[Federal Register Volume 59, Number 51 (Wednesday, March 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6127]


[[Page Unknown]]

[Federal Register: March 16, 1994]


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Part VII





Department of Education





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34 CFR Part 668




Student Assistance General Provisions; Final Rule
DEPARTMENT OF EDUCATION

34 CFR Part 668

RIN 1840-AB90

 
Student Assistance General Provisions

AGENCY: Department of Education.

ACTION: Final regulations.

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SUMMARY: The Secretary amends the Student Assistance General Provisions 
regulations governing student eligibility under the Higher Education 
Act of 1965, as amended (HEA). The regulations implement certain new 
provisions of the Higher Education Amendments of 1992 and the Higher 
Education Technical Amendments of 1993 that pertain to student 
eligibility. The regulations also make technical corrections to the 
final regulations published in the Federal Register on June 8, 1993 
with regard to the applicability of Sec. 668.7(a)(1) to specific 
programs set forth in title IV of the HEA (title IV, HEA). The purpose 
of the regulations is to reduce the potential for abuse in the programs 
authorized under the title IV, HEA programs by improving the accuracy 
of the information used to assess a student's eligibility for these 
programs. The regulations also clarify the Secretary's policy with 
regard to the eligibility of incarcerated students, students studying 
abroad, and students enrolled in telecommunications or correspondence 
courses.

EFFECTIVE DATE: Subject to meeting the requirements of section 431(d) 
of the General Education Provisions Act (20 U.S.C. 1232(d)), these 
regulations take effect on July 1, 1994. When these regulations become 
effective, they govern student eligibility for any title IV, HEA 
program assistance that may be awarded to any student for award years 
beginning with 1994-95.

FOR FURTHER INFORMATION CONTACT: Claude Denton, Program Specialist, 
Student Eligibility and Verification Section, General Provisions 
Branch, Division of Policy Development, U.S. Department of Education, 
400 Maryland Avenue SW., (ROB-3, Room 4318), Washington, DC 20202. 
Telephone: (202) 708-7888. Individuals who use a telecommunications 
device for the deaf (TDD) may call the Federal Information Relay 
Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8 p.m., Eastern 
time, Monday through Friday.

SUPPLEMENTARY INFORMATION: The Student Assistance General Provisions 
regulations implement requirements that apply to all institutions that 
participate in the title IV, HEA student financial assistance programs. 
The title IV, HEA student financial assistance programs include the 
Federal Pell Grant, Federal Stafford Loan, Federal PLUS Loan, Federal 
Supplemental Loans for Students (SLS), Federal Direct Student Loan 
(Direct Loans), State Student Incentive Grant (SSIG), Federal Perkins 
Loan, Federal Work-Study (FWS), and Federal Supplemental Educational 
Opportunity Grant (FSEOG) programs. The last three programs are known 
collectively as the ``campus-based programs.''
    These regulations implement portions of the Higher Education 
Amendments of 1992, Public Law 102-325, enacted July 23, 1992. 
Regulatory implementation of this statute revises the Student 
Assistance General Provisions (34 CFR part 668), which apply to all 
students seeking assistance under the title IV, HEA programs. These 
revisions seek to improve the efficiency of the title IV, HEA programs 
and, by so doing, improve their capacity to enhance opportunities for 
postsecondary education. Encouraging students to graduate from high 
school and to pursue high quality postsecondary education are important 
elements of the National Education Goals.

Waiver of Rulemaking

    On June 8, 1993, the Secretary published final regulations in the 
Federal Register, 58 FR 32188, that implement statutory changes, make 
technical modifications, and enhance program integrity in the title IV, 
HEA programs. As published, Sec. 668.7(a)(1) of those regulations 
incorrectly states that an otherwise eligible student who is enrolled 
for no longer than one twelve-month period as at least a half-time 
student in a course of study necessary for enrollment in an eligible 
program is eligible to receive assistance under the Stafford Loan, 
PLUS, SLS, FWS, Federal Perkins Loan, or FDSL programs. Under section 
484(b)(3) of the HEA, as amended by the Higher Education Technical 
Amendments of 1993 (Technical Amendments)(Pub. L. 103-208, enacted 
December 20, 1993), this student would be eligible to receive 
assistance under the Stafford Loan, PLUS, SLS or FDSL programs only.
    In addition, the Higher Education Amendments of 1992 amended 
section 484(b)(4) of the HEA to provide that an otherwise eligible 
student, who is enrolled or accepted for enrollment as at least a half-
time student at an eligible institution in a program necessary for a 
professional credential or certification from a State that is required 
for employment as a teacher in an elementary or secondary school in 
that State, is now eligible to receive assistance under the FWS, 
Federal Perkins Loan, or FDSL programs in addition to funds under the 
Stafford Loan, PLUS, or SLS programs. Section 668.7(a)(1) has been 
corrected to reflect the applicable statutory requirements. Until the 
effective date of these regulations, the statutory requirements of 
section 484(b) (3) and (4) of the HEA supersede Sec. 668.7(a)(1) as 
published in the June 8, 1993 final regulations.
    For purposes of this rulemaking, the Technical Amendments also 
exempt students from three Pacific Island republics from the 
requirement of providing social security numbers as a condition of 
eligibility for title IV, HEA assistance. In addition, the Technical 
Amendments provide for institutional authority to determine that a 
social security number is correct without the need for a subsequent 
review by the Secretary. In accordance with these statutory changes, 
Secs. 668.7(a)(16) and 668.7(i) have been revised, respectively.
    It is the practice of the Secretary to offer interested parties the 
opportunity to comment on proposed regulations in accordance with 
section 431(b)(2)(A) of the General Education Provisions Act (20 U.S.C. 
1232(b)(2)(A)) and the Administrative Procedure Act, 5 U.S.C. 553. 
However, since these changes merely incorporate statutory requirements 
into the regulations and do not implement substantive policy, public 
comment could have no effect. Therefore, the Secretary has determined 
pursuant to 5 U.S.C. 553(b)(B) that public comment on the regulations 
is unnecessary and contrary to the public interest.

Major Issues

    On October 4, 1993, the Secretary published a notice of proposed 
rulemaking (NPRM) in the Federal Register (58 FR 51712). The NPRM 
included a discussion of the major issues surrounding the proposed 
changes that will not be repeated here. The following list summarizes 
those issues and identifies the pages of the preamble to the NPRM on 
which a discussion of those issues may be found:
    Amendment to General Definitions contained in Sec. 668.2 to add a 
definition of the term ``output document'' to ensure consistent use of 
the term throughout part 668 (page 51713);
    Addition of provisions for a data match with the Selective Service 
System and providing that a confirmation of Selective Service 
registration on the student's application output document that is 
submitted to the institution fulfills the Selective Service 
registration requirement (page 51713);
    Addition of a provision making incarcerated students ineligible to 
receive assistance under the Federal Family Education Loan, Federal 
Direct Student Loan, and Federal Perkins Loan programs (page 51713);
    Addition of a provision requiring a student, as a condition of 
eligibility for title IV, HEA assistance, to provide a social security 
number (page 51714);
    Addition of provisions for a data match with the Social Security 
Administration to verify the accuracy of social security numbers 
provided by students and institutional requirements related to this 
verification (pages 51714-51715);
    Addition of a provision making a student ineligible to receive 
title IV, HEA assistance for a correspondence course unless the course 
is part of a program leading to an associate, bachelor's, or graduate 
degree (page 51715);
    Addition of a provision establishing a methodology for calculating 
the percentage of telecommunications and correspondence courses 
delivered by the institution for the purpose of determining whether the 
total number of telecommunications and correspondence courses exceeds 
50 percent of all courses offered (page 51715); and
    Addition of a provision clarifying that if a program of study 
abroad is approved for credit by the home institution at which a 
student is enrolled, the otherwise eligible student is eligible to 
receive title IV, HEA assistance without regard to whether the study 
abroad program is required as part of the student's degree program 
(pages 51715-51716).
    Section 668.7(i) has been revised, in response to public comments, 
to provide for institutional verification of a student's social 
security number if the institution has information that conflicts with 
the Secretary's initial determination that the student's social 
security number is accurate.
    The Technical Amendments redesignated several provisions of HEA 
section 484 and, accordingly, several references to that statutory 
provision in these regulations have been revised.

Analysis of Comments and Changes

    In response to the Secretary's invitation in the NPRM, 31 parties 
submitted comments on the proposed regulations. An analysis of the 
comments and of the changes in the regulations since publication of the 
NPRM follows.
    Substantive issues are discussed under the section of the 
regulations to which they pertain. Technical and other minor changes 
and suggested changes the Secretary is not legally authorized to make 
under the applicable statutory authority are not addressed.

Section 668.7  Eligible Student

Selective Service Registration Status

    Comments: Several commenters supported the provision for a data 
match with the Selective Service System and the provision that a 
confirmation of Selective Service registration on the student's output 
document that is submitted to the institution fulfills the requirement 
to file a separate statement of compliance. One commenter recommended a 
waiver of the Statement of Registration Status when a student presents 
other documentation from the Selective Service System proving 
registration. One commenter questioned the need for a 30-day period for 
the student to collect and submit documentation to the institution to 
support his claim of registration or exemption from registration, and 
suggested that a statement from the student or a telephone call to the 
Selective Service System would be equally effective and less burdensome 
to the institution. One commenter requested that the Secretary address 
the issues regarding students who failed to register with Selective 
Service and are currently beyond the age of registration, veterans of 
the Armed Forces who never registered, and aliens who missed the 
opportunity to register. One commenter suggested that the data match 
with the Selective Service System eliminates the need for a Statement 
of Registration Status and recommended deletion of the Statement of 
Registration Status from the student's output document. Another 
commenter noted that section 484(n) of the HEA provides that an 
institution may use data or documents to support the student's 
registration, or exemption from registration, as a substitute for a 
separate statement of compliance, but the commenter suggested that no 
regulatory provisions exist, or are proposed, for waiver of the 
Statement of Registration Status if the student submits documentation 
proving that he is registered. Concern was also expressed by a 
commenter that the 30-day minimum period allowed for the student to 
submit a Statement of Registration Status imposes Selective Service 
enforcement responsibilities on institutions. Another commenter 
suggested that the Secretary stress in the preamble to these 
regulations that the 30-day provision is a minimum requirement and that 
institutions have the option of a later deadline. One commenter was 
concerned about whether an institution can allow exceptions to the 30-
day deadline if an output document is submitted close to the end of an 
award year and the 30-day period would extend beyond the end of the 
award year, thereby precluding the student's eligibility for programs 
without late disbursement provisions. Another commenter questioned 
whether the 30-day period should begin at the time the institution 
receives the student's output document, given the fact that many 
institutions using electronic output documents receive the output 
documents before the student receives them. One commenter requested 
specific examples of what the Secretary would describe as clear and 
unambiguous evidence of compliance with Selective Service registration 
requirements, and suggested that the examples should include returned 
Postal Service receipts from the Selective Service System. Another 
commenter suggested that the Secretary add a provision to 
Sec. 668.7(a)(13) to provide that if a student submits a Statement of 
Registration Status claiming to be registered with Selective Service 
and that claim is not confirmed by the data match, the student should 
be required to present evidence from the Selective Service System to 
resolve these conflicting sources of information. Several commenters 
suggested that if the data match is out of service, the Secretary 
should delay processing the student's application for title IV, HEA 
assistance until the data match is again operational.
    Discussion: Section 484(n) of the HEA requires the Secretary to 
conduct a data base match with the Selective Service System for the 
purpose of enforcing the Selective Service registration provisions of 
section 113 of Public Law 97-252. Since the Secretary's participation 
in this data match is mandatory, the institution's compliance with 
section 2 of the Computer Matching and Privacy Protection Act of 1988 
is also mandatory with respect to providing the student a minimum of 30 
days to provide a Statement of Registration Status, or clear and 
convincing evidence to the institution to support the student's claim 
to have registered, or to be exempt from, Selective Service 
registration. If the data match does not confirm that the student is 
registered with Selective Service, the Secretary does not consider the 
student's statement to be ``clear and convincing'' evidence, but 
considers the institution's documented statement based on a telephone 
conversation with an employee of the Selective Service System to meet 
the ``clear and convincing'' standard. Returned Postal Service receipts 
from the Selective Service System are also acceptable forms of 
documentation. Regarding the recommendation for a waiver of the 
Statement of Registration Status if evidence of registration is 
submitted by the student, the Secretary notes that provisions for such 
a waiver already exist in Sec. 668.33. However, the Secretary believes 
that a revision to Sec. 668.7(a)(13)(ii) is needed to clarify that 
Sec. 668.33 may require the student to file a Statement of Registration 
Status or other evidence. With regard to veterans of the U.S. Armed 
Forces who failed to register with the Selective Service System, the 
Secretary recently issued final regulations (58 FR 32188, June 8, 1993) 
that address this issue. Section 668.33(b) of the Student Assistance 
General Provisions now provides that the student is not required to be 
registered with the Selective Service System if the student ``served as 
a member of one of the U.S. Armed Forces on active duty and received a 
DD Form 214, ``Certificate of Release or Discharge from Active Duty'' 
showing military service with other than the reserve forces and 
National Guard.'' Section 668.33(b) also provides that a student who 
was required to be registered with the Selective Service System prior 
to age 26, is now at least 26 years old or older, and claims to have 
unknowingly failed to register with the Selective Service System must 
demonstrate to the institution that he did not knowingly and willfully 
fail to register with Selective Service. This requirement is satisfied 
if the student obtains and presents to the institution an advisory 
opinion from the Selective Service System that does not dispute the 
student's claim that he did not knowingly and willfully fail to 
register, and the institution does not have uncontroverted evidence 
that the student knowingly and willfully failed to register. Section 
668.33, as revised by the June 8, 1993 final regulations, also provides 
for a waiver of the Statement of Registration Status if the student 
submits to the institution documentation proving that he is registered. 
With regard to the comment suggesting removal of the Statement of 
Registration Status, the statute provides for use of documentation as a 
substitute for the Statement of Registration Status only if the student 
is able to submit such documentation. If the student claims to have 
registered with Selective Service, or claims to be exempt from 
registration, and does not have evidence to support such claims, the 
Statement of Registration Status is an effective means of communicating 
these claims to the institution. With regard to the comment that the 
30-day period for the student to submit a Statement of Registration 
Status forces institutions into an ``enforcement'' position of denying 
title IV, HEA assistance based on institutionally-set deadlines, the 
Secretary wishes to emphasize that the 30-day requirement is mandated 
by the Computer Matching and Privacy Protection Act of 1988 and that 
the provision establishes a minimum length of time, giving institutions 
the option of setting a later deadline. Furthermore, the 30-day period 
is intended to provide due process protection to an individual who may 
be adversely affected by the results of a data match, and is not 
intended to force the institution into denying title IV, HEA assistance 
to students before the institution would otherwise be prepared to do 
so. The Secretary also realizes that strict adherence to the 30-day 
minimum period may create difficulties when the student's application 
is being processed near the end of the award year, and supports the use 
of institutional discretion in setting deadlines that conform to 
existing statutory requirements and practical considerations regarding 
the time needed to process title IV, HEA applications. With regard to 
the comment concerning the beginning of the 30-day period for 
institutions with electronic access to output documents, the 30-day 
period should not begin until the student acknowledges to the 
institution receipt of the output document containing information 
relating to the results of the data match.
    Changes: Section 668.7(a)(13)(ii) is revised to clarify that if the 
student's Selective Service System status is not confirmed by the data 
match, the student may be required to file a Statement of Registration 
Status or other evidence as required by Sec. 668.33.

Incarcerated Students

    Comments: One commenter requested clarification with respect to 
whether a student meets the Secretary's definition of ``incarcerated'' 
if the student is furloughed during the day for the purpose of 
attending classes and returns to confinement in a correctional 
institution at night. Other commenters questioned whether an 
incarcerated student should be allowed to receive his or her loan for a 
period of attendance completed before the incarceration begins. One 
commenter requested that the Secretary describe or reference 
calculation and disbursement procedures for borrowers who have reduced 
eligibility due to incarceration. Another commenter questioned whether 
a student who is incarcerated at the beginning of an enrollment or 
payment period and is subsequently released prior to the end of that 
period should be considered eligible for the entire period.
    Discussion: The Secretary is considering the definition of an 
``incarcerated student'' in a separate proposed rulemaking published in 
the Federal Register on February 10, 1994 (59 FR 6446-6465). Until that 
rulemaking is effective, institutions are advised to seek the advice of 
their own legal counsel with regard to compliance with section 
484(b)(5) of the HEA, which makes incarcerated students ineligible to 
receive assistance under the title IV, HEA loan programs. This comment 
will be considered along with any others received during the comment 
period applicable to that rulemaking. With regard to whether an 
incarcerated student can receive a loan disbursement for a period of 
attendance completed before incarceration, section 484(b)(5) of the HEA 
precludes an incarcerated student from receiving a loan disbursement, 
even if the disbursement would have applied toward a period of 
attendance already completed. Calculations of eligibility for students 
who become incarcerated during a payment period should be similar to 
the calculations made with regard to cost of attendance for a borrower 
who withdraws from the institution during the period. A student who is 
incarcerated at the beginning of a payment period and is subsequently 
released before the end of the payment period is eligible for 
disbursement of loan funds provided that the disbursement is made after 
release from incarceration and the student maintains an eligible 
student status as provided in Sec. 668.7.
    Changes: None.

Social Security Number

    Comments: One commenter questioned the need for a social security 
number data match, suggesting that institutions should be allowed to 
maintain evidence of a correct social security number on file. Several 
commenters expressed concern that title IV, HEA assistance may be 
delayed to a student if the data match with the Social Security 
Administration is out of service at the time the student's application 
for title IV, HEA assistance is processed and the student is unable to 
promptly provide evidence of a correct social security number. One 
commenter suggested the use of several data elements as matching 
criteria, including proper names, nicknames, abbreviated names, and 
married names. One commenter questioned the Secretary's proposal to 
resubmit the student's social security number for a final determination 
if there is a possibility the data match could again be nonoperational. 
Title IV, HEA assistance may be delayed, according to other commenters, 
when institutions choose not to incur liability if a student provides 
evidence of a correct social security number that differs from the 
social security number originally submitted to the Secretary. Several 
commenters suggested that the Secretary should issue a rejected output 
document if the student's social security number is not confirmed, and 
that responsibility for reconciliation of the nonconfirmed match should 
be placed on the student and the Social Security Administration. 
Several commenters suggested that, if the accuracy of a student's 
social security number is not confirmed because the data match is not 
in operation, the institution should assume that the social security 
number provided by the student is correct until a subsequent data match 
indicates that the social security number is incorrect, and that the 
student should not be required to present evidence to prove the 
accuracy of his or her social security number. One commenter asked the 
Secretary for specific guidance on how to assist the student in 
providing evidence and obtaining a final determination from the 
Secretary with regard to the accuracy of the student's social security 
number, and several commenters urged the Secretary to allow the 
institutions to make this final determination. Another commenter 
requested the opportunity to make a first disbursement without 
liability if the student can provide evidence of an accurate social 
security number. One commenter suggested that, once verification 
confirms that the student's social security number is accurate and such 
verification is documented in the student's file, no subsequent 
verification of the student's social security number be required in 
subsequent years. One commenter questioned whether corrections to the 
student's social security number will cause a permanent change to the 
student's record identification number, and whether the default data 
match will be initiated based on the corrected social security number. 
Several commenters suggested that a maximum turnaround time be allowed 
for institutions to await a final determination from the Secretary with 
regard to the accuracy of a student's social security number and that, 
if a final determination is not received by the due date, that the 
institution be allowed to disburse title IV, HEA funds. Several 
commenters requested a thorough test of the matching data base to 
prevent nonconfirmations of social security numbers because of name 
changes, misspellings, and other typographical errors. One commenter 
suggested that the institution should be allowed to require evidence of 
an accurate social security number if the institution has information 
that conflicts with the Secretary's confirmation that the student's 
social security number is correct. One commenter recommended the 
deletion of Sec. 668.7(i)(1), contending that there are no 
circumstances in which the institution would be required to comply with 
this provision. One commenter objected to any assignment of liability 
to the institution in light of section 484(p)(4) of the HEA, which 
prohibits the Secretary from taking any compliance, disallowance, 
penalty, or other regulatory action against an institution with respect 
to an error in a social security number, unless the error is the result 
of institutional fraud. One commenter suggested that students who do 
not meet the institutional deadline as proposed in Sec. 668.7(i)(3)(i) 
should be ineligible for the period of enrollment during which they 
applied for title IV, HEA assistance, not for the entire award year.
    Discussion: With regard to the comment concerning the need for a 
data match with the Social Security Administration, section 484(p) of 
the HEA requires the Secretary, in cooperation with the Commissioner of 
the Social Security Administration, to verify any social security 
number provided by a student applying for title IV, HEA assistance. The 
Secretary believes that a data match is the most efficient method of 
accomplishing this task. The Secretary understands that a student with 
a social security number that is not confirmed by the Secretary because 
the data match is out of service may experience delays in title IV, HEA 
assistance if he or she cannot promptly provide evidence of a correct 
social security number. As a possible solution to this problem and to 
reduce administrative burden on institutions, the Secretary considered 
carefully the possibility of delaying the processing of applications 
when the data match is out of service. Such delays would back up entire 
batches of applications on subsequent processing days, however, and 
would seriously compromise the efficiency of the processing system 
during peak volume periods. The Secretary is confident that 
interruptions in data match operations will be rare, that the data 
match will provide virtually trouble-free, continuous service and that 
the institution will very infrequently need to resubmit a social 
security number because the data match is out of service. If the match 
is out of service, however, the Secretary believes that the institution 
should require documented evidence from the student of a correct social 
security number and should make a determination that the student's 
social security number is correct before disbursing title IV, HEA 
assistance. With regard to the comment favoring the use of proper 
names, nicknames, abbreviated names and married names as matching 
criteria, the Secretary, in cooperation with staff at the Social 
Security Administration, considered a number of possible data items 
that are normally collected by the Social Security Administration, and 
has determined that the student's name, date of birth, and social 
security number are the three most useful matching elements. With 
regard to the commenter who suggests that title IV, HEA assistance will 
be delayed if the student's institution chooses not to incur liability 
if the student provides evidence of a social security number that 
differs from the social security number originally submitted to the 
Secretary, section 484(p)(2) has been revised by the Higher Education 
Technical Amendments of 1993 to accommodate this concern. According to 
this revised statutory provision, if a student's social security number 
is determined by the Secretary to be incorrect, the institution must 
deny the student's eligibility for title IV, HEA assistance until such 
time as the student provides documented evidence of a social security 
number that is determined by the institution to be correct. The 
Secretary will not impose any liability on the institution making this 
determination if the student's social security number is subsequently 
found to be incorrect, provided that the institution has not committed 
fraud and the institution's determination is based on clear and 
convincing evidence. The institution may make a determination that a 
social security number is correct and disburse title IV, HEA assistance 
to an otherwise eligible student even if the student is submitting a 
social security number that differs from the social security number 
originally submitted to the Secretary. If such a determination is made, 
the institution will be required to report the new social security 
number to the Secretary, and the Secretary will accept the new social 
security number as accurate. This statutory change addresses the 
concerns of commenters seeking guidance on how to provide evidence and 
obtain a final determination from the Secretary with regard to a 
student's social security number that has not been confirmed as 
accurate by the data match. The institution has the authority to make a 
determination with regard to the accuracy of a student's social 
security number. Commenters urging the Secretary to allow the 
institution to make a final determination, commenters seeking to make 
disbursements without liability if the student can provide evidence of 
an accurate social security number, and commenters suggesting a maximum 
turnaround time for the Secretary's final determination have also had 
their concerns addressed by this change. The Secretary agrees in 
principle with the commenter who suggests that the Secretary should 
issue a rejected output document if the student's social security 
number is not confirmed. Rejected output documents are planned for 
applications in which the social security number does not correspond 
with a valid social security number in the Social Security 
Administration data base. However, the Secretary plans to use the 
output document to alert the institution to particular matching 
criteria, such as the date of birth, that do not match corresponding 
data in the Social Security Administration data base, rather than 
rejecting the application for minor discrepancies. The Secretary is 
interested in minimizing the burden on institutions wherever possible 
in this process of reconciling nonconfirmed matches and solicits 
comments from institutions at any time with regard to the technical 
aspects of data match operations. However, the Secretary disagrees with 
the commenter who would place responsibility for reconciliation of 
nonconfirmed matches on the student and the Social Security 
Administration. The institution retains primary responsibility for 
ensuring that all students receiving title IV, HEA assistance are 
eligible students in accordance with this section of the regulations. 
The Secretary agrees with the commenter's suggestion that a verified 
social security number should not need verification in subsequent 
years, and will include the social security number as part of the 
renewal application data items that are transferred from year to year. 
With regard to the comment regarding use of the student's corrected 
social security number as the student's record identification number 
and for purposes of the default match, the Secretary will maintain both 
social security numbers in the processing system but will automatically 
rerun the default match for any corrected social security number. The 
Secretary agrees with the commenter who suggests that the Social 
Security Administration data base be tested to prevent nonconfirmations 
due to name changes, misspellings, and other typographical errors, and 
has begun such testing. However, the Secretary recognizes that the data 
base is only as accurate as the data that is made available to it and 
kept updated by individuals. The Secretary also agrees with the 
commenter who suggests that the institution be allowed to require 
evidence of an accurate social security number from the student if the 
institution has information which conflicts with the Secretary's 
determination from the data match that the student's social security 
number is accurate. The Secretary does not agree with the commenter who 
proposes the deletion of Sec. 668.7(i)(1), which prohibits an 
institution from denying, delaying, reducing, or terminating a 
student's eligibility for title IV, HEA assistance because social 
security number verification is pending. This provision, also found in 
section 484(p)(1) of the HEA, prevents delays in disbursements of title 
IV, HEA assistance to students attending institutions that would 
otherwise not disburse title IV, HEA assistance on the basis of their 
own determinations that the student's social security number is 
correct. For students whose social security numbers are not confirmed 
as correct by the data match, section 484(p)(2) mandates a delay in 
title IV, HEA disbursements until documented evidence of a correct 
social security number is provided to the institution. However, once 
this evidence is provided and the institution determines that the 
social security number is correct, section 484(p)(1) prohibits any 
further delays in title IV, HEA disbursements to otherwise eligible 
students. The Secretary disagrees with the commenter who argues that 
the Secretary cannot assign liability to an institution failing to 
comply with the requirements of this section, on the basis that section 
484(p)(4) of the HEA prohibits the Secretary from taking any 
compliance, disallowance, penalty, or other regulatory action against 
an institution with respect to an error in a social security number, 
unless the error is the result of institutional fraud. The Secretary, 
in accordance with this provision, will not take any of the 
administrative actions mentioned in HEA section 484(p)(4) against an 
institution that, notwithstanding compliance with this section, makes a 
title IV, HEA disbursement to a student using an incorrect social 
security number. However, section 484(p) does not prevent the Secretary 
from holding an institution liable for any title IV, HEA disbursements 
made in error to a student if the erroneous disbursements were caused 
by the institution's failure to comply with the provisions of this 
section.
    Changes: If there is a determination by the Secretary that the 
social security number provided by a student to an institution is 
incorrect, Sec. 668.7(i) is revised to allow an institution to 
determine that a student's social security number is correct based on 
documented evidence. If the institution verifies the accuracy of a 
social security number that differs from the social security number 
originally provided to the Secretary, the institution is required to 
report the correct social security number to the Secretary. Section 
668.7(i)(2) is also revised to require an institution to collect 
evidence of a correct social security number if the institution has 
information that conflicts with the Secretary's determination that the 
student's social security number is correct.

Enrollment in Correspondence or Telecommunications Courses

    Comments: One commenter suggested that the Secretary clarify that a 
student's ineligibility for title IV, HEA assistance because of the 
student's enrollment in a correspondence course not leading to a degree 
extends only to that course, and that the same student may be eligible 
for title IV, HEA assistance if he or she is enrolled in degree program 
courses. The same commenter inquired as to whether a student enrolled 
in a telecommunications course that is being categorized as a 
correspondence course for purposes of HEA section 484(l)(1) is also 
counted as a correspondence student for purposes of HEA section 
481(a)(3).
    One commenter questioned whether a course taught through live, 
interactive telephone transmission qualifies as a telecommunications 
course. One commenter requested clarification with regard to whether 
the Secretary's use of the phrase ``part of an educational program'' in 
Sec. 668.7(a)(15) refers to part of the student's academic program or 
part of the curriculum of the institution. One commenter questioned 
whether students enrolled in residential degree programs who enroll in 
additional correspondence courses for purposes of certification or 
licensure would be eligible for title IV, HEA assistance. The same 
commenter inquired as to whether an aid officer can deny funding 
applicable to correspondence programs provided at another institution 
with which a consortium agreement exists. One commenter suggested that 
the Secretary should institute a waiver procedure which would allow 
certain institutions to waive the 50 percent standard provided in 
Sec. 668.7(j). One commenter requested that the Secretary define the 
term ``correspondence.''
    Discussion: The Secretary agrees with the commenter's presumption 
that a student enrolled in a telecommunications or correspondence 
course that is not part of a degree program is ineligible for title IV, 
HEA assistance only to the extent that he or she is enrolled in 
ineligible courses. An otherwise eligible student who is enrolled in 
both degree program coursework and non-degree correspondence courses 
continues to be eligible for title IV, HEA assistance to offset the 
costs of the degree program courses. With regard to the applicability 
of the 50 percent standard to HEA section 481(a)(3), the Secretary 
wishes to emphasize that the calculation of the percentage of 
telecommunications and correspondence courses provided for in 
Sec. 668.7(j) is applicable only to Sec. 668.7(j), and does not apply 
to the standard set for percentage of students enrolled in 
correspondence courses in HEA section 481(a)(3). With regard to the 
question concerning use of the phrase ``part of a program'' in 
Sec. 668.7(a)(15), the phrase refers to the student's academic program, 
which must lead to an associate, bachelor's, or graduate degree. A 
student enrolled in correspondence courses for the purpose of attaining 
certification or licensure is not eligible for title IV, HEA assistance 
for those courses, but may be eligible to receive title IV, HEA 
assistance for other correspondence courses in a degree program. With 
regard to the comment concerning consortium agreements, the aid officer 
may deny title IV, HEA assistance to a student for any correspondence 
courses that do not meet degree-seeking requirements, including 
correspondence courses taken by consortium agreement at another 
institution. With regard to whether a course taught through live, 
interactive telephone transmission is a telecommunications course, the 
Secretary notes that HEA section 484(m)(4) defines 
``telecommunications'' as ``the use of television, audio, or computer 
transmission, including open broadcast, closed circuit, cable, 
microwave, or satellite, audio conferencing, computer conferencing, or 
video cassettes or discs, except that such term does not include a 
course that is delivered using video cassette or disc recordings at 
such institution and that is not delivered in person to other students 
of that institution.'' Since the definition encompasses audio or 
computer conferencing, a course taught through interactive telephone 
transmissions must be considered a telecommunications course. With 
regard to the comment requesting a waiver procedure, the Secretary has 
no authority to prescribe procedures for waiving any of the provisions 
in HEA section 484. With regard to a definition of ``correspondence,'' 
the Secretary is considering a definition of ``correspondence course'' 
in a separate proposed rulemaking published in the Federal Register on 
February 10, 1994 (59 FR 6446-6465). Until that separate rulemaking is 
published as final regulations, the commenter may refer to Sec. 600.2 
of the Institutional Eligibility regulations, which defines a ``program 
of study by correspondence'' as ``an educational program offered 
principally by mail by an institution. Under this type of program, the 
institution prepares lesson materials and mails them to the student in 
a sequential and logical order. The student completes the lessons and 
mails them back to the institution within a specified period of time. 
The program may include a required period of residential training.''
    Changes: None.

Program of Study Abroad

    Comments: One commenter questioned whether the Secretary intends to 
limit the eligibility of permanent resident aliens and other noncitizen 
students seeking assistance under the Federal Family Education Loan 
Program for the purpose of enrolling in study abroad programs. One 
commenter asked for clarification concerning the circumstances under 
which an aid officer could approve a study abroad course that is not 
part of the student's degree program.
    Discussion: Permanent resident aliens and other noncitizens who are 
determined to be eligible students for purposes of Sec. 668.7(a)(4)(ii) 
and part 668, Subpart I, and are otherwise eligible, are not prohibited 
from enrolling in study abroad programs. With regard to the approval of 
a study abroad course that is not part of a degree program, this 
provision ensures that an eligible student may receive title IV, HEA 
assistance for any study abroad course that is approved for credit at 
an eligible institution, and that the course need not be required for 
completion of a specific degree. For example, an otherwise eligible 
student pursuing a degree in mathematics may receive title IV, HEA 
assistance for an elective course in art history taken abroad, provided 
that the art history course is approved for credit by the eligible 
institution toward the student's graduation.
    Changes: None.

Executive Order 12866

    These final regulations have been reviewed in accordance with 
Executive Order 12866. Under the terms of the order the Secretary has 
assessed the potential costs and benefits of this regulatory action.
    The potential costs associated with the final 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 costs and benefits--both quantitative 
and qualitative--of these regulations, the Secretary has determined 
that the benefits of the regulations justify the costs.

Paperwork Reduction Act of 1980

    These regulations have been examined under the Paperwork Reduction 
Act of 1980 and have been found to contain no information collection 
requirements.

Assessment of Educational Impact

    In the notice of proposed rulemaking, the Secretary requested 
comments on whether the proposed regulations would require transmission 
of information that is being gathered by or is available from any other 
agency or authority of the United States.
    Based on the response to the proposed rules and on its own review, 
the Department has determined that the regulations in this document do 
not 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 in 34 CFR Part 668

    Administrative practice and procedure, Colleges and universities, 
Consumer protection, Education, Grant programs--education, Loan 
programs--education, Student aid.

    Dated: February 2, 1994.
Richard W. Riley,
Secretary of Education.

(Catalog of Federal Domestic Assistance Numbers: Federal 
Supplemental Opportunity Grant Program, 84.007; Federal Stafford 
Loan Program, 84.032; Federal PLUS Loan Program, 84.032; Federal 
Work-Study Program, 84.033; Federal Perkins Loan Program, 84.038; 
Federal Pell Grant Program, 84.063; State Student Incentive Grant 
Program, 84.069; Early Intervention Scholarship Program, 84.272)

    The Secretary amends part 668 of title 34 of the Code of Federal 
Regulations as follows:

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

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

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

    2. Section 668.2, paragraph (b) is amended by adding in 
alphabetical order a new definition for ``Output document'' to read as 
follows:


Sec. 668.2  General definitions.

* * * * *
    (b) * * *
    Output document: The Student Aid Report (SAR), Electronic Student 
Aid Report (ESAR), other document or automated data generated by the 
Department of Education's central processing system as the result of 
processing the data provided in a Free Application for Federal Student 
Aid (FAFSA) or multiple data entry application.
* * * * *
    3. Section 668.7 is amended by revising paragraph (a)(1)(ii) and 
adding a new paragraph (a)(1)(iii); revising paragraph (a)(8); removing 
the word ``and'' at the end of paragraph (a)(11)(vii); removing the 
period at the end of paragraph (a)(12), and adding, in its place, a 
semicolon; and by adding new paragraphs (a)(13), (a)(14), (a)(15), 
(a)(16), (i), (j), and (k) to read as follows:


Sec. 668.7  Eligible student.

    (a) * * *
    (1) * * *
    (ii) For purposes of the Stafford Loan, PLUS, SLS, or Federal 
Direct Student Loan Program, enrolled for no longer than one twelve-
month period as at least a half-time student in a course of study 
necessary for enrollment in an eligible program; or
    (iii) For purposes of the Stafford Loan, PLUS, SLS, CWS, Perkins 
Loan, or Federal Direct Student Loan Program, enrolled or accepted for 
enrollment as at least a half-time student at an eligible institution 
in a program necessary for a professional credential or certification 
from a State that is required for employment as a teacher in an 
elementary or secondary school in that State;
* * * * *
    (8) In accordance with the requirements of Sec. 668.32, has filed a 
Statement of Educational Purpose;
* * * * *
    (13) Has filed--
    (i) An output document confirming registration with Selective 
Service by providing the results of a data match with the Selective 
Service System; or
    (ii) In the absence of confirmation as provided in paragraph 
(a)(13)(i) of this section and within a deadline to be set by the 
institution of no less than 30 days from the date the institution 
receives the output document, a Statement of Registration Status or 
other evidence in accordance with Sec. 668.33;
    (14) For purposes of the FFEL, Federal Direct Student Loan, and 
Federal Perkins Loan programs, is not an incarcerated student at the 
time funds are delivered or disbursed;
    (15) Is, if enrolled in a telecommunications or correspondence 
course, enrolled in a telecommunications or correspondence course that 
is part of an educational program leading to an associate, bachelor's, 
or graduate degree; and
    (16) Except for residents of the Republic of the Marshall Islands, 
the Federated States of Micronesia, or the Republic of Palau, has a 
correct social security number that has been verified in accordance 
with the requirements of paragraph (i) of this section;
* * * * *
    (i) Social security number. The Secretary verifies a social 
security number provided by a student to an eligible institution and 
shall enforce the following conditions:
    (1) An institution shall not deny, reduce, delay or terminate a 
student's eligibility for assistance under the title IV, HEA programs 
because social security number verification is pending;
    (2) If the institution receives an output document from a student 
indicating that the Secretary has determined that the student's social 
security number is correct, the institution shall not require the 
student to produce other evidence to confirm that the student's social 
security number is correct, unless the institution--
    (i) Has documentation that conflicts with the social security 
number status reported on the output document; or
    (ii) Has reason to believe the output document is incorrect.
    (3) If the institution receives an output document from a student 
indicating that the Secretary has determined that the social security 
number provided to the institution by the student is incorrect, or that 
the Secretary was unable to confirm that the social security number 
provided to the institution by the student is correct, the 
institution--
    (i) Shall provide the student an opportunity, within a deadline of 
at least 30 days from the date the institution receives the output 
document, to provide clear and convincing evidence to verify that the 
student has a correct social security number; and
    (ii) May disburse any combination of title IV, HEA program funds, 
employ the student under the Federal Work-Study Program, or certify a 
Federal Stafford, Federal PLUS, Federal SLS, or Federal Direct Student 
loan application for the student upon making, based on the evidence 
provided for in paragraph (i)(3)(i) of this section, a determination 
that the social security number provided by the otherwise eligible 
student to the institution is correct; and
    (iii) Shall report the student's correct social security number to 
the Secretary if the correct social security number differs from the 
social security number previously reported by the student to the 
Secretary.
    (4) If a student fails to submit the documentation by the deadline 
established in accordance with paragraph (i)(3)(i) of this section, the 
institution may not disburse to the student, or certify the student as 
eligible for, any title IV, HEA program funds for that period of 
enrollment or award year; employ the student under the Federal Work-
Study Program; or certify a Federal Stafford, Federal PLUS, Federal 
Direct Student Loan, or Federal SLS loan application for the student 
for that period of enrollment.
    (5) If the Secretary determines that the social security number 
provided to an eligible institution by a student is incorrect, and the 
institution has not made a determination under paragraph (i)(3) of this 
section, and a loan has been guaranteed for the student under the 
Federal Family Education Loan Program, the institution shall notify and 
instruct the lender and guaranty agency making and guaranteeing the 
loan, respectively, to cease further disbursements of the loan, until 
the Secretary or the institution determines that the social security 
number provided by the student is correct, but the guaranty shall not 
be voided or otherwise nullified with respect to disbursements made 
before the date that the lender and the guaranty agency receive the 
notice.
    (6) Nothing in this section shall permit the Secretary to take any 
compliance, disallowance, penalty or other regulatory action against--
    (i) Any institution of higher education with respect to any error 
in a social security number, unless the error was the result of fraud 
on the part of the institution; or
    (ii) Any student with respect to any error in a social security 
number, unless the error was a result of fraud on the part of the 
student.
    (j) Special provisions regarding telecommunications and 
correspondence courses. (1) A student enrolled in an educational 
program at an eligible institution (other than an institution that 
meets the definition in section 521(4)(C) of the Carl D. Perkins 
Vocational and Applied Technology Education Act) that is offered in 
whole or in part through telecommunications and leads to a recognized 
associate, bachelor's, or graduate degree conferred by the institution 
is not enrolled in correspondence courses unless the total amount of 
telecommunications and correspondence courses at the institution equals 
or exceeds 50 percent of all courses delivered at that institution.
    (2) The percentage provided in paragraph (j)(1) of this section is 
calculated by comparing the total number of correspondence and 
telecommunications courses delivered during the preceding award year 
with the total number of all courses delivered during that award year. 
If an institution delivers the same course in person, by 
telecommunications, or by correspondence, the Secretary considers each 
delivery of the course by the institution to be a separate course for 
purposes of this calculation.
    (3) A student is subject to reduced eligibility for title IV, HEA 
assistance if the financial aid administrator determines under the 
discretionary authority provided in section 479A of the HEA that the 
student's telecommunications instruction results in a substantially 
reduced cost of attendance to the student.
    (k) Program of study abroad. (1) An otherwise eligible student who 
is engaged in a program of study abroad is eligible to receive title 
IV, HEA assistance if--
    (i) The student maintains enrollment in an eligible institution 
during his or her program of study abroad; and
    (ii) The eligible institution approves the program of study abroad 
for academic credit at the eligible institution.
    (2) The study abroad program need not be required as part of the 
student's degree program.


Sec. 668.131  [Amended]

    4. Section 668.131 is amended by removing the definition of Output 
document.

[FR Doc. 94-6127 Filed 3-15-94; 8:45 am]
BILLING CODE 4000-01-P