[Federal Register Volume 59, Number 114 (Wednesday, June 15, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14231]


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[Federal Register: June 15, 1994]


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CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

45 CFR Parts 2525, 2526, 2527, 2528, and 2529

 

National Service Trust

AGENCY: Corporation for National and Community Service.

ACTION: Interim final rule.

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SUMMARY: The Corporation for National and Community Service (the 
Corporation) is issuing this interim final rule implementing 
requirements of subtitle D of the National and Community Service Act of 
1990 (the Act). This rule describes the following: the National Service 
Trust (the Trust); who is eligible to receive education awards from the 
Trust; how the amount of the education awards is determined; the 
purposes for which the education awards may be used; and the 
circumstances under which AmeriCorps participants will receive 
forbearance and payment of interest expenses on qualified student 
loans. This rule is intended to allow for the provision of educational 
benefits to AmeriCorps participants.

DATES: Interim rule effective June 15, 1994; comments must be received 
on or before August 1, 1994.

ADDRESSES: Comments must be mailed to the Corporation for National and 
Community Service, P.O. Box 34680, Washington, DC 20034-4680 or hand 
delivered to the Office of the General Counsel, room 9200, 1100 Vermont 
Avenue, Washington, DC 20525. Comments received may be inspected at the 
Corporation for National and Community Service, Office of the General 
Counsel, room 9200, 1100 Vermont Avenue NW., Washington, DC 20525, 
between 9 a.m. and 5 p.m. Eastern daylight savings time.

FOR FURTHER INFORMATION CONTACT:
Terry Russell, (202) 606-4949 (Voice) or (202) 606-5256 (TDD), between 
the hours of 9 a.m. and 6 p.m. Eastern daylight savings time. For 
individuals with disabilities, information will be made available in 
alternative formats upon request.

SUPPLEMENTARY INFORMATION: The Corporation has published this rule as 
an interim final rule rather than as a proposed rule pursuant to 44 
U.S.C. 553(b)(3)(B). The Corporation is making grants to AmeriCorps 
programs that will operate over the summer of 1994 and whose 
participants will need to receive education awards under the terms and 
conditions of this rule. Since it would be contrary to the public 
interest to publish this rule as a proposed rule, it is published as an 
interim final rule to take effect immediately.
    On March 23, 1994, the Corporation published final regulations 
governing the Corporation's grantmaking programs and various support 
and investment activities authorized by the Act (59 FR 13772). This 
rule establishes regulations to implement sections 145 through 148 of 
subtitle D of the Act, which requires the Corporation to make payments 
from the National Service Trust for education awards for AmeriCorps 
participants and for interest expenses that accrue on qualified student 
loans for which participants have obtained forbearance during a term of 
service in an AmeriCorps program.

Overview of This Interim Final Rule and Discussion of Policy 
Decisions

    In general, this rule incorporates, without substantive change, the 
statutory requirements regarding the eligibility of AmeriCorps 
participants to receive and use education awards, the standards for 
determining the amount of the education award, the possible uses of and 
procedures for using education awards, the procedures for obtaining 
forbearance in repaying qualified student loans while serving in an 
AmeriCorps program, and the procedures for making interest payments 
from the National Service Trust.
    Some sections of the regulations interpret and elaborate on 
provisions in the statute. Those sections are discussed below.
    AmeriCorps participants who are released for cause are not eligible 
to receive any portion of the education award. However, participants 
who are released for compelling personal circumstances, at the 
discretion of their respective programs, either may have their service 
suspended and return at a later date to complete their terms or may 
receive a pro-rated education award. Sections 2526.20 and 2527.10 of 
this rule set some guidelines for programs to make these 
determinations.
    First, the corporation encourages programs--whenever possible and 
appropriate--to suspend a participant's term of service rather than 
offer a pro-rated education award. The intent is to always encourage 
participants to complete their terms of service if at all possible. 
Second, the regulations further clarify that participants who are 
released for compelling personal circumstances only may receive a pro-
rated education award if they have completed at least 15% of their 
terms of service. There are a number of reasons for this policy. From a 
logistical standpoint, 15% of a full-time term of service equates to 
approximately six weeks; similarly, programs are allowed to fill an 
approved AmeriCorps position left vacant due to attrition only within 
the first six weeks of a term of service. Programs that offered pro-
rated education awards within this first six weeks would forfeit those 
AmeriCorps positions--an outcome that is desirable neither for the 
programs nor for the Corporation. From an economic standpoint, the 
value of a pro-rated education award for significantly less than 15% of 
a term of service would be insufficient to pay for most educational 
expenses and, in many cases, would be less than the administrative 
costs of providing that award. Finally, the Corporation did not set the 
limit at a higher percentage because it recognizes that there may be 
compelling cases in which participants legitimately would be unable to 
continue service even after a period of suspension but would benefit 
from and should receive a relatively small, pro-rated education award.
    Section 2526.50 clarifies that the suspension of an individual's 
eligibility to use an education award as a result of the conviction of 
the possession or sale of a controlled substance does not constitute a 
valid reason for the extension of the seven-year period for using an 
education award.
    The sections in part 2528 describe the uses of and the procedures 
for using education awards. The regulations in these sections are 
designed to ensure that the necessary documentation and verification 
are obtained at each stage of the process without imposing too great a 
burden on holders of qualified student loans, institutions of higher 
education, participants, or the Corporation.
    Part 2529 describes the procedures for participants to obtain 
forbearance in the repayment of qualified student loans and for the 
Corporation to pay interest expenses that accrue during such periods of 
forbearance. Similar to the regulations in part 2528, the regulations 
in this part are designed to ensure that the necessary documentation 
and verification is obtained while minimizing administrative burdens. 
Section 2529.20 clarifies that individuals who are eligible for a pro-
rated education awards or for pro-rated Stafford Loan Forgiveness also 
are eligible for pro-rated payments of interest expenses based on the 
portion of the term of service that was completed. The Corporation will 
not, however, pay interest expenses that accrue during a period of 
suspension of a term of service. Section 2529.30 clarifies that 
different repayment requirements apply to VISTA volunteers.

Invitation to Comment

    The Corporation invites written comments on the text of this 
interim final rule and requests that the comments identify the specific 
sections of the regulations to which they relate and provide reasons 
for any suggested changes.

Miscellaneous Requirements

    Interested parties should be advised that because the assistance 
provided under the authority of this rule constitutes Federal financial 
assistance for the purposes of title VI of the Civil Rights Act of 1964 
(which bars discrimination based on race, color, or national origin), 
title IX of the Education Amendments of 1972 (which bars discrimination 
on the basis of gender), the Rehabilitation Act of 1973 (which bars 
discrimination on the basis of disability), and the Age Discrimination 
Act of 1975 (which bars discrimination on the basis of age), grantees 
will be required to comply with the aforementioned provisions of 
Federal law.
    Grant recipients will be expected to expend Corporation grants in a 
judicious and reasonable manner, consistent with pertinent provisions 
of Federal law and regulations. Grantees must keep records according to 
Corporation guidelines, including records that fully disclose the 
amount and disposition of the proceeds of a Corporation grant. The 
Inspector General of the Corporation (or other authorized official) 
shall have access, for the purpose of audit and examination, to the 
books and records of grantees that may be related or pertinent to the 
Corporation grant.
    Grantees should further be advised that Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments, and Administrative Requirements for Grants and Cooperative 
Agreements to other than State and Local Governments, as well as 
regulations for the Privacy Act, Freedom of Information Act, Sunshine 
Act, Government-wide Debarment and Suspension, and Government-wide 
Requirements for Drug-Free Workplace will also be published.
    As required by the Regulatory Flexibility Act, it is hereby 
certified that this rule will not have a significant impact on small 
business entities.
    As required by the Paperwork Reduction Act of 1980, the Corporation 
will submit the information collection requirements contained in this 
rule to the Office of Management and Budget for its review (44 U.S.C. 
3504(h)). The information collection requirements are needed in order 
to provide assistance to parties affected by these regulations, in 
accordance with statutory mandates.

(Catalog of Federal Domestic Assistance Numbers: 94.003 for State 
Commissions, Alternative Administrative Entities, and Transitional 
Entities; 94.004 for K-12 Service-Learning Programs; 94.005 for 
Higher Education Service-Learning Programs; 94.006 for AmeriCorps 
Programs; 94.007 for Investment for Quality and Innovation Programs)

List of Subjects

45 CFR Part 2525

    Grant programs--social programs, Student aid, Volunteers.

45 CFR Part 2526

    Grant programs--social programs, Student aid, Volunteers.

45 CFR Part 2527

    Grant programs--social programs, Student aid, Volunteers.

45 CFR Part 2528

    Grant programs--social programs, Student aid, Volunteers.

45 CFR Part 2529

    Grant programs--social programs, Student aid, Volunteers.

    Dated: June 7, 1994.
Terry Russell,
General Counsel.

    Accordingly, the Corporation amends title 45, chapter XXV of the 
Code of Federal Regulations by adding parts 2525 through 2529 to read 
as follows:

PART 2525--NATIONAL SERVICE TRUST: PURPOSE AND DEFINITIONS

Sec.
2525.10  What is the National Service Trust?
2525.20  Definitions.

    Authority: 42 U.S.C. 12601-12604.


Sec. 2525.10  What is the National Service Trust?

    The National Service Trust is an account in the Treasury of the 
United States from which the Corporation makes payments of education 
awards, Stafford loan forgiveness awards, and pays interest that accrue 
on qualified student loans for AmeriCorps participants during terms of 
service in approved AmeriCorps positions.


Sec. 2525.20  Definitions.

    In addition to the definitions in Sec. 2510.20 of this chapter, the 
following definitions apply to terms used in parts 2525 through 2529 of 
this chapter:
    Approved school-to-work program. The term approved school-to-work 
program means a school-to-work program officially approved by the 
Secretaries of the Departments of Education and Labor.
    Cost of attendance. The term cost of attendance has the same 
meaning as in title IV of the Higher Education Act of 1965, as amended 
(20 U.S.C. 1070 et. seq.).
    Education award. The term education award means the financial 
assistance available under parts 2526 through 2528 of this chapter for 
which an individual in an approved AmeriCorps position--except for an 
individual in a Stafford Loan Forgiveness program (SLF program)--may be 
eligible.
    Holder. The term holder means--
    (1) The original lender; or
    (2) Any other entity to whom a loan is subsequently sold, 
transferred, or assigned if such entity acquires a legally enforceable 
right to receive payments from the borrower.
    Institution of higher education. For the purposes of parts 2525 
through 2529 of this chapter, the term institution of higher education 
has the same meaning given the term in section 481(a) of the Higher 
Education Act of 1965, as amended (20 U.S.C. 1088(a)).
    Qualified student loan. The term qualified student loan means any 
loan made, insured, or guaranteed pursuant to title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1070 et. seq.), other than a loan to a 
parent of a student pursuant to section 428B of such Act (20 U.S.C. 
1078-2), and any loan made pursuant to title VII or VIII of the Public 
Service Health Act (42 U.S.C. 292a et. seq.).
    Term of service. The term term of service means--
    (1) For AmeriCorps participants other than VISTA volunteers, any of 
the terms of service specified in Sec. 2522.220 of this chapter; and
    (2) For VISTA volunteers, not less than a full year of service as a 
VISTA volunteer.

PART 2526--ELIGIBILITY TO RECEIVE AND USE EDUCATIONAL BENEFITS

Sec.
2526.10  What types of AmeriCorps educational benefits are 
available?
2526.20  Who is eligible to receive a full education award from the 
National Service Trust?
2526.30  Who is eligible to receive a full Stafford loan forgiveness 
award from the National Service Trust?
2526.40  Is an AmeriCorps participant who does not complete a term 
of service eligible to receive a pro-rated education or Stafford 
loan forgiveness award?
2526.50  What conditions must an AmeriCorps participant who has 
received an education award meet in order to use that education 
award?
2526.60  How do convictions for the possession or sale of controlled 
substances affect an education award recipient's ability to use that 
award?
2526.70  What is the time period during which an individual must use 
an education award?
2526.80  How many education or Stafford loan forgiveness awards may 
an individual receive?
2526.90  May an individual receive an education or Stafford loan 
forgiveness award and loan cancellations for the same service?
2526.100  How are education and Stafford loan forgiveness awards 
treated in determining eligibility for financial assistance under 
the Higher Education Act of 1965, as amended?

    Authority: 42 U.S.C. 12601-12604.


Sec. 2526.10  What types of AmeriCorps educational benefits are 
available?

    Individuals serving in approved AmeriCorps positions may be 
eligible to receive either AmeriCorps education awards or Stafford loan 
forgiveness awards, but may not receive both awards for the same term 
of service.


Sec. 2526.20  Who is eligible to receive a full education award from 
the National Service Trust?

    (a) General. To receive a full education award from the National 
Service Trust, an AmeriCorps participant must meet the eligibility 
requirements for, and successfully complete the required term of 
service in, an approved AmeriCorps position, including approved 
AmeriCorps positions in the VISTA program established by the Domestic 
Volunteer Service Act of 1973 (42 U.S.C. 4950 et. seq.) and the 
National Civilian Community Corps program established by the National 
and Community Service Act of 1990.
    (b) Conditions. (1) For any term of service, a VISTA Volunteer who 
successfully completes his or her required term of service is only 
eligible to receive an education award from the National Service Trust 
if he or she does not accept the postservice stipend authorized under 
section 105(a)(1) of the Domestic Volunteer Service Act of 1973.
    (2) For any term of service, a National Civilian Community Corps 
participant who successfully completes his or her required term of 
service is only eligible to receive an education award from the 
National Service Trust if he or she does not accept the alternative 
benefit described in section 158(g) of the National and Community 
Service Act of 1990.


Sec. 2526.30  Who is eligible to receive a full Stafford loan 
forgiveness award from the National Service Trust?

    An individual who successfully completes a term of service in an 
approved AmeriCorps position in a Stafford Loan Forgiveness program is 
eligible to receive a full Stafford loan forgiveness award.


Sec. 2526.40  Is an AmeriCorps participant who does not complete a term 
of service eligible to receive a pro-rated education or Stafford loan 
forgiveness award?

    (a) An individual who is released from a term of service for 
compelling personal circumstances, in accordance with Sec. 2522.230(a) 
of this chapter, is eligible to receive a pro-rated education or 
Stafford loan forgiveness award as determined according to 
Sec. 2527.10(d)(1) of this chapter if--
    (1) The individual completed at least fifteen percent of his or her 
required term of service prior to the release; and
    (2) The program chooses to provide the individual with a pro-rated 
education or Stafford loan forgiveness award pursuant to 
Sec. 2522.230(a)(1) of this chapter rather than permitting the 
individual to complete the remainder of the term of service after a 
temporary suspension of service pursuant to Sec. 2522.230(a)(2) of this 
chapter.
    (b) Programs are encouraged, when appropriate, to suspend service 
rather than offer prorated educational benefits.
    (c) An individual who is released from a term of service for cause 
in accordance with Sec. 2522.230(b) of this chapter is not eligible for 
any portion of an education or Stafford loan forgiveness award.
    (d) A VISTA volunteer who does not complete a term of service as a 
result of the early closure of the project in which he or she is 
serving is eligible to receive a pro-rated education award as 
determined according to Sec. 2527.10(d)(1) of this chapter.


Sec. 2526.50  What conditions must an individual who has received an 
education award meet in order to use that education award?

    An individual who receives an education award is eligible to use 
the award if the individual--
    (a) Has received a high school diploma or its equivalent, is 
enrolled at an institution of higher education, or has received a 
waiver based on an individual education assessment conducted by the 
AmeriCorps program in which the individual participated;
    (b) Is a citizen, national, or permanent resident alien of the 
United States; and
    (c) Is not eligible to use the education award under Sec. 2526.40 
as a result of a conviction of the possession or sale of a controlled 
substance.


Sec. 2526.60  How do convictions for the possession or sale of 
controlled substances affect an education award recipient's ability to 
use that award?

    (a) Except as provided in paragraph (b) of this section, a 
recipient of an education award who is convicted under pertinent 
Federal or State law of the possession or sale of a controlled 
substance is not eligible to use his or her education award from the 
date of the conviction until the end of a specified time period, which 
is determined based on the type of conviction as follows:
    (1) For conviction of the possession of a controlled substance, the 
ineligibility periods are--
    (i) One year for a first conviction;
    (ii) Two years for a second conviction; and
    (iii) For a third or subsequent conviction, indefinitely, as 
determined by the Corporation according to the following factors--
    (A) Type of controlled substance;
    (B) Amount of controlled substance;
    (C) Whether firearms or other dangerous weapons were involved in 
the offense;
    (D) Nature and extent of any other criminal record;
    (E) Nature and extent of any involvement in trafficking of 
controlled substances;
    (F) Length of time between offenses;
    (G) Employment history;
    (H) Service to the community;
    (I) Recommendations from community members and local officials, 
including experts in substance abuse and treatment; and
    (J) Any other relevant aggravating or ameliorating circumstances.
    (2) For conviction of the sale of a controlled substance, the 
ineligibility periods are--
    (i) Two years for a first conviction; and
    (ii) Two years plus such additional time as the Corporation 
determines as appropriate for second and subsequent convictions, based 
on the factors set forth in paragraphs (a)(1)(iii) (A) through (J) of 
this section.
    (b) (1) If the Corporation determines that an individual who has 
had his or her eligibility to use the education award suspended 
pursuant to paragraph (a) of this section has successfully completed a 
legitimate drug rehabilitation program, or in the case of a first 
conviction that the individual has enrolled in a legitimate drug 
rehabilitation program, the individual's eligibility to use the 
education award will be restored.
    (2) In order for the Corporation to determine that the requirements 
of paragraph (b)(1) of this section have been met--
    (i) The drug rehabilitation program must be recognized as 
legitimate by appropriate Federal, State or local authorities; and
    (ii) The individual's enrollment in or successful completion of the 
legitimate drug rehabilitation program must be certified by an 
appropriate official of that program.


Sec. 2526.70  What is the time period during which an individual must 
use an education award?

    (a) General requirement. An individual must use an education award 
within seven years of the date on which the individual successfully 
completes a term of service, unless the individual applies for and 
receives an extension in accordance with the requirements of paragraph 
(b) of this section.
    (b) Extensions. In order to receive an extension of the seven-year 
time period for using an education award, an individual must apply to 
the Corporation for an extension prior to the end of that time period. 
The Corporation will grant an application for an extension under the 
following circumstances:
    (1) If the Corporation determines that an individual was performing 
another term of service in an approved AmeriCorps position during the 
seven-year period, the Corporation will grant an extension for a time 
period that is equivalent to the time period during which the 
individual was performing the other term of service.
    (2) If the Corporation determines that an individual was 
unavoidably prevented from using the education award during the seven-
year period, the Corporation will grant an extension for a period of 
time that the Corporation deems appropriate. An individual who is 
ineligible to use an education award as a result of the individual's 
conviction of the possession or sale of a controlled substance under 
Sec. 2526.40 is not considered to be unavoidably prevented from using 
the education award for the purposes of this paragraph.


Sec. 2526.80  How many education or Stafford loan forgiveness awards 
may an individual receive?

    An individual may receive an education or Stafford loan forgiveness 
award for each of up to two terms of service. For the purposes of this 
section, full-time, part-time and reduced part-time terms of service 
described in Sec. 2522.220 of this chapter are each considered terms of 
service.


Sec. 2526.90  May an individual receive an education or Stafford loan 
forgiveness award and loan cancellations for the same service?

    No. Although an education award may be used to repay qualified 
student loans pursuant to Sec. 2528.20 of this chapter, an individual 
may not receive an education or Stafford loan forgiveness award for a 
term of service and have that same service credited toward repayment of 
other student loans.


Sec. 2526.100  How are education and Stafford loan forgiveness awards 
treated in determining eligibility for financial assistance under the 
Higher Education Act of 1965, as amended?

    Institutions of higher education shall consider education and 
Stafford loan forgiveness awards neither as income in calculating 
expected family contributions nor as estimated financial assistance in 
packaging assistance under the Higher Education Act of 1965, as amended 
(20 U.S.C. 1070 et seq.).

PART 2527--AMOUNT OF AMERICORPS EDUCATIONAL BENEFITS

Sec.
2527.10  How are the amounts of the education and Stafford loan 
forgiveness awards determined?

    Authority: 42 U.S.C. 12601-12604.


Sec. 2527.10  How are the amounts of the education and Stafford loan 
forgiveness awards determined?

    (a) Education awards for full-time service. The education award for 
full-time service is equal to 90 percent of--
    (1) One-half of an amount equal to the aggregate basic educational 
assistance allowance provided in 38 U.S.C. 3015(b)(1) (as in effect on 
July 28, 1993), for the period referred to in 38 U.S.C. 3013(a)(1) (as 
in effect on July 28, 1993), for a member of the Armed forces who is 
entitled to such an allowance under 38 U.S.C. 3011 and whose initial 
obligated period of active duty is two years; less
    (2) One-half of the aggregate basic contribution required to be 
made by the member in 38 U.S.C. 3011(b) (as in effect on July 28, 
1993).
    (b) Stafford loan forgiveness awards for full-time service. The 
Stafford loan forgiveness award for a full-time participant in a 
Stafford Loan Forgiveness program is equal to 15 percent of that 
greater of--
    (1) That participant's current Stafford loan obligations that were 
incurred during the final two years of that participant's undergraduate 
education; or
    (2) That participant's current Stafford loan obligations that were 
incurred during the most recent two years of that participant's 
graduate education in a teaching program.
    (c) Part-time service. The education and Stafford loan forgiveness 
awards for part-time terms of service are equal to one-half of the 
corresponding full-time education and Stafford loan forgiveness awards 
described in paragraphs (a) and (b) of this section.
    (d) Incomplete or reduced terms of service. (1) The education or 
Stafford loan forgiveness awards for individuals who are released from 
a term of service for compelling personal circumstances and are 
eligible for a pro-rated full- or part-time education or Stafford loan 
forgiveness award in accordance with the requirements in Sec. 2526.40 
of this chapter, or for VISTA volunteers who are released due to the 
early of a project, are equal to the product of--
    (i) The ratio of the portion of the term of service completed to 
the required term of service; and
    (ii) The amount of the full- or part-time education award available 
for that term of service as determined pursuant to paragraph (a), (b) 
or (c) of this section.
    (2) The education award for individuals serving in a reduced part-
time term of service described in Sec. 2522.220 of this chapter is 
equal to the product of--
    (i) The ratio of the number of hours of service required for the 
reduced part-time term of service to 900; and
    (ii) The amount of the part-time education or Stafford loan 
forgiveness award as determined pursuant to paragraph (c) of this 
section.
    (e) Authority to aggregate awards. An individual who serves two 
terms of service in a Stafford loan forgiveness program(s) may elect 
(prior to the end of the first such term of service) to aggregate the 
two Stafford loan forgiveness awards that the individual receives such 
that the individual receives a single Stafford loan forgiveness award 
at the end of the second term of service that is equal to the sum of 
the awards for each of the terms. An individual who wishes to aggregate 
his or her Stafford loan forgiveness awards must comply with the 
procedural requirements of Sec. 2528.60 of this chapter.

PART 2528--USES OF AND PROCEDURES FOR USING EDUCATIONAL BENEFITS

Sec.
2528.10 For what purposes may education awards be used?
2528.20  What are the procedural requirements for using education 
awards to repay qualified student loans?
2528.30  What are the procedural requirements for using education 
awards to pay for all or part of the cost of attendance at an 
institution of higher education or to pay for expenses incurred in 
participating in an approved school-to-work program?
2528.40  Is there a limit on the amount of an individual's education 
award that the Corporation will disburse to an institution of higher 
education for a given period of enrollment?
2528.50  What happens if an individual withdraws or fails to 
complete the period of enrollment in an institution of higher 
education or school-to-work program for which the Corporation has 
disbursed all or part of that individual's education award?
2528.60  What are the procedural requirements for using a Stafford 
loan forgiveness award to repay Stafford loans?

    Authority: 42 U.S.C. 12601-12604.


Sec. 2528.10  For what purposes may education awards be used?

    (a) Education awards may be used--
    (1) To repay qualified student loans or portions thereof in 
accordance with Sec. 2528.20:
    (2) To pay all or part of the cost of attendance at an institution 
of higher education in accordance with Secs. 2528.30 through 2528.50; 
and
    (3) To pay expenses incurred in participating in approved school-
to-work programs in accordance with Sec. 2528.60.
    (b) Education awards are divisible and may be applied to any 
combination of those loans, costs and expenses described in paragraph 
(a) of this section.


Sec. 2528.20  What are the procedural requirements for using education 
awards to repay qualified student loans?

    (a) In order to use an education award to repay qualified student 
loans, the recipient of the award must submit an application to the 
Corporation, in a manner prescribed by the corporation that:
    (1) Identifies, or permits the Corporation to identify, the holder 
or holders of the loans;
    (2) Indicates, or permits the Corporation to determine, the amounts 
of principal and interest outstanding on the loans;
    (3) Specifies, if the outstanding balance of the principal on the 
loans is greater than the amount to be disbursed by the Corporation, 
which of the loans the individual prefers to have paid; and
    (4) Contains whatever other information the Corporation may 
require.
    (b) Upon receipt of an application under paragraph (a) of this 
section, the Corporation will notify each holder of a loan that has 
been designated for payment in the individual's application and will 
identify any information or documentation that the holder must provide 
to the corporation before the Corporation will make payment.
    (c) When the Corporation receives all required information from the 
holder of the loan, the Corporation will pay the holder of the loan in 
accordance with the instructions in the application of the education 
award recipient and will notify the recipient of the payment.
    (d) The Corporation may establish procedures to aggregate payments 
to holders of loans for more than a single individual.


Sec. 2528.30  What are the procedural requirements for using education 
awards to pay for all or part of the cost of attendance at an 
institution of higher education or to pay for expenses incurred in 
participating in an approved school-to-work program?

    (a) In order to use an education award to pay for the cost of full-
time or part-time attendance at an institution of higher education or 
to pay for expenses incurred in participating in an approved school-to-
work program, the recipient of an award must submit an application to 
the institution of higher education or school-to-work program in which 
the individual is or will be enrolled, on a form prescribed by the 
Corporation, that contains such information as the Corporation may 
require to verify that the individual is a recipient of and eligible to 
use an education award.
    (b) An institution of higher education or approved school-to-work 
program that receives one or more applications submitted in accordance 
with the requirements of paragraph (a) of this section shall submit to 
the Corporation, in a manner prescribed by the Corporation, a statement 
that--
    (1) Identifies each eligible individual filing an application;
    (2) Specifies the amounts for which such eligible individuals are 
qualified;
    (3)(i) For institutions of higher education, certifies that--
    (A) The institution of higher education has in effect a program 
participation agreement under section 487 of the Higher Education Act 
of 1965;
    (B) The institution's eligibility to participate in any of the 
programs under title IV of such Act has not been limited, suspended, or 
terminated; and
    (C) Individuals using education awards to pay for the cost of 
attendance at that institution do not comprise more than 15 percent of 
the total student population of the institution;
    (ii) For school-to-work programs, certifies that the program has 
been approved by the Departments of Education and Labor;
    (4) Indicates the costs of attendance or participation for any 
period(s) of enrollment for which the individual(s) are applying the 
education award(s); and
    (5) Contains such provisions concerning financial compliance as the 
Corporation may require in the application.
    (c) When the Corporation receives a statement from an institution 
of higher education or a school-to-work program in accordance with the 
requirements of paragraph (b) of this section, the Corporation will pay 
a first installment for the first period of enrollment, which shall be 
not more than half of the total monetary value of the education awards 
that the individuals identified on the institution's statement are 
scheduled to receive. The Corporation will pay installments for each 
subsequent period of enrollment upon receipt of statements updating the 
information required under paragraph (b) of this section for the 
relevant period of enrollment.


Sec. 2528.40  Is there a limit on the amount of an individual's 
education award that the Corporation will disburse to an institution of 
higher education for a given period of enrollment?

    Yes. The Corporation's disbursement from an individual's education 
award for any period of enrollment may not exceed the difference 
between--
    (a) The individual's cost of attendance for that period of 
enrollment, determined in accordance with section 472 of the Higher 
Education Act of 1965; and
    (b) The sum of--
    (1) The student's estimated financial assistance for that period 
under part A of title IV of such Act; and
    (2) The student's veterans' education benefits, determined in 
accordance with section 480(c) of such Act.


Sec. 2528.50  What happens if an individual withdraws or fails to 
complete the period of enrollment in an institution of higher education 
or school-to-work program for which the Corporation has disbursed all 
or part of that individual's education award?

    (a) (1) An institution of higher education or school-to-work 
program that receives a disbursement of education award funds from the 
Corporation must have in effect a fair and equitable refund policy that 
includes procedures for providing a refund to the Corporation if an 
individual for whom the Corporation has disbursed education award funds 
withdraws or otherwise fails to complete the period of enrollment at 
that institution or program for which the assistance was provided.
    (2) (i) For purposes of this section, an institution of higher 
education's refund policy is deemed ``fair and equitable'' if it is 
consistent with the requirements of paragraphs (b) and (c) of section 
484B of the Higher Education Act of 1965, as amended.
    (ii) For the purposes of this section, a school-to-work program's 
refund policy is deemed ``fair and equitable'' if it complies with any 
standards that may be developed by the Departments of Education and 
Labor.
    (b) The Corporation credits to the individual's education award 
allocation in the National Service Trust the amount of any refund 
received for that individual under paragraph (a) of this section.


Sec. 2528.60  What are the procedural requirements for using a Stafford 
loan forgiveness award to repay Stafford loans?

    (a) In order to apply a Stafford loan forgiveness award to the 
repayment of a Stafford loan(s), a participant in an AmeriCorps 
Stafford Loan Forgiveness program must submit an application to the 
Corporation that--
    (1) Identifies the holder or holders of the participant's Stafford 
loans as described in Sec. 2527.10(b) of this chapter;
    (2) Indicates the amounts of outstanding principal and the rates of 
interest on those loans;
    (3) Indicates, where appropriate, to which of the loans the 
individual would prefer to apply the Stafford loan forgiveness award;
    (4) If the participant serves two terms of service in a Stafford 
Loan Forgiveness program, indicates whether the participant wishes to 
aggregate the Stafford loan forgiveness awards pursuant to 
Sec. 2527.10(e) of this chapter; and
    (5) Contains whatever other information the Corporation may 
require.
    (b) When a participant receives a Stafford loan forgiveness award, 
the Corporation will notify each holder of a Stafford loan identified 
in the participant's application of the portion of the loan that the 
Corporation will repay and will identify any information or 
documentation that the holder must provide to the Corporation.
    (c) When the Corporation receives all required information from the 
holder of the loan(s) pursuant to paragraph (b) of this section, the 
Corporation will pay the holder(s) an amount determined according to 
Sec. 2527.10 of this chapter and will notify the participant of the 
payment.
    (d) The Corporation may establish procedures to aggregate payments 
to holders of Stafford loans for more than one individual.

PART 2529--FORBEARANCE AND INTEREST PAYMENT PROCEDURES

Sec.
2529.10  What are the procedural requirements for obtaining 
forbearance in the repayment of a qualified student loan during an 
individual's term of service in an approved AmeriCorps position?
2529.20  What are the procedural requirements for using National 
Service Trust funds to pay interest that accrues on a qualified 
student loan for which an individual has obtained forbearance?
2529.30  What additional student loan forbearance benefits are 
available for VISTA volunteers?

    Authority: 42 U.S.C. 12601-12604.


Sec. 2529.10  What are the procedural requirements for obtaining 
forbearance in the repayment of a qualified student loan during an 
individual's term of service in an approved AmeriCorps position?

    (a) In order to obtain forbearance in the repayment of a qualified 
student loan during a term of service in an approved AmeriCorps 
position, an individual, other than a VISTA volunteer, must submit a 
written request to the holder of the loan.
    (b) Upon receipt of a request under paragraph (a) of this section, 
the holder of a qualified student loan must contact the Corporation to 
verify that the individual is serving in an approved AmeriCorps 
position and to determine the period for which the holder must grant 
forbearance.
    (c) The holder shall grant forbearance in the repayment of a 
qualified student loan for the period of an individual's required term 
of service after obtaining the verification required under paragraph 
(b) of this section.
    (d) The holder shall promptly report to the Corporation each 
individual and loan for which it grants forbearance, the period for 
which it has granted forbearance, and the projected amount of interest 
that will accrue on the loan during the period of forbearance.
    (e) If an individual who has obtained forbearance on a qualified 
student loan(s) does not complete his or her term of service, or if 
that individual's term of service is suspended, the Corporation will 
promptly notify the holder(s) of that loan(s).
    (f) The holder is not required to grant forbearance in the 
repayment of qualified student loans for any period during which an 
individual's service in an approved AmeriCorps position has been 
suspended.


Sec. 2529.20  What are the procedural requirements for using National 
Service Trust funds to pay interest that accrues on a qualified student 
loan for which an individual has obtained forbearance?

    The Corporation will make payments from the National Service Trust 
for interest that accrues on qualified student loans for which an 
individual, other than a VISTA volunteer, has obtained forbearance 
under Sec. 2529.10 in accordance with the following requirements:
    (a) Completed terms of service. (1) If an individual successfully 
completes a term of service, the Corporation will notify the holder of 
the individual's loan of the date of completion; the holder shall 
document the accrued interest expense to the Corporation; and the 
Corporation will pay all or a portion of the accrued interest and 
notify the individual and the holder of the loan of the payment.
    (2) The percentage of the accrued interest that the Corporation 
will pay pursuant to paragraph (a)(1) of this section is equal to the 
lesser of--
    (i) The product of--
    (A) The required number of hours for the term of service divided by 
the total number of days for which forbearance was granted; and
    (B) 365 divided by 17; and
    (ii) 100.
    (b) Incomplete terms of service. (1) If an individual does not 
successfully complete a term of service, but is eligible for a pro-
rated educational benefits under Sec. 2527.10(c) of this chapter or 
pro-rated Stafford Loan Forgiveness under Sec. 2522.650(c) of this 
chapter, the Corporation will notify the holder of the loan if the date 
of the individual's release, the holder of the loan shall document to 
the Corporation the amount of accrued interest as of the date of the 
release, and the Corporation will pay all or a portion of such interest 
and notify the individual and the holder of the loan of the payment.
    (2) The percentage of the accrued interest that the Corporation 
will pay pursuant to paragraph (b)(1) of this section is equal to 
lesser of--
    (i) The product of--
    (A) The number of hours of service completed divided by the number 
of days for which forbearance was granted; and
    (B) 365 divided by 17; and
    (ii) 100.
    (3) The individual is responsible for the repayment of any accrued 
interest that is not paid by the Corporation pursuant to paragraph 
(b)(2) of this section.
    (4) If the individual does not successfully complete the required 
term of service and is not eligible for a pro-rated education award 
under Sec. 2527.10(c) of this chapter or pro-rated Stafford Loan 
Forgiveness under Sec. 2522.605(c) of this chapter, the Corporation 
will notify the holder of the loan of the circumstances and date of the 
individual's release but will pay no portion of the accrued interest.
    (c) Suspended service. The Corporation will not pay any interest 
expenses that accrue on an individual's qualified student loan(s) 
during a period of suspended service.


Sec. 2529.30  What additional student loan forbearance benefits are 
available for VISTA volunteers?

    (a) VISTA volunteers may be eligible to have periodic installment 
payments of principal deferred for up to three years during periods of 
economic hardship, in accordance with the Higher Education Act of 1965, 
as amended.
    (b) VISTA volunteers also may qualify for interest benefits on 
Stafford loans from the Department of Education under 34 CFR 682.301.

[FR Doc. 94-14231 Filed 6-14-94; 8:45 am]
BILLING CODE 6820-BA-M