[Federal Register Volume 61, Number 179 (Friday, September 13, 1996)]
[Proposed Rules]
[Pages 48564-48569]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23390]



[[Page 48563]]


_______________________________________________________________________

Part IV





Department of Education





_______________________________________________________________________



34 CFR Part 668, et al.



Student Assistance General Provisions; Proposed Rule

  Federal Register / Vol. 61, No. 179 / Friday, September 13, 1996 / 
Proposed Rules  

[[Page 48564]]



DEPARTMENT OF EDUCATION

34 CFR Parts 668, 674, 675, 676, 682, 685, and 690

RIN 1840-AC39


Student Assistance General Provisions

AGENCY: Department of Education.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Secretary proposes to amend the Student Assistance General 
Provisions regulations, 34 CFR Part 668, to implement an amendment made 
to the General Education Provisions Act (GEPA) by the Improving 
America's Schools Act of 1994 (IASA). That amendment decreased from 
five years to three years the length of time that a recipient of 
Federal funds is required to maintain records. In addition, the 
Secretary is proposing to consolidate and clarify existing records 
retention rules, and reduce administrative burden on institutions.

DATES: Comments must be received on or before October 28, 1996.

ADDRESSES: All comments concerning these proposed regulations should be 
addressed to: Mr. Kenneth Smith, U.S. Department of Education, P.O. Box 
23272, Washington, DC 20026-3272, or to the following internet address 
([email protected]).
    To ensure that public comments have maximum effect in developing 
the final regulations, the Department urges that each comment clearly 
identify the specific section or sections of the regulations that the 
comment addresses and that comments be in the same order as the 
regulations.
    A copy of any comments that concern information collection 
requirements should also be sent to the Office of Management and Budget 
at the address listed in the Paperwork Reduction Act section of this 
preamble. A copy of those comments may also be sent to the Department 
representative named in the above paragraph.

FOR FURTHER INFORMATION CONTACT: Ms. Paula M. Husselmann or Mr. Kenneth 
Smith, U.S. Department of Education, 600 Independence Avenue, SW, ROB-
3, Room 3045, Washington, DC 20202-5346. The telephone number for Ms. 
Paula Husselmann is (202) 708-7888. The telephone number for Mr. 
Kenneth Smith is (202) 708-9406. 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 IASA, Pub.L. 103-382, enacted on October 
20, 1994, amended Section 437 of GEPA to reduce from five years to 
three years the length of time that a recipient of funds under programs 
administered by the Secretary of Education must maintain records. An 
institution that participates in the student financial assistance 
programs authorized by title IV of the Higher Education Act of 1965, 
(title IV, HEA programs) is covered by this statutory amendment. 
Therefore, the Secretary is amending applicable regulations to conform 
those regulations to this statutory change. However, this reduction in 
record retention time is applicable only to institutions of higher 
education that participate in the title IV, HEA programs. It does not 
apply, for example, to lenders or guarantee agencies under the Federal 
Family Education Loan (FFEL) Programs because these entities are not 
recipients of program funds.
    In the context of examining the regulations governing record 
keeping, the Secretary noted that the starting point for the record 
retention period was different under each of the title IV, HEA 
programs. The Secretary believes that the record keeping period should 
be the same for all programs, to the extent possible. Therefore, the 
Secretary is proposing as a general rule that, other than records 
relating to student loans, an institution must keep records relating to 
its administration of a title IV, HEA program for an award year for 
three years after the end of that award year. Thus, an institution 
would have to keep records relating to its administration of a title 
IV, HEA program for the 1996-97 award year through June 30, 2000. 
However, an institution is free to keep these records, as well as the 
records discussed below, for a longer period of time if it so desires.
    The Secretary is proposing the following for certain types of 
records that do not fit within the general rule. With regard to records 
relating to student loans under the FFEL and Direct Loan Programs, the 
Secretary is proposing that an institution keep these records for three 
years after the end of the award year in which the student borrower 
last attended the institution. This later starting date for loan 
records is necessary to provide for the enforceability of the loan, and 
to ensure the borrower's repayment. The Secretary is also proposing 
that an institution keep loan records relating to the repayment of 
loans under the Federal Perkins Loan Program in accordance with the 
regulations governing that program, 34 CFR 674.19.
    A Fiscal Operations Report and Application to Participate in the 
Federal Perkins Loan, Federal Supplemental Educational Opportunity 
Grant (FSEOG), and Federal Work-Study (FWS) Programs (FISAP) involves 
two award years and is submitted in a third award year. Thus, when an 
institution submits a FISAP in October 1996 (in the 1996-97 award year) 
it reports data for the just completed award year (1995-96), and 
requests funds for the immediate future award year (1997-98). In 
addition, an institution must be able to document the income grid 
information that it provides on the FISAP. Accordingly, the Secretary 
is proposing that an institution keep the FISAP and the records 
supporting information contained in a FISAP, including income grid 
information, for three years after the end of the award year in which 
the FISAP was submitted. Thus, it must keep the FISAP it submits in 
October 1996 and records supporting the data included in that FISAP 
until June 30, 2000.
    The Secretary has included a non-exhaustive list of the more 
prominent required records in Sec. 668.24 of these proposed 
regulations. However, this list does not include every specific record 
that must be maintained by institutions.
    The Secretary will include a more comprehensive listing of records 
required to be kept in the next publication of the Student Financial 
Aid Handbook.
    The Secretary is, to the extent possible, also consolidating in 
Sec. 668.24, record keeping requirements applicable to institutions, 
and eliminating those requirements in the individual program 
regulations.
    Finally, the Secretary is proposing regulations to accommodate new 
technology by allowing institutions to satisfy its record keeping 
requirements under various electronic formats. The Secretary proposes 
that all record information, except those records required to be 
retained in electronic format, must be retrievable in a coherent hard 
copy or in other media format acceptable to the Secretary. The 
provision ``acceptable to the Secretary'' means any media format that 
the Secretary indicates in various communications with institutions is 
acceptable; this provision does not mean that institutions must apply 
for approval of any media format. With respect to retaining electronic 
records the institution receives or transmits in electronic format, the 
Secretary proposes that institutions maintain any required record that 
it transmits or receives electronically in the same electronic format 
in which the record

[[Page 48565]]

was sent or received. The Secretary proposes rules to govern the 
location of records for review by the Secretary or his representative. 
Specifically, the regulations propose that an institution make its 
records readily available for review at an institutional location 
designated by the Secretary.

Executive Order 12866

    Executive Order 12866 requires each agency to write regulations 
that are easy to understand.
    The Secretary invites comments on how to make these regulations 
easier to understand, including answers to questions such as the 
following: (1) Are the requirements in the proposed regulations clearly 
stated? (2) Do the regulations contain technical terms or other wording 
that interferes with their clarity? (3) Does the format of the 
regulations (grouping and order of sections, use of headings, 
paragraphing, etc.) aid or reduce their clarity? Would the regulations 
be easier to understand if they were divided into more (but shorter) 
sections? (A ``section'' is preceded by the symbol ``Sec. '' and a 
numbered heading; for example, Sec. 668.24 Records retention and 
examinations. (4) Is the description of the proposed regulations in the 
``Supplementary Information'' section of this preamble helpful in 
understanding the proposed regulations? How could this description be 
more helpful in making the proposed regulations easier to understand? 
(5) What else could the Department do to make the regulations easier to 
understand?
    A copy of any comments that concern how the Department could make 
these proposed regulations easier to understand should be sent to Mr. 
Stanley M. Cohen, Regulations Quality Officer, U.S. Department of 
Education, 600 Independence Avenue, SW, Room 5121, FOB-10, Washington, 
DC 20202-2241.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities.
    Entities affected by these regulations are institutions of higher 
education that participate in title IV, HEA Programs. These 
institutions are defined as small entities, according to the U.S. Small 
Business Administration Size Standards, if they are for-profit or non-
profit institutions with total annual revenue below $5,000,000, or if 
they are institutions controlled by governmental entities with 
populations below 50,000. These proposed regulations would not have a 
significant economic impact on small entities. The regulations would 
benefit both small and large institutions by reducing from five to 
three years the length of time that institutions must keep records 
relating to their administration of title IV, HEA Programs. The 
regulations also would reduce burden on all institutions by providing a 
common record keeping period for all programs, to the extent possible. 
Finally, the proposed regulations would allow institutions to satisfy 
record keeping requirements under various electronic formats. Thus, 
institutions, both small and large, would experience regulatory relief 
and a positive economic impact as a result of these proposed 
regulations.
    The Secretary requests comments from small institutions as to 
whether the proposed changes would have a significant economic impact 
on them.

Paperwork Reduction Act of 1995

    Section 668.24 contains an information collection requirement. As 
required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), 
the Department of Education has submitted a copy of this section to the 
Office of Management and Budget (OMB) for its review.
    Collection of Information: Recordkeeping Requirements
    An institution must maintain records documenting its application 
for and participation in the title IV, HEA programs. The information to 
be collected includes any application for title IV, HEA program funds 
and program records that document an institution's eligibility to 
participate in the title IV, HEA programs; the eligibility of its 
educational programs for title IV, HEA program funds; its 
administration of the title IV, HEA programs in accordance with all 
applicable requirements; its financial responsibility; information 
included in any application for title IV, HEA program funds; and its 
disbursement and delivery of title IV, HEA program funds. The 
Department needs and uses these records to verify an institution's 
compliance with statute and regulations.
    Information is to be collected by institutions on an ongoing basis, 
as it is created or becomes available. Annual reporting and 
recordkeeping burden for this collection of information is estimated to 
average 79.8 hours for each response for 10,000 respondents, including 
the time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed and completing and reviewing 
the collection of information. The total annual reporting and 
recordkeeping burden for this collection is estimated to be 798,164 
hours.
    Organizations and individuals desiring to submit comments on the 
information collection requirements should direct them to the Office of 
Information and Regulatory Affairs, OMB, Room 10235, New Executive 
Office Building, Washington, D.C. 20503; Attention: Desk Officer for 
the U.S. Department of Education.
    The Department considers comments by the public on this proposed 
collection of information in--
     Evaluating whether the proposed collection of information 
is necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
     Evaluating the accuracy of the Department's estimate of 
the burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques of other forms of information technology; e.g., permitting 
electronic submission of responses.
    OMB is required to make a decision concerning the collection of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, a comment to OMB is best assured of having its full effect 
if OMB receives it within 30 days of publication. This does not affect 
the deadline for the public to comment to the Department on the 
proposed regulations.

Invitation To Comment

    Interested persons are invited to submit comments and 
recommendations regarding these proposed regulations.
    All comments submitted in response to these proposed regulations 
will be available for public inspection, during and after the comment 
period, in Room 3045, Regional Office Building 3, 7th and D Streets, 
SW, Washington, DC, between the hours of 8:30 a.m. and 4:00 p.m., 
Monday through Friday of each week, except Federal holidays.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether the 
proposed regulations in this document would require transmission of 
information that

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is being gathered by or is available from any other agency or authority 
of the United States.

List of Subjects

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

    Loan programs--education, Reporting and recordkeeping requirements, 
Student aid.

34 CFR Part 675

    Colleges and universities, Employment, Grant programs--education, 
Reporting and recordkeeping requirements, Student aid.

34 CFR Part 676

    Grants programs--education, Reporting and recordkeeping 
requirements, Student aid.

34 CFR Parts 682 and 685

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

34 CFR Part 690

    Colleges and universities, Education of disadvantaged, Grant 
programs--education, Reporting and recordkeeping requirements, Student 
aid.

    Dated: September 9, 1996.
Richard W. Riley,
Secretary of Education.

(Catalog of Federal Domestic Assistance Numbers: 84.007: Federal 
Supplemental Educational Opportunity Grant Program; 84.032: Federal 
Stafford Loan Program; 84.032: Federal PLUS Program; 84.032: Federal 
Supplemental Loans for Students Programs; 84.033: Federal Work-Study 
Program; 84.038: Federal Perkins Loan Program; 84.063: Federal Pell 
Grant Program; 84.069: State Student Incentive Grant Program; 
84.268: Federal Direct Student Loan Program; and 84.272: National 
Early Intervention and Scholarship and Partnership Program. A 
Catalog of Federal Domestic Assistance Number for the Presidential 
Access Scholarship Program has not been assigned)

    The Secretary proposes to amend Parts 668, 674, 675, 676, 682, 685, 
and 690 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, 1099c, and 
1141, unless otherwise noted.

    2. Section 668.24 is revised to read as follows:


Sec. 668.24  Records retention and examinations.

    (a) Program records. An institution shall establish and maintain, 
on a current basis, any application for title IV, HEA program funds and 
program records that document--
    (1) Its eligibility to participate in the title IV, HEA programs;
    (2) The eligibility of its educational programs for title IV, HEA 
program funds;
    (3) Its administration of the title IV, HEA programs in accordance 
with all applicable requirements;
    (4) Its financial responsibility, as specified in this part;
    (5) Information included in any application for title IV, HEA 
program funds; and
    (6) Its disbursement and delivery of title IV, HEA program funds.
    (b) Fiscal records. (1) An institution shall account for the 
receipt and expenditure of title IV, HEA program funds in accordance 
with generally accepted accounting principles.
    (2) An institution shall establish and maintain on a current 
basis--
    (i) Financial records that reflect each HEA, title IV program 
transaction; and
    (ii) General ledger control accounts and related subsidiary 
accounts that identify each title IV, HEA program transaction and 
separate those transactions from all other institutional financial 
activity.
    (c) Required records. (1) The records that an institution must 
maintain in order to comply with the provisions of this section include 
but are not limited to--
    (i) The Student Aid Report (SAR) or Institutional Student 
Information Record (ISIR) used to determine eligibility for title IV, 
HEA program funds;
    (ii) Application data submitted to the Secretary, lender, or 
guaranty agency by the institution on behalf of the student or parent;
    (iii) Documentation of each student's or parent borrower's 
eligibility for title IV, HEA program funds;
    (iv) Documentation relating to each student's or parent borrower's 
receipt of title IV, HEA program funds, including but not limited to 
documentation of--
    (A) The amount of the grant or loan, its payment period or loan 
period, and the calculations used to determine the amount of the grant 
or loan;
    (B) The date and amount of each disbursement of grant or loan 
funds, and the date and amount of each payment of FWS wages;
    (C) The amount, date, and basis of the institution's calculation of 
any refunds or overpayments due to or on behalf of the student; and
    (D) The payment of any refund or overpayment to the title IV, HEA 
program fund, a lender, or the Secretary, as appropriate;
    (v) Documentation of and information collected at any initial or 
exit counseling required by applicable program regulations;
    (vi) Reports and forms used by the institution in its participation 
in a title IV, HEA program, and any records needed to verify data that 
appear in those reports and forms; and
    (vii) Documentation supporting the institution's calculations of 
its completion or graduation rates under Secs. 668.46 and 668.49.
    (2) In addition to the records required under this part--
    (i) Participants in the Federal Perkins Loan Program shall follow 
procedures established in 34 CFR 674.19 for documentation of repayment 
history for that program;
    (ii) Participants in the FWS Program shall follow procedures 
established in 34 CFR 675.19 for documentation of work, earnings, and 
payroll transactions for that program; and
    (iii) Participants in the FFEL Program shall follow procedures 
established in 34 CFR 682.610 for documentation of additional loan 
record requirements for that program.
    (d) General. (1) An institution shall maintain required records in 
a systematically organized manner.
    (2) An institution shall make its records readily available for 
review by the Secretary or the Secretary's authorized representative at 
an institutional location designated by the Secretary or the 
Secretary's authorized representative.
    (3) An institution may keep required records in hard copy or in 
microform, computer file, optical disk, CD-ROM, or other media formats, 
provided that--
    (i) Except for the records described in paragraph (d)(3)(ii) of 
this section, all record information must be retrievable in a coherent 
hard copy format or in other media formats acceptable to the Secretary;
    (ii) An institution shall maintain any record that it transmits or 
receives electronically with regard to a title IV,

[[Page 48567]]

HEA program in the electronic format in which it was sent or received;
    (iii) Any imaged media format used to maintain required records 
must be capable of reproducing an accurate, legible, and complete copy 
of the original document, and when printed, this copy must be the same 
approximate size as the original document;
    (iv) Any document that contains a signature, seal, certification, 
or any other image or mark required to validate the authenticity of its 
information must be maintained in its original hard copy or in an 
imaged media format; and
    (v) Participants in the Federal Perkins Loan Program shall follow 
procedures established in 34 CFR 674.19 for maintaining the original 
promissory notes and repayment schedules for that program.
    (4) If an institution closes, stops providing educational programs, 
is terminated or suspended from the Title IV, HEA programs, or 
undergoes a change of ownership that results in a change of control as 
described in 34 CFR 600.31, it shall provide for--
    (i) The retention of required records; and
    (ii) Access to those records, for inspection and copying, by the 
Secretary or the Secretary's authorized representative.
    (e) Record retention. Unless otherwise directed by the Secretary--
    (1) An institution shall keep records relating to its 
administration of the Federal Perkins Loan, FWS, FSEOG, or Federal Pell 
Grant Program for three years after the end of the award year for which 
the aid was awarded and disbursed under those programs, provided that 
an institution shall keep--
    (i) The Fiscal Operations Report and Application to Participate in 
the Federal Perkins Loan, FSEOG, and FWS Programs (FISAP), and any 
records necessary to support the data contained in the FISAP, including 
``income grid information,'' for three years after the end of the award 
year in which the FISAP is submitted; and
    (ii) Repayment records for a Federal Perkins loan, including 
records relating to cancellation and deferment requests, in accordance 
with the provisions of 34 CFR 674.19;
    (2)(i) An institution shall keep records relating to a student or 
parent borrower's eligibility and participation in the FFEL or Direct 
Loan Program for three years after the end of the award year in which 
the student last attended the institution; and
    (ii) An institution shall keep all other records relating to its 
participation in the FFEL or Direct Loan Program, including records of 
any other reports or forms, for three years after the end of the award 
year in which the records are submitted; and
    (3) An institution shall keep all records involved in any loan, 
claim, or expenditure questioned by a title IV, HEA program audit, 
program review, investigation, or other review until the later of--
    (i) The resolution of that questioned loan, claim, or expenditure; 
or
    (ii) The end of the retention period applicable to the record.
    (f) Examination of records. (1) An institution that participates in 
any title IV, HEA program and the institution's third-party servicer, 
if any, shall cooperate with an independent auditor, the Secretary, the 
Department of Education's Inspector General, the Comptroller General of 
the United States, or their authorized representatives, a guaranty 
agency in whose program the institution participates, and the 
institution's accrediting agency, in the conduct of audits, 
investigations, program reviews, or other reviews authorized by law.
    (2) The institution and servicer must cooperate by--
    (i) Providing timely access, for examination and copying, to 
requested records, including but not limited to computerized records 
and records reflecting transactions with any financial institution with 
which the institution or servicer deposits or has deposited any title 
IV, HEA program funds, and to any pertinent books, documents, papers, 
or computer programs; and
    (ii) Providing reasonable access to personnel associated with the 
institution's or servicer's administration of the title IV, HEA 
programs for the purpose of obtaining relevant information.
    (3) The Secretary considers that an institution or servicer has 
failed to provide reasonable access to personnel under paragraph 
(f)(2)(ii) of this section if the institution or servicer--
    (i) Refuses to allow those personnel to supply all relevant 
information;
    (ii) Permits interviews with those personnel only if the 
institution's or servicer's management is present; or
    (iii) Permits interviews with those personnel only if the 
interviews are tape recorded by the institution or servicer.
    (4) Upon request of the Secretary, or a lender or guaranty agency 
in the case of a borrower under the FFEL Program, an institution 
promptly shall provide the requester with any information the 
institution has respecting the last known address, full name, employer, 
and employer address of a recipient of title IV funds who attends or 
attended the institution.

(Authority: 20 U.S.C. 1070a, 1070b, 1078, 1078-1, 1078-2, 1078-3, 
1082, 1087, 1087a et seq., 1087cc, 1087hh, 1088, 1094, 1099c, 1141, 
1232f; 42 U.S.C. 2753; and section 4 of Pub. L. 95-452, 92 Stat. 
1101-1109)


Sec. 668.25   [Amended]

    3. Section 668.25(c)(4)(i) is amended by removing 
``Sec. 668.23(h)'' and adding, in its place, ``Sec. 668.24''.


Sec. 668.26   [Amended]

    4. Section 668.26(b)(3) is amended by removing the word ``five'' 
and adding, in its place, the word ``three''.

PART 674--FEDERAL PERKINS LOAN PROGRAM

    5. 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.

    6. Section 674.19 is amended by revising paragraph (d); removing 
paragraph (e)(4)(v) and redesignating paragraph (e)(4)(vi) as paragraph 
(e)(4)(v); and revising paragraphs (e)(1) and (e)(3), and the heading 
of paragraph (e)(4) to read as follows:


Sec. 674.19   Fiscal procedures and records.

* * * * *
    (d) Records and reporting. (1) An institution shall establish and 
maintain program and fiscal records that are reconciled at least 
monthly.
    (2) Each year an institution shall submit a Fiscal Operations 
Report plus other information the Secretary requires. The institution 
shall insure that the information reported is accurate and shall submit 
it on the form and at the time specified by the Secretary.
    (e) * * *
    (1) Records. An institution shall follow the records retention and 
examination provisions in this part and in 34 CFR 668.24.
* * * * *
    (3) Period of retention of repayment records. An institution shall 
retain repayment records, including cancellation and deferment 
requests, for at least three years from the date on which a loan is 
assigned to the Department of Education, canceled, or repaid.
    (4) Manner of retention of promissory notes and repayment 
schedules.
* * * * *

PART 675--FEDERAL WORK-STUDY PROGRAMS

    7. The authority citation for Part 675 continues to read as 
follows:


[[Page 48568]]


    Authority: 42 U.S.C. 2571-2756b, unless otherwise noted.

    8. Section 675.19 is amended by removing paragraphs (b)(2)(v) 
through (b)(2)(vii), (b)(4), (b)(5), and (c); adding the word ``and'' 
at the end of paragraph (b)(2)(iii); removing the semicolon at the end 
of paragraph (b)(2)(iv), and adding, in its place, a period; and 
revising paragraph (b)(1) to read as follows:


Sec. 675.19   Fiscal procedures and records.

* * * * *
    (b) * * * (1) An institution shall follow the records retention and 
examination provisions in this part and in 34 CFR 668.24.
* * * * *

PART 676--FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT 
PROGRAM

    9. The authority citation for Part 676 continues to read as 
follows:

    Authority: 20 U.S.C. 1070b-1070b-3, unless otherwise noted.

    10. Section 676.19 is amended by removing paragraph (c); and 
revising paragraph (b) to read as follows:


Sec. 676.19   Fiscal procedures and records.

* * * * *
    (b) Records and reporting. (1) An institution shall follow the 
records retention and examination provisions in this part and in 34 CFR 
668.24.
    (2) An institution shall establish and maintain program and fiscal 
records that are reconciled at least monthly.
    (3) Each year an institution shall submit a Fiscal Operations 
Report plus other information the Secretary requires. The institution 
shall insure that the information reported is accurate and shall submit 
it on the form and at the time specified by the Secretary.

PART 682--FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM

    11. The authority citation for Part 682 continues to read as 
follows:

    Authority: 20 U.S.C. 1071 to 1087-2, unless otherwise noted.

    12. Section 682.414 is amended by revising paragraph (a)(2); 
redesignating paragraphs (a)(3) and (a)(4) as paragraphs (a)(4) and 
(a)(5), respectively; adding a new paragraph (a)(3); removing the words 
``paragraphs (a)(3)(ii) (C)-(K) of this section on microfilm, optical 
disk, or other machine readable format'' in redesignated paragraph 
(a)(5)(i), and adding, in its place, ``paragraphs (a)(4)(ii) (C)-(K) of 
this section in accordance with 34 CFR Part 668''; removing paragraph 
(c) introductory text; removing paragraphs (c)(1) and (c)(2); 
redesignating paragraph (c)(3) as (c)(1); and adding a new paragraph 
(c)(2) to read as follows:


Sec. 682.414  Records, reports, and inspection requirements for 
guaranty agency programs.

    (a) * * *
    (2) Except as provided in paragraph (a)(3) of this section, the 
guaranty agency shall retain records for each loan for at least five 
years after the loan is paid in full or has been determined to be 
uncollectible in accordance with the agency's write-off procedures. 
However, in particular cases the Secretary may require the retention of 
records beyond this minimum period. For the purpose of this section, 
the term ``paid in full'' includes loans paid by the Secretary due to 
the borrower's death (or student's death in the case of a PLUS loan), 
the borrower's permanent and total disability or bankruptcy, the 
discharge of the borrower's loan obligation because of attendance at a 
closed school, or because the student's eligibility to borrow had been 
falsely certified by the school.
    (3) A guaranty agency shall retain a copy of the audit report 
required under Sec. 682.305(c) for not less than five years after the 
report is issued.
* * * * *
    (c) Inspection requirements. (1) * * *
    (2) For purposes of complying with this paragraph, references to an 
institution in 34 CFR 668.24(f)(1) through (3) shall mean a guaranty 
agency or its agent.
    13. Section 682.610 is amended by revising paragraphs (a) and (b); 
removing the word ``or'' at the end of paragraph (c)(2)(ii); removing 
the period at the end of paragraph (c)(2)(iii), and adding, in its 
place, ``; or''; redesignating paragraph (f)(2) as paragraph 
(c)(2)(iv); removing the words ``the school shall notify the holder of 
the loan within 30 days thereafter, either directly or through the 
guaranty agency'' in redesignated paragraph (c)(2)(iv); and removing 
paragraphs (d), (e), and (f) to read as follows:


Sec. 682.610   Administrative and fiscal requirements for participating 
schools.

    (a) General. Each school shall--
    (1) Establish and maintain proper administrative and fiscal 
procedures and all necessary records as set forth in the regulations in 
this part and in 34 CFR part 668;
    (2) Follow the records retention and examination provisions in this 
part and in 34 CFR 668.24; and
    (3) Submit all reports required by this part and 34 CFR part 668 to 
the Secretary.
    (b) Loan record requirements. In addition to records required by 34 
CFR part 668, for each Stafford, SLS, or PLUS loan received by or on 
behalf of its students, a school shall maintain a copy of the loan 
application or data electronically submitted to the lender, which 
includes--
    (1) The name of the lender;
    (2) The address of the lender;
    (3) The amount of the loan and the period of enrollment for which 
the loan was intended; and
    (4) In the case of a Stafford or SLS loan--
    (i) For loans delivered to the school by check, the date the school 
endorsed each loan check;
    (ii) The date or dates of delivery of the loan proceeds by the 
school to the student; and
    (iii) For loans delivered by electronic funds transfer, a copy of 
the student's written authorization required under Sec. 682.604(c)(3) 
to transfer the initial and subsequent disbursements of each FFEL 
program loan.
* * * * *

PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

    14. The authority citation for Part 685 continues to read as 
follows:

    Authority: 20 U.S.C. 1087a et seq., unless otherwise noted.

    15. Section 685.309 is amended by revising paragraphs (a)(1), (c), 
and (d); removing paragraphs (e), (f), and (g); redesignating 
paragraphs (h), (i), and (j) as paragraphs (e), (f), and (g), 
respectively, to read as follows:


Sec. 685.309   Administrative and fiscal control and fund accounting 
requirements for schools participating in the Direct Loan Program.

    (a) * * *
    (1) Establish and maintain proper administrative and fiscal 
procedures and all necessary records as set forth in this part and in 
34 CFR part 668; and
* * * * *
    (c) Record retention requirements. An institution shall follow the 
records retention and examination requirements in this part and in 34 
CFR 668.24.
    (d) Accounting requirements. A school shall follow accounting 
requirements in 34 CFR 668.24(b).
* * * * *

PART 690--FEDERAL PELL GRANT PROGRAM

    16. The authority citation for Part 690 continues to read as 
follows:

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


[[Page 48569]]


    17. Section 690.81 is amended by revising paragraph (a) to read as 
follows:


Sec. 690.81   Fiscal control and fund accounting procedures.

    (a) An institution shall follow provisions for maintaining general 
fiscal records in this part and in 34 CFR 668.24(b).
* * * * *
    18. Section 690.82 is revised to read as follows:


Sec. 690.82   Maintenance and retention of records.

    (a) An institution shall follow the records retention and 
examination provisions in this part and in 34 CFR 668.24.
    (b) For any disputed expenditures in any award year for which the 
institution cannot provide records, the Secretary determines the final 
authorized level of expenditures.

(Approved by the Office of Management and Budget under control 
number 1840-0681)

(Authority: 20 U.S.C. 1070a, 1232f)

[FR Doc. 96-23390 Filed 9-12-96; 8:45 am]
BILLING CODE 4000-01-P