[Federal Register Volume 59, Number 38 (Friday, February 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4152]


[[Page Unknown]]

[Federal Register: February 25, 1994]


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Part VI





Department of Education





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34 CFR Parts 690 and 691




Federal Pell Grant Program; Presidential Access Scholarship Program; 
Proposed Rule
DEPARTMENT OF EDUCATION

34 CFR Parts 690 and 691

RIN 1840-AB73

 
Federal Pell Grant Program; Presidential Access Scholarship 
Program

AGENCY: Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to amend the Federal Pell Grant Program 
regulations and to establish regulations for the newly enacted 
Presidential Access Scholarship Program. These regulations are needed 
to implement recently enacted provisions of the Higher Education Act of 
1965 (HEA), as amended by the Higher Education Amendments of 1992 (the 
1992 Amendments), enacted on July 23, 1992.
    The proposed amendments to the Federal Pell Grant Program 
regulations incorporate changes in student eligibility requirements and 
institutional administration requirements. The program name has also 
been changed from the ``Pell Grant Program'' to the ``Federal Pell 
Grant Program.''
    The proposed regulations for the Presidential Access Scholarship 
Program specify the eligibility requirements for students to apply for 
and receive an award. These proposed regulations also specify the roles 
of institutions of higher education, State officials, and State 
agencies in administering the program.

DATES: Comments must be received on or before April 11, 1994.

ADDRESSES: All comments concerning these proposed regulations should be 
addressed to Fred H. Sellers, Student Financial Assistance Programs, 
Office of Postsecondary Education, U.S. Department of Education, 400 
Maryland Avenue SW., room 4018, Regional Office Building 3, Washington, 
DC 20202-5447. Telephone (202) 708-4607.
    A copy of any comments that concern information collection 
requirements should also be sent to the Office of Management and Budget 
at the address listed in the Paperwork Reduction Act section of this 
preamble.

FOR FURTHER INFORMATION CONTACT: Denise Boulanger, Student Financial 
Assistance Programs, Office of Postsecondary Education, U.S. Department 
of Education, 400 Maryland Avenue SW., room 4018, Regional Office 
Building 3, Washington, DC 20202-5447. Telephone (202) 708-4607. 
Individuals who use a telecommunications device for the deaf (TDD) may 
call the Federal Information Relay Service at 1-800-877-8339 between 8 
a.m. and 8 p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION: The purpose of the proposed revisions in the 
regulations for the Federal Pell Grant Program (formerly known as the 
Pell Grant Program) is to incorporate statutory changes to the HEA, as 
amended by the 1992 Amendments. The proposed changes in the Pell Grant 
Program would: (1) Rename the program the Federal Pell Grant Program; 
(2) eliminate the duration of eligibility limitations; (3) revise the 
formula for calculating a Federal Pell Grant payment for a payment 
period; (4) limit the eligibility of incarcerated students; (5) 
incorporate references to the Federal Need Analysis System's Expected 
Family Contribution (EFC) under part F, title IV of the HEA; (6) 
eliminate, in certain circumstances, the requirement that the student 
present a Student Aid Report (SAR) to the institution in order to be 
paid his or her Federal Pell Grant and allow an institution to pay a 
student on the basis of a valid institutional student information 
report (ISIR), i.e., a report to an institution that includes an 
applicant's application information and EFC, generated by the central 
processor; and (7) allow less-than-half-time students to receive a 
Federal Pell Grant.
    The 1992 Amendments included a provision giving the Secretary the 
option to allow, on a case-by-case basis, a student pursuing a 
baccalaureate degree to receive two Federal Pell Grants within one 12-
month period if the student completed more than an academic year of 
coursework and needed funds to attend additional terms beyond the 
academic year but within the same award year. The Higher Education 
Technical Amendments of 1993, enacted on December 20, 1993, (Pub. L. 
103-208) (The 1993 Technical Amendments) expanded the eligibility for a 
second Scheduled Award to include students pursuing an associate 
degree. The Secretary is requesting comment on how to implement this 
provision fairly and equitably.
    The Federal Pell Grant Program, a cornerstone of the Federal 
student financial aid programs, supports National Education Goal 5 
which states that every adult American will be literate and will 
possess the knowledge and skills to compete in a global economy and 
exercise the rights and responsibilities of citizenship. The program, 
reauthorized in section 401 of the 1992 Amendments, will further Goal 5 
by helping eligible students obtain marketable skills, achieve higher 
levels of education than they might otherwise have pursued, and obtain 
the knowledge required to discharge the responsibilities of 
citizenship.

Federal Pell Grant Program

    Significant Proposed Changes to the Federal Pell Grant Program 
Regulations:

Section 690.2  General Definitions

    The Secretary proposes to amend the definitions in Sec. 690.2 for 
``disbursement schedule'' and ``enrollment status'' to include 
references to students enrolled less-than-half-time, ``payment 
schedule,'' and to add new definitions of ``academic year,'' ``annual 
award,'' ``central processor,'' ``expected family contribution,'' 
``incarcerated student,'' ``institutional student information report,'' 
``less-than-half-time student,'' and ``valid institutional student 
information report'' to incorporate clarifying eligibility language 
included in the 1992 Amendments.
    The Secretary believes that the new definition of academic year in 
the 1992 Amendments is particularly important because it not only 
requires completion of a minimum number of credit hours or clock hours 
during an academic year, it also requires that the academic year be a 
minimum of 30 weeks of instructional time.

Section 690.3 Payment Period.

    The Secretary proposes to amend Sec. 690.3 to define more 
accurately payment periods for eligible programs offered in credit 
hours, but not in academic terms, if the majority of credit hours 
cannot be earned until the program or academic year is completed. Under 
the current definition, determining the end of one payment period and 
the beginning of another for this type of program has been uncertain 
and has resulted in program abuse at some institutions. The addition to 
the definition of a payment period was made to prevent a particular 
type of program abuse that occurs at an institution without terms that 
does not have a clearly defined midpoint in its program or academic 
year. Specifically, institutions have arbitrarily established a 
midpoint that is inappropriately early. As a result, students received 
disbursements in excess of the coursework that the students completed 
for the payment period. The Secretary is proposing that for this type 
of program, if a student cannot earn half the credits in a program or 
academic year by the calendar midpoint of that program or academic 
year, the first payment period shall end and the second payment period 
shall begin on the later of: (a) the calendar midpoint between the 
first and last scheduled days of class of the program or academic year; 
or (b) the date, as determined by institution, that the student has 
completed half of his or her academic coursework. For example, an 
institution offers a program which consists of 24 semester hours. A 
student is not considered to have earned any of the semester hours 
until he or she finishes the program. The student's second payment 
period begins on the later of the date of the calendar midpoint in the 
program or the date that the institution determines the student has 
completed half of his or her coursework.

Section 690.6  Duration of Eligibility

    Currently Secs. 690.6(b) through (d) limit, in most instances, the 
eligibility of a Federal Pell Grant recipient to 5 or 6 years, 
depending on the length of the recipient's undergraduate program of 
study. The 1992 Amendments remove the provisions in section 411(c)(1) 
of the HEA that limited the number of years a student was eligible to 
receive an award. Therefore, the Secretary proposes to amend this 
section of the regulations by removing those limitations.

Section 690.8  Enrollment Status for Students Taking Regular and 
Correspondence Courses

    The Secretary proposes to amend Sec. 690.8 concerning the 
enrollment status of students taking regular and correspondence courses 
to include less-than-half-time students.

Section 690.10  Administrative Cost Allowance to Participating Schools

    In those instances where an institution enrolls significant numbers 
of less-than-full-time or independent students, the Secretary proposes 
that the institution use some of its administrative cost allowance 
funds to make financial aid services available to those students as 
required under section 489(b)(2) of the HEA.

Subpart C--Expected Family Contribution for Students With Special 
Conditions

    The Secretary proposes to remove subpart C of the current 
regulations. In fiscal years 1989-92, the Department of Education 
Appropriations Act provided that section 479A of the HEA, which allows 
a financial aid administrator to exercise professional judgment 
concerning a student's and a student's family's ability to pay for his 
or her education, did not apply to the Pell Grant Program. Instead, the 
Secretary prescribed ``special conditions'' that, if the student or his 
or her family met them, would allow the student to apply for a Pell 
Grant using expected year income instead of base year income. The 
regulations in subpart C specified those ``special conditions.'' 
However, the Department of Education Appropriations Act for fiscal year 
1993 does not exempt the Federal Pell Grant Program from section 479A 
for award year 1993-94. Consequently, financial aid administrators may 
exercise professional judgment concerning a student's ability to pay 
for his or her education when determining the student's eligibility for 
a Federal Pell Grant. Based on that judgment, a financial aid 
administrator may make adjustments to data elements submitted by the 
student on his or her application, recalculate the expected family 
contribution (EFC), and pay the student based on the new EFC. The 
special conditions contained in subpart C of the current regulations 
will, therefore, no longer be necessary for award year 1993-94.

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

    The 1992 Amendments authorize and require a financial aid 
administrator to pay a student his or her Federal Pell Grant based on 
an output document produced by the central processor and sent directly 
to the institution. Therefore, the Secretary proposes to allow an 
institution to pay a student a Federal Pell Grant not only when the 
student presents a valid Student Aid Report (SAR) but, under certain 
circumstances, when the institution obtains a ``valid institutional 
student information report'' from the central processor.

Section 690.62  Calculation of a Federal Pell Grant

    The 1992 Amendments increase the amount of the minimum grant from 
$200 to $400. The Secretary proposes to amend the language in 
Sec. 690.92 to reflect this change and to provide that a student 
eligible for a grant equal to or greater than $200, but less than $400, 
shall be awarded $400. In addition, the 1992 Amendments eliminate the 
Secretary's authority to adjust Federal Pell Grant awards due to 
insufficient appropriations. Therefore, the Secretary proposes to 
remove Sec. 690.62(c), which provides for adjustments for less-than-
full funding.

Section 690.63  Calculation of a Federal Pell Grant for a Payment 
Period

    The 1992 Amendments add new statutory language defining an 
``academic year.'' The new definition no longer defines the minimum 
academic year for a program using only one measure of length. Instead, 
the new definition uses two minimum measures that must be met, and 
these measures are, in many circumstances, different from the ones used 
under the old definition. The new definition requires that an academic 
year be a minimum of 30 weeks of instructional time in which a full-
time student is expected to complete at least (1) 24 semester or 
trimester hours; (2) 36 quarter hours at an institution that measures 
program length in credit hours; or (3) 900 clock hours at an 
institution that measures program length in clock hours.
    The 1993 Technical Amendments further amended section 481 of the 
HEA definition of academic year to provide that the Secretary may 
reduce, for good cause on a case-by-case basis, the 30-week minimum to 
not less than 26 weeks of instructional time in the case of an 
institution of higher education that provides a 2-year or 4-year 
program of instruction for which it awards an associate or 
baccalaureate degree. The Secretary is requesting comment on how to 
implement this provision in another notice of proposed rulemaking for 
subparts A and B of the Student Assistance General Provisions 
regulations (34 CFR part 668) which will be published in the Federal 
Register in the near future.
    While the Secretary is amending the definition of ``academic year'' 
to comply with section 481 of the HEA, it is also necessary for the 
Secretary to amend Sec. 690.63 to incorporate the new definition of 
academic year, as defined in section 481 of the HEA, into the Federal 
Pell Grant payment calculations. To implement this change for purposes 
of Federal Pell Grant award calculations, each institution must define 
its academic year for each of its programs in terms of the number of 
credit hours or clock hours offered and the number of weeks of 
instructional time during which those hours are provided. That 
definition must satisfy the new statutory definition of an academic 
year, i.e., at least 24 semester or trimester hours, 36 quarter hours, 
or 900 clock hours, and at least 30 weeks of instructional time. The 
institution may, of course, use the same definition of academic year 
for each of its programs. In addition, an institution must determine if 
its traditional definition of an academic year--2 semesters or 
trimesters, or 3 quarters at an institution that measures program 
length in credit hours, or at least 900 clock hours at an institution 
that measures program length in clock hours--meets or exceeds 30 weeks 
of instructional time as incorporated in the new statutory definition 
of academic year.
    Institutions with standard academic terms have traditionally 
defined an academic year as the period of time in which a full-time 
student is expected to complete two semesters or trimesters in the fall 
and spring or three quarters in the fall, winter, and spring. These 
institutions have not generally included additional or special terms 
that it may offer, such as in the summer, as part of the academic year. 
Therefore, the Secretary believes that many institutions with 
semesters, trimesters, or quarters can satisfy the academic year 
requirement in their regularly scheduled fall and spring semesters or 
trimesters or fall, winter, and spring quarters.
    The following discussions provide descriptions of the procedures 
for calculating the amount of a student's payment for a payment period. 
The Secretary recognizes that these procedures may be considered 
complex and welcomes specific comment on any ways to simplify or better 
present them that do not compromise program integrity or implementation 
of the new definition of academic year.

Programs Using Standard Terms With at Least 30 Weeks of Instructional 
Time as Described in Sec. 690.63(a)(1) With Awards Calculated Under 
Sec. 690.63(b)

    A student at a term institution may currently complete the credit-
hour requirements for an academic year in two semesters or trimesters, 
fall and spring, or three quarters, fall, winter, and spring. Those 
terms may total at least 30 weeks of instructional time and the 
institution may require a student to enroll for at least 12 credit 
hours for any term in the award year to be considered full-time. 
Moreover, the institution may not offer the student's program with 
multiple start dates or overlapping terms. If all conditions apply, the 
institution continues to calculate the Federal Pell Grant payment in a 
payment period, for all terms, in the same manner as that payment is 
currently calculated. For example, an institution has fall and spring 
semesters that when combined provide 24 semester hours of credit, 12 
hours per semester for a full-time student, in 30 weeks of 
instructional time. Therefore, a full-time student is paid up to one-
half of his or her Scheduled Award for each of the fall and spring 
semesters. Further, the student will be eligible to be paid one-half of 
his or her Scheduled Award, if he or she has enough remaining 
eligibility (including, if eligible, a second Scheduled Award) for a 
summer term even if that term is not at least one-half of the academic 
year in weeks of instructional time.

Programs Using Standard Terms With Less Than 30 Weeks of Instructional 
Time as Described in Sec. 690.63(a)(2) With Awards Calculated Under 
Sec. 690.63(c)

    A student at a term institution that measures its program in credit 
hours may currently complete the credit-hour requirements for an 
academic year in two semesters or trimesters, fall and spring, or three 
quarters, fall, winter, and spring. However, the weeks in these terms 
may total less than 30 weeks of instructional time, and the institution 
may require a student to attend at least 12 hours for any term in the 
award year to be considered full-time. Moreover, the institution may 
not offer the student's program with multiple start dates or 
overlapping terms. Under these conditions, the institution must prorate 
the Federal Pell Grant award for a term based on the number of weeks of 
instructional time in the two semesters or trimesters or three quarters 
that it takes to complete the credit-hour requirements for an academic 
year compared to the number of weeks of instructional time required to 
complete the institution's academic year as defined by the institution 
consistent with section 481 of the HEA. A payment for a payment period, 
for all terms, is then determined from a student's award. For example, 
an institution has two semesters, fall and spring, in which a student 
attends 12 hours each semester to be considered a full-time student. 
The two semesters have 28 weeks of instructional time. The institution 
defines its academic year as 24 semester hours and 30 weeks of 
instructional time. The institution must determine a full-time 
student's award for the two semesters by multiplying the student's 
Scheduled Award by 28 weeks of instructional time, the instructional 
time in the fall and spring semesters, divided by the 30 weeks of 
instructional time in the institution's academic year consistent with 
section 481 of the HEA. The student will be eligible to be paid one-
half of his or her award as calculated by this formula for any term in 
the award year. Further, the student will be eligible to be paid one-
half of his or her award as calculated by this formula, if he or she 
has enough remaining eligibility, for the summer term.

Other Programs Using Terms and Credit Hours as Described in 
Sec. 690.63(a)(3) With Awards Calculated Under Sec. 690.63(d)

    These provisions apply to institutions that use terms, measure 
progress in credit hours, and do not meet the provisions of Sec. 690.63 
(a)(1) and (b) or Sec. 690.63 (a)(2) and (c). In addition, the 
Secretary proposes to provide that institutions that meet the 
requirements under Sec. 690.63 (a)(1) or (a)(2) to use the formulas in 
Sec. 690.63 (b) or (c) may also use the formula in (d). The Secretary 
believes that providing this option ensures that these institutions 
will have the flexibility to handle any special circumstances that may 
arise. If the terms are standard terms (i.e., semesters, trimesters, or 
quarters), the institution must determine a student's enrollment status 
and, based on that enrollment status, determine the student's award 
from the Payment Schedule or one of the Disbursement Schedules (annual 
award). Then, a student's payment for a payment period is determined by 
multiplying the annual award by the number of weeks of instructional 
time in the term divided by the number of weeks of instructional time 
in the institution's academic year. For example, an institution uses 
quarters and credit hours and those quarters begin each week throughout 
the year. A full-time student is required to enroll for at least 12 
credit hours per quarter. Each quarter provides 8 weeks of 
instructional time. The institution defines its academic year as 36 
quarter hours and 30 weeks of instructional time. A student's payment 
for a payment period is calculated by: (1) Determining his or her 
enrollment status; (2) based on that enrollment status, selecting his 
or her annual award from the proper Payment or Disbursement Schedule; 
and (3) multiplying the annual award by the fraction of the number of 
weeks of instructional time in the term (8 weeks) divided by the number 
of weeks of instructional time in the academic year (30 weeks). The 
student's payment for a payment period would be 8/30 of the annual 
award.
    For programs at institutions using terms and credit hours, other 
than semesters, trimesters, and quarters, the institution must first 
determine a student's enrollment status before an award can be 
calculated. If the terms are not semesters, trimesters, or quarters, 
full-time enrollment status is determined by: (1) Dividing the number 
of weeks of instructional time in the term by the number of weeks of 
instructional time in the academic year; and (2) multiplying the credit 
hours in the academic year by the number obtained in item 1. Once the 
institution determines the number of credit hours for full-time 
enrollment status in a term and determines what portion of full-time 
equals three-quarter-time, half-time, or less-than-half-time enrollment 
status, the institution must compare the number of hours the student is 
enrolled to the number of hours required for full-time, three-quarter-
time, half-time, or less-than-half-time. Once enrollment status is 
determined, the institution selects the appropriate Payment or 
Disbursement Schedule to determine the student's annual award. The 
institution then divides the number of weeks of instructional time in 
the payment period by the number of weeks of instructional time in the 
institution's academic year and calculates the student's payment for a 
payment period by multiplying the annual award by results of the 
fraction. For example, an institution has 4 nonstandard terms.
    The first and fourth terms provide 4 weeks of instructional time, 
the second term provides 8 weeks of instructional time, and the third 
term provides 6 weeks of instructional time. The institution defines 
its academic year as 30 credit hours and 30 weeks of instructional 
time. A student enrolls for 6 credits during the first and fourth terms 
of 4 weeks each, 12 credits for the second term of 8 weeks, and 6 
credits during the third term of 6 weeks. To calculate the student's 
enrollment status in the first and fourth terms, the institution 
divides the number of weeks of instructional time in each term (4) by 
the number of weeks of instructional time in the academic year (30). 
The institution then multiplies the credit hours in its academic year 
(30) by the fraction (\4/30\) to determine the student's enrollment 
status ((30 (\4/30\))=4). The student must be enrolled for 4 credits to 
be considered full time. Since the student is enrolled full time for 6 
hours in the first term, the student's annual award is determined from 
the Payment Schedule. To determine the payments for the first and 
fourth terms, the institution divides the number of weeks in the terms 
(4) by the number of weeks in the academic year (30). The institution 
then multiplies the annual award by the results of that fraction (\4/
30\=.133). The enrollment status and payments for the other payment 
periods are determined in the same manner.

Programs Using Clock Hours or Credit Hours Without Terms as Described 
in Sec. 690.63(a)(4) With Awards Calculated Under Sec. 690.63(e)

    At an institution that offers its programs using credit hours 
without terms or clock hours, the institution calculates a student's 
Federal Pell Grant for a payment period by: (1) Determining the 
student's Scheduled Federal Pell Grant from the Payment Schedule; (2) 
multiplying the student's Scheduled Award by the following fraction: 
the number of weeks of instructional time required for a full-time 
student to complete the lesser of the clock or credit hours in the 
program or academic year divided by the number of weeks of 
instructional time for a full-time student to complete the clock or 
credit hours in the institution's academic year; and (3) multiplying 
the amount determined in step 2 by the following fraction: the number 
of credit or clock hours in the payment period divided by the number of 
credit or clock hours in the institution's academic year.
    For example, a student enrolls in a 1,200 clock-hour program at an 
institution that defines its academic year as 900 clock hours and 30 
weeks of instructional time. Each payment period is 450 clock hours, 
and a full-time student completes the clock hours in the payment period 
in 12 weeks of instructional time. To determine the student's payment 
for a payment period, the institution must determine the student's 
Scheduled Award using the Payment Schedule. The institution then must 
multiply the student's Scheduled Award by the number of weeks of 
instructional time that it takes a full-time student to complete the 
clock hours in the academic year divided by the number of weeks of 
instructional time in the academic year (24/30 = .8). The institution 
multiplies that amount by the number of clock hours in the payment 
period divided by the number of clock hours in the academic year (450/
900 = .5).

Section Sec. 690.65  Transfer Student: Attendance at More Than One 
Institution During an Award Year

    Because the 1992 Amendments authorize and require a financial aid 
administrator to pay a student his or her Federal Pell Grant based on 
receipt of a valid institutional student information report produced by 
the central processor that is sent directly to the institution, the 
Secretary proposes to amend Sec. 690.65 to incorporate the use of the 
institutional student information report into the procedures for paying 
transfer students. The use of an institutional student information 
report to, in some instances, pay a student a Federal Pell Grant 
eliminates the SAR as the only document from which a student can be 
paid.

Section 690.75  Determination of Eligibility for Payment

    The 1992 Amendments allow a student attending an institution on a 
less-than-half-time basis to receive a Federal Pell Grant. Prior to the 
1992 Amendments, a less-than-half-time student was only eligible under 
certain restricted conditions. Therefore, the Secretary proposes to 
amend the regulations to incorporate less-than-half-time students into 
the requirements for determining the eligibility of a student for 
payment.
    The Secretary proposes to limit the eligibility of an incarcerated 
student for a Federal Pell Grant as required under amended section 
401(b)(8) of the HEA. A student incarcerated under a sentence of death 
or life without eligibility for parole or release would not be eligible 
to receive a Federal Pell Grant. In addition, the HEA provides that for 
an incarcerated student to receive a Federal Pell Grant, the State in 
which the student is incarcerated must demonstrate to the Secretary 
that it uses Federal Pell Grants to supplement, not supplant, the 
postsecondary assistance provided incarcerated students in fiscal year 
1988. The Secretary has determined that this provision applies only to 
students who are incarcerated by a State. Federally incarcerated 
students are not covered by this provision. Under the proposed 
regulations, the Secretary requires a State to submit an annual report 
to demonstrate its continuing financial commitment to assisting 
incarcerated students to receive postsecondary education assistance.
    In a May 7, 1993 letter to the Governor of each State, the 
Secretary provided a form for the 1993-94 award year. Using the form, 
each State can provide the information necessary to determine if that 
State is currently using Federal Pell Grant funds to supplement and not 
supplant State postsecondary assistance provided to incarcerated 
students in fiscal year 1988. The form for the 1993-94 award year did 
not require, as do the proposed regulations, that a State provide the 
data by individual categories. The Secretary believes that the 
categories assist a State in determining sources of postsecondary 
assistance provided to incarcerated students, and the State must 
consider these categories to arrive at a total amount. The Secretary 
also believes that providing the information by individual categories 
will assure that the information is more accurate while imposing 
minimal additional burden on the State. However, the Secretary is 
requesting comment on whether providing the data by individual 
categories imposes an additional burden on States and, if so, whether 
commenters believe that the benefits of more accurate information may 
outweigh the additional burden.

Section 690.77  Initial Disbursement of a Federal Pell Grant in an 
Award Year Without a Valid SAR or Valid Institutional Student 
Information Report

    The Secretary has proposed an amendment to Sec. 690.77 to allow an 
institution to make an initial Federal Pell Grant disbursement before 
receiving a valid SAR or valid institutional student information report 
sent to the institution from the central processor. The Secretary is 
proposing this amendment to include payment of an initial disbursement 
before receiving the valid institutional student information report 
provided for in the amendment to section 401(f) of the HEA.
    Notwithstanding the proposed amendment, the Secretary is also 
considering removing Sec. 690.77 due to the rapid delivery of 
institutional student information reports to institutions, the 
increased use of the Department's electronic programs in the Federal 
application processing system, and the growing number of mandated 
Federal requirements, such as matching applicant information with other 
Federal agency data bases. The Secretary specifically requests comment 
concerning the possible deletion of this section.

Section 690.80  Recalculation of a Federal Pell Grant Award

    Because there is no longer statutory authority requiring the use of 
the provision in subpart C, the Secretary proposes to amend Sec. 690.80 
to remove the references to sections in subpart C. Those sections 
provided for a student to apply for a Federal Pell Grant using expected 
year income instead of base year income if the student or his or her 
family met special conditions.

Section 690.82  Maintenance and Retention of Records

    The Secretary proposes to amend the recordkeeping requirements in 
the regulations to require an institution to maintain the SARs or 
institutional student information reports only for those students who 
receive Federal Pell Grants. Currently, an institution is required to 
keep SARs on file for every student who submits one to the institution, 
regardless of whether the student receives assistance from the 
institution. The Secretary believes that the current recordkeeping 
requirement in Sec. 690.82 is unnecessary if the student did not 
receive a Federal Pell Grant. All other recordkeeping requirements of 
other title IV HEA programs would still apply.

Presidential Access Scholarship Program

    The proposed regulations for the Presidential Access Scholarship 
(PAS) Program would implement the PAS Program as enacted under title 
IV, part A, subpart 2, chapter 3 of the amended HEA. Funds for the PAS 
Program were not appropriated for fiscal year 1993 (the 1993-94 award 
year) or 1994 (the 1994-95 award year). As indicated in the Conference 
Report for the 1992 Amendments to the HEA, the purposes of the PAS 
Program are to (1) encourage students to finish high school and attend 
college and (2) to upgrade the course of study completed by high school 
graduates who are from low or moderate-income families. The PAS Program 
supports National Education Goal 2, which calls for the high school 
graduation rate in the United States to reach at least 90 percent; 
National Education Goal 3, which calls for students to learn to use 
their minds well so they will be prepared for responsible citizenship, 
further learning, and productive employment in our modern economy; and 
National Education Goal 5, which calls for every adult American to be 
literate and possess the knowledge and skills to compete in a global 
economy and exercise the rights and responsibilities of citizenship.
    One of the eligibility requirements for a student to qualify for a 
PAS award is based directly on his or her eligibility for a Federal 
Pell Grant award. The Secretary has developed a functional delivery 
system for providing Federal Pell Grant funds to a student through his 
or her institution. Because the amount of the PAS award is based on the 
amount of a student's Federal Pell Grant and the PAS can easily be 
incorporated into the Federal Pell Grant delivery system, the Secretary 
believes that this system is the best method for providing a student 
with his or her PAS award. The Secretary, therefore, is proposing 
regulations describing the requirements for a participating 
institution's administration of the program. The proposed regulations 
for the PAS Program duplicate, or are as similar as possible to, the 
Federal Pell Grant Program regulations. The Secretary believes that 
coordinating the administrative requirements of the PAS Program with 
the Federal Pell Grant Program will assist participating institutions 
in administering both programs, reduce the amount of additional 
institutional administrative burden and paperwork, and simplify the 
process for students to apply for assistance under these programs.
    The proposed PAS regulations that clarify or amplify the statutory 
requirements are explained below.

Subpart B--Application Procedures and Eligibility Requirements

    Section 406C(b) of the HEA specifies that an eligible student shall 
submit an application to the Secretary. Section 691.12 of the proposed 
regulations requires that the student apply for a PAS at the same time 
the student applies for a Federal Pell Grant. The Secretary believes 
that because a student is eligible to receive a PAS only if he or she 
is eligible to receive a Federal Pell Grant, it is a matter of 
administrative convenience for a student, his or her institution, and 
the Secretary if a single application is submitted for both programs.
    Sections 406C and 406E of the HEA specify the eligibility 
requirements for students to apply for, receive, and continue to 
receive a PAS. The proposed regulations have incorporated these 
requirements in Secs. 691.15, 691.16, and 691.17. These sections 
include the following requirements: (1) The student be scheduled to 
graduate from high school or be a high school graduate, or the 
recipient of the equivalent of a high school diploma as recognized by a 
State, within 3 years of being accepted for enrollment or enrolling at 
an institution of higher education; (2) the student have taken certain 
specified college preparatory coursework in high school and achieved a 
minimum 2.5 grade point average in the final two years of high school; 
(3) the student have participated, with limited exceptions, in a 
federally sponsored or federally approved early-intervention program or 
have graduated in the top 10 percent of his or her high school class; 
and (4) to continue to receive an award, the student must remain 
eligible for a Federal Pell Grant and be maintaining satisfactory 
academic progress at his or her institution.
    It should be noted that the definition of eligible early- 
intervention program at Sec. 691.2 includes the National Early 
Intervention Scholarship and Partnership Program as authorized by 
section 404A of the HEA. Regulations for this program have not yet been 
promulgated. When they are, however, they will be incorporated into 
these regulations.
    The Secretary believes that if an applicant who did not graduate in 
the top 10 percent of his or her high school class was unable to 
participate in an early intervention program where the applicant 
resides due to unusual or exceptional circumstances, the applicant 
should not be prevented from participating in the PAS Program. 
Therefore, Sec. 691.16 implements a waiver for those students not 
graduating in the top 10 percent of their class. However, an applicant 
who simply chooses not to participate in an early intervention program 
should not receive PAS Program funds. The Secretary believes that this 
interpretation is consistent with the statute. The requirement that an 
applicant take certain specified college preparatory classes cannot be 
waived under the statute. The regulations mirror this requirement but 
also permit an applicant who was unable to take the required high 
school coursework where he or she resides to complete that coursework 
at another high school or community college. The applicant must be able 
to demonstrate that he or she has completed the required coursework 
before the applicant receives a PAS award.

Subpart F--Determination of Awards

    Subpart F of the proposed regulations includes instructions for 
determining the amount of an award for any academic year and for a 
specific payment period. This determination is based on the amount of 
the Federal Pell Grant a student is eligible to receive. Procedures are 
proposed for receiving a valid SAR or valid institutional student 
information report and for calculating an award when the payment period 
crosses over 2 award years. In addition, the Secretary proposes to 
establish institutional requirements regarding transfer students, 
correspondence students, and exceptions to the maximum PAS award when a 
student is eligible for more than one Scheduled Federal Pell Grant 
within an award year.

Subpart G--Institutional Administration

    Subpart G of the proposed regulations establishes requirements 
under which institutions must administer the PAS Program. As proposed, 
in order to participate in the PAS Program, an institution would be 
required to include the PAS Program in its agreement with the Secretary 
under 34 CFR 668.12. To implement this requirement, the Secretary 
intends to propose amending 34 CFR 668.1(c) to include the PAS Program 
in a separate notice of proposed rulemaking amending subparts A and B 
of the Student Assistance General Provisions regulations. As a result, 
all the relevant provisions of 34 CFR part 668 would apply to the PAS 
Program. If the institution withdraws or is terminated from the 
program, provisions will be proposed that prescribe how an institution 
must disburse funds to a student. Also, this proposed subpart would 
provide guidance on fiscal accounting procedures, retention of records, 
and submission of reports. As in the Federal Pell Grant Program, the 
Secretary specifically is requesting comment concerning the need for 
proposed Sec. 691.77 and also concerning the proposed administrative 
burden on institutions to administer the program.

Subpart H--Administrative Responsibilities of a State

    Because section 406F(a) of the HEA requires that a State enter into 
an agreement with the Secretary in order for students residing in that 
State to receive a PAS, proposed Sec. 691.90 describes the contents of 
the agreement. In addition, proposed Sec. 691.91 establishes the 
records a State must maintain and the length of time a State must keep 
those records.

Executive Order 12866

    These proposed regulations have been reviewed in accordance with 
Executive Order 12866. Under the terms of the order the Secretary has 
assessed the potential costs and benefits of the regulatory action.
    The potential costs associated with the proposed regulations are 
those resulting from statutory requirements and those determined by the 
Secretary to be necessary for administering this program effectively 
and efficiently. Burdens specifically associated with information 
collection requirements, if any, are identified and explained elsewhere 
in this preamble under the heading Paperwork Reduction Act of 1980.
    In assessing the potential cost and benefits--both quantitative and 
qualitative--of these proposed regulations, the Secretary has 
determined that the benefits of the proposed regulations justify the 
costs.
    The Secretary has also determined that this regulatory action does 
not unduly interfere with State governments in the exercise of their 
governmental functions.
    To assist the Department in complying with the specific 
requirements of Executive Order 12866, the Secretary invites comment on 
whether there may be further opportunities to reduce any potential 
costs or increase potential benefits resulting from these proposed 
regulations without impeding the effective and efficient administration 
of the program.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities. States entering into an agreement with the Secretary are not 
defined as ``small entities'' in the Regulatory Flexibility Act. The 
small entities that would be affected by these proposed regulations are 
small institutions of higher education. However, these proposed 
regulations would not have a significant economic impact on the small 
institutions affected because, although certain reporting and 
recordkeeping requirements are imposed on participating institutions, 
these requirements are modeled on existing student financial assistance 
programs requirements already imposed on these institutions under title 
IV of the Higher Education Act of 1965, as amended. Therefore, the 
Secretary has determined that these provisions will have minimal impact 
on the small institutions of higher education.

Paperwork Reduction Act of 1980

    Sections 690.13, 690.75, 690.77, 690.82, 691.7, 691.9, 691.12, 
691.61, 691.73, 691.79, 691.81, 691.82, 691.83, 691.90, and 691.91 
contain information collection requirements for the Federal Pell Grant 
Program and the PAS Program. As required by the Paperwork Reduction Act 
of 1980, the Department of Education will submit a copy of these 
sections to the Office of Management and Budget (OMB) for its review. 
(44 U.S.C. 3504(h))
    These proposed regulations affect businesses or other for-profit 
organizations and nonprofit institutions that are eligible to 
participate in the title IV, HEA programs. The Department needs and 
uses the information to implement the 1992 Amendments for the Federal 
Pell Grant Program and PAS Program. The regulations provide the 
requirements that States, institutions, and students must follow to 
participate in these programs.

Federal Pell Grant

    Annual public reporting and recordkeeping burden for this 
collection of information is estimated to average 40 hours per response 
for 57 States and Territories and 2,280 total hours per year, including 
the time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed, and completing and reviewing 
the collection of information.

Presidential Access Scholarship Program

    Annual public reporting and recordkeeping burden for this 
collection of information is estimated to average: (1) 3 hours per 
response for 57 States and Territories; (2) 1 hour per response for 
390,000 applicants; and (3) 3 hours per response for 10,000 
institutions. The total hours for States, applicants, and institutions 
are 420,171 hours per year including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    Organizations and individuals desiring to submit comments on the 
information collection requirements should direct them to the Office of 
Information and Regulatory Affairs, OMB, room 3002, New Executive 
Office Building, Washington, DC 20503; Attention: Daniel J. Chenok.
    Invitation To Comment: Interested persons are invited to submit 
comments and recommendations regarding these proposed regulations.
    All comments submitted in response to these proposed regulations 
will be available for public inspection, during and after the comment 
period, in room 4018, Regional Office Building 3, 7th and D Streets 
SW., Washington, DC, between the hours of 8:30 a.m. and 4 p.m., Monday 
through Friday of each week except Federal holidays.
    To assist the Department in complying with the specific 
requirements of Executive Order 12291 and the Paperwork Reduction Act 
of 1980 and their overall requirement of reducing regulatory burden, 
the Secretary invites comment on whether there might be further 
opportunities to reduce any regulatory burdens found in these proposed 
regulations.

Assessment of Impact

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

List of Subjects

34 CFR Part 690

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

34 CFR Part 691

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

(Catalog of Federal Domestic Assistance (CFDA) Numbers: 84.063 
Federal Pell Grant Program; Catalog of Federal Domestic Assistance 
Number for the Presidential Access Scholarship Program has not been 
assigned)

    Dated: February 17, 1994.
Richard W. Riley,
Secretary of Education.
    The Secretary proposes to amend title 34 of the Code of Federal 
Regulations by amending part 690 and adding a new part 691 as follows:

PART 690--[Amended]

    1. The authority citation for part 690 is revised to read as 
follows:

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

    2. The heading for part 690 is revised to read as follows:

PART 690--FEDERAL PELL GRANT PROGRAM


Secs. 690.1, 690.2, 690.3, 690.6, 690.7, 690.9, 690.10, 690.11, 690.12, 
subpart F, 690.62, 690.64, 690.65, 690.66, 690.71, 690.72, 690.73, 
690.74, 690.75, 690.78, 690.79, 690.81, and 690.83  [Amended]

    3. In part 690 add the word ``Federal'' before the words ``Pell 
Grant'' in the following places:
    (a) Section 690.1;
    (b) Section 690.2(c) under the terms ``Disbursement Schedule'' and 
``Scheduled Pell Grant'';
    (c) Section 690.3(a)(2)(ii);
    (d) Section 690.6(a) and (e);
    (e) Section 690.7(a)(1) introductory text, (a)(2) (twice), (b) 
introductory text (twice), (c)(2), (c)(3), and (c)(4);
    (f) Section 690.9(a) introductory text, (a)(1) (twice), (a)(2) 
introductory text, and (a)(2)(ii);
    (g) Section 690.10(a) and (b);
    (h) Section 690.11 heading and text;
    (i) Section 690.12(a);
    (j) Subpart F heading;
    (k) Section 690.62(a);
    (l) Section 690.64 heading, (a)(2), and (b);
    (m) Section 690.65(d) introductory text, (d)(1), (d)(3), and (e) 
(three times);
    (n) Section 690.66(b)(1) introductory text, (b)(1)(i), (b)(1)(ii), 
(c)(1) introductory text, (c)(1)(i), (c)(1)(ii), and (c)(5);
    (o) Section 690.71;
    (p) Section 690.72(a);
    (q) Section 690.73(b)(2), (b)(3), and (b)(4);
    (r) Section 690.75(a) introductory text, (a)(3)(i), (a)(3)(ii), 
(c), and (d) (twice);
    (s) Section 690.78(c) introductory text;
    (t) Section 690.79(a)(1) and (a)(2);
    (u) Section 690.81(a)(2) and (b) (twice); and
    (v) Section 690.83(a)(1) introductory text, (b)(1), and (c)(2).


Secs. 690.74 and 690.81  [Amended]

    4. In part 690 add the word ``Federal'' before the words ``Pell 
Grants'' in the following places:
    (a) Section 690.74 (twice); and
    (b) Section 690.81(c).


Sec. 690.2  [Amended]

    5. Section 690.2 paragraph (b) is amended by adding in alphabetical 
order the term ``Federal Pell Grant Program'' and removing the terms 
``Academic year'' and ``Pell Grant Program''.
    6. Section 690.2 paragraph (c) is amended by removing the 
definition of ``Pell Grant Index''; by adding, in alphabetical order, 
new definitions of ``Academic year'', ``Annual award'', ``Central 
processor'', ``Expected family contribution'', ``Incarcerated 
student'', ``Institutional student information report'', ``Less-than-
half-time student'', and ``Valid institutional student information 
report''; and by revising the definitions of ``Disbursement Schedule'', 
paragraph (1) under ``Enrollment status'', and ``Payment Schedule'' to 
read as follows:


Sec. 690.2  General Definitions

* * * * *
    (c) * * *
    Academic year: An academic year as defined in section 481 of the 
HEA.
    Annual award: The Federal Pell Grant award amount a full-time 
student would receive under the Payment Schedule for a full award year, 
and the amount a three-quarter-time, half-time, and less-than-half-time 
student would receive under the appropriate Disbursement Schedule for a 
full award year.
    Central processor: An organization under contract with the 
Secretary that calculates an applicant's expected family contribution 
based on the applicant's application data, transmits an institutional 
student information report to each institution designated by the 
applicant, and submits reports to the Secretary on the correctness of 
the central processor's computations of the amount of the expected 
family contribution and the accuracy of the answers to questions on the 
application form for the previous academic year.
* * * * *
    Disbursement Schedule: A table showing the grant amounts that 
three-quarter, half-time, and less-than-half-time students at term-
based institutions using credit hours would receive for an academic 
year. This table is published annually by the Secretary and is based 
on--
    (1) A student's expected family contribution, as determined in 
accordance with title IV, part F of the Higher Education Act of 1965 
(HEA), as amended; and
    (2) A student's attendance costs as defined in title IV, part F of 
the HEA.
* * * * *
    Enrollment status: (1) Full-time, three-quarter-time, half-time, or 
less-than-half-time depending on a student's credit-hour work load per 
academic term at an institution using semesters, trimesters, quarters, 
or other academic terms and measuring progress by credit hours.
* * * * *
    Expected family contribution (EFC): The amount an applicant and his 
or her spouse and family are expected to pay toward the student's cost 
of attendance.
* * * * *
    Incarcerated student: A student serving a criminal sentence in a 
Federal, State, or local penitentiary, prison, jail, reformatory, work 
farm, or other similar correctional institution. A student who is in a 
``half-way house'' or ``home detention'' or is sentenced to serve only 
weekends is not considered incarcerated.
* * * * *
    Institutional student information report: A paper document or an 
institutional paper printout from a computer-generated electronic 
record that the central processor transmits to the institution that 
includes an applicant's--
    (1) Personal identification information;
    (2) Application data used to calculate the applicant's EFC; and
    (3) EFC calculated by the central processor.
* * * * *
    Less-than-half-time student: An enrolled student who is carrying a 
less-than-half-time academic work load--as determined by the 
institution--that amounts to less than half the work load of the 
appropriate minimum requirement outlined in the institution's 
definition of a full-time student.
* * * * *
    Payment Schedule: A table showing a full-time student's Scheduled 
Federal Pell Grant for a given award year. This table, published 
annually by the Secretary, is based on--
    (1) The student's expected family contribution, as determined in 
accordance with part F of title IV; and
    (2) The student's cost of attendance as defined in part F of title 
IV.
* * * * *
    Valid institutional student information report: An institutional 
student information report--
    (1) On which all the information used in calculating the 
applicant's expected family contribution is accurate and complete as of 
the date the application is signed;
    (2) That is signed by the applicant; and
    (3) That, if corrections are made, is signed--
    (i) By the applicant's spouse; and
    (ii) If the applicant is dependent, by one of his or her parents.
* * * * *
    7. Section 690.3 is amended by revising (b) introductory text, 
(b)(1), and (b)(2), removing (b)(3), and redesignating (b)(4) as 
(b)(3):


Sec. 690.3  Payment period.

* * * * *
    (b) Payment periods for an eligible program that does not have 
academic terms: (1) For a student whose eligible program is one 
academic year or less--
    (i) (A) The first payment period is the period of time in which the 
student completes the first half of his or her academic year or the 
first half of his or her program (in credit or clock hours); and
    (B) The second payment period is the period of time in which the 
student completes the second half of the academic year or the second 
half of his or her program (in credit or clock hours); or
    (ii) At an institution measuring progress in credit hours, if a 
student cannot earn half the credits in the academic year or program 
until after the midpoint between the first and last scheduled days of 
class, the student is considered to begin his or her second payment 
period on the later of--
    (A) The calendar midpoint between the first and last scheduled days 
of class of the program or academic year; or
    (B) The date, as determined by institution, that the student has 
completed half of his or her academic coursework.
    (2) For a student whose program is more than one academic year in 
credit or clock hours, the payment periods must be calculated under 
paragraph (b)(1) of this section unless the remaining portion of the 
program is less than an academic year. If the remaining portion of the 
program is less than an academic year, each payment period must be the 
period of time in which a student first completes--
    (i) One-half of the academic year as determined under the 
provisions in (b)(1); or
    (ii) The remaining hours in the student's program.
* * * * *
    8. Section 690.6 is amended by removing paragraphs (c), (d), and 
(e), and by amending paragraph (b) by adding a second sentence to read 
as follows:


Sec. 690.6  Duration of student eligibility.

* * * * *
    (b) * * * Any noncredit or remedial course taken by a student, 
including a course in English language instruction, is not included in 
the institution's determination of that student's period of Federal 
Pell Grant eligibility.

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

    9. Section 690.8 is amended by revising paragraphs (c) and (d) to 
read as follows:


Sec. 690.8  Enrollment status for students taking regular and 
correspondence courses.

* * * * *
    (c)(1) Notwithstanding the limitation in paragraph (b)(3) of this 
section, a student who would be a half-time student based solely on his 
or her correspondence work is considered a half-time student unless the 
calculation in paragraph (b) of this section produces an enrollment 
status greater than half-time.
    (2) A student who would be a less-than-half-time student based 
solely on his or her correspondence work or a combination of 
correspondence work and regular course work is considered a less-than-
half-time student.
    (d) The following chart provides examples of the rules set forth in 
this section. It assumes that the institution defines full-time 
enrollment as 12 credits per term, making the half-time enrollment 
equal to 6 credits per term. 

----------------------------------------------------------------------------------------------------------------
                                                                        Total                                   
                                         Number of                   course load                                
                                           credit       Number of     in credit                                 
           Under Sec. 691.8                hours      credit hours     hours to          Enrollment status      
                                          regular    correspondence   determine                                 
                                            work                      enrollment                                
                                                                        status                                  
----------------------------------------------------------------------------------------------------------------
(b)(3)................................            3              3             6  Half-time.                    
(b)(3)................................            3              6             6  Half-time.                    
(b)(3)................................            3              9             6  Half-time.                    
(b)(3)................................            6              3             9  Three-quarter-time.           
(b)(3)................................            6              6            12  Full-time.                    
(b)(3) and (c)........................            2              6             6  Half-time.                    
(c)1..................................  ...........  ..............  ...........  Less-than-half-time.          
----------------------------------------------------------------------------------------------------------------
1Any combination of regular and correspondence work that is greater than 0, but less than 6 hours.              

    10. Section 690.10 is amended by revising the authority citation at 
the end of the section and by adding a new paragraph (c) to read as 
follows:


Sec. 690.10  Administrative cost allowance to participating schools.

* * * * *
    (c) If an institution enrolls a significant number of students who 
are attending less-than-full-time or are independent students, the 
institution shall use a reasonable proportion of these funds to make 
financial aid services available during times and in places that will 
most effectively accommodate the needs of those students.

(Authority: 20 U.S.C. 1096)

    11. Section 690.13 is amended by revising the first sentence to 
read as follows:


Sec. 690.13  Notification of expected family contribution.

    The Secretary sends a ``Student Aid Report'' (SAR) to each eligible 
applicant and an institutional student information report to each 
institution designated by the applicant. * * *

Subpart C--[Removed and Reserved]

    12. Subpart C is removed and reserved.
    13. Section 690.61 is revised to read as follows:


Sec. 690.61  Submission process and deadline for a student aid report 
or institutional student information report.

    (a) Submission process. (1) Except as provided in paragraph (a)(2) 
of this section, an institution may make a disbursement of a Federal 
Pell Grant to a student only if--
    (i) The student has submitted a valid SAR to the institution; or
    (ii) The institution--
    (A) Has obtained a valid institutional student information report 
for that student; and
    (B) Participates in the Secretary's electronic programs (Recipient 
Data Exchange, Electronic Data Exchange, or ``Floppy Disk'' Exchange) 
to report Federal Pell Grant disbursements; and
    (C) Uses that institutional student information report to determine 
the student's eligibility to receive his or her Federal Pell Grant.
    (2) An institution may make one disbursement of a student's Federal 
Pell Grant without a valid SAR or valid institutional student 
information report if it follows the procedures described in 
Sec. 690.77.
    (3) An institution is entitled to rely on valid SAR information or 
valid institutional student information report information except under 
the conditions set forth in 34 CFR 668.14(f) and 668.60.
    (b) Student Aid Report or institutional student information report 
deadline. (1) Except as noted in 34 CFR 668.60, for a student to 
receive a Federal Pell Grant for an award year, the student must submit 
the relevant parts of the SAR to his or her institution or the 
institution must receive a valid institutional student information 
report by June 30 of that award year.
    (2) Except as noted in 34 CFR 668.60, for a student to receive a 
Federal Pell Grant for an award year, the student must submit the 
relevant parts of the SAR to his or her institution or the institution 
must receive a valid institutional student information report while the 
student is still enrolled and eligible for payment at that institution.

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

    14. Section 690.62 is amended by revising the heading of the 
section, by removing paragraph (c), and by revising paragraph (b), to 
read as follows:


Sec. 690.62  Calculation of a Federal Pell Grant.

* * * * *
    (b) No payment may be made to a student if the student's Scheduled 
Federal Pell Grant is less than $200. However, a student who is 
eligible for a Federal Pell Grant that is equal to or greater than 
$200, but less than or equal to $400, shall be awarded a Federal Pell 
Grant of $400.
    15. Section 690.63 is revised to read as follows:


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

    (a)(1) Programs using standard terms with at least 30 weeks of 
instructional time. A student's Federal Pell Grant for a payment period 
is calculated under paragraph (b) or (d) of this section if--
    (i) The student is enrolled in an eligible program that--
    (A) Measures progress in credit hours;
    (B) Is offered in semesters, trimesters, or quarters;
    (C) Requires the student to enroll for at least 12 credit hours in 
each term in the award year to qualify as a full-time student; and
    (D) Is not offered with multiple start dates or overlapping terms; 
and
    (ii) The institution offering the program--
    (A) Provides the program using an academic calendar that includes 
two semesters or trimesters in the fall through the following spring, 
or three quarters in the fall, winter, and spring; and
    (B) Provides at least 30 weeks of instructional time in the terms 
specified in paragraph (a)(1)(ii)(A) of this section.
    (2) Programs using standard terms with less than 30 weeks of 
instructional time. A student's Federal Pell Grant for a payment period 
is calculated under paragraph (c) or (d) of this section if--
    (i) The student is enrolled in an eligible program that--
    (A) Measures progress in credit hours;
    (B) Is offered in semesters, trimesters, or quarters;
    (C) Requires the student to enroll in at least 12 credit hours in 
each term in the award year to qualify as a full-time student; and
    (D) Is not offered with multiple start dates or overlapping terms; 
and
    (ii) The institution offering the program--
    (A) Provides the program using an academic calendar that includes 
two semesters or trimesters in the fall through the following spring, 
or three quarters in the fall, winter, and spring; and
    (B) Does not provide at least 30 weeks of instructional time in the 
terms specified in paragraph (a)(2)(ii)(A) of this section.
    (3) Other programs using terms and credit hours. A student's 
Federal Pell Grant for a payment period is calculated under paragraph 
(d) of this section if the student is enrolled in an eligible program 
that--
    (i) Measures progress in credit hours; and
    (ii) Is offered in academic terms other than those described in 
paragraphs (a)(1) and (a)(2) of this section.
    (4) Programs not using terms or using clock hours. A student's 
Federal Pell Grant for any payment period is calculated under paragraph 
(e) of this section if the student is enrolled in an eligible program 
that--
    (i) Is offered in credit hours but is not offered in academic 
terms; or
    (ii) Is offered in clock hours.
    (b) Programs using standard terms with at least 30 weeks of 
instructional time. The Federal Pell Grant for a payment period, i.e., 
an academic term, for a student in a program using standard terms with 
at least 30 weeks of instructional time in two semesters or trimesters 
or in three quarters as described in paragraph (a)(1)(ii)(A) of this 
section, is calculated by--
    (1) Determining his or her enrollment status for the term;
    (2) Based upon that enrollment status, determining his or her 
annual award from the Payment Schedule for full-time students or the 
Disbursement Schedule for three-quarter-time, half-time, or less-than-
half-time students; and
    (3) Dividing the amount described under paragraph (b)(2) of this 
section by--
    (i) Two at institutions using semesters or trimesters or three at 
institutions using quarters; or
    (ii) The number of terms over which the institution chooses to 
distribute the student's annual award if--
    (A) An institution chooses to distribute all of the student's 
annual award determined under paragraph (b)(2) of this section over 
more than two terms at institutions using semesters or trimesters or 
more than three quarters at institutions using quarters; and
    (B) The number of weeks of instructional time in the terms, 
including the additional term or terms, equals the weeks of 
instructional time in the institution's academic year.
    (c) Programs using standard terms with less than 30 weeks of 
instructional time. The Federal Pell Grant for a payment period, i.e., 
an academic term, for a student in a program using standard terms with 
less than 30 weeks of instructional time in two semesters or trimesters 
or in three quarters as described in paragraph (a)(2)(ii)(A) of this 
section, is calculated by--
    (1) Determining his or her enrollment status for the term;
    (2) Based upon that enrollment status, determining his or her 
annual award from the Payment Schedule for full-time students or the 
Disbursement Schedule for three-quarter-time, half-time, or less-than-
half-time students;
    (3) Either--
    (i)(A) Multiplying his or her annual award determined under 
paragraph (c)(2) of this section by the following fraction as 
applicable:
    At an institution using semesters or trimesters--

TP25FE94.010

; or
    At an institution using quarters--

TP25FE94.011

; and
    (B) Dividing the amount determined under paragraph (c)(3)(i)(A) of 
this section by two at institutions using semesters or trimesters or 
three at institutions using quarters; or
    (ii) Dividing the student's annual award determined under paragraph 
(c)(2) by the number of terms over which the institution chooses to 
distribute the student's annual award if--
    (A) An institution chooses to distribute all of the student's 
annual award determined under paragraph (c)(2) of this section over 
more than two terms at institutions using semesters or trimesters or 
more than three quarters at institutions using quarters; and
    (B) The number of weeks of instructional time in the terms 
including the additional term or terms equals the weeks of 
instructional time in the institution's academic year.
    (d) Other programs using terms and credit hours. The Federal Pell 
Grant for a payment period, i.e., an academic term, for a student in a 
program using terms and credit hours, other than those described in 
paragraphs (a) (1) or (2) of this section, is calculated by--
    (1)(i) For a student enrolled in a semester, trimester, or quarter, 
determining his or her enrollment status for the term; or
    (ii) For a student enrolled in a term other than a semester, 
trimester, or quarter, determining his or her enrollment status for the 
term by--
    (A) Dividing the number weeks of instructional time in the term by 
the number of weeks of instructional time in the institution's academic 
year;
    (B) Multiplying the fraction determined under paragraph 
(d)(1)(ii)(A) by the number of credit hours in the institution's 
academic year to determine the number of hours required to be enrolled 
to be considered a full-time student; and
    (C) Determining a student's enrollment status by calculating the 
proportion of the number of hours in which the student enrolls in the 
term to the number of hours required to be considered full-time under 
paragraph (d)(1)(ii)(B) of this section;
    (2) Based upon that enrollment status, determining his or her 
annual award from the Payment Schedule for full-time students or the 
Disbursement Schedule for three-quarter-time, half-time, or less-than-
half-time student;
    (3) Multiplying his or her annual award determined under paragraph 
(d)(2) of this section by the following fraction:

TP25FE94.012

; and
    (4) Paying the student the amount determined under paragraph (d)(3) 
of this section.
    (e) Programs using clock hours or credit hours without terms. The 
Federal Pell Grant for a payment period for a student in a program 
using credit hours without terms or using clock hours is calculated 
by--
    (1) Determining the student's Scheduled Federal Pell Grant using 
the Payment Schedule;
    (2) Multiplying the Scheduled Award by--

TP25FE94.013

; and
    (3) Multiplying the amount determined under paragraph (e)(2) of 
this section by--

TP25FE94.014

    (f) A single disbursement may not exceed 50 percent of any award 
determined under paragraph (d) or (e) of this section. If a payment for 
a payment period calculated under paragraphs (d) or (e) of this section 
would require the disbursement of more than 50 percent of a student's 
annual award in that payment period, the institution shall make at 
least two disbursements to the student in that payment period. The 
institution may not disburse an amount that exceeds 50 percent of the 
student's annual award until the student has completed the period of 
time in the payment period that equals, in terms of weeks of 
instructional time, 50 percent of the weeks of instructional time in 
the institution's academic year.
    (g) Notwithstanding paragraphs (b), (c), (d), (e), and (f) of this 
section--
    (1) The amount of a student's award for an award year may not 
exceed his or her Scheduled Federal Pell Grant award for that award 
year; and
    (2) An incarcerated student's Federal Pell Grant shall not exceed 
the sum of the amount of tuition and fees normally assessed for that 
course of study by the institution plus the actual cost of books and 
supplies.
    (h) For purposes of this section, an institution must define its 
academic year for each of its eligible programs in terms of the number 
of credit or clock hours and weeks of instructional time in accordance 
with the requirements of section 481(d) of the HEA.
    16. Section 690.65 is amended by revising paragraphs (a), (c), and 
(f) to read as follows:


Sec. 690.65  Transfer student: attendance at more than one institution 
during an award year.

    (a) If a student who receives a Federal Pell Grant at one 
institution subsequently enrolls at a second institution in the same 
award year, the student may receive a grant at the second institution 
only if--
    (1) The student has submitted a valid SAR; or
    (2) The second institution participates in the Secretary's 
electronic programs to report Federal Pell Grant disbursements 
(Recipient Data Exchange, Electronic Data Exchange, or ``Floppy Disk'' 
Exchange) and the second institution has obtained a valid institutional 
student information report, in which case the institution shall use the 
information from the valid institutional student information report to 
determine the amount of the student's award. (The institution shall 
follow the procedures set forth in 34 CFR 668.19 relating to financial 
aid transcripts.)
* * * * *
    (c) The second institution may pay a Federal Pell Grant only for 
that portion of the academic year in which a student is enrolled at 
that institution. The grant amount must be adjusted, if necessary, to 
ensure that the grant does not exceed the student's Scheduled Federal 
Pell Grant for that award year.
* * * * *
    (f) A transfer student shall repay any amount received in an award 
year that exceeds his or her Scheduled Federal Pell Grant.


Sec. 690.73  [Amended]

    17. Section 690.73(b)(1) is amended by adding after the word 
``institution'' the words ``or for whom the institution received a 
valid institutional student information report''.
    18. Section 690.75 is amended by revising paragraphs (a)(2), and 
(b), and by adding new paragraphs (f), (g), and (h) to read as follows:


Sec. 690.75  Determination of eligibility for payment.

    (a) * * *
    (2) Is enrolled as an undergraduate student; and
* * * * *
    (b) If an eligible student submits a valid SAR to the institution 
or the institution receives a valid institutional student information 
report for that student and that student then becomes ineligible before 
receiving a payment, the institution may pay the student only the 
amount that it determines could have been used for educational purposes 
before the student became ineligible.
* * * * *
    (f) If the student is an incarcerated student, the student is 
eligible to receive a Federal Pell Grant if--
    (1) (i) The State in which the student is incarcerated has 
submitted, and the Secretary has approved, a report as described in 
Sec. 690.75(g); or
    (ii) The student is a federally incarcerated student in any state; 
and
    (2) The student is not under sentence of death or under sentence of 
life imprisonment without eligibility for parole or release.
    (g) For an eligible incarcerated student to receive funds during an 
award year, the State in which the student is incarcerated must file a 
report annually on a form approved by the Secretary. The report 
confirms that the State expended as much on postsecondary educational 
assistance for incarcerated students during the Federal fiscal year 
prior to the year in which an incarcerated student is otherwise 
eligible to receive a Federal Pell Grant as was expended by the State 
for incarcerated students in Federal fiscal year 1988. For purposes of 
this report, States must provide information about State postsecondary 
educational expenditures for incarcerated students for the Federal 
fiscal year prior to the year in which the student is eligible and 
Federal fiscal year 1988. The report must include fiscal information 
about the following--
    (1) Appropriated funds, including funds appropriated to State 
Departments of Correction or other State agencies, expended for 
postsecondary education assistance to incarcerated students;
    (2) Tuition waivers for postsecondary incarcerated students;
    (3) Tuition reimbursements for postsecondary incarcerated students;
    (4) State postsecondary educational assistance programs where the 
funds are expended for incarcerated students (except the Federal 
portion of any grant under the State Student Incentive Grant Program, 
and any other Federal postsecondary assistance);
    (5) Special school district funding for postsecondary education for 
incarcerated students; and
    (6) Any other funds expended on postsecondary educational 
assistance for incarcerated students, excluding any Federal assistance.
    (h) For each payment period during which an incarcerated student is 
otherwise eligible, the institution may make payments to the student 
only if the State has submitted its annual report and the Secretary 
approved that report prior to the payment period during which the 
student is eligible to be paid. The institution shall not make payments 
to an incarcerated student for payment periods during which the student 
was enrolled and eligible but the State's annual report was not 
submitted and approved by the Secretary.
    19. Section 690.77 is revised to read as follows:


Sec. 690.77  Initial disbursement of a Federal Pell Grant in an award 
year without a valid SAR or valid institutional student information 
report.

    (a) Within an award year, an institution may make one disbursement 
of a student's Federal Pell Grant before receiving the student's valid 
SAR or valid institutional student information report if the 
institution--
    (1) Receives a student's application information;
    (2) Does not have documentation that indicates that the application 
information is inaccurate; and
    (3) Receives an EFC--
    (i) From the Secretary; or
    (ii) From an organization that has a contract with the Secretary to 
transmit application data to the Secretary.
    (b) If an institution receives a student's application information 
specified in paragraphs (a)(1) and (a)(3) of this section and his or 
her EFC from the Secretary, or his or her EFC as calculated by the 
Secretary from an organization that has a contract to transmit 
application data to the Secretary, but the institution has 
documentation that indicates that the application information is 
inaccurate, the institution may make one disbursement of a student's 
Federal Pell Grant within an award year before receiving the student's 
valid SAR or valid institutional student information report if the 
institution--
    (1) Resolves the inconsistencies between its documentation and the 
student's application information;
    (2) Recalculates the student's EFC based on correct information;
    (3) Makes the disbursement of the student's Federal Pell Grant for 
the first payment period based on the recalculated EFC; and
    (4) Reports the changes in the student's application information 
and the recalculated EFC to the Secretary within the deadline 
established by the Secretary.
    (c)(1) If an institution chooses to make a disbursement under 
paragraph (a) or (b) of this section, it shall be liable for that 
disbursement if the institution does not receive a valid SAR or valid 
institutional student information report for the student for that award 
year.
    (2) If an institution chooses to make a disbursement under 
paragraph (b) of this section, the institution and the student shall be 
liable for any overpayment caused by an incorrect recalculation of the 
student's EFC.
    (3) If a student receives an overpayment as a result of a 
disbursement made under paragraph (a) or (b) of this section, the 
institution shall eliminate the overpayment by following the procedures 
described in 34 CFR 668.61(a).

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

    20. Section Sec. 690.80 is amended by revising the section heading 
and paragraphs (a) and (b)(1) to read as follows:


Sec. 690.80  Recalculation of a Federal Pell Grant award.

    (a) Change in expected family contribution. (1) The institution 
shall recalculate a Federal Pell Grant award for the entire award year 
if the student's expected family contribution changes at any time 
during the award year. The change may result from--
    (i) The correction of a clerical or arithmetic error under 
Sec. 690.14; or
    (ii) A correction based on information required in Sec. 690.12 or 
Sec. 690.77.
    (2) Except as described in 34 CFR 668.60(c), the institution shall 
adjust the student's award when an overaward or underaward is caused by 
the change in the expected family contribution. That adjustment must be 
made--
    (i) Within the same award year--if possible--to correct any 
overpayment or underpayment; or
    (ii) During the next award year to correct any overpayment that 
could not be adjusted during the year in which the student was 
overpaid.
    (b) Change in enrollment status. (1) If the student's enrollment 
status changes from one academic term to another term within the same 
award year, the institution shall recalculate the Federal Pell Grant 
award for the new payment period taking into account any changes in the 
cost of attendance.
* * * * *
    21. Section 690.82 is amended by revising paragraphs (a) 
introductory text and (a)(1) to read as follows:


Sec. 690.82  Maintenance and retention of records.

    (a) Each institution shall maintain adequate records (including 
those related to verification), which include the fiscal and accounting 
records that are required under Sec. 690.81, records required for 
audits in 34 CFR 668.23, the SAR or institutional student information 
report of each student who received a Federal Pell Grant, and records 
indicating--
    (1) The eligibility of all enrolled students who have submitted 
valid SARs to the institution or for whom the institution has received 
valid institutional student information report;
* * * * *
    22. A new part 691 is added to read as follows:

PART 691--PRESIDENTIAL ACCESS SCHOLARSHIP PROGRAM

Subpart A--General

Sec.
691.1  Scope and purpose.
691.2  General definitions.
691.3  Definitions of payment period.
691.4  [Reserved]
691.5  [Reserved]
691.6  Duration of student eligibility.
691.7  Institutional participation.
691.8  Enrollment status for students taking regular and 
correspondence courses.
691.9  Written agreements between two or more eligible institutions.
691.10  [Reserved]
691.11  Payments from more than one institution.

Subpart B--Application Procedures and Eligibility Requirements

691.12  The application process.
691.13-691.14  [Reserved]
691.15  Eligibility to apply initially for a scholarship.
691.16  Eligibility requirements to receive an award.
691.17  Eligibility requirements to continue to receive an award.

Subpart C--[Reserved]

Subpart D--[Reserved]

Subpart E--[Reserved]

Subpart F--Determination of Awards

691.61  Disbursement conditions and deadlines.
691.62  Calculation of a Presidential Access Scholarship Program 
award.
691.63  Calculation of a Presidential Access Scholarship for a 
payment period.
691.64  Calculation of a Presidential Access Scholarship for a 
payment period that occurs in 2 award years.
691.65  Transfer student: attendance at more than one institution 
during an award year.
691.66  Correspondence study.

Subpart G--Institutional Administration

691.71  Scope.
691.72  Institutional participation agreement.
691.73  Termination of institutional participation agreement.
691.74  [Reserved]
691.75  Determination of eligibility for payment.
691.76  Frequency of payment.
691.77  Initial disbursement of a PAS in an award year without a 
valid SAR or institutional student information report.
691.78  Method of disbursement by check or credit to a student's 
account.
691.79  Recovery of overpayments.
691.80  Recalculation of a PAS Program award.
691.81  Fiscal control and fund accounting procedures.
691.82  Maintenance and retention of records.
691.83  Submission of reports.

Subpart H--Administrative Responsibilities of a State

691.90  Early-intervention agreement.
691.91  Records a State must maintain.

    Authority: 20 U.S.C. 1070a-31 et seq.

Subpart A--General


Sec. 691.1  Scope and purpose.

    The purposes of the Presidential Access Scholarship (PAS) Program 
are to encourage students to finish high school and attend college and 
to upgrade the course of study completed by high school graduates who 
are from low or moderate-income families.

(Authority: 20 U.S.C. 1070a-31)


Sec. 691.2  General definitions.

    (a) Definitions of the following terms used in this part are 
described in subpart A of the regulations for Institutional Eligibility 
under the Higher Education Act of 1965, as amended, 34 CFR part 600:

Accredited
Clock hour
program
Program of study by correspondence
Recognized equivalent of high school diploma
Secretary

    (b) Definitions of the following terms used in this part are 
described in subpart A of the Student Assistance General Provisions, 34 
CFR part 668:

Award year
Enrolled
Federal Pell Grant Program
Public or private nonprofit institution of higher education
Regular student
State

    (c) Other terms used in this part are:
    Academic year: An academic year as defined in section 481 of the 
HEA.
    Central processor: An organization under contract with the 
Secretary that calculates an applicant's expected family contribution 
based on the applicant's application data, transmits an institutional 
student information report to each of the institutions designated by 
the applicant, and submits reports to the Secretary on the correctness 
of the central processor's computations of the amount of the expected 
family contribution and the accuracy of the answers to questions on the 
application form for the previous academic year.
    Disbursement Schedule: A table showing the scholarship amounts for 
three-quarter, half-time, and less-than-half-time students at term-
based institutions using credit hours would receive for an academic 
year. This table, published annually by the Secretary, is based on the 
amount of a student's Federal Pell Grant.
    Electronic Data Exchange: An electronic exchange system between the 
Secretary and an institution under which a student is able to correct 
or verify information contained on his or her SAR at the institution he 
or she is attending and the institution is able to print out a SAR for 
that student that is based on the corrected or verified information.
    Eligible early-intervention program: A program as required under 
Sec. 691.16(a)(5) that provides education-related activities such as 
counseling, mentoring, academic support, outreach, and other supportive 
services, including providing information on opportunities for 
postsecondary financial aid, to students enrolled in preschool through 
grade 12. To qualify, a program must be one of the following:
    (1) A Talent Search project as described in 34 CFR part 643 and 
authorized under section 402B of the HEA, as amended;
    (2) An Upward Bound project as described in 34 CFR part 645 and 
authorized under section 402C of the HEA, as amended;
    (3) An Opportunity Center as described in 34 CFR part 644 and 
authorized under section 402F of the HEA, as amended; or
    (4) A National Early Intervention Scholarship and Partnership 
Program as authorized under section 404A of the HEA, as amended; or
    (5) A program that is certified as an honors scholars program by 
the Governor of the State in which it is offered and that the Governor 
determines meets comparable requirements for any program funded under 
34 CFR parts 643, 644, 645, or section 404A of the HEA.
    Eligible institution: An institution as defined in section 481 of 
the HEA.
    Eligible program: A program as defined in section 481 of the HEA.
    Expected family contribution (EFC): The amount a student and his or 
her spouse and family are expected to pay toward the student's cost of 
attendance.
    Full-time student: An enrolled student who is carrying a full-time 
academic work load (other than by correspondence)--as determined by the 
institution--under a standard applicable to all students enrolled in a 
particular program. However, an institution's full-time standard must 
equal or exceed one of the following minimum requirements:
    (1) 12 semester hours or 12 quarter hours per academic term in an 
institution using a semester, trimester, or quarter system;
    (2) 24 semester hours or 36 quarter hours per academic year for an 
institution using credit hours but not using a semester, trimester, or 
quarter system, or the prorated equivalent for a program of less than 1 
academic year;
    (3) 24 clock hours per week for an institution using clock hours;
    (4) In an institution using both credit and clock hours, any 
combination of credit and clock hours where the sum of the following 
fractions is equal to or greater than one:

TP25FE94.015

    (5) A series of courses or seminars which equal 12 semester hours 
or 12 quarter hours in a maximum of 18 weeks; or
    (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.
    Half-time student: (1) Except as provided in paragraph (2) of this 
definition, an enrolled student who is carrying a half-time academic 
work load--as determined by the institution--that amounts to at least 
half the work load of the appropriate minimum requirement outlined in 
the institution's definition of a full-time student.
    (2) A student enrolled solely in a program of study by 
correspondence who is carrying a work load of at least 12 hours of work 
per week or is earning at least 6 credit hours per semester, trimester, 
or quarter. However, regardless of the workload, no student enrolled 
solely in correspondence study is considered more than a half-time 
student.
    Honors scholars program: A program designed to encourage a high 
level of academic achievement from students who are enrolled in the 
program.
    Institution of higher education (Institution): An institution of 
higher education, a proprietary institution of higher education, or a 
postsecondary vocational institution as defined in section 481 of the 
HEA.
    Institutional student information report: A paper document or an 
institutional paper printout from a computer-generated electronic 
record that the central processor transmits to the institution, which 
includes an applicant's--
    (1) Personal identifying information;
    (2) Application data used to calculate the applicant's EFC; and
    (3) EFC calculated by the central processor.
    Less than half-time student: An enrolled student who is carrying a 
less than half-time academic work load--as determined by the 
institution--that amounts to less than half the work load of the 
appropriate minimum requirement outlined in the definition of a full-
time student.
    Payment Schedule: A table showing a full-time student's Scheduled 
PAS Award for an academic year. This table is published annually by the 
Secretary.
    Scheduled Presidential Access Scholarship: The amount of a PAS that 
would be paid to a full-time student for a full academic year.
    Student Aid Report (SAR): A report provided to an applicant showing 
the amount of his or her expected family contribution.
    Student Aid Report (SAR) Payment Document: A part of the SAR that 
is provided to the Secretary by an institution showing an applicant's 
expected family contribution, cost of attendance, and enrollment status 
at that institution.
    Three-quarter-time student: An enrolled student who is carrying a 
three-quarter-time academic work load--as determined by the 
institution--that amounts to at least three-quarters of the work of the 
appropriate minimum requirement outlined in the definition of a ``full-
time student.''
    Undergraduate student: A student enrolled in an undergraduate 
course of study at an institution of higher education who--
    (1) Has not earned a baccalaureate or first professional degree; 
and
    (2) Is in an undergraduate course of study that usually does not 
exceed 4 academic years or is enrolled in a 4 to 5 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 only 
for the first 4 academic years of that program.
    Valid institutional student information report: An institutional 
student information report--
    (1) On which all the information used in calculating the 
applicant's expected family contribution is accurate and complete as of 
the date the application is signed;
    (2) That is signed by the applicant; and
    (3) That if corrections are made, is signed--
    (i) By the applicant's spouse; and
    (ii) If the applicant is dependent, by one of his or her parents.
    Valid Student Aid Report: A Student Aid Report--
    (1) On which all of the information used in the calculation of the 
applicant's expected family contribution is accurate and complete as of 
the date the application is signed; and
    (2) For the Electronic Data Exchange, that is signed by the 
applicant and, if corrections are made--
    (i) Is signed by the applicant's spouse; and
    (ii) If the applicant is dependent, is signed by one of his or her 
parents.

(Authority: 20 U.S.C. 1070a--31 et seq.)


Sec. 691.3  Definitions of payment period.

    (a) Payment period for an eligible program that has academic terms:
    (1) Except as noted in paragraph (a)(2) of this section, for an 
eligible program that uses semesters, trimesters, quarters, or other 
academic terms, the payment period is the semester, trimester, quarter, 
or other academic term.
    (2) For an eligible program that uses semesters, trimesters, 
quarters, or other academic terms and measures progress in clock 
hours--
    (i) A payment period is a semester, trimester, quarter, or other 
academic term if the student completes all the clock hours scheduled 
for that term;
    (ii) If at the end of a term, the student has not completed all of 
the clock hours scheduled for that term and the student has received a 
PAS for that term, the payment period extends beyond that term for as 
long as it takes the student to complete the number of clock hours 
originally scheduled for that term; and
    (iii) If a payment period extends into another term, the next 
payment period consists of the number of clock hours scheduled for that 
term that were not included in the previous payment period.
    (b) Payment period for an institution that does not have academic 
terms:
    (1) For the first academic year for a student--
    (i) The first payment period is the period of time in which the 
student completes the first half of his or her academic year (in credit 
hours or clock hours);
    (ii) The second payment period is the period of time in which the 
student completes the second half of that academic year.
    (2) For subsequent academic years, or fractions of academic years, 
each payment period must be the period of time in which a student 
completes--
    (i) One-half of the academic year; or
    (ii) The remaining hours in the student's program, whichever is to 
be completed first.
    (3) For a student whose remaining program is less than an academic 
year--
    (i) The first payment period must be the period of time in which 
the student completes the first half of his or her remaining program 
(in credit or clock hours); and
    (ii) The second payment period must be the period of time in which 
the student completes the second half of his or her remaining program.
    (4) If an institution chooses to have more than two payment periods 
in an academic year, the rules in paragraphs (b)(1) through (b)(3) of 
this section are modified to reflect the increased number of payment 
periods. For example, if an institution chooses to have three payment 
periods in an academic year, each payment period must correspond to 
one-third of the academic year.

(Authority: 20 U.S.C. 1070a-32)


Secs. 691.4-691.5  [Reserved]


Sec. 691.6  Duration of student eligibility.

    A scholarship under the PAS Program shall be awarded to a student 
for a period of--
    (a) Not more than 4 academic years; or
    (b) Not more than 5 academic years in the case of a student who is 
enrolled in an undergraduate course of study requiring attendance for 
the full-time equivalent of 5 academic years.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.7  Institutional participation.

    (a)(1) An institution of higher education is eligible to award 
scholarships for the PAS Program if it--
    (i) Meets the appropriate definition set forth in section 481 of 
the HEA;
    (ii) Enters into a program participation agreement with the 
Secretary; and
    (iii) Complies with that agreement and with the applicable 
provisions of this part and 34 CFR part 668.
    (2) If an institution begins participation in the PAS Program 
during an award year, a student enrolled in and attending that 
institution is eligible to receive a PAS for the payment period during 
which the institution enters into a program participation agreement 
with the Secretary and any subsequent payment period.
    (b) If an institution becomes ineligible to participate in the PAS 
Program during an award year, an eligible student who was attending the 
institution and who submitted a valid SAR to the institution or whose 
institution received a valid institutional student information report 
from the U.S. Department of Education before the date the institution 
became ineligible is paid a PAS for that award year for--
    (1) The payment periods that the student completed before the 
institution became ineligible; and
    (2) The payment period in which the institution became ineligible.
    (c) An institution that becomes ineligible shall, within 45 days 
after the effective date of loss of eligibility, provide to the 
Secretary--
    (1) The name and enrollment status of each eligible student who, 
during the award year, received a PAS at the institution before it 
became ineligible;
    (2) The amount of funds paid to each PAS recipient for that award 
year;
    (3) The amount due each student eligible to receive a PAS through 
the end of the payment period during which the institution became 
ineligible; and
    (4) An accounting of the PAS expenditures for that award year to 
the date of ineligibility.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.8  Enrollment status for students taking regular and 
correspondence courses.

    (a) If, in addition to regular coursework, a student takes 
correspondence courses from either his or her own institution or 
another institution having an agreement for this purpose with the 
student's institution, the correspondence work may be included in 
determining the student's enrollment status to the extent permitted 
under paragraph (b) of this section.
    (b) Except as noted in paragraph (c) of this section, the 
correspondence work that may be included in determining a student's 
enrollment status is that amount of work which--
    (1) Applies toward a student's degree or certificate;
    (2) Is completed within the period of time required for regular 
course work; and
    (3) Does not exceed the amount of a student's regular course work 
for the payment period for which the student's enrollment status is 
being calculated.
    (c) (1) Notwithstanding the limitation in paragraph (b)(3) of this 
section, a student who would be a half-time student based solely on his 
or her correspondence work is considered a half-time student unless the 
calculation in paragraph (b) of this section produces an enrollment 
status greater than half-time.
    (2) A student who would be a less-than-half-time student based 
solely on his or her correspondence work or a combination of 
correspondence work and regular course work is considered a less-than-
half-time student.
    (d) The following chart provides examples of the rules set forth in 
this section. It assumes that the institution defines full-time 
enrollment as 12 credits per term, making the half-time enrollment 
equal to 6 credits per term.

----------------------------------------------------------------------------------------------------------------
                                                                        Total                                   
                                         Number of                   course load                                
                                           credit       Number of     in credit                                 
           Under Sec. 691.8                hours      credit hours     hours to          Enrollment status      
                                          regular    correspondence   determine                                 
                                            work                      enrollment                                
                                                                        status                                  
----------------------------------------------------------------------------------------------------------------
(b)(3)................................            3              3             6  Half-time.                    
(b)(3)................................            3              6             6  Half-time.                    
(b)(3)................................            3              9             6  Half-time.                    
(b)(3)................................            6              3             9  Three-quarter-time.           
(b)(3)................................            6              6            12  Full-time.                    
(b)(3) and (c)........................            2              6             6  Half-time.                    
(c)\1\................................  ...........  ..............  ...........  Less-than-half-time.          
----------------------------------------------------------------------------------------------------------------
\1\Any combination of regular and correspondence work that is greater than 0, but less than 6 hours.            

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.9   Written agreements between two or more eligible 
institutions.

    (a) A student who is enrolled in an eligible program at one 
eligible institution and taking courses at one or more other eligible 
institutions that apply toward his or her degree or certificate at the 
first institution may receive a PAS for attendance at both institutions 
only if there is a written agreement between the institutions.
    (b) The institution at which the student is enrolled and expects to 
receive his or her degree or certificate shall determine and pay the 
student's PAS. However, the other institution may determine and pay the 
student's PAS if the institutions agree in writing to that arrangement.
    (c) The institution that determines and pays the PAS shall--
    (1) Take into account all courses that apply to the student's 
degree or certificate taken by the student at each eligible institution 
participating in the agreement when determining the student's 
enrollment status and cost of attendance; and
    (2) Maintain all records regarding the student's eligibility for 
and receipt of the PAS.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.10   [Reserved]


Sec. 691.11   Payments from more than one institution.

    A student is not entitled to receive PAS Program payments 
concurrently from more than one institution or from the Secretary and 
an institution.

(Authority: 20 U.S.C. 1070a-32)

Subpart B--Application Procedures and Eligibility Requirements


Sec. 691.12   The application process.

    Each eligible student desiring to apply for a PAS shall--
    (a) Submit annually an application to the Secretary on the same 
approved form and at the same time the student applies for a Federal 
Pell Grant;
    (b) Provide the application to the Secretary within the time frame 
required to apply for a Federal Pell Grant; and
    (c) Provide such information as is required to apply for a Federal 
Pell Grant.

(Authority: 20 U.S.C. 1070a-33)


Secs. 691.13-691.14   [Reserved]


Sec. 691.15   Eligibility to apply initially for a scholarship.

    A student is eligible to apply for a PAS for his or her first year 
of postsecondary study if the student--
    (a) Is scheduled to graduate from or is a graduate of a public or 
private secondary school, or has the equivalent of a high school 
diploma as recognized by the State in which the eligible student 
resides, but has not yet received a baccalaureate degree; and
    (b) Is either enrolled, accepted for enrollment, or intends to 
enroll, at an institution of higher education not later than 3 calendar 
years after the date that the student graduates from secondary school 
or obtains the recognized equivalent of a high school diploma.

(Authority: 20 U.S.C. 1070a-35)


Sec. 691.16   Eligibility requirements to receive an award.

    (a) A student is eligible to receive a PAS for his or her first 
year of postsecondary study if the student--
    (1) Is eligible to receive a Federal Pell Grant in the award year 
in which the PAS is awarded;
    (2) Is enrolled or accepted for enrollment in a degree or 
certificate program of at least 2 years in length;
    (3) Has demonstrated academic achievement and preparation for 
postsecondary education by taking the following college preparatory 
level coursework that includes at least--
    (i) Four years of English;
    (ii) Three years of science;
    (iii) Three years of mathematics;
    (iv) Either--
    (A) Three years of history; or
    (B) Two years of history and one year of social studies; and
    (v) Either--
    (A) Two years of foreign language; or
    (B) One year of computer science and 1 year of foreign language;
    (4) Has earned a gradepoint average of 2.5 or higher, on a scale of 
4.0, in the final 2 years of high school; and
    (5) Has either (i) participated for a minimum period of 36 months 
in an eligible early-intervention program; or
    (ii) Ranked in the top 10 percent, by grade point average, of the 
student's secondary school graduating class.
    (b) Notwithstanding the requirements in paragraph (a)(5) of this 
section, a student may receive a PAS if an authorized official of the 
State in which the student resides certifies to the Secretary that the 
student was unable to participate in an eligible early-intervention 
program because--
    (1) The program was not available in the area where the student 
resides; or
    (2) Due to unusual and exceptional circumstances, the student was 
unable to participate in such a program.
    (c) Notwithstanding the requirements in paragraph (a)(3) of this 
section, a student may receive a PAS if the student's secondary school 
does not offer the necessary coursework required in paragraph (a)(3) of 
this section, and the student has completed the required coursework at 
another local secondary school or at a community college.
    (d) Notwithstanding the requirements in paragraph (a)(3)(v) of this 
section, a student may receive a PAS if the student is--
    (1) Fluent in a language other than English and participates in a 
program to learn English; or
    (2) An English-speaking student who is fluent in a second language.

(Authority: 20 U.S.C. 1070a-33, 1070a-35, 1070a-36(c))


Sec. 691.17   Eligibility requirements to continue to receive an award.

    (a) To be eligible to continue to receive a PAS after the first 
year of postsecondary study, a student shall--
    (1) Continue to meet the eligibility requirements in Sec. 691.16(a) 
(1) and (2); and
    (2) Fulfill the requirements for satisfactory academic progress as 
described in Sec. 668.7(c) of the Student Assistance General Provisions 
regulations and section 484(c) of the HEA.
    (b) If a student ceases to be eligible for a PAS because he or she 
is no longer eligible for a Federal Pell Grant, the student can later 
regain eligibility to receive a PAS at the time he or she qualifies for 
a Federal Pell Grant.

(Authority: 20 U.S.C. 1070a-33)

Subparts C-E [Reserved]

Subpart F--Determination of Awards


Sec. 691.61   Disbursement conditions and deadlines.

    (a) Submission process. (1) Except as provided in paragraph (a)(2) 
of this section, an institution makes a disbursement of a PAS to a 
student only if--
    (i) (A) The student has submitted a valid Student Aid Report (SAR) 
to that institution; or
    (B) The institution has obtained a valid institutional student 
information report for that student, the institution participates in 
the Secretary's electronic programs (Recipient Data Exchange, 
Electronic Data Exchange, or ``Floppy Disk'' Exchange) to report 
Federal Pell Grant disbursements, and the institution uses that 
institutional student information report for the student to receive his 
or her PAS; and
    (ii) (A) The student presents a certificate issued by an 
appropriate official of a high school in a State verifying that the 
student has completed the necessary coursework to qualify for a PAS; or
    (B) The student presents written documentation that he or she has 
participated in an approved eligible early-intervention program for at 
least 36 months or qualifies for an exception under Secs. 691.16(b).
    (2) An institution may make one disbursement of a student's PAS 
without a valid SAR or valid institutional student information report 
if it follows the procedures described in Sec. 691.77.
    (3) An institution may rely on valid SAR information or 
institutional student information report information except under 
conditions set forth in 34 CFR 668.14(f) and 668.60.
    (b) Student Aid Report or institutional student information report 
deadline.
    (1) Except as noted in 34 CFR 668.60, to receive a PAS for an award 
year, a student shall submit to his or her institution the relevant 
parts of the SAR or the institution shall receive a valid institutional 
student information report by June 30 of that award year.
    (2) Except as noted in 34 CFR 668.60, for a student to receive a 
PAS for an award year, the student shall submit to his or her 
institution the relevant parts of the SAR or the institution shall 
receive a valid institutional student information report while the 
student is still enrolled and eligible for payment at that institution.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.62  Calculation of a Presidential Access Scholarship Program 
award.

    The amount of a student's PAS for an academic year is equal to 25 
percent of the student's Federal Pell Grant awarded for that academic 
year as determined under 34 CFR 690.62 except that--
    (a) If funding in a fiscal year is sufficient to fund fully all 
eligible student awards in that academic year, no payment shall be made 
to a full-time student of less than $400 for an academic year, 
independent of the amount of the Federal Pell Grant.
    (b) If funding is insufficient to fund fully all eligible students, 
the Secretary reduces each student's award in proportion to the amount 
that the PAS Program is not fully funded.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.63  Calculation of a Presidential Access Scholarship for a 
payment period.

    For an eligible student enrolled in an institution of higher 
education in an eligible program, the student's PAS for each payment 
period is calculated by--
    (a) Determining his or her total PAS award in accordance with 
Sec. 691.62; and
    (b) Determining the amount of each payment based on the payment 
amount for a Federal Pell Grant as calculated in accordance with 
Sec. 690.63.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.64  Calculation of a Presidential Access Scholarship for a 
payment period that occurs in 2 award years.

    (a) If a student enrolls in a payment period that is scheduled to 
occur in 2 award years--
    (1) The entire payment period must be considered to occur within 1 
award year.
    (2) The institution shall determine for each PAS recipient the 
award year in which the payment period will be placed subject to the 
restrictions set forth in paragraph (a)(3) of this section.
    (3) The institution shall place a payment period with more than 6 
months scheduled to occur within 1 award year in that award year.
    (4) If an institution places the payment period in the first award 
year, it shall pay a student with funds from the first award year.
    (5) If an institution places the payment period in the second award 
year, it shall pay a student with funds from the second award year.
    (b) An institution may not make a payment that will result in the 
student receiving more than his or her Scheduled PAS for an award year
    (c)(1) If an eligible program uses academic terms and offers a 
series of minisessions that occur in 2 award years, the combined 
sessions must be treated as one term. A student may not receive more 
that one term's award for completing any combination of these 
minisessions.
    (2) For each minisession, an institution that uses academic terms 
in an eligible program shall determine the student's enrollment status 
for the entire term. That enrollment status must be based on--
    (i) The total number of credits for which the student enrolled in 
all sessions if that number is known when the award is calculated; or
    (ii) A projected number of credits based on the credits enrolled 
for in the first session, if the number of credits to be taken in 
subsequent sessions is unknown when the award is calculated.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.65  Transfer student: attendance at more than one institution 
during an award year.

    (a) If a student who receives a PAS at one institution subsequently 
enrolls at a second institution in the same award year, the student may 
receive a PAS at the second institution only if--
    (1) The student has submitted a valid SAR; or
    (2) The second institution participates in the Secretary's 
electronic programs (Recipient Data Exchange, Electronic Data Exchange, 
or ``Floppy Disk'' Exchange) to report Federal Pell Grant disbursements 
and the second institution obtains a valid institutional student 
information report, in which case the institution shall use the 
information from the institutional student information report to 
determine the student's PAS.
    (b) The second institution shall calculate the student's award 
according to Sec. 691.63.
    (c) The second institution may pay a PAS only for that portion of 
the award year in which a student is enrolled at that institution. The 
scholarship amount must be adjusted, if necessary, to ensure that the 
scholarship award does not exceed the percentage of the award remaining 
from the student's first institution for that award year.
    (d) If a student's PAS award at the second institution differs from 
the Scheduled PAS Award at the first institution, the award amount at 
the second institution is calculated as follows--
    (1) The amount received at the first institution is compared to the 
PAS award at the first institution to determine the percentage of the 
PAS award that the student has received.
    (2) The percentage in paragraph (d)(1) of this section is 
subtracted from 100 percent.
    (3) The remaining percentage is the percentage of the Scheduled PAS 
award at the second institution to which the student is entitled.
    (e) The student's PAS award for each payment period is calculated 
according to the procedures in Sec. 691.63, unless the remaining 
percentage of the Scheduled PAS at the second institution, referred to 
in paragraph (d)(3) of this section, is less than the amount the 
student would normally receive for that payment period. In that case, 
the student's PAS is equal to the remaining percentage.
    (f) A transfer student shall repay any amount received in an award 
year which exceeds his or her Scheduled PAS.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.66  Correspondence study.

    A student enrolled in an eligible program of study by 
correspondence must be paid according to the following procedures:
    (a) The institution shall determine the length of each 
correspondence program it offers by preparing a written schedule for 
submission of lessons, reflecting a work load of at least 12 hours of 
preparation per week.
    (b)(1) For an institution, if there is not a required period of 
residential training in the program, a student's PAS for an academic 
year is calculated by--
    (i) Determining the student's PAS award based on Sec. 691.62; and
    (ii) Multiplying the Scheduled PAS by one-half.
    (2) An academic year must consist of two payment periods. The first 
payment period must be the period of time in which the student 
completes the first half of his or her academic year. The second 
payment period must be the period of time in which the student 
completes the second half of the academic year.
    (3) For the first payment period, the institution shall pay the 
student one-half of the amount calculated in paragraph (b)(1)(ii) of 
this section after he or she has submitted 25 percent of the lessons or 
otherwise completed 25 percent of the work scheduled for the academic 
year or for the program if the program is less than an academic year.
    (4) The institution shall make the final payment for the second 
payment period after the student has submitted 75 percent of the 
lessons or otherwise completed 75 percent of the work scheduled for the 
academic year or for the program.
    (c) (1) For an institution, if there is a required period of 
residential training in the program, a student's PAS for an academic 
year is calculated by--
    (i) Determining the student's PAS award according to Sec. 691.62, 
and;
    (ii) Multiplying the Scheduled PAS by one-half.
    (2) The nonresidential portion of an academic year must consist of 
two payment periods. The first payment period must be the period of 
time in which the student completes the first half of his or her 
academic year or the nonresidential portion of the program if it is 
less than an academic year. The second payment period must be the 
period of time in which the student completes the second half of the 
academic year or nonresidential portion of the program.
    (3) For the first payment period, the institution shall pay the 
student one-half of the amount calculated in paragraph (c)(1)(ii) of 
this section after he or she has submitted 25 percent of the 
nonresidential lessons or otherwise completed 25 percent of the work 
scheduled for the academic year or for the program if the program is 
less than an academic year.
    (4) The institution shall make the final payment (for the 
nonresidential portion of the program) for the second payment period 
after the student has submitted 75 percent of the nonresidential 
lessons or otherwise completed 75 percent of the work scheduled for the 
academic year or for the program.
    (5) A student's PAS disbursement for the residential portion of the 
program is calculated according to the procedures in Sec. 691.63(c) for 
a student enrolled in a regular course of study at an institution that 
measures progress by clock hours.

(Authority: 20 U.S.C. 1070a-32)

Subpart G--Institutional Administration


Sec. 691.71  Scope.

    This subpart deals with program administration by an institution of 
higher education. An institution shall enter into a program 
participation agreement with the Secretary so that it may calculate and 
pay PAS awards to students.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.72  Institutional participation agreement.

    The Secretary may enter into an agreement with an institution of 
higher education pursuant to which the institution will calculate and 
pay PAS awards to its students.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.73  Termination of institutional participation agreement.

    (a) Termination by the Secretary. The Secretary may terminate the 
agreement with an institution by giving the institution--
    (1) Thirty days written notice; or
    (2) Less than 30 days written notice if a shorter notice is 
necessary to prevent the likelihood of a substantial loss of funds to 
the Federal government or to students.
    (b) Information required. An institution shall provide the 
following information to the Secretary if the Secretary terminates the 
agreement:
    (1) The name and enrollment status of each eligible student who 
submitted a valid SAR to the institution or for whom the institution 
obtained a valid institutional student information report before the 
termination date.
    (2) The amount of funds the institution paid to PAS recipients for 
the award year in which the agreement is terminated.
    (3) The amount due to each student eligible to receive a PAS 
through the end of the award year.
    (4) An accounting of PAS expenditures to the date of termination.
    (c) Termination by the institution. An institution may terminate 
the agreement by giving the Secretary written notice. The termination 
becomes effective on June 30 of that award year. The institution shall 
carry out the agreement for the remainder of that award year.
    (d) Termination because of a change in ownership which results in a 
change of control. The agreement automatically terminates when an 
institution changes ownership that results in a change of control. The 
Secretary may enter into an agreement with the new owner if the 
institution complies with requirements set forth in subpart B of the 
Student Assistance General Provisions, 34 CFR part 668.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.74  [Reserved]


Sec. 691.75  Determination of eligibility for payment.

    (a) For each payment period, an institution may pay a PAS to an 
eligible student only after it determines that the financial aid 
transcript requirements of 34 CFR 668.19 have been met, and the 
student--
    (1) Qualifies as eligible to receive a Federal Pell Grant and as an 
eligible student under Secs. 691.16 or 691.17 for a continuing student;
    (2) Is enrolled as an undergraduate student; and
    (3) (i) Has completed required clock hours for which he or she has 
been paid a PAS, if the student is enrolled in an eligible program that 
is measured in clock hours; or
    (ii) Has completed the required credit hours for which he or she 
has been paid a PAS, if the student is enrolled in an eligible program 
that is measured in credit hours and that does not have academic terms.
    (b) If an eligible student submits a valid SAR to the institution 
or the institution receives a valid institutional student information 
report for the student and that student then becomes ineligible before 
receiving a payment, the institution may pay the student only the 
amount that it determines could have been used for purposes before the 
student became ineligible.
    (c) If an institution determines at the beginning of a payment 
period that a student is not maintaining satisfactory progress but 
reverses that determination before the end of the payment period, the 
institution may pay a PAS to the student for the entire payment period.
    (d) If an institution determines at the beginning of a payment 
period that a student is not maintaining satisfactory progress but 
reverses that determination after the end of the payment period, the 
institution may neither pay the student a PAS for that payment period 
nor make adjustments in subsequent PAS payments to compensate for the 
loss of aid for that period.
    (e) A member of a religious order, community, society, agency, or 
organization who is pursuing a course of study in an institution of 
higher education is considered to have an expected family contribution 
of at least $3,000 if that religious order--
    (1) Has as a primary objective the promotion of ideals and beliefs 
regarding a Supreme Being; and
    (2) Provides subsistence support to its members or has directed the 
member to pursue the course of study.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.76  Frequency of payment.

    (a) In each payment period, an institution may pay a student at 
such times and in such installments as it determines will best meet the 
student's needs.
    (b) The institution may pay funds in one lump sum for all the prior 
payment periods for which the student was an eligible student within 
the award year. The student's enrollment status must be determined 
according to work already completed.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.77  Initial disbursement of a PAS in an award year without a 
valid SAR or institutional student information report.

    (a) Within an award year, an institution may make one disbursement 
of a student's PAS before receiving the student's valid SAR or valid 
institutional student information report if the institution--
    (1) Receives a student's application information;
    (2) Does not have documentation that indicates that the application 
information is inaccurate; and
    (3) Receives an EFC--
    (i) From the Secretary; or
    (ii) From an organization that has a contract with the Secretary to 
transmit application data to the Secretary.
    (b) If an institution receives a student's application information 
specified in paragraphs (a)(1) and (a)(3) of this section and the 
student's EFC from the Secretary, or the student's EFC produced by the 
Secretary from an organization that has a contract to transmit 
application data to the Secretary, but the institution has 
documentation that indicates that the application information is 
inaccurate, the institution may make one disbursement of a student's 
PAS within an award year before receiving the student's valid SAR or 
valid institutional student information report if the institution--
    (1) Resolves the inconsistencies between its documentation and the 
student's application information;
    (2) Recalculates the student's EFC and Federal Pell Grant based on 
correct information;
    (3) Makes the disbursement of the student's PAS for the first 
payment period based on the recalculated EFC and Federal Pell Grant; 
and
    (4) Reports the changes in the student's application information 
and the recalculated EFC to the Secretary within the deadline 
established by the Secretary.
    (c)(1) If an institution chooses to make a disbursement under 
paragraph (a) or (b) of this section, it shall be liable for that 
disbursement if it does not receive a valid SAR or valid institutional 
student information report for the student for that award year.
    (2) If an institution chooses to make a disbursement under 
paragraph (b) of this section, the institution and the student shall be 
liable for any overpayment caused by an incorrect recalculation of the 
student's EFC.
    (3) If a student receives an overpayment as a result of a 
disbursement made under paragraph (a) or (b) of this section, the 
institution shall eliminate the overpayment by following the procedures 
described in 34 CFR 690.77.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.78  Method of disbursement by check or credit to a student's 
account.

    (a)(1) The institution may pay a student directly by check or by 
crediting his or her institutional account.
    (2) Unless a student has agreed otherwise, the amount an 
institution may credit to a student's account may not exceed the amount 
the student is required to pay the institution for--
    (i) Tuition and fees;
    (ii) Board, if the student contracts with the institution for 
board; and
    (iii) Housing, if the student contracts with the institution for 
housing.
    (3) An institution may not require a student to grant permission to 
credit his or her account for the costs of other goods and services the 
institution provides to the student.
    (4) The institution shall notify the student of the amount he or 
she can expect to receive and how that amount will be paid.
    (b)(1) The institution may not make a payment to a student for a 
payment period until the student is registered for classes for that 
period.
    (2) The earliest an institution may directly pay a registered 
student is 10 days before the first day of classes of a payment period.
    (3) The earliest an institution may credit a registered student's 
account is 3 weeks before the first day of classes of a payment period.
    (c) The institution shall return to the Secretary any funds paid to 
a student who, before the first day of classes--
    (1) Officially or unofficially withdraws; or
    (2) Is expelled.
    (d)(1) If an institution intends to pay a student directly, it 
shall notify him or her before the payment is made when it will pay the 
PAS award.
    (2) If a student does not pick up the check on time, the 
institution shall still pay the student if he or she requests payment 
within 15 days after the last date that his or her enrollment ends in 
that award year.
    (3) If the student has not picked up his or her payment at the end 
of the 15-day period, the institution may credit the student's account 
only for any outstanding charges for tuition and fees and room and 
board for the award year incurred by the student while he or she was 
eligible.
    (4) A student forfeits the rights to receive the payment if he or 
she does not pick up a payment by the end of the 15 day period.
    (5) Notwithstanding paragraph (d)(4) of this section, the 
institution may, if it chooses, pay a student who did not pick up his 
or her payment, through the next payment period.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.79  Recovery of overpayments.

    (a)(1) A student is liable for any PAS overpayment made to him or 
her.
    (2) The institution is liable for any overpayment if the 
overpayment occurred because the institution failed to follow the 
procedures set forth in this part. The institution shall restore those 
funds to the Secretary even if it cannot collect the overpayment from 
the student.
    (b) If an institution makes an overpayment for which it is not 
liable, it shall help the Secretary recover the overpayment by--
    (1) Making a reasonable effort to contact the student and recover 
the overpayment; and
    (2) If unsuccessful, providing the Secretary with the student's 
name, social security number, amount of overpayment, and other relevant 
information.
    (c) If an institution refers a student who received an overpayment 
for which it is not liable to the Secretary for recovery, the student 
remains ineligible for further title IV, HEA program assistance for 
attendance at any institution until the student repays the overpayment 
or the Secretary determines the overpayment has been resolved.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.80  Recalculation of a PAS Program award.

    (a) The institution shall recalculate a PAS award for the entire 
award year if the student's Federal Pell Grant changes at any time 
during the award year for any reason specified in Sec. 690.80, 
including changes in enrollment status, EFC, or cost of attendance.
    (b) The institution shall adjust the student's award when an 
overaward or underaward is caused by the change in the Federal Pell 
Grant award. That adjustment must be made--
    (1) Within the same award year--if possible--to correct any 
overpayment or underpayment; or
    (2) During the next award year to correct any overpayment that 
could not be adjusted during the year in which the student was 
overpaid.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.81  Fiscal control and fund accounting procedures.

    (a)(1) An institution shall establish and maintain on a current 
basis financial records that reflect all program transactions. The 
institution shall establish and maintain general ledger control 
accounts and related subsidiary accounts that identify each program 
transaction and separate those transactions from all other 
institutional financial activity.
    (2) The institution shall account for the receipt and expenditure 
of PAS funds in accordance with generally accepted accounting 
principles.
    (b) A separate bank account for PAS funds is not required. However, 
the institution shall notify any bank in which it deposits PAS funds of 
all accounts in that bank in which it deposits Federal funds.
    (c) Except for funds received for administrative expenses, funds 
received by an institution under this part may be used only to pay PAS 
funds to students. The funds are held in trust by the institution for 
the intended student beneficiaries and may not be used or hypothecated 
for any other purpose.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.82  Maintenance and retention of records.

    (a) Each institution shall maintain adequate records (including 
those related to verification) that include the fiscal and accounting 
records that are required under Sec. 691.81, records required for 
audits in 34 CFR 668.23, the SAR or valid institutional student 
information report of each student receiving a PAS, and records 
indicating--
    (1) The eligibility for a PAS of all enrolled students who have 
submitted valid SARs or valid institutional student information report 
to the institution;
    (2) The name and social security number of and the amount of the 
PAS award paid to each student;
    (3) The amount and date of each payment;
    (4) The amount and date of any overpayment that has been restored 
to the program account; and
    (5) Each student's enrollment period.
    (b)(1) The institution shall make the records listed in paragraph 
(a) of this section available for inspection by the Secretary's 
authorized representative at any reasonable time in the institution's 
offices. It shall keep the records for each award year for 5 years 
after that award year has ended.
    (2) For any disputed expenditures in any award year for which the 
institution cannot provide records, the Secretary determines the final 
authorized level of expenditures.
    (c) The institution shall keep records involved in any claim or 
expenditure questioned by Federal audit until resolution of any audit 
questions.
    (d) An institution may substitute microform copies in lieu of 
original records in meeting the requirements of this section.

(Authority: 20 U.S.C. 1070a-32)


Sec. 691.83  Submission of reports.

    (a)(1) An institution may receive either a payment from the 
Secretary for an award to a PAS recipient or a corresponding reduction 
in the amount of Federal funds received in advance for which it is 
accountable if--
    (i) The institution submits to the Secretary all SAR Payment 
Documents (or the equivalent as defined by the Secretary) for that 
award in the manner and form prescribed in paragraph (a)(2) of this 
section by September 30 following the end of the award year in which 
the scholarship is made, and
    (ii) The Secretary accepts those SAR Payment Documents.
    (2) The Secretary accepts SAR Payment Documents that are submitted 
in accordance with procedures established through publication in the 
Federal Register and that contain information including that previously 
provided by the student and the institution.
    (3) An institution that does not comply with the requirements of 
this paragraph may receive payment or reduction in accountability only 
as provided in paragraph (c) of this section.
    (b) An institution shall report to the Secretary any change in 
enrollment status, cost of attendance, or other event or condition that 
causes a change in the amount of a Federal Pell Grant and a resulting 
change in a PAS for which a student qualifies by submitting to the 
Secretary an SAR Payment Document reporting a change to the Secretary 
by the end of that reporting period that next follows the reporting 
period in which the change occurred.
    (c) (1) An institution that has timely submitted an SAR Payment 
Document for a student in accordance with paragraph (a) of this section 
but does not timely submit to the Secretary, or have accepted by the 
Secretary, an SAR Payment Document necessary to document the full 
amount of the PAS award to which the student is entitled may receive a 
payment or reduction in accountability in the full amount of that award 
if--
    (i) A program review or an audit report produced in accordance with 
the standards prescribed in 34 CFR 668.23(c) demonstrated to the 
satisfaction of the Secretary that the student was eligible to receive 
an amount greater than that reported on the SAR Payment Document timely 
submitted to, and accepted by the Secretary; and
    (ii) The institution seeks an adjustment to reflect an overpayment 
for that award that is at least $100.
    (2) An institution that has timely submitted and has accepted a SAR 
Payment Document for a student in accordance with this section shall 
report a reduction in the amount of a PAS award that the student 
received when it determines that an overpayment has occurred, unless 
that overpayment is one for which the institution is not liable under 
Sec. 690.79(a).
    (3) The Secretary pays or recognizes a reduction in accountability 
under this paragraph after deducting the amount of any overpayments for 
which the institution is liable under Sec. 691.79(a).
    (d) In accordance with 34 CFR 668.84, the Secretary may impose a 
fine on the institution if the institution fails to comply with the 
requirements in paragraph (a), (b), or (c) of this section.


(Authority 20 U.S.C. 1070a-32)

Subpart H--Administrative Responsibilities of a State


Sec. 691.90  Early-intervention agreement.

    For a student to receive a PAS, the State agency in the State in 
which the student resides shall have entered into a one-time written 
agreement with the Secretary, except that a State must submit a 
subsequent agreement if the Secretary subsequently requires changes in 
this initial agreement. Each State's agreement must be approved by the 
Secretary and must include provisions designed to ensure the following:
    (a) All secondary school students in the State have equal and easy 
access to the coursework described in Sec. 691.16(c) and 406C(a)(2) of 
the HEA.
    (b) The State agency has procedures in place to verify to the 
Secretary that--
    (1) A student receiving a PAS has taken the coursework described in 
Sec. 691.16(c);
    (2) The coursework described in Sec. 691.16 is of a college 
preparatory level; and
    (3) The State requires all secondary schools in the State to issue 
a certificate to each eligible student certifying that the student has 
completed the necessary coursework to qualify for a PAS.
    (c) The State agency has procedures in place to notify institutions 
of higher education of the availability of the PAS so that the 
institutions may award additional scholarships in concert with the PAS. 
The State agency has procedures to inform junior high school students 
enrolled in public or private schools and their families about--
    (1) The value of postsecondary education;
    (2) The availability of student aid to meet college expenses; and
    (3) The availability of a PAS for students from low and moderate-
income families who take academically demanding courses.

(Authority 20 U.S.C. 1070a-36)


Sec. 691.91  Records a State must maintain.

    (a) The State agency shall maintain written procedures and records 
to support the information supplied in the
early-intervention agreement in Sec. 691.90 and the Governor's 
certification of other eligible early intervention programs.
    (b) The State agency shall maintain the written procedures and 
records required under this subpart for a period of five calendar years 
from the end of the award year to which the records relate.

(Authority: U.S.C. 1070a-36)

[FR Doc. 94-4152 Filed 2-24-94; 8:45 am]
BILLING CODE 4000-01-P