[Federal Register Volume 60, Number 126 (Friday, June 30, 1995)]
[Rules and Regulations]
[Pages 34428-34433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16209]




[[Page 34427]]

_______________________________________________________________________

Part VII





Department of Education





_______________________________________________________________________



34 CFR Parts 600, 667, 668, and 674



Institutional Eligibility Under the Higher Education Act of 1965, as 
Amended; Final Rule

  Federal Register / Vol. 60, No. 126 / Friday, June 30, 1995 / Rules 
and Regulations  

[[Page 34428]]


DEPARTMENT OF EDUCATION

34 CFR Parts 600, 667, 668, and 674


Institutional Eligibility Under the Higher Education Act of 1965, 
as Amended; State Postsecondary Review Program; Student Assistance 
General Provisions; Federal Perkins Loan Program

AGENCY: Department of Education.

ACTION: Final regulations.

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

SUMMARY: The Secretary amends the following regulatory provisions to 
correct minor technical errors and to conform with self-implementing 
statutory provisions: the institutional eligibility regulations 
contained in Part 600, Subparts A and C; the allotment formula and 
funding procedures regulations contained in Part 667, Subpart B of the 
State Postsecondary Review Program regulations; the student eligibility 
regulations contained in Part 668, Subpart A of the Student Assistance 
General Provisions regulations; the standards for participation 
regulations contained in Part 668, Subpart B; the student consumer 
information regulations contained in Part 668, Subpart D; the 
verification regulations contained in Part 668, Subpart E; the fine, 
limitation, suspension, and termination proceedings regulations 
contained in Part 668, Subpart G; the cash management regulations 
contained in Part 668, Subpart K; and the Federal Perkins Loan Program 
regulations contained in Part 674, Subpart A.

EFFECTIVE DATE: July 31, 1995.

FOR FURTHER INFORMATION CONTACT: Rachael Sternberg, U.S. Department of 
Education, 600 Independence Avenue, S.W., Regional Office Building 3, 
Room 3053, Washington, D.C. 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 8:00 a.m. and 8 p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION: The following sections are amended for 
clarification and consistency throughout the title IV, HEA programs, 
and to correct technical errors and omissions in the text of the final 
regulations:
    Section 600.7 is amended to address an omission from current 
regulations addressing the effect of a bankruptcy filing on the 
institution's eligibility. Current regulations address the effect of 
filing for relief in bankruptcy on institutional eligibility, but omit 
explanation of the effect of an involuntary petition filed against the 
institution or its affiliates. In filing an involuntary petition, 
creditors seek a judicial ruling that an entity is in such financial 
straits that it must be treated, for the benefit of the creditors, like 
an entity that needs and voluntarily seeks protection in bankruptcy. 
Section 600.7 is therefore amended to clarify that an institution is 
subject to the statutory exclusion from eligibility only after the 
institution or its affiliate voluntarily files for relief in bankruptcy 
or there has been an order for relief entered as a result of an 
involuntary petition for relief against the institution or its 
affiliate.
    Section 600.30(a) describes the events that an institution must 
report to the Secretary; as recently published, paragraph (a)(7) would 
have the institution report the ``exercise'' of substantial control by 
an individual or entity that previously lacked such control. This 
appeared to change prior requirements that the institution report the 
acquisition of substantial control by such an individual, rather than 
the first exercise of such control. This change was not intentional, 
and the provision is revised to continue the requirement that the 
institution report the acquisition of substantial control by one who 
did not have that power.
    Section 600.31 is revised to correct inadvertent errors in the 
percentages of ownership interest that would be deemed to constitute 
control of a closely-held corporation; paragraph (c)(1)(ii) of this 
section describes a 50% interest as sufficient to give control over 
such a corporation; this should read ``greater than'' a 50% interest. 
Similarly, current regulations refer to a change ``of'' ownership and 
control, yet many of the changes addressed in this section are really 
changes within the current ownership of an institution, and section 498 
of the HEA itself refers to changes ``in'' ownership and control. The 
regulatory references are revised here to refer to changes ``in'' 
ownership and control, in order to more accurately reflect this fact.
    Section 668.7 is also amended as a result of recent changes set 
forth in the Bankruptcy Reform Act of 1994 (Pub. L. 103-394). The 
Bankruptcy Reform Act of 1994 prohibits a school, lender, guarantor, or 
the Department of Education from denying an applicant eligibility for 
title IV, HEA program assistance on the grounds that the applicant 
failed to repay a debt that was discharged or dischargeable in 
bankruptcy. This amendment took effect on October 22, 1994, the date of 
enactment of the law, and superseded those provisions of Sec. 668.7(f) 
that provided that a borrower was considered to remain in default on a 
title IV, HEA program loan discharged in bankruptcy and therefore was 
ineligible for new loan assistance unless the borrower made 
satisfactory arrangements to repay the debt. Section 668.7(f) is 
therefore amended here to conform with existing law: a student whose 
loan or grant overpayment is discharged or determined to be 
dischargeable qualifies for new title IV, HEA grant, loan, and work 
study assistance without regard to the prior default on that loan or 
unpaid status on that grant overpayment.
    Bankruptcy law establishes a number of exceptions to discharge that 
can apply to student loans and grant overpayments, but the most 
pertinent of these, found in 11 U.S.C. 523(a)(8), addresses the 
dischargeability of student aid debts in particular. The legislative 
history of 11 U.S.C. 523(a)(8) and cases interpreting that provision 
make clear that this provision of bankruptcy law, which is unaffected 
by the new amendments, makes title IV, HEA student aid debts 
presumptively non-dischargeable in bankruptcy until the borrower files 
a complaint in the bankruptcy proceeding and obtains a court decision 
that the debt qualifies for discharge under either of the two 
exceptions in 11 U.S.C. 523(a)(8). An applicant for student aid who 
claims that a defaulted prior student loan or an unpaid grant 
overpayment obligation is dischargeable or was discharged in bankruptcy 
must provide the institution with the appropriate documentation to 
prove that claim.
    To reduce unnecessary burden on potential title IV, HEA applicants, 
the regulation as revised permits the holder of the debt to accept what 
it deems to be satisfactory proof that the debt would qualify for a 
determination of dischargeability under 11 U.S.C. 523(a)(8)(A) based on 
the fact that the debt first became due for the requisite period--
currently seven years--prior to the filing of the petition in 
bankruptcy. The holder of the loan or grant obligation can typically 
determine the duration of the repayment with reliability from its own 
records. If the holder of the loan or grant obligation is satisfied 
that these records establish that the debt was in repayment for the 
requisite period, there is no need to require the applicant to secure a 
judicial determination of that fact. It has been a common practice to 
accept this showing as sufficient to consider a title IV, HEA program 
debt to be dischargeable, and this regulation reflects and incorporates 
that practice. However, where the duration of the repayment period is 
in 

[[Page 34429]]
dispute, where the applicant asserts that repayment would constitute an 
undue hardship so as to be dischargeable under 11 U.S.C. 523(a)(8)(B), 
or where the dischargeability of the debt is in question on other 
grounds, such as failure to schedule the debt properly, the applicant 
must obtain a specific judicial determination that the debt is 
dischargeable.
    Section 668.15 is amended by adding paragraph (b)(7)(i)(C), 
revising paragraphs (c)(1)(ii), and (e)(3)(ii), and by adding a new 
paragraph (e)(3)(iii). Paragraph 668.15(b)(7)(i)(C) is a continuing 
requirement that was inadvertently omitted in the November 29, 1994 
Final Regulations. The Secretary is revising Sec. 668.15(c) to clarify 
that an institution may rebut a finding of not meeting financial 
responsibility standards due to the past performance of its owners by 
showing that any prior liabilities are in repayment. Section 
668.15(e)(3) has been modified to include a reference to the Office of 
Management and Budget Circular for use by state and local governments.
    Section 668.16 is amended to allow schools to appeal FFEL cohort 
default rates under all FFEL appeal criteria. Under the current 
regulations, appeal is allowed only under paragraph Sec. 668.17(d): 
erroneous data under mitigating circumstances. This exclusion was 
unintentional.
    Section 668.22 is corrected to clarify that the federal refund by 
an institution to a student attending that institution is based upon 
all the institutional charges assessed the student by the institution, 
not just tuition charges. This section is also corrected to clarify 
when the administrative fee of the lesser of 5% or $100 is applicable.
    Section 668.47 is amended to clarify that, in paragraph (a)(6)(i), 
all statistics concerning the occurrence on campus of the stated 
criminal offenses, whether reported to the local police or to an 
official of the school, must be included in the annual security report 
published and distributed by September first of each and every year 
starting with September 1, 1992. Paragraph (a)(8) is corrected and 
redesignated to eliminate reference to the Hate Crimes Statistics Act; 
that act does not apply to the crimes listed in this paragraph. 
Paragraph (b)(1) is corrected to clarify that the paragraph applies 
only to distribution to current students and employees, as distribution 
requirements for prospective students are covered in a separate 
paragraph (paragraph (b)(2)).
    Section 668.57 is corrected to clarify that the signature of the 
independent applicant need not be accompanied by the signature of the 
applicant's spouse for the purpose of verifying household size and the 
number of family members enrolled in a postsecondary educational 
institution. This correction conforms with the signature requirements 
on the 1995-1996 Free Application for Federal Student Aid (FAFSA).
    Section 668.59 is amended to include the applicant's income earned 
from work in the use of the $400 tolerance option provided in the final 
regulations for Student Assistance General Provisions that were 
published in the Federal Register on November 29, 1994. This option 
authorizes an institution to disburse assistance under these programs 
without recalculating the applicant's award. If the net difference in 
dollar items for Adjusted Gross Income (AGI), untaxed income, and U.S. 
taxes paid is $400 or less, the Secretary has determined that the $400 
tolerance in Sec. 668.59(a)(2)(ii) and (c)(2)(ii) should also be 
applicable to income earned from work reported by individuals who are 
not required to file a tax return.
    The language of Sec. 668.83 is revised to correct the description 
of the roles of the respective officials with regard to emergency 
actions, and the consequences of certain actions taken by those 
officials on pending emergency actions. The show-cause official, in 
ruling on objections raised to an emergency action, may continue, 
modify, or revoke a pending emergency action. A revocation by the show-
cause official disposes of the action on the stated grounds with 
prejudice to its reinitiation on those same grounds. The initiating 
official may continue or modify a pending action, or may withdraw that 
action prior to its expiration. In contrast to revocation by the show-
cause official, withdrawal by the initiating official of a pending 
emergency action is without prejudice to emergency action being 
reinitiated on the same grounds.
    Sections 668.162, 668.165 and 668.166 are amended to clarify how 
the cash management regulations pertain to the provisions of the PLUS 
Loan program. Section 668.165 is also amended to clarify, in accordance 
with statute, that in order to disburse Federal Direct Student Loan 
program funds to a student, an institution must credit that student's 
account if the institution uses student accounts.
    Section 668.163 is revised to clarify the individual steps required 
under the reimbursement funding method.
    Section 668.164 is amended to clarify that FFEL program funds are 
excluded from the bank account and interest recovery requirements of 
this section. An institution that receives FFEL Program funds through 
electronic funds transfer or by master check must meet the requirements 
described in Sec. 682.207(b).
    Section 674.16(d) is amended to restore the provision allowing an 
institution to advance funds to a student while studying abroad, 
without obtaining the student's signature for the advance of funds. The 
December 1, 1994 Student Assistance General Provisions final 
regulations inadvertently amended this section of the November 30, 1994 
final Campus-based regulations.

Waiver of Notice of Proposed Rulemaking

    In accordance with section 437 of the General Education Provisions 
Act, 20 U.S.C. 1232, and the Administrative Procedure Act, 5 U.S.C. 
553, it is the practice of the Secretary to offer interested parties 
the opportunity to comment on proposed regulations. However, the 
regulatory changes in this document are necessary to correct minor 
technical errors and to implement mandatory statutory provisions. The 
changes in this document do not establish any new policies. Therefore, 
the Secretary has determined that publication of a proposed rule is 
unnecessary and contrary to the public interest under 5 U.S.C. 
553(b)(B).

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.

Regulatory Flexibility Act Certification

    The Secretary certifies that these regulations will not have a 
significant economic impact on a substantial number of small entities. 
Small entities affected by these regulations are small institutions of 
higher education. These regulations contain technical amendments 
designed to clarify and correct current regulations. The changes will 
not have a significant economic impact on the institutions affected.

Assessment of Educational Impact

    The Secretary has determined that the regulations in this document 
would 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

34 CFR Part 600

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

[[Page 34430]]
education, Reporting and recordkeeping requirements, Student aid.

34 CFR Part 667

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

34 CFR Part 668

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

34 CFR Part 674

    Education loan programs--education, Student aid.

    Dated: June 27, 1995.
David A. Longanecker,
Assistant Secretary for Postsecondary Education.
(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal 
Supplemental Education Opportunity Grant Program; 84.032 Federal 
Stafford Loan Program; 84.032 Federal PLUS Program; 84.032 Federal 
Supplemental Loans for Students Program; 84.033 Federal Work-Study 
Program; 84.038 Federal Perkins Loan Program; 84.063 Federal Pell 
Grant Program; 84.069 Federal State Student Incentive Grant Program; 
84.268 Federal Direct Student Loan Program; and 84.272 National 
Early Intervention Scholarship and Partnership Program.)

    The Secretary amends Parts 600, 667, 668, and 674 of Title 34 of 
the Code of Federal Regulations as follows:

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

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

    Authority: 20 U.S.C. 1088, 1091, 1094, 1099b, 1099c, and 1141, 
unless otherwise noted.

    2. Section 600.7 is amended by revising paragraphs (a) introductory 
text, (a)(1) introductory text, (a)(1)(iv), and (a)(2) to read as 
follows:


Sec. 600.7  Conditions of institutional eligibility.

    (a) General rule. For purposes of title IV of the HEA, an 
educational institution that otherwise satisfies the requirements 
contained in Secs. 600.4, 600.5, or 600.6 nevertheless does not qualify 
as an eligible institution under this part if--
    (1) For its latest complete award year--
* * * * *
    (iv) Fifty percent or more of its regular enrolled students had 
neither a high school diploma nor the recognized equivalent of a high 
school diploma, and the institution does not provide a four-year or 
two-year educational program for which it awards a bachelor's degree or 
an associate degree, respectively;
    (2) The institution, or an affiliate of the institution that has 
the power, by contract or ownership interest, to direct or cause the 
direction of the management of policies of the institution--
    (A) Files for relief in bankruptcy, or
    (B) Has entered against it an order for relief in bankruptcy; or
* * * * *
    3. Section 600.30 is amended by revising paragraph (a)(7) 
introductory text to read as follows:


Sec. 600.30  Institutional notification requirements.

    (a) * * *
    (7) A persons ability to affect substantially the actions of the 
institution, if that person did not previously have this ability. The 
Secretary generally considers a person to have this ability if the 
person--
* * * * *
    4. Section 600.31 is amended by revising paragraphs (a)(1), (a)(2) 
introductory text, (c)(1), (c)(2), (c)(3) introductory text, (c)(4), 
and (e) introductory text, to read as follows:


Sec. 600.31  Change in ownership resulting in a change of control.

    (a) General. (1) An institution that undergoes a change in 
ownership that results in a change of control ceases to qualify as an 
eligible institution upon the change in ownership and control. A change 
in ownership that results in a change in control includes any change by 
which a person who has or thereby acquires an ownership interest in the 
entity that owns this institution or the parent corporation of that 
entity, acquires or loses the ability to control the institution.
    (2) In order to reestablish eligibility and to resume participation 
in the title IV, HEA programs, the institution must demonstrate to the 
Secretary that after the change in ownership and control--
* * * * *
    (c) Standards for identifying changes in ownership and control--(1) 
Closely-held corporation. A change in ownership and control occurs 
when--
    (i) A person acquires more than 50 percent of the total outstanding 
voting stock of the corporation;
    (ii) A person who holds an ownership interest in the corporation 
acquires control of more than 50 percent of the outstanding voting 
stock of the corporation; or
    (iii) A person who holds or controls 50 percent or more of the 
total outstanding stock of the corporation ceases to hold or control 
that proportion of the stock of the corporation.
    (2) Publicly-traded corporation required to be registered with the 
Securities and Exchange Commission (SEC). A change in ownership and 
control occurs when a change of control of the corporation takes place 
that gives rise to the obligation to file a Form 8K with the SEC 
notifying that agency of the change in control.
    (3) Other corporations. A change in ownership and control of a 
corporation that is neither closely-held nor required to be registered 
with the SEC occurs when--
* * * * *
    (4) Partnership or sole proprietorship. A change in ownership and 
control occurs when a person who has or acquires an ownership interest 
acquires or loses control as described in this section.
* * * * *
    (e) Excluded transactions. A change in ownership and control 
otherwise subject to this section does not include a transfer of 
ownership and control upon the retirement or death of the owner, to--
* * * * *

PART 667--STATE POSTSECONDARY REVIEW PROGRAM

    5. The authority for Part 667 continues to read as follows:

    Authority: 20 U.S.C. 1099a through 1099a-3, unless otherwise 
noted.

    6. Section 667.12 is amended by revising paragraph (c)(2)(iii) 
introductory text, and (c)(2)(iii)(A) to read as follows:


Sec. 667.12  Application for funds.

* * * * *
    (c) * * *
    (2) * * *
    (iii) A SPRE may establish the lowest review priority for an 
institution if--
    (A) The institution is referred to the SPRE for a reason described 
in Sec. 667.5(b)(6) concerning the timely submission of an audit report 
or Sec. 667.5(b)(9) concerning a change in ownership that results in a 
change of control; and
* * * * * 

[[Page 34431]]


PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

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

    Authority: 20 U.S.C. 1085, 1088, 1091, 1092, 1099c, and 1141, 
unless otherwise noted.

    8. Section 668.7 is amended by removing paragraph (b)(1) 
introductory text ``Before admission--'', revising paragraph (f), and 
revising the authority citation to read as follows:


Sec. 668.7  Eligible student.

* * * * *
    (f) Effect of bankruptcy relief on title IV, HEA program 
eligibility. The Secretary does not consider an unpaid title IV, HEA 
program loan to be in default nor an unpaid title IV, HEA program grant 
overpayment to be owed for purposes of determining eligibility for 
assistance under a title IV, HEA program if the student applicant--
    (1) Has obtained a judicial determination that the debt has been 
discharged or is dischargeable in bankruptcy, or
    (2) Demonstrates to the satisfaction of the holder of the debt 
that--
    (i) At the time the applicant filed the petition for relief the 
loan or demand had been outstanding for repayment of the grant 
overpayment, for the period required under 11 U.S.C. 523(a)(8)(A), 
exclusive of applicable suspensions of the repayment period for either 
debt of the kind defined in 34 CFR 682.402(m), and
    (ii) The debt otherwise qualifies for discharge under applicable 
bankruptcy law.
* * * * *
(Authority: 20 U.S.C. 1070a-1070c-1, 1077, 1078, 1078-1-3, 1082, 
1085, 1087a, 1087cc, and 1091; 28 U.S.C. 3201; 42 U.S.C. 2753; 
section 9 of Pub. L. 100-369; and 11 U.S.C. 523 and 525)

    9. Section 668.13 is amended by revising paragraphs (c)(2)(ii) and 
(c)(2)(iii) to read as follows:


Sec. 668.13  Certification procedures.

* * * * *
    (c) * * *
    (2) * * *
    (ii) Not later than the end of the third complete award year 
following the date on which the Secretary provisionally certified the 
institution under paragraphs (c)(1)(ii), (iii), (iv) or (e)(2) of this 
section; and
    (iii) If the Secretary provisionally certified the institution 
under paragraph (c)(1)(v) of this section, not later than 18 months 
after the date that the Secretary withdrew recognition from the 
institutions nationally recognized accrediting agency.
* * * * *
    10. Section 668.15 is amended by adding new paragraph (b)(7)(i)(C), 
revising paragraphs (c)(1)(ii), and (e)(3)(ii), and by adding a new 
paragraph (e)(3)(iii) to read as follows:


Sec. 668.15  Factors of financial responsibility.

* * * * *
    (b) * * *
    (7) * * *
    (i) * * *
    (C) Had, for its latest fiscal year, a positive tangible net worth. 
In applying this standard, a positive tangible net worth occurs when 
the institution's tangible assets exceed its liabilities. The 
calculation of tangible net worth shall exclude all assets classified 
as intangible in accordance with the generally accepted accounting 
principles; or
* * * * *
    (c) * * *
    (1) * * *
    (ii) That person, family member, institution, or servicer does not 
demonstrate that the liability is being repaid in accordance with an 
agreement with the Secretary; or
* * * * *
    (e) * * *
    (3) * * *
    (ii) Office of Management and Budget Circular A-133, ``Audits of 
Institutions of Higher Education and Other Nonprofit Organizations;'' 
or
    (iii) Office of Management and Budget Circular A-128, ``Audits of 
State and Local Governments.''
* * * * *
    11. Section 668.16 is amended by removing the letter ``(d)'' from 
the cross-reference in the last sentence of paragraph (m)(2)(ii).
    12. Section 668.22 is amended by revising paragraph (d)(1) to read 
as follows:


Sec. 668.22  Institutional refunds and repayments.

* * * * *
    (d) Federal Refund. (1) ``Federal refund,'' as used in this 
section, means a refund by an institution to a student attending that 
institution of not less than the portion of institutional charges 
(tuition, fees, room, board and other charges assessed the student by 
the institution) to be refunded as follows--
    (i) The institution must refund 100 percent of institutional 
charges, if a student withdraws from the institution before the first 
day of classes for the period of enrollment for which the student was 
charged;
    (ii) The institution must refund 100 percent of institutional 
charges, less an administrative fee, if any, as described in paragraph 
(d)(2) of this section, if a student withdraws on the first day of 
classes for the period of enrollment for which the student was charged;
    (iii) The institution must refund at least 90 percent of 
institutional charges, less an administrative fee, if any, as described 
in paragraph (d)(2) of this section, if a student withdraws at any time 
after the first day of classes for the period of enrollment for which 
the student was charged up to and including the end of the first 10 
percent (in time) of that period of enrollment;
    (iv) The institution must refund at least 50 percent of 
institutional charges, less an administrative fee, if any, as described 
in paragraph (d)(2) of this section, if the student withdraws at any 
time after the end of the first 10 percent (in time) of the period of 
enrollment for which the student was charged up to and including the 
end of the first 25 percent (in time) of that period of enrollment; and
    (v) The institution must refund at least 25 percent of 
institutional charges, less an administrative fee, if any, as described 
in paragraph (d)(2) of this section, if the student withdraws at any 
time after the end of the first 25 percent (in time) of the period of 
enrollment for which the student was charged up to and including the 
end of the first 50 percent (in time) of that period of enrollment.
* * * * *
    13. Section 668.47 is amended by revising paragraphs (a)(6)(i), 
(a)(8), (b)(1) introductory text, and (b)(1)(i) to read as follows:


Sec. 668.47  Institutional security policies and crime statistics.

    (a) * * *
    (6) * * *
    (i) Statistics concerning the occurrence on campus of the following 
criminal offenses reported to local police agencies or to any official 
of the institution who has significant responsibility for student and 
campus activities:
    (A) Murder.
    (B) Rape (prior to August 1, 1992) or sex offenses, forcible or 
nonforcible (on or after August 1, 1992).
    (C) Robbery.
    (D) Aggravated assault.
    (E) Burglary.
    (F) Motor-vehicle theft; and
* * * * *
    (8) Statistics concerning the number of arrests for the following 
crimes occurring on campus:
    (i) Liquor-law violations. 

[[Page 34432]]

    (ii) Drug-abuse violations.
    (iii) Weapons possessions.
* * * * *
    (b) * * *
    (1) Current students and employees by appropriate publications and 
mailings, through--
    (i) Direct mailing to each individual through the U.S. Postal 
Service, campus mail, or computer network; or
* * * * *
    14. Section 668.57 is amended by revising paragraphs (b), (c)(1) 
introductory text, and (d)(3)(i) to read as follows:


Sec. 668.57  Acceptable documentation.

* * * * *
    (b) Number of family members in household. An institution shall 
require an applicant selected for verification to verify the number of 
family members in the household by submitting to it a statement signed 
by the applicant and one of the applicant's parents if the applicant is 
a dependent student, or the applicant if the applicant is an 
independent student, listing the name and age of each family member in 
the household and the relationship of that household member to the 
applicant.
    (c) * * *
    (1) Except as provided in Sec. 668.56(b), (c), (d), and (e), an 
institution shall require an applicant selected for verification to 
verify annually information included on the application regarding the 
number of household members in the applicant's family enrolled on at 
least a half-time basis in postsecondary institutions. The institution 
shall require the applicant to verify the information by submitting a 
statement signed by the applicant and one of the applicant's parents, 
if the applicant is a dependent student, or by the applicant if the 
applicant is an independent student, listing--
* * * * *
    (d) * * *
    (3) * * *
    (i) A statement signed by the applicant and one of the applicant's 
parents in the case of a dependent student, or by the applicant in the 
case of an independent student, certifying the amount of child support 
received; and
* * * * *
    15. Section 668.59 is amended by revising paragraphs (a)(2)(ii) and 
(c)(2)(ii) to read as follows:


Sec. 668.59  Consequences of a change in application information.

    (a) * * *
    (2) * * *
    (ii) No dollar amount in excess of $400 as calculated by the net 
difference between the corrected sum of Adjusted Gross Income (AGI) 
plus untaxed income minus U.S. taxes paid and the uncorrected sum of 
Adjusted Gross Income (AGI) plus untaxed income minus U.S. taxes paid. 
If no Federal Income Tax Return was filed, income earned from work may 
be used in lieu of Adjusted Gross Income (AGI).
* * * * *
    (c) * * *
    (2) * * *
    (ii) No dollar amount in excess of $400 as calculated by the net 
difference between the corrected sum of Adjusted Gross Income (AGI) 
plus untaxed income minus U.S. taxes paid and the uncorrected sum of 
Adjusted Gross Income (AGI) plus untaxed income minus U.S. taxes paid. 
If no Federal Income Tax Return was filed, income earned from work may 
be used in lieu of Adjusted Gross Income (AGI).
* * * * *
    16. Section 668.83 is amended by revising paragraphs (f)(2) and (g) 
to read as follows:


Sec. 668.83  Emergency action.

* * * * *
    (f) * * *
    (2) Until a final decision is issued by the Secretary in a 
proceeding described in paragraph (f)(1) of this section, any action 
affecting the emergency action is at the sole discretion of the 
initiating official, or, if a show- cause proceeding is conducted, the 
show-cause official.
* * * * *
    (g) The expiration of an emergency action, or its modification or 
revocation by the show-cause official, does not bar subsequent 
emergency action on a ground other than one specifically identified in 
the notice imposing the prior emergency action. Separate grounds may 
include violation of an agreement or limitation imposed or resulting 
from the prior emergency action.
* * * * *
    17. Section 668.162 is amended by revising paragraph (1)(iii) under 
the definition of Disburse to read as follows:


Sec. 668.162  Definitions.

* * * * *
    Disburse. * * *
    (1) * * *
    (iii) Dispensing cash for which an institution obtains a signed 
receipt from the student, or in the case of a PLUS Loan from the parent 
borrower; or
* * * * *
    18. Section 668.163 is amended by revising paragraph (a)(3) to read 
as follows:


Sec. 668.163  Requesting funds.

    (a) * * *
    (3) Reimbursement payment method. (i) The Secretary has sole 
discretion in determining whether to place an institution on the 
reimbursement payment method. Before an institution on reimbursement 
submits a request for cash, the Secretary requires the institution to--
    (A) Identify the students for whom the institution is seeking 
reimbursement that will be included in the institution's request for 
cash;
    (B) Document properly that each student included in the request for 
cash satisfies all applicable title IV, HEA program requirements and 
that the disbursements the institution will make to these students are 
for the correct amounts; and
    (C) Credit appropriately the account of each student included in 
the request for cash.
    (ii) Along with an institution's request for cash, the Secretary 
requires the institution to submit for review any documentation 
necessary for determining that the institution has complied with the 
requirements described in paragraphs (a)(3)(i)(B) and (a)(3)(i)(C) of 
this section and with any other requirements specified by the 
Secretary. The amount of the institution's request for cash may not 
exceed the amount of the disbursements the institution will make to 
students included in that request. When the institution receives the 
funds, it must disburse the funds immediately and only to the students 
identified in the institution's request for cash.
    (iii) The Secretary approves the institution's request for cash and 
transfers electronically the amount of that request into a bank account 
designated by the institution if the Secretary determines that the 
institution has complied with all of the requirements described in 
paragraphs (a)(3)(i) and (a)(3)(ii) of this section.
* * * * *
    19. Section 668.164 is amended by revising paragraph (a) to read as 
follows:


Sec. 668.164  Maintaining funds.

    (a) General. (1) Except for the requirement described in paragraph 
(f) of this section, this section does not apply to funds that an 
institution receives under the FFEL programs. An institution that 
receives FFEL program funds through electronic funds transfer or by 
master check must maintain those funds as provided under 
Sec. 682.207(b).
    (2)(i) For funds an institution receives under the Federal Pell 
Grant, Campus-based, SSIG, and FDSL programs, an institution must 
maintain a bank 

[[Page 34433]]
account that meets the requirements under paragraphs (b) or (c) of this 
section into which the Secretary transfers or the institution deposits 
Federal funds that the institution receives from the title IV, HEA 
programs. Except as provided in paragraph (e) of this section, an 
institution is not required to maintain a separate account for title 
IV, HEA program funds.
    (ii) An institution must--
    (A) Notify the bank of the accounts that contain Federal funds and 
retain a record of that notice in its recordkeeping system; or
    (B) Ensure that the name of the account discloses clearly that 
Federal funds are maintained in that account; and
    (iii) File with the appropriate State or municipal government 
entity a UCC-1 statement disclosing that the account contains Federal 
funds and maintain a copy of that statement in its records.
* * * * *
    20. Section 668.165 is amended by adding paragraph (a)(4) and by 
revising paragraphs (a)(1), (b)(1), (b)(2) introductory text, 
(b)(2)(i)(C), (b)(4)(i) introductory text, (c)(2), (d)(1)(i) and 
(d)(1)(iii) to read as follows:


Sec. 668.165  Disbursing funds.

    (a) * * *
    (1) An institution must notify a student or, in the case of a PLUS 
loan, the student's parent of the amount of title IV, HEA program funds 
the institution can expect to receive, and how and when those funds 
will be paid.
* * * * *
    (4) If an institution uses student accounts, an institution must 
disburse a Direct Loan Program Loan by crediting the student's account.
    (b) * * *
    (1) General. In crediting the student's account with title IV, HEA 
program funds, the institution may apply those funds only to allowable 
charges described under paragraph (b)(3) of this section, except that 
the institution may not apply the student's title IV, HEA program funds 
to any charges the institution assessed the student in a prior award 
year or period of enrollment. An institution must provide written 
notification expeditiously to a student or parent, as applicable, that 
the institution has credited the student's account with Direct Loan or 
FFEL program funds.
    (2) Student account balances. Unless otherwise authorized, by a 
student or parent borrower, whenever an institution applies title IV, 
HEA program funds to a student's account and determines that an amount 
of those funds exceeds, or exceeded, the amount of allowable charges 
the institution assessed the student, the institution must pay that 
balance directly to the student, or in the case of a PLUS loan to the 
parent borrower, as soon as possible but--
    (i) * * *
    (C) The date the student, or parent borrower rescinds his or her 
authorization under paragraph (d) of this section; and
* * * * *
    (4) * * *
    (i) Except as provided in paragraph (b)(4)(ii) of this section, an 
institution, as a fiduciary for benefit of a student, may hold student 
funds from the title IV, HEA programs in excess of institutional 
charges included in paragraph (b)(3) of this section, if the student, 
or in the case of a PLUS loan the parent borrower, authorizes the 
institution to retain the excess funds to assist the student in 
managing those funds. If an institution chooses to hold excess student 
funds, the institution--
* * * * *
    (c) * * *
    (2) Except as provided in paragraph (c)(3) of this section, the 
earliest an institution may directly pay, or credit the account of an 
enrolled student with title IV, HEA program funds, or in the case of a 
PLUS Loan pay the parent borrower is--
    (i) 10 days before the first day of a payment period or period of 
enrollment, as applicable; and
    (ii) For second and subsequent disbursements of loan funds under 
the Direct Loan and FFEL programs, 10 days before the first day of a 
semester, term, or other period of enrollment for which that 
disbursement is intended.
* * * * *
    (d) * * *
    (1) * * *
    (i) Disburse title IV, HEA program funds by initiating an 
electronic funds transfer as provided in paragraph (a)(2) of this 
section;
* * * * *
    (iii) Hold excess student funds under paragraph (b)(4) of this 
section.
* * * * *
    21. Section 668.166 is amended by revising paragraph (c)(2)(i) to 
read as follows:


Sec. 668.166  Excess cash.

* * * * *
    (c) * * *
    (2) * * *
    (i) Considers the institution to have issued a check on the date 
that the check cleared the institution's bank account, unless the 
institution demonstrates to the satisfaction of the Secretary that it 
issued the check shortly after the institution wrote the check; and
* * * * *

PART 674--FEDERAL PERKINS LOAN PROGRAM

    22. The authority citation for part 674 continues to read as 
follows:

    Authority: 20 U.S.C. 1087aa-1087ii and 20 U.S.C. 421-429, unless 
otherwise noted.

    23. Section 674.16 is amended by revising paragraph (d) to read as 
follows:


Sec. 674.16  Making and disbursing loans.

* * * * *
    (d)(1)(i) The institution shall disburse funds to a student or the 
student's account in accordance with the provisions of Sec. 668.165.
    (ii) The borrower must sign for each advance of funds on the 
promissory note, except as provided in paragraph (d)(2) of this 
section.
    (2)(i) In the case of a borrower enrolled in a study-abroad program 
approved for credit by the home institution in which the borrower is 
enrolled, the borrower may not be required to sign for any advance of 
funds made while the borrower is studying abroad if obtaining the 
borrower's signature would pose an undue hardship on the institution.
    (ii) The institution shall properly document the reason for not 
obtaining the borrower's signature.
* * * * *

[FR Doc. 95-16209 Filed 6-29-95; 8:45 am]
BILLING CODE 4000-01-P