employers. A student may be employed under the FWS 
program by--
    (1) The institution in which the student is enrolled;
    (2) A Federal, State, or local public agency;
    (3) A private nonprofit organization; or
    (4) A private for-profit organization.
    (b) Agreement between institution and organization. (1) If an 
institution wishes to have its students employed under this part by a 
Federal, State or local public agency, or a private nonprofit or for-
profit organization, it shall enter into a written agreement with that 
agency or organization. The agreement must set forth the FWS work 
conditions. The agreement must indicate whether the institution or the 
agency or organization shall pay the students employed, except that the 
agreement between an institution and a for-profit organization must 
require the employer to pay the non-Federal share of the student 
earnings.

[[Page 805]]

    (2) The institution may enter into an agreement with an agency or 
organization that has professional direction and staff.
    (3) The institution is responsible for ensuring that--
    (i) Payment for work performed under each agreement is properly 
documented; and
    (ii) Each student's work is properly supervised.
    (4) The agreement between the institution and the employing agency 
or nonprofit organization may require the employer to pay--
    (i) The non-Federal share of the student earnings; and
    (ii) Required employer costs such as the employer's share of social 
security or workers' compensation.
    (c) FWS general employment conditions and limitation. (1) Regardless 
of the student's employer, the student's work must be governed by 
employment conditions, including pay, that are appropriate and 
reasonable in terms of--
    (i) Type of work;
    (ii) Geographical region;
    (iii) Employee proficiency; and
    (iv) Any applicable Federal, State, or local law.
    (2) FWS employment may not--
    (i) Impair existing service contracts;
    (ii) Displace employees;
    (iii) Fill jobs that are vacant because the employer's regular 
employees are on strike;
    (iv) Involve the construction, operation, or maintenance of any part 
of a facility used or to be used for religious worship or sectarian 
instruction; or
    (v) Include employment for the U.S. Department of Education.
    (d) Academic credit and work-study. (1) A student may be employed 
under the FWS program and also receive academic credit for the work 
performed. Those jobs include, but are not limited to, work performed 
when the student is--
    (i) Enrolled in an internship;
    (ii) Enrolled in a practicum; or
    (iii) Employed in a research, teaching, or other assistantship.
    (2) A student employed in an FWS job and receiving academic credit 
for that job may not be--
    (i) Paid less than he or she would be if no academic credit were 
received;
    (ii) Paid for receiving instruction in a classroom, laboratory, or 
other academic setting; and
    (iii) Paid unless the employer would normally pay the person for the 
same position.

(Approved by the Office of Management and Budget under control number 
1845-0019)

(Authority: 42 U.S.C. 2753)

[52 FR 45770, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 
FR 61419, Nov. 30, 1994; 62 FR 50848, Sept. 26, 1997; 64 FR 58293, Oct. 
28, 1999]



Sec. 675.21  Institutional employment.

    (a) An institution, other than a proprietary institution, may employ 
a student to work for the institution itself, including those 
operations, such as food service, cleaning, maintenance, or security, 
for which the institution contracts, if the contract specifies--
    (1) The number of students to be employed; and
    (2) That the institution selects the students to be employed and 
determines each student's pay rate.
    (b) A proprietary institution may employ a student to work for the 
institution, but only in jobs that--
    (1) Are in community services as defined in Sec. 675.2; or
    (2) Are on campus and that--
    (i) Involve the provision of student services as defined in 
Sec. 675.2(b) that are directly related to the work-study student's 
training or education;
    (ii) To the maximum extent possible, complement and reinforce the 
educational program or vocational goals of the student; and
    (iii) Do not involve the solicitation of potential students to 
enroll at the proprietary institution.

(Authority: 42 U.S.C. 2753)

[52 FR 45770, Dec. 1, 1987, as amended at 59 FR 61417, Nov. 30, 1994; 67 
FR 67078, Nov. 1, 2002]



Sec. 675.22  Employment provided by a Federal, State, or local public
agency, or a private nonprofit organization.

    (a) If a student is employed by a Federal, State, or local public 
agency, or a private nonprofit organization, the work that the student 
performs must be in the public interest.

[[Page 806]]

    (b) FWS employment in the public interest. The Secretary considers 
work in the public interest to be work performed for the national or 
community welfare rather than work performed to benefit a particular 
interest or group. Work is not in the public interest if--
    (1) It primarily benefits the members of a limited membership 
organization such as a credit union, a fraternal or religious order, or 
a cooperative;
    (2) It is for an elected official who is not responsible for the 
regular administration of Federal, State, or local government;
    (3) It is work as a political aide for any elected official;
    (4) A student's political support or party affiliation is taken into 
account in hiring him or her;
    (5) It involves any partisan or nonpartisan political activity or is 
associated with a faction in an election for public or party office; or
    (6) It involves lobbying on the Federal, State, or local level.

(Authority: 42 U.S.C. 2753)

[52 FR 45770, Dec. 1, 1987, as amended at 57 FR 32356, July 21, 1992; 59 
FR 61419, Nov. 30, 1994]



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

    (a) An institution may use up to 25 percent of its FWS allocation 
and reallocation for an award year to pay the compensation of FWS 
students employed by a private for-profit organization.
    (b) If a student is employed by a private, for-profit organization--
    (1) The work that the student performs must be academically relevant 
to the student's educational program, to the maximum extent practicable; 
and
    (2) The private for-profit organization--
    (i) Must provide the non-Federal share of the student's 
compensation; and
    (ii) May not use any FWS funds to pay an employee who would 
otherwise be employed by that organization.

(Authority: 42 U.S.C. 2753)

[52 FR 45770, Dec. 1, 1987, as amended at 57 FR 32356, July 21, 1992; 59 
FR 61419, Nov. 30, 1994; 64 FR 58294, Oct. 28, 1999]



Sec. 675.24  Establishment of wage rate under FWS.

    (a) Wage rates. (1) Except as provided in paragraph (a)(3) of this 
section, an institution shall compute FWS compensation on an hourly wage 
basis for actual time on the job. An institution may not pay a student a 
salary, commission, or fee.
    (2) An institution may not count fringe benefits as part of the wage 
rate.
    (3) An institution may pay a graduate student it employs a salary or 
an hourly wage, in accordance with its usual practices.
    (b) Minimum wage rate. The minimum wage rate for a student employee 
under the FWS program is the minimum wage rate required under section 
6(a) of the Fair Labor Standards Act of 1938.

(Authority: 42 U.S.C. 2753)

[52 FR 45770, Dec. 1, 1987, as amended at 59 FR 61419, Nov. 30, 1994]



Sec. 675.25  Earnings applied to cost of attendance.

    (a)(1) The institution shall determine the amount of earnings from a 
FWS job to be applied to a student's cost of attendance (attributed 
earnings) by subtracting taxes and job related costs from the student's 
gross earnings.
    (2) Job related costs are costs the student incurs because of his or 
her job. Examples are uniforms and transportation to and from work. Room 
and board during a vacation period may also be considered a job related 
cost if they would not otherwise be incurred except for the FWS 
employment.
    (b) If a student is employed under FWS during a vacation or other 
period when he or she is not attending classes, the institution shall 
apply the attributed earnings (earnings minus taxes and job related 
costs) to the cost of attendance for the next period of enrollment.

(Authority: 42 U.S.C. 2753)

[52 FR 45770, Dec. 1, 1987, as amended at 59 FR 61419, Nov. 30, 1994]



Sec. 675.26  FWS Federal share limitations.

    (a)(1) The Federal share of FWS compensation paid to a student 
employed other than by a private for-profit organization, as described 
in Sec. 675.23, may

[[Page 807]]

not exceed 75 percent unless the Secretary approves a higher share under 
paragraph (a)(2) or (d) of this section.
    (2) The Federal share of the compensation paid to a student may 
exceed 75 percent, but may not exceed 90 percent, if--
    (i) The student is employed at a private nonprofit organization or a 
Federal, State, or local public agency that--
    (A) Is not a part of, and is not owned, operated, or controlled by, 
or under common ownership, operation, or control with, the institution;
    (B) Is selected by the institution on an individual case-by-case 
basis;
    (C) Would otherwise be unable to afford the costs of this 
employment; and
    (ii) The number of students compensated under paragraph (a)(2)(i) of 
this section is not more than 10 percent of the total number of students 
paid under the FWS Program at the institution.
    (3) The Federal share of the compensation paid to a student employed 
by a private for-profit organization may not exceed 50 percent.
    (4) An institution may not use FWS funds to pay a student after he 
or she has, in addition to other estimated financial assistance, earned 
$300 or more over his or her financial need.
    (b) The institution may not include the following when determining 
the Federal share:
    (1) Fringe benefits such as paid sick days, paid vacations, or paid 
holidays.
    (2) The employer's share of social security, workers' compensation, 
retirement, or any other welfare or insurance program that the employer 
must pay on account of the student employee.
    (c) If an institution receives more money under an employment 
agreement from an off-campus employer than required employer costs, its 
not-Federal share, and any share of administrative costs that the 
employer agreed to pay, the excess funds must be--
    (1) Used to reduce the Federal share on a dollar-for-dollar basis;
    (2) Held in trust for off-campus student employment next year; or
    (3) Refunded to the off-campus employer.
    (d) For each award year, the Secretary authorizes a Federal share of 
100 percent of the compensation earned by a student under this part if--
    (1) The work performed by the student is for the institution itself, 
for a Federal, State, or local public agency, or for a private nonprofit 
organization; and
    (2)(i) The institution in which the student is enrolled--
    (A) Is designated as an eligible institution under--
    (1) The Developing Hispanic-Serving Institutions Program (34 CFR 
part 606);
    (2) The Strengthening Institutions Program, American Indian Tribally 
Controlled Colleges and Universities Program, or Alaska Native and 
Native Hawaiian-Serving Institutions Program (34 CFR part 607);
    (3) The Strengthening Historically Black Colleges and Universities 
Program (34 CFR part 608); or
    (4) The Strengthening Historically Black Graduate Institutions 
Program (34 CFR part 609); and
    (B) Requests that increased Federal share as part of its regular FWS 
funding application for that year;
    (ii) The student is employed as a reading tutor for preschool age 
children or children who are in elementary school;
    (iii) The student is performing family literacy activities in a 
family literacy project that provides services to families with 
preschool age children or children who are in elementary school;
    (iv) The student is employed as a mathematics tutor for children who 
are in elementary school through the ninth grade; or
    (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).

(Authority: 20 U.S.C. 1068d and 1103d; 42 U.S.C. 2753)

[52 FR 45770, Dec. 1, 1987, as amended at 59 FR 61417, 61419, Nov. 30, 
1994; 61 FR 60396, Nov. 27, 1996; 62 FR 63439, Nov. 28, 1997; 63 FR 
52855, Oct. 1, 1998; 64 FR 58294, Oct. 28, 1999; 66 FR 34039, June 26, 
2001; 71 FR 45698, Aug. 9, 2006; 74 FR 55950, Oct. 29, 2009]

[[Page 808]]



Sec. 675.27  Nature and source of institutional share.

    (a)(1) An institution may use any resource available to it, except 
funds allocated under the FWS program, to pay the institutional share of 
FWS compensation to its students. The institutional share may be paid in 
the form of services and equipment, e.g., tuition, room, board, and 
books.
    (2) The institution shall document all amounts claimed as non-cash 
contributions.
    (3) Non-cash compensation may not include forgiveness of a charge 
assessed solely because of a student's employment under the FWS program.
    (b) An institution may not solicit or accept fees, commission, 
contributions, or gifts as a condition for FWS employment, nor permit 
any organization with which it has an employment agreement to do so.

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

(Authority: 42 U.S.C. 2754)

[52 FR 45770, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 
FR 61419, Nov. 30, 1994; 62 FR 50848, Sept. 26, 1997]



             Subpart B_Job Location and Development Program



Sec. 675.31  Purpose.

    The purpose of the Job Location and Development program is to expand 
off-campus job opportunities for students who are enrolled in eligible 
institutions of higher education and want jobs, regardless of their 
financial need, and to encourage students to participate in community 
service activities.

(Authority: 42 U.S.C. 2756)

[59 FR 61417, Nov. 30, 1994]



Sec. 675.32  Program description.

    An institution may expend up to the lesser of $50,000 or 10 percent 
of its FWS allocation and reallocation for an award year to establish or 
expand a program under which the institution, separately or in 
combination with other eligible institutions, locates and develops jobs, 
including community service jobs, for currently enrolled students.

(Authority: 42 U.S.C. 2756)

[59 FR 61417, Nov. 30, 1994]



Sec. 675.33  Allowable costs.

    (a)(1) Allowable and unallowable costs. Except as provided in 
paragraph (a)(2) of this section, costs reasonably related to carrying 
out the programs described in Sec. 675.32 are allowable.
    (2) Costs related to the purchase, construction, or alteration of 
physical facilities or indirect administrative costs are not allowable.
    (b) Federal share of allowable costs. An institution may use FWS 
funds, as provided in Sec. 675.32, to pay up to 80 percent of allowable 
costs.
    (c) Institutional share of allowable costs. An institution's share 
of allowable costs may be in cash or in the form of services. The 
institution shall keep records documenting the amount and source of its 
share.

(Authority: 42 U.S.C. 2756)

[52 FR 45770, Dec. 1, 1987, as amended at 59 FR 61419, Nov. 30, 1994]



Sec. 675.34  Multi-Institutional job location and development programs.

    (a) An institution participating in the FWS program may enter into a 
written agreement to establish and operate job location programs for its 
students with other participating institutions.
    (b) The agreement described in paragraph (a) of this section must--
    (1) Designate the administrator of the program; and
    (2) Specify the terms, conditions, and performance standards of the 
program.
    (c) Each institution shall retain responsibility for the proper 
disbursement of the Federal funds it contributes under an agreement with 
other eligible institutions.

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

(Authority: 42 U.S.C. 2756)

[52 FR 45770, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 
FR 61417, Nov. 30, 1994]

[[Page 809]]



Sec. 675.35  Agreement.

    (a) A FWS participating institution, to establish or expand these 
programs, shall enter into an agreement with the Secretary.
    (b) The agreement must provide--
    (1) That the institution will administer the programs in accordance 
with the HEA and the provisions of this part;
    (2) That the institution will submit to the Secretary an annual 
report on the use of the funds and an evaluation of the effectiveness of 
the programs in benefiting the institution's students; and
    (3) Satisfactory assurances that--
    (i) The institution will not use program funds to locate and develop 
jobs at an eligible institution;
    (ii) The institution will use program funds to locate and develop 
jobs for students during and between periods of attendance at the 
institution, not upon graduation;
    (iii) The program will not displace employees or impair existing 
service contracts;
    (iv) Program funds can realistically be expected to generate total 
student wages exceeding the total amount of the Federal funds spent 
under this subpart; and
    (v) If the institution uses Federal funds to contract with another 
institution, suitable performance standards will be part of that 
contract.

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

(Authority: 42 U.S.C. 2756)

[52 FR 45770, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 
FR 61417, 61419, Nov. 30, 1994]



Sec. 675.36  Procedures and records.

    Procedures and records concerning the administration of a JLD 
project established and operated under this subpart are governed by 
applicable provisions of Sec. 675.19.

(Authority: 42 U.S.C. 2756a)



Sec. 675.37  Termination and suspension.

    (a) If the Secretary terminates or suspends an institution's 
eligibility to participate in the FWS program, the action also applies 
to the institution's job location and development programs.
    (b) The Secretary pays an institution's financial obligations 
incurred and allowable before the termination but not incurred--
    (1) During a suspension; or
    (2) In anticipation of a suspension.
    (c) However, the institution must cancel as many outstanding 
obligations as possible.

(Authority: 42 U.S.C. 2756a)

[52 FR 45770, Dec. 1, 1987, as amended at 59 FR 61419, Nov. 30, 1994]



                     Subpart C_Work-Colleges Program

    Source: 59 FR 61418, Nov. 30, 1994, unless otherwise noted.



Sec. 675.41  Special definitions.

    The following definitions apply to this subpart:
    (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--
    (1) Is an integral and stated part of the institution's educational 
philosophy and program;

[[Page 810]]

    (2) Requires participation of all resident students for enrollment 
and graduation;
    (3) Includes learning objectives, evaluation, and a record of work 
performance as part of the student's college record;
    (4) Provides programmatic leadership by college personnel at levels 
comparable to traditional academic programs;
    (5) Recognizes the educational role of work-learning-service 
supervisors; and
    (6) Includes consequences for nonperformance or failure in the work-
learning-service program similar to the consequences for failure in the 
regular academic program.

(Authority: 42 U.S.C. 2756b)

[59 FR 61418, Nov. 30, 1994, as amended at 74 FR 55950, Oct. 29, 2009]



Sec. 675.42  Allocation and reallocation.

    The Secretary allocates and reallocates funds based on each 
institution's approved request for Federal funds for the Work-Colleges 
program as a percent of the total of such approved requests for all 
applicant institutions.

(Authority: 42 U.S.C. 2756b)



Sec. 675.43  Purpose.

    The purpose of the Work-Colleges program is to recognize, encourage, 
and promote the use of comprehensive work-learning-service programs as a 
valuable educational approach when it is an integral part of the 
institution's educational program and a part of a financial plan that 
decreases reliance on grants and loans and to encourage students to 
participate in community service activities.

(Authority: 42 U.S.C. 2756b)

[59 FR 61418, Nov. 30, 1994, as amended at 75 FR 55950, Oct. 29, 2009]



Sec. 675.44  Program description.

    (a) An institution that satisfies the definition of ``work-college'' 
in Sec. 675.41(a) and wishes to participate in the Work-Colleges program 
must apply to the Secretary at the time and in the manner prescribed by 
the Secretary.
    (b) An institution may expend funds separately, or in combination 
with other eligible institutions, to provide work-learning-service 
opportunities for currently enrolled students.
    (c) For any given award year, Federal funds allocated and 
reallocated for that award year under sections 442 and 462 of the HEA 
may be transferred for the purpose of carrying out the Work-Colleges 
program to provide flexibility in strengthening the self-help-through-
work element in financial aid packaging.

(Authority: 42 U.S.C. 2756b)

[59 FR 61418, Nov. 30, 1994, as amended at 75 FR 55950, Oct. 29, 2009]



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

    (a) Allowable costs. An institution participating in the Work-
Colleges program may use its allocated and reallocated program funds to 
carry out the following activities:
    (1) Support the educational costs of qualified students through 
self-help payments or credits provided under the work-learning-service 
program within the limits of part F of title IV of the HEA.
    (2) Promote the work-learning-service experience as a tool of 
postsecondary education, financial self-help, and community service-
learning opportunities.
    (3) Carry out activities in sections 443 or 446 of the HEA.
    (4) Administer, develop, and assess comprehensive work-learning-
service programs including--
    (i) Community-based work-learning-service alternatives that expand 
opportunities for community service and career-related work; and
    (ii) Alternatives that develop sound citizenship, encourage student 
persistence, and make optimum use of assistance under the Work-Colleges 
program in education and student development.
    (5) Coordinate and carry out joint projects and activities to 
promote work-learning-service.
    (6) Carry out a comprehensive, longitudinal study of student 
academic progress and academic and career outcomes, relative to student 
self-sufficiency in financing their higher education, repayment of 
student loans, continued community service, kind and

[[Page 811]]

quality of service performed, and career choice and community service 
selected after graduation.
    (b) Federal share of allowable costs. An institution, in addition to 
the funds allocated and reallocated for this program, may use 
transferred funds provided under its Federal Perkins Loan or its FWS 
program to pay allowable costs.
    (c) Institutional share of allowable costs. An institution must 
match Federal funds made available for this program on a dollar-for-
dollar basis from non-Federal sources. The institution shall keep 
records documenting the amount and source of its share.

(Authority: 42 U.S.C. 2756b)

[59 FR 61418, Nov. 30, 1994, as amended at 64 FR 58294, Oct. 28, 1999; 
75 FR 55950, Oct. 29, 2009]



Sec. 675.46  Unallowable costs.

    An institution participating in the Work-Colleges program may not 
use its allocated and reallocated program funds and transferred funds 
provided under its Federal Perkins Loan or its FWS program to pay costs 
related to the purchase, construction, or alteration of physical 
facilities or indirect administrative costs.

(Authority: 42 U.S.C. 2756b)



Sec. 675.47  Multi-institutional work-colleges arrangements.

    (a) An institution participating in the Work-Colleges program may 
enter into a written agreement with another participating institution to 
promote the work-learning-service experience.
    (b) The agreement described in paragraph (a) of this section must--
    (1) Designate the administrator of the program; and
    (2) Specify the terms, conditions, and performance standards of the 
program.
    (c) Each institution shall retain responsibility for the proper 
disbursement of the Federal funds it contributes under an agreement with 
other eligible institutions.

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

(Authority: 42 U.S.C. 2756b)



Sec. 675.48  Agreement.

    To participate in the Work-Colleges program, an institution shall 
enter into an agreement with the Secretary. The agreement provides that, 
among other things, the institution shall--
    (a) Assure that it will comply with all the appropriate provisions 
of the HEA and the appropriate provisions of the regulations;
    (b) Assure that it satisfies the definition of ``work-college'' in 
Sec. 675.41(a);
    (c) Assure that it will match the Federal funds according to the 
requirements in Sec. 675.45(c); and
    (d) Assure that it will use funds only to carry out the activities 
in Sec. 675.45(a).

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

(Authority: 42 U.S.C. 2756b)



Sec. 675.49  Procedures and records.

    In administering a Work-Colleges program under this subpart, an 
institution shall comply with the applicable provisions of 34 CFR part 
673 and this part 675.

(Authority: 42 U.S.C. 2756b)

[59 FR 61418, Nov. 30, 1994, as amended at 61 FR 60396, Nov. 27, 1996]



Sec. 675.50  Termination and suspension.

    Procedures for termination and suspension under this subpart are 
governed by applicable provisions found in 34 CFR part 668, subpart G of 
the Student Assistance General Provisions regulations.

(Authority: 42 U.S.C. 2756b)



                 Sec. Appendix A to Part 675 [Reserved]



PART 676_FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT PROGRAM
--Table of Contents



    Note: An asterisk (*) indicates provisions that are common to parts 
674, 675, and 676. The use of asterisks will assure participating 
institutions that a provision of one regulation is identical to the 
corresponding provisions in the other two.
Sec.
676.1  Purpose and identification of common provisions.
676.2  Definitions.
676.3-676.7  [Reserved]
676.8  Program participation agreement.

[[Page 812]]

676.9  Student eligibility.
676.10  Selection of students for FSEOG awards.
676.11-676.15  [Reserved]
676.16  Payment of an FSEOG.
676.17  [Reserved]
676.18  Use of funds.
676.19  Fiscal procedures and records.
676.20  Minimum and maximum FSEOG awards.
676.21  FSEOG Federal share limitations.

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

    Source: 52 FR 45778, Dec. 1, 1987, unless otherwise noted.



Sec. 676.1  Purpose and identification of common provisions.

    (a) The Federal Supplemental Educational Opportunity Grant (FSEOG) 
Program awards grants to financially needy students attending 
institutions of higher education to help them pay their educational 
costs.
    *(b) Provisions in these regulations that are common to all campus-
based programs are identified with an asterisk.

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

[52 FR 45778, Dec. 1, 1987, as amended at 59 FR 61420, Nov. 30, 1994]



Sec. 676.2  Definitions.

    (a) The definitions of the following terms used in this part are set 
forth in subpart A of the Student Assistance General Provisions, 34 CFR 
part 668:

Academic Competitiveness Grant (ACG) Program
Academic year
Award year
Clock hour
Enrolled
Expected family contribution (EFC)
Federal Family Education Loan (FFEL)
Federal Pell Grant Program
Federal Perkins Loan Program
Federal PLUS Program
Federal SLS Program
Federal Work-Study (FWS) Program
Full-time student
HEA
National Science and Mathematics Access to Retain Talent Grant (National 
SMART Grant) Program
Payment period
Secretary
Teacher Education Assistance for College and Higher Education (TEACH) 
Grant Program
TEACH Grant
Undergraduate student

    (b) The Secretary defines other terms used in this part as follows:
    *Financial need: The difference between a student's cost of 
attendance and his or her EFC.
    *Institution of higher education (institution): A public or private 
nonprofit institution of higher education, a proprietary institution of 
higher education, or a postsecondary vocational institution.
    * Need-based employment: Employment provided by an institution 
itself or by another entity to a student who has demonstrated to the 
institution or the entity (through standards or methods it establishes) 
a financial need for the earnings from that employment for the purpose 
of defraying educational costs of attendance for the award year for 
which the employment is provided.

(Authority: 20 U.S.C. 1070g, 1087aa-1087ii)

[52 FR 45778, Dec. 1, 1987, as amended at 53 FR 52582, Dec. 28, 1988; 57 
FR 32357, July 21, 1992; 59 FR 61421, Nov. 30, 1994; 60 FR 61815, Dec. 
1, 1995; 61 FR 60608, Nov. 29, 1996; 69 FR 12276, Mar. 16, 2004; 71 FR 
38003, July 3, 2006; 72 FR 62030, Nov. 1, 2007; 73 FR 35495, June 23, 
2008]



Secs. 676.3-676.7  [Reserved]



Sec. 676.8  Program participation agreement.

    To participate in the FSEOG program, an institution shall enter into 
a participation agreement with the Secretary. The participation 
agreement provides, among other things, that the institution shall--
    (a) Use the funds it receives solely for the purposes specified in 
this part; and
    (b) Administer the FSEOG program in accordance with the HEA, the 
provisions of this part, and the Student Assistance General Provisions 
regulations, 34 CFR part 668.

(Authority: 20 U.S.C. 1070b et seq., and 1094)

[52 FR 45778, Dec. 1, 1987, as amended at 59 FR 61421, Nov. 30, 1994]



Sec. 676.9  Student eligibility.

    A student at an institution of higher education is eligible to 
receive an FSEOG for an award year if the student--
    (a) Meets the relevant eligibility requirements contained in 34 CFR 
668.32;

[[Page 813]]

    (b) Is enrolled or accepted for enrollment as an undergraduate 
student at the institution; and
    (c) Has financial need as determined in accordance with part F of 
title IV of the HEA. A member of a religious order (an order, community, 
society, agency, or organization) who is pursuing a course of study at 
an institution of higher education is considered to have no financial 
need if that religious order--
    (1) Has as its primary objective the promotion of ideals and beliefs 
regarding a Supreme Being;
    (2) Requires its members to forego monetary or other support 
substantially beyond the support it provides; and
    (3) Directs the member to pursue the course of study or provides 
subsistence support to its members.

(Authority: 20 U.S.C. 1070b-1, 1070b-2 and 1091)

[52 FR 45778, Dec. 1, 1987, as amended at 59 FR 61421, Nov. 30, 1994; 62 
FR 50848, Sept. 26, 1997]



Sec. 676.10  Selection of students for FSEOG awards.

    (a)(1) In selecting among eligible students for FSEOG awards in each 
award year, an institution shall select those students with the lowest 
expected family contributions who will also receive Federal Pell Grants 
in that year.
    (2) If the institution has FSEOG funds remaining after giving FSEOG 
awards to all the Federal Pell Grant recipients at the institution, the 
institution shall award the remaining FSEOG funds to those eligible 
students with the lowest expected family contributions who will not 
receive Federal Pell Grants.
    (b) Part-time and independent students. If an institution's 
allocation of FSEOG funds is directly or indirectly based in part on the 
financial need demonstrated by students attending the institution as 
less-than-full-time or independent students, a reasonable portion of the 
allocation must be offered to those students.

(Authority: 20 U.S.C. 1070b-2)

[52 FR 45778, Dec. 1, 1987, as amended at 59 FR 61420, 61421, Nov. 30, 
1994; 64 FR 58294, Oct. 28, 1999]



Secs. 676.11-676.15  [Reserved]



Sec. 676.16  Payment of an FSEOG.

    (a)(1) Except as provided in paragraphs (b) and (e) of this section, 
an institution shall pay in each payment period a portion of an FSEOG 
awarded for a full academic year.
    (2) The institution shall determine the amount paid each payment 
period by the following fraction:


FSEOG

--------

  N

where:

FSEOG = the total FSEOG awarded for an academic year and N = the number 
          of payment periods that the institution expects the student 
          will attend in that year.

    (3) An institution may pay the student, within each payment period, 
at such times and in such amounts as it determines best meets the 
student's needs.
    (b) If a student incurs uneven cost or estimated financial 
assistance amounts during an academic year and needs additional funds in 
a particular payment period, the institution may pay FSEOG funds to the 
student for those uneven costs.
    (c) An institution shall disburse funds to a student or the 
student's account in accordance with the provisions in Sec. 668.164.
    (d)(1) The institution shall return to the FSEOG account any funds 
paid to a student who, before the first day of classes--
    (i) Officially or unofficially withdraws; or
    (ii) Is expelled.
    (2) A student who does not begin class attendance is deemed to have 
withdrawn.

[[Page 814]]

    (e) A correspondence student shall submit his or her first completed 
lesson before receiving an FSEOG payment.

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

(Authority: 20 U.S.C. 1070b. 1091)

[52 FR 45778, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 57 
FR 32357, July 21, 1992; 59 FR 61420, 61421, Nov. 30, 1994; 59 FR 61722, 
Dec. 1, 1994; 61 FR 60396, Nov. 27, 1996; 61 FR 60608, Nov. 29, 1996; 71 
FR 45698, Aug. 9, 2006; 72 FR 62030, Nov. 1, 2007]



Sec. 676.17  [Reserved]



Sec. 676.18  Use of funds.

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

(Authority: 20 U.S.C. 1070b et seq., 1095 and 1096)

[52 FR 45778, Dec. 1, 1987, as amended at 57 FR 32357, July 21, 1992; 59 
FR 61420, 61421, Nov. 30, 1994; 61 FR 60396, Nov. 27, 1996; 64 FR 58294, 
Oct. 28, 1999]



Sec. 676.19  Fiscal procedures and records.

    (a) Fiscal Procedures. (1) In administering its FSEOG program, an 
institution shall establish and maintain an internal control system of 
checks and balances that insures that no office can both authorize 
payments and disburse funds to students.
    (2) An institution shall maintain funds received under this part in 
accordance with the requirements in Sec. 668.163.
    (b) Records and reporting. (1) An institution shall follow the 
record retention and examination provisions in this part and in 34 CFR 
668.24.
    (2) An institution shall establish and maintain program and fiscal 
records that are reconciled at least monthly.
    (3) Each year an institution shall submit a Fiscal Operations Report 
plus other information the Secretary requires. The institution shall 
insure that the information reported is accurate and shall submit it on 
the form and at the time specified by the Secretary.

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

(Authority: 20 U.S.C. 1070b, 1094, and 1232f)

[52 FR 45778, Dec. 1, 1987, as amended at 53 FR 49147, Dec. 6, 1988; 59 
FR 61421, Nov. 30, 1994; 59 FR 61722, Dec. 1, 1994; 60 FR 61815, Dec. 1, 
1995; 61 FR 60493, Nov. 27, 1996; 62 FR 50848, Sept. 26, 1997]



Sec. 676.20  Minimum and maximum FSEOG awards.

    (a) An institution may award an FSEOG for an academic year in an 
amount it determines a student needs to continue his or her studies. 
However, except as provided in paragraph (c) of this section, an FSEOG 
may not

[[Page 815]]

be awarded for a full academic year that is--
    (1) Less than $100; or
    (2) More than $4,000.
    (b) For a student enrolled for less than a full academic year, the 
minimum allowable FSEOG may be proportionately reduced.
    (c) The maximum amount of the FSEOG may be increased from $4,000 to 
as much as $4,400 for a student participating in a program of study 
abroad that is approved for credit by the home institution, if 
reasonable costs for the study abroad program exceed the cost of 
attendance at the home institution.

(Authority: 20 U.S.C. 1070, 1070b-1)

[52 FR 45778, Dec. 1, 1987, as amended at 59 FR 61421, Nov. 30, 1994]



Sec. 676.21  FSEOG Federal share limitations.

    (a) Except as provided in paragraph (b) of this section, for the 
1993-94 award year and subsequent award years, the Federal share of the 
FSEOG awards made by an institution may not exceed 75 percent of the 
amount of FSEOG awards made by that institution.
    (b) The Secretary authorizes, for each award year, a Federal share 
of 100 percent of the FSEOGs awarded to students by an institution 
that--
    (1) Is designated as an eligible institution under--
    (i) The Developing Hispanic-Serving Institutions Program (34 CFR 
part 606);
    (ii) The Strengthening Institutions Program, American Indian 
Tribally Controlled Colleges and Universities Program, or Alaska Native 
and Native Hawaiian-Serving Institutions Program (34 CFR part 607); or
    (iii) The Strengthening Historically Black Colleges and Universities 
Program (34 CFR part 608); and
    (2) Requests that increased Federal share as part of its regular 
SEOG funding application for that year.
    (c) The non-Federal share of SEOG awards must be made from the 
institution's own resources, which include for this purpose--
    (1) Institutional grants and scholarships;
    (2) Tuition or fee waivers;
    (3) State scholarships; and
    (4) Foundation or other charitable organization funds.

(Authority: 20 U.S.C. 1068d, 1103d, and 1070b-2)

[52 FR 45778, Dec. 1, 1987, as amended at 59 FR 61421, Nov. 30, 1994; 66 
FR 34039, June 26, 2001]

                        PARTS 677	679 [RESERVED]

[[Page 817]]



                              FINDING AIDS




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

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 819]]



                    Table of CFR Titles and Chapters




                      (Revised as of July 1, 2018)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
       III  Administrative Conference of the United States (Parts 
                300--399)
        IV  Miscellaneous Agencies (Parts 400--599)
        VI  National Capital Planning Commission (Parts 600--699)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 2--199)
        II  Office of Management and Budget Guidance (Parts 200--
                299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300--
                399)
        IV  Department of Agriculture (Parts 400--499)
        VI  Department of State (Parts 600--699)
       VII  Agency for International Development (Parts 700--799)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
         X  Department of the Treasury (Parts 1000--1099)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1800--1899)
        XX  United States Nuclear Regulatory Commission (Parts 
                2000--2099)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Department of Housing and Urban Development (Parts 
                2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)

[[Page 820]]

     XXVII  Small Business Administration (Parts 2700--2799)
    XXVIII  Department of Justice (Parts 2800--2899)
      XXIX  Department of Labor (Parts 2900--2999)
       XXX  Department of Homeland Security (Parts 3000--3099)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)
     XXXIV  Department of Education (Parts 3400--3499)
      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
     XXXVI  Office of National Drug Control Policy, Executive 
                Office of the President (Parts 3600--3699)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)
       LIX  Gulf Coast Ecosystem Restoration Council (Parts 5900--
                5999)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
        IV  Office of Personnel Management and Office of the 
                Director of National Intelligence (Parts 1400--
                1499)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Parts 2100--2199)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600--3699)

[[Page 821]]

    XXVIII  Department of Justice (Parts 3800--3899)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Parts 4300--
                4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
     XXXVI  Department of Homeland Security (Parts 4600--4699)
    XXXVII  Federal Election Commission (Parts 4700--4799)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)
     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
      XLIX  Federal Labor Relations Authority (Parts 5900--5999)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
       LXX  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 8000--8099)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)

[[Page 822]]

     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)
    LXXXIV  Bureau of Consumer Financial Protection (Parts 9400--
                9499)
    LXXXVI  National Credit Union Administration (Parts 9600--
                9699)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)
    XCVIII  Council of the Inspectors General on Integrity and 
                Efficiency (Parts 9800--9899)
      XCIX  Military Compensation and Retirement Modernization 
                Commission (Parts 9900--9999)
         C  National Council on Disability (Parts 10000--10049)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--199)
         X  Privacy and Civil Liberties Oversight Board (Parts 
                1000--1099)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)

[[Page 823]]

         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
       XXV  Office of Advocacy and Outreach, Department of 
                Agriculture (Parts 2500--2599)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  National Institute of Food and Agriculture (Parts 
                3400--3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

[[Page 824]]

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XIII  Nuclear Waste Technical Review Board (Parts 1300--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts 9400--9499)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)

[[Page 825]]

      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research (Parts 1600--1699)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--1199)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)

[[Page 826]]

        XI  National Technical Information Service, Department of 
                Commerce (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399) [Reserved]

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  U.S. Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  U.S. Immigration and Customs Enforcement, Department 
                of Homeland Security (Parts 400--599) [Reserved]

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)

[[Page 827]]

       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Millennium Challenge Corporation (Parts 1300--1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)

[[Page 828]]

        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XV  Emergency Mortgage Insurance and Loan Programs, 
                Department of Housing and Urban Development (Parts 
                2700--2799) [Reserved]
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)

[[Page 829]]

      XXIV  Board of Directors of the HOPE for Homeowners Program 
                (Parts 4000--4099) [Reserved]
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--899)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Parts 900--999)
        VI  Office of the Assistant Secretary, Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--End)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

[[Page 830]]

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Bureau of Safety and Environmental Enforcement, 
                Department of the Interior (Parts 200--299)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
         V  Bureau of Ocean Energy Management, Department of the 
                Interior (Parts 500--599)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)
       XII  Office of Natural Resources Revenue, Department of the 
                Interior (Parts 1200--1299)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)

[[Page 831]]

        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of Investment Security, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)
         X  Financial Crimes Enforcement Network, Department of 
                the Treasury (Parts 1000--1099)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army, Department 
                of Defense (Parts 200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)

[[Page 832]]

        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Career, Technical and Adult Education, 
                Department of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599) 
                [Reserved]
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799) 
                [Reserved]
            Subtitle C--Regulations Relating to Education
        XI  (Parts 1100--1199) [Reserved]
       XII  National Council on Disability (Parts 1200--1299)

                          Title 35 [Reserved]

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
        VI  [Reserved]
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Parts 1500--
                1599)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  U.S. Copyright Office, Library of Congress (Parts 
                200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                300--399)
        IV  National Institute of Standards and Technology, 
                Department of Commerce (Parts 400--599)

[[Page 833]]

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)
      VIII  Gulf Coast Ecosystem Restoration Council (Parts 1800--
                1899)

          Title 41--Public Contracts and Property Management

            Subtitle A--Federal Procurement Regulations System 
                [Note]
            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
   62--100  [Reserved]
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
  103--104  [Reserved]
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
  129--200  [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]

[[Page 834]]

            Subtitle E--Federal Information Resources Management 
                Regulations System [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
   II--III  [Reserved]
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--699)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1099)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 400--999)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10099)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)

[[Page 835]]

       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
        IX  Denali Commission (Parts 900--999)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Administration for Children and Families, Department 
                of Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission of Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Parts 2300--2399)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

[[Page 836]]

        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)
         V  The First Responder Network Authority (Parts 500--599)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  Agency for International Development (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management, Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399) 
                [Reserved]

[[Page 837]]

        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  Civilian Board of Contract Appeals, General Services 
                Administration (Parts 6100--6199)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--1499) 
                [Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)

[[Page 838]]

        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

[[Page 839]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of July 1, 2018)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Administrative Conference of the United States    1, III
Advisory Council on Historic Preservation         36, VIII
Advocacy and Outreach, Office of                  7, XXV
Afghanistan Reconstruction, Special Inspector     5, LXXXIII
     General for
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              2, VII; 22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture, Department of                        2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Economic Research Service                       7, XXXVII
  Energy Policy and New Uses, Office of           2, IX; 7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  National Institute of Food and Agriculture      7, XXXIV
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force, Department of                          32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII

[[Page 840]]

Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army, Department of                               32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase from People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Career, Technical and Adult Education, Office of  34, IV
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazardous Investigation       40, VI
     Board
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X, XIII
Civil Rights, Commission on                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Council of the Inspectors General on Integrity    5, XCVIII
     and Efficiency
Court Services and Offender Supervision Agency    5, LXX
     for the District of Columbia
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce, Department of                           2, XIII; 44, IV; 50, VI
  Census Bureau                                   15, I
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, XI; 37, IV
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Technical Information Service          15, XI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Secretary of Commerce, Office of                15, Subtitle A
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Financial Protection Bureau              5, LXXXIV; 12, X
Consumer Product Safety Commission                5, LXXI; 16, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
     for the District of Columbia
Customs and Border Protection                     19, I
Defense Contract Audit Agency                     32, I
Defense, Department of                            2, XI; 5, XXVI; 32, 
                                                  Subtitle A; 40, VII
  Advanced Research Projects Agency               32, I

[[Page 841]]

  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III; 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
Denali Commission                                 45, IX
Disability, National Council on                   5, C; 34, XII
District of Columbia, Court Services and          5, LXX; 28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          2, XXXIV; 5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Career, Technical and Adult Education, Office   34, IV
       of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Career, Technical, and Adult Education, Office  34, IV
       of
Educational Research and Improvement, Office of   34, VII
Election Assistance Commission                    2, LVIII; 11, II
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Policy, National Commission for        1, IV
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             2, IX; 5, XXIII; 10, II, 
                                                  III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   2, XV; 5, LIV; 40, I, IV, 
                                                  VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99

[[Page 842]]

  National Drug Control Policy, Office of         2, XXXVI; 21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           2, XXXV; 5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       5, XXXVII; 11, I
Federal Emergency Management Agency               44, I
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Agency                    5, LXXX; 12, XII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority                 5, XIV, XLIX; 22, XIV
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Financial Crimes Enforcement Network              31, X
Financial Research Office                         12, XVI
Financial Stability Oversight Council             12, XIII
Fine Arts, Commission of                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV

[[Page 843]]

Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Gulf Coast Ecosystem Restoration Council          2, LIX; 40, VIII
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          2, III; 5, XLV; 45, 
                                                  Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X, XIII
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  2, XXX; 5, XXXVI; 6, I; 8, 
                                                  I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection                   19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing and Urban Development, Department of      2, XXIV; 5, LXV; 24, 
                                                  Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Immigration and Customs Enforcement Bureau        19, IV
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Independent Counsel, Offices of                   28, VI

[[Page 844]]

Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII, XV
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior, Department of                           2, XIV
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Natural Resource Revenue, Office of             30, XII
  Ocean Energy Management, Bureau of              30, V
  Reclamation, Bureau of                          43, I
  Safety and Enforcement Bureau, Bureau of        30, II
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
Investment Security, Office of                    31, VIII
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice, Department of                            2, XXVIII; 5, XXVIII; 28, 
                                                  I, XI; 40, IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Independent Counsel, Offices of                 28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor, Department of                              2, XXIX; 5, XLII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI

[[Page 845]]

  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I, VII
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Libraries and Information Science, National       45, XVII
     Commission on
Library of Congress                               36, VII
  Copyright Royalty Board                         37, III
  U.S. Copyright Office                           37, II
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Military Compensation and Retirement              5, XCIX
     Modernization Commission
Millennium Challenge Corporation                  22, XIII
Mine Safety and Health Administration             30, I
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space Administration     2, XVIII; 5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   2, XXII; 45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Capital Planning Commission              1, IV, VI
National Counterintelligence Center               32, XVIII
National Credit Union Administration              5, LXXXVI; 12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           2, XXXVI; 21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Geospatial-Intelligence Agency           32, I
National Highway Traffic Safety Administration    23, II, III; 47, VI; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II; 37, IV
National Intelligence, Office of Director of      5, IV; 32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       2, XXV; 5, XLIII; 45, VI

[[Page 846]]

  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III, IV, V
     Administration
National Transportation Safety Board              49, VIII
Natural Resources Conservation Service            7, VI
Natural Resource Revenue, Office of               30, XII
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy, Department of                               32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     2, XX; 5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Ocean Energy Management, Bureau of                30, V
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       2, XXXVII; 22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 5, IV; 45, 
                                                  VIII
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory Commission                      5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Privacy and Civil Liberties Oversight Board       6, X
Procurement and Property Management, Office of    7, XXXII
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Safety and Environmental Enforcement, Bureau of   30, II
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV

[[Page 847]]

Securities and Exchange Commission                5, XXXIV; 17, II
Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State, Department of                              2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     2, XII; 5, L
  Commercial Space Transportation                 14, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 47, IV; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury, Department of                           2, X;5, XXI; 12, XV; 17, 
                                                  IV; 31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection                   19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Financial Crimes Enforcement Network            31, X
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, Office of                  31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
U.S. Copyright Office                             37, II
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs, Department of                   2, VIII; 38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Wage and Hour Division                            29, V
Water Resources Council                           18, VI

[[Page 848]]

Workers' Compensation Programs, Office of         20, I, VII
World Agricultural Outlook Board                  7, XXXVIII

[[Page 849]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations (CFR) that 
were made by documents published in the Federal Register since January 
1, 2013 are enumerated in the following list. Entries indicate the 
nature of the changes effected. Page numbers refer to Federal Register 
pages. The user should consult the entries for chapters, parts and 
subparts as well as sections for revisions.
For changes to this volume of the CFR prior to this listing, consult the 
annual edition of the monthly List of CFR Sections Affected (LSA). The 
LSA is available at www.fdsys.gov. For changes to this volume of the CFR 
prior to 2001, see the ``List of CFR Sections Affected, 1949-1963, 1964-
1972, 1973-1985, and 1986-2000'' published in 11 separate volumes. The 
``List of CFR Sections Affected 1986-2000'' is available at 
www.fdsys.gov.

                                  2013

34 CFR
                                                                   78 FR
                                                                    Page
Chapter IV
Policy statement...................................................12955
Chapter VI
Policy statement....................................................5036
600  Technical correction..........................................17598
600.9  Regulation at 75 FR 66946 implementation date delayed to 7-
        1-14.......................................................29652
602  Technical correction..........................................17598
603  Technical correction..........................................17598
668  Technical correction..........................................17598
668  Authority citation revised....................................48050
668.71  (a)(1), (2), (b) and (c) amended...........................57799
668.75  Removed....................................................57799
668.91  (a)(1) and (4) revised; (a)(5), (6) and (b)(2)(v) added....48050
668.98  (c), (d) and (e) revised...................................48051
668.113  (b) revised...............................................48051
668.116  (e)(1)(ii), (iii), (v) and (vi) revised...................48051
668.122  (a) and (c) revised.......................................48051
668.124  (c), (d) and (e) revised..................................48051
668.204  (c)(1)(i) amended.........................................65804
668.214  (a)(1) and (d)(2) amended.................................65804
674.2  (b) amended.................................................65805
674.9  (j)(1) amended; (k) redesignated as (l); new (k) added......65805
674.19  (f) added..................................................65805
674.33  (g)(4)(i)(B) revised; (g)(8)(i) amended....................65805
674.34  (e)(4), (6) and (9) removed; (e)(5), (7) and (8) 
        redesignated as new (e)(4), (5) and (6); (d) introductory 
        text amd new (e)(5) amended; (f) revised...................65805
674.39  (a)(2) revised.............................................65805
674.50  (e)(1) amended.............................................65805
674.52  (b)(2) removed; (b)(1)(i), (ii), (c), (d) and (e) 
        redesignated as (b)(1), (2), (d), (e) and (f); new (c) and 
        (g) added..................................................65805

                                  2014

34 CFR
                                                                   79 FR
                                                                    Page
Chapter IV
Policy statement...................................................17035
Chapter IV  Heading revised; interim...............................76100
400  Heading revised; interim......................................76100
400.3  (a)(1), (6) and (9) removed; (e) added; interim.............76100
400.4  (a) introductory text revised; interim......................76100
426  Removed; interim..............................................76100
460  Removed; interim..............................................76100
464  Removed; interim..............................................76100
491  Removed; interim..............................................76100
Chapter V
Policy statement...................................................17035
535  Removed; interim..............................................76100

[[Page 850]]

Chapter VI
Policy statement.........17035, 31028, 31031, 31870, 32651, 33432, 52273
600  Technical amendment....................................71958, 71959
600.2  Amended; authority citation revised.........................65006
600.9  Regulation at 75 FR 66946 implementation date delayed in 
        part to 7-1-15.............................................35692
600.10  (c)(1), (2), (3)(i) and authority citation revised.........65006
600.20  (c)(1) introductory text and authority citation revised....65006
600.21  (a)(11) added; authority citation revised..................65006
606.6  (a)(1) and (6) removed; (c) added; interim..................76100
607  Authority citation revised....................................76100
607.6  (a)(1) and (6) removed; (c) added; interim..................76100
608  Authority citation revised....................................76101
608.3  (a)(1) and (6) removed; (c) added; interim..................76101
608.4  (a) introductory text revised; interim......................76101
609.3  (a)(1) and (6) removed; (c) added; interim..................76101
609.4  (a) introductory text revised; interim......................76101
611.61  Itroductory text revised; interim..........................76101
614.3  (a)(1), (5) and (8) removed; (c) added; interim.............76101
628.5  (b)(1)(i) and (ii) removed; (b)(1)(v), (vi), (vii) and (c) 
        added; (b)(2) revised; interim.............................76101
628.47  (d) and (e) revised; interim...............................76101
636  Removed; interim..............................................76101
637.3  (a)(1) and (6) removed; (c) added; interim..................76102
642.5  (a) revised; (c) added; interim.............................76102
642.6  Heading and (a) introductory text revised; interim..........76102
643.6  (a) revised; (c) added; interim.............................76102
643.7  Heading and (a) introductory text revised; interim..........76102
643.30  Introductory text revised; interim.........................76102
644.6  (a) revised; (c) added; interim.............................76102
644.7  Heading and (a) introductory text revised; interim..........76102
644.30  Introductory text revised; interim.........................76102
645.5  (a) revised; (c) added; interim.............................76102
645.6  Heading and (a) introductory text revised; interim..........76103
645.40  Introductory text revised; interim.........................76103
646.6  (a) revised; (c) added; interim.............................76103
646.7  Heading and (a) introductory text revised; interim..........76103
646.30  Introductory text revised; interim.........................76103
647.6  (a) revised; (c) added; interim.............................76103
647.7  Heading and (a) introductory text revised; interim..........76103
647.30  Introductory text revised; interim.........................76103
648  Authority citation revised....................................76103
648.8  (a)(1) and (6) removed; (c) added; interim..................76103
648.9  Heading and (a) introductory text revised; interim..........76103
650.3  (b)(1) and (5) removed; (c) added; interim..................76103
654.4  (a)(5) and (7) removed; (c) added; interim..................76104
655  Authority citation revised....................................76104
655.3  (a)(1) and (6) removed; (d) added; interim..................76104
655.4  Heading and (a) introductory text revised; interim..........76104
661.4  Heading and (a) introductory text revised; interim..........76104
662.6  (b) revised; (c) added; interim.............................76104
662.7  (a) introductory text revised; interim......................76104
663.6  (b) revised; (c) added; interim.............................76104
663.7  (a) introductory text revised; interim......................76104
664.4  (b) revised; (c) added; interim.............................76104
664.5  Heading and (a) introductory text revised; interim..........76105
668  Technical amendment....................................71958, 71959
668.6  (a) removed; (d) added; authority citation revised..........65006
668.7  Removed.....................................................65006
668.8  (d)(2)(iii) amended.........................................65006
668.14  (a)(26) revised............................................65007
668.46  Revised....................................................62783

[[Page 851]]

668.41--668.49 (Subpart D)  Appendix A revised.....................62789
668.401--668.415 (Subpart Q)  Added................................65007
668.412  (h) correctly added.......................................71958
668.413  Correctly amended; (b)(1)(i), (c)(2)......................71958
668.500--668.516 (Subpart R)  Added................................65019

                                  2015

34 CFR
                                                                   80 FR
                                                                    Page
Chapter VI
600  Policy statement..............................................73991
602  Policy statement..............................................73991
603  Policy statement..............................................73991
668  Authority citation revised....................................67193
    Policy statement...............................................73991
668.2  Amended.....................................................67193
668.8  (k) and (l) revised.........................................67193
668.16  (m)(2)(ii)(B), (iv) and (v) revised; (m)(2)(ii)(C) added 
                                                                   67235
668.161--668.167 (Subpart K)  Revised..............................67194
668.204  (c)(1)(ii), (iii) and (5) revised.........................67236
668.208  (a)(2)(ii), (b)(2) and (3) revised........................67236
668.214  (a) and (c)(2) revised....................................67236

                                  2016

34 CFR
                                                                   81 FR
                                                                    Page
Chapter IV
Chapter IV  Policy statement.......................................25339
462  Authority citation revised....................................55551
462.1  Authority citation revised..................................55551
462.2  Revised.....................................................55551
462.3  (a) introductory text and authority citation revised; (b) 
        amended....................................................55551
462.4  Revised.....................................................55551
462.10  (b) and authority citation revised.........................55552
462.11  (a)(4), (b), (e) introductory text, (f) introductory text, 
        (j)(4) and authority citation revised......................55552
462.12  (a)(2)(iv), (c)(2), (d)(2), (e)(1)(ii), (5) and authority 
        citation revised...........................................55552
462.13  (b) and authority citation revised.........................55552
462.14  (b) and authority citation revised.........................55552
462.40  (c)(2), (3) and authority citation revised.................55552
462.41  (b)(2), (3), (c)(2) and authority citation revised.........55553
462.42  Authority citation revised.................................55553
462.43  Removed....................................................55553
462.44  Removed....................................................55553
463  Added.........................................................55553
463.100--463.145 (Subpart H)  Added................................56046
463.150--463.240 (Subpart I)  Added................................56051
463.300--463.900 (Subpart J)  Added................................56057
464  Removed.......................................................55558
472  Removed.......................................................55558
477  Removed.......................................................55558
489  Removed.......................................................55558
490  Removed.......................................................55559
Chapter VI
Chapter VI  Policy statement.......................................39196
600.2  Amended; eff. 7-1-18........................................92262
600.9  (c) revised; (d) added; eff. 7-1-18.........................92262
612  Added.........................................................75614
668  Authority citation revised....................................76070
668.2  Regulation at 80 FR 67193 (b) early implementation date 
        announced..................................................20251
    (a) amended; eff. 7-1-18.......................................92262
668.14  (b)(30)(ii)(C) and (31)(v) amended; (b)(32) added..........76070
668.41  (h) and (i) added; authority citation revised..............76070
668.50  Added; eff. 7-1-18.........................................92262
668.71  (c) amended................................................76072
668.90  (a)(3) revised.............................................76072
668.93  (h) and (i) redesignated as (i) and (j); new (h) added.....76072
668.161--668.167 (Subpart K)  Regulation at 80 FR 67194 (a)(1) and 
        (c) early implementation date announced....................20251
    (e)(2)(ii)(B), (viii), (3), (f)(4)(i)(A), (vi), (xii) and (5) 
corrected..........................................................20251
    (a)(2) introductory text corrected.............................20251
    (a)(2) corrected...............................................20251
668.171  Revised...................................................76072
668.175  (c), (d), (f) and authority citation revised; (e) 
        removed; (f) added.........................................76075
668.176  Added.....................................................76076

[[Page 852]]

668.171--668.176 (Subpart L)  Appendix C added.....................76076
674.33  (g)(3) revised; (g)(8)(vi) through (ix) redesignated as 
        (g)(8)(vii) through (x); new (g)(8)(vi) added..............76078
674.61  (a) revised................................................76078

                                  2017

34 CFR
                                                                   82 FR
                                                                    Page
Chapter VI
600  Policy statement..............................................48424
612  Removed.......................................................21475
668  Policy statement.........................13227, 39362, 45465, 48195
    Regulation implementation date delayed in part to 7-1-18.......30975
    Regulation at 82 FR 21475 compliance date extended in part to 
1-1-18.............................................................32762
668.14  Regulation at 81 FR 76070 eff. date delayed indefinitely 
                                                                   27621
    Regulation at 81 FR 76070 eff. date delayed to 7-1-18..........49114
668.41  Regulation at 81 FR 76070 eff. date delayed indefinitely 
                                                                   27621
    Regulation at 81 FR 76070 eff. date delayed to 7-1-18..........49114
668.71  Regulation at 81 FR 76072 eff. date delayed indefinitely 
                                                                   27621
    Regulation at 81 FR 76072 eff. date delayed to 7-1-18..........49114
668.81  (a)(5), (e), (f) and (g) added; authority citation revised
                                                                    6256
668.83  (f)(1) amended..............................................6257
668.84  (b)(3) and (4) revised......................................6257
668.85  (b)(1)(iii) and (4) amended; (b)(3) revised.................6257
668.86  (a)(3) amended; (b)(3) and (4) revised......................6257
668.87  Redesignated as 668.88; added...............................6257
668.88  Redesignated as 668.89; redesignated from 668.87............6257
    Revised.........................................................6258
668.89  Redesignated as 668.90; redesignated from 668.88............6257
    Revised.........................................................6258
668.90  Redesignated as 668.91; redesignated from 668.89............6257
    Regulation at 81 FR 76072 eff. date delayed indefinitely.......27621
    Regulation at 81 FR 76072 eff. date delayed to 7-1-18..........49114
668.91  Redesignated as 668.92; redesignated from 668.90............6257
    (a)(2) redesignated as (a)(2)(i); new (a)(2)(i) and (4) 
amended; (a)(2)(ii) and (c)(2)(x) added.............................6259
668.92  Redesignated as 668.93; redesignated from 668.91............6257
668.93  Redesignated as 668.94; redesignated from 668.92............6257
    Regulation at 81 FR 76072 eff. date delayed indefinitely.......27621
    Regulation at 81 FR 76072 eff. date delayed to 7-1-18..........49114
668.94  Redesignated as 668.95; redesignated from 668.93............6257
668.95  Redesignated as 668.96; redesignated from 668.94............6257
668.96  Redesignated as 668.97; redesignated from 668.95............6257
    (a), (b) and (c) amended........................................6259
668.97  Redesignated as 668.98; redesignated from 668.96............6257
668.98  Redesignated as 668.99; redesignated from 668.97............6257
668.99  Redesignated from 668.98....................................6257
    (c) amended.....................................................6259
668.171  Regulation at 81 FR 76072 eff. date delayed indefinitely 
                                                                   27621
    Regulation at 81 FR 76072 eff. date delayed to 7-1-18..........49114
668.175  Regulation at 81 FR 76075 eff. date delayed indefinitely 
                                                                   27621
    Regulation at 81 FR 76075 eff. date delayed to 7-1-18..........49114
668  Regulation 81 FR 76076 eff. date delayed indefinitely.........27621
    Regulation at 81 FR 76076 eff. date delayed to 7-1-18..........49114
668.231  (b)(1) introductory text amended; authority citation 
        removed....................................................31913
674  Authority citation revised....................................31913
    Policy statement........................................45465, 48195
674.17  (a) introductory text amended; CFR correction..............13968
674.33  Regulation at 81 FR 76078 eff. date delayed indefinitely 
                                                                   27621
    Regulation at 81 FR 76078 eff. date delayed to 7-1-18..........49114

[[Page 853]]

674.51  (l)(1) amended; authority citation removed.................31913

                                  2018

   (Regulations published from January 1, 2018, through July 1, 2018)

34 CFR
                                                                   83 FR
                                                                    Page
Chapter VI
Chapter  VI Policy statement.......................................10619
668  Notification..................................................28177
    Technical correction...........................................28543
668.14  Regulation at 81 FR 76070 eff. date further delayed to 7-
        1-19........................................................6459
668.41  Regulation at 81 FR 76070 eff. date further delayed to 7-
        1-19........................................................6459
668.71  Regulation at 81 FR 76072 eff. date further delayed to 7-
        1-19........................................................6459
668.84  (a) amended.................................................2065
668.90  Regulation at 81 FR 76072 eff. date further delayed to 7-
        1-19........................................................6459
668.93  Regulation at 81 FR 76072 eff. date further delayed to 7-
        1-19........................................................6459
668.171  Regulation at 81 FR 76072 eff. date further delayed to 7-
        1-19........................................................6459
668.175  Regulation at 81 FR 76075 eff. date further delayed to 7-
        1-19........................................................6459
668  Regulation at 81 FR 76076 eff. date further delayed to 7-1-19
                                                                    6459
674.33  Regulation at 81 FR 76078 eff. date further delayed to 7-
        1-19........................................................6459


                                    