[Federal Register Volume 64, Number 40 (Tuesday, March 2, 1999)]
[Rules and Regulations]
[Pages 10184-10189]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4886]



[[Page 10183]]

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Part II





Department of Education





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34 CFR Part 694



Office of Postsecondary Education; Gaining Early Awareness and 
Readiness for Undergraduate Programs; Final Rule

Office of Postsecondary Education; Notice Inviting Applications for New 
Awards for Fiscal Year 1999--Gaining Early Awareness and Readiness for 
Undergraduate Programs--GEAR UP; Notice

  Federal Register / Vol. 64, No. 40 / Tuesday, March 2, 1999 / Rules 
and Regulations  

[[Page 10184]]



DEPARTMENT OF EDUCATION

34 CFR Part 694

RIN 1840-AC59


Gaining Early Awareness and Readiness for Undergraduate Programs

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Final regulations.

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

SUMMARY: The Secretary amends the Code of Federal Regulations to add 
regulations necessary to implement certain provisions of the Higher 
Education Amendments of 1998. The regulations only apply to the fiscal 
year 1999 grant competition.

EFFECTIVE DATE: These regulations take effect April 1, 1999.

FOR FURTHER INFORMATION CONTACT: Lisa Aserkoff, U.S. Department of 
Education, 400 Maryland Avenue, SW, Washington, DC 20202-2110. 
Telephone: (202) 401-6296. 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.
    Individuals with disabilities may obtain this document in an 
alternate format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION:

Background

    These final regulations implement certain provisions of the Higher 
Education Amendments of 1998 (Amendments), (Public Law 105-244), 
enacted October 7, 1998, amending the Higher Education Act of 1965 
(HEA).
    Section 403 of the Amendments established the Gaining Early 
Awareness and Readiness for Undergraduate Programs (GEAR UP), a program 
designed to give more low-income students the skills, encouragement, 
and preparation needed to pursue postsecondary education, and to 
strengthen academic programs and student services at participating 
schools. GEAR UP provides two types of competitive grants: State grants 
and Partnership grants. State grants must provide early college 
preparation and awareness activities through the early intervention 
component of the GEAR UP program and scholarships for participating 
students through the scholarship component of GEAR UP. Partnerships 
must provide early college preparation and awareness activities through 
the early intervention component, and are encouraged to provide college 
scholarships, although they are not required to include a scholarship 
component in their GEAR UP projects.
    Under its principles for regulating, the Department of Education 
(Department) regulates only when it improves the quality and equality 
of services to its customers--learners of all ages. The Department 
regulates only when absolutely necessary, and then in the most 
flexible, most equitable, and least burdensome way possible. The 
Department regulates if a demonstrated problem exists and cannot be 
resolved without regulation or if necessary to provide legally binding 
interpretation to resolve an ambiguity. The Department does not 
regulate if entities or situations to be regulated are so diverse that 
a uniform approach does more harm than good.
    These final regulations are necessary to implement the GEAR UP 
program. In some instances, the Amendments require the Secretary to 
regulate. In others, regulations are necessary to clarify certain 
provisions in the statute.
    The regulations set a maximum amount that the Secretary may award 
each year to a Partnership or a State under GEAR UP. For Partnership 
grants, the maximum amount that the Secretary may award each year is 
calculated by multiplying the number of students the Partnership 
proposes to serve that year, as stated in the Partnership's plan, by 
$800. The Secretary has determined that this is an appropriate average 
per student, per year, Federal dollar amount to spend under GEAR UP. 
The Secretary believes that this average maximum Federal dollar amount 
per student will ensure that the Department can fund a substantial 
number of projects nationwide each year, while still providing for a 
broad range of services for those students served.
    The final regulations set the maximum dollar amount that the 
Secretary may award each year for State grants under GEAR UP at $5 
million. As with Partnership grants, the Secretary believes that this 
will ensure that the Department can fund a substantial number of 
projects each year, while providing the services necessary to ensure a 
successful program.
    Under the statute, a Partnership must, and a State may, conduct its 
early intervention component by serving entire grade levels, or 
cohorts, of students. The final regulations clarify the statutory 
requirements regarding which students a Partnership, or a State that 
chooses to use the cohort approach, must serve under the GEAR UP early 
intervention component. After outlining the statutory requirements, the 
regulations explain what happens if there are changes in the cohort.
    A Partnership or State must include in the cohort of students 
receiving direct services any additional students at the grade level of 
the students in the cohort who begin attending the school where the 
cohort began. For example, if a Partnership or State starts with a 6th 
grade cohort, and several new students arrive at the school the 
following year, when the cohort has reached 7th grade, the Partnership 
or State must serve as part of the cohort any new 7th grade students. 
The Secretary believes that any new student who begins attending a 
school participating in a GEAR UP program, before the cohort leaves the 
school with a 7th grade at which the cohort began to receive GEAR UP 
services, should have the opportunity to benefit from the direct 
services other students are receiving. On the other hand, some students 
who began in the cohort are likely to leave the participating school as 
well. Students who depart the participating school are not required to 
be served. Thus, this requirement should not cause the size of the 
cohort to increase significantly in the years before the cohort leaves 
the school with a 7th grade at which the cohort began to receive GEAR 
UP services.
    As the cohort moves on to a subsequent participating school (for 
example, a high school), it is possible that a single middle-grades 
school could feed into more than one high school. Some cohorts may 
therefore eventually have their students distributed among several 
schools.
    These regulations provide that if not all the students in the 
cohort attend the same school after the cohort completes the last grade 
level offered by the school at which the cohort began to receive GEAR 
UP services, the Partnership or the State may, but is not required to, 
provide services to all of those students. However, the Partnership or 
State must continue to provide GEAR UP services to at least those 
students in the cohort who attend subsequent participating schools that 
enroll a substantial majority of the students in the cohort.
    For example, a cohort could graduate from its middle-grades school 
after the 8th grade, and the students from that cohort could then begin 
attending three different high schools. If 40% of the cohort attends 
one high school, 30% attends another high school, and another 30% 
attends a third high school, the Partnership or State would be required 
to serve the students from

[[Page 10185]]

the original cohort in at least two of the high schools in order to 
meet the substantial majority requirement.
    The Secretary believes that requiring Partnerships or States to 
provide services to at least those students in the cohort who attend 
subsequent participating schools that enroll a substantial majority of 
the students in the cohort is the best way to ensure that the maximum 
number of students from the original cohort continue to receive 
services, without placing an undue burden on Partnerships or States.
    The regulations outline the requirements a Partnership or State 
must meet if it chooses to provide services to private school students 
under the program's early intervention component. The regulations are 
based on private school student participation requirements generally 
applicable to most elementary and secondary education programs carried 
out by the Department and are designed to ensure that Federal funds are 
used for educational services that are secular, neutral, and 
nonideological.
    The regulations establish the matching requirements for GEAR UP 
Partnerships. Under the regulations, a Partnership must state in its 
application the percentage of the cost of the GEAR UP project for each 
year that the Partnership will provide from non-Federal funds, and then 
comply with the matching percentage stated in the application for each 
year of the project period. However, a Partnership must provide at 
least 20% of the cost of the project from non-Federal funds for any 
year in the project period, and the non-Federal share of the cost of 
the GEAR UP project must be at least 50% of the total cost over the 
project period.
    The Secretary believes that these matching requirements give 
Partnerships broad flexibility in terms of the amount of the project 
cost that the Partnership must provide each year. The Secretary also 
believes that a Partnership should be responsible for at least 20 
percent of the cost of the project for any given year, and for at least 
50 percent of the entire cost of the project. The Secretary believes 
that the success of any project depends in part upon strong community 
support. The 50 percent requirement helps to ensure that the GEAR UP 
project can be sustained, even after Federal funds are no longer 
available, through strong community Partnerships, with support from all 
partners.
    These regulations also address the requirements for the scholarship 
component of the project for States, and for any Partnership that 
chooses to include a scholarship component in its project. The 
regulations outline the minimum scholarship amount that a State or 
Partnership must award under the scholarship component. Under the 
statute, the minimum amount of the scholarship for each fiscal year is 
not less than the lesser of: 75 percent of the average cost of 
attendance for an in-State student, in a 4-year program, at public 
institutions of higher education in that State; or the maximum Federal 
Pell Grant funded under section 401 of the HEA for that year. The 
statute gives the Secretary the authority to decide how to determine 75 
percent of the average cost of attendance. These regulations specify 
that the percentage will be determined using section 472 of the HEA, 
the cost of attendance provisions for Title IV of the HEA. As GEAR UP 
is a Title IV program, the Secretary believes the general cost of 
attendance provisions for Title IV should apply. This provision is also 
based on the regulations for cost of attendance under the National 
Early Intervention Scholarship and Partnership Program (NEISP), the 
program which GEAR UP replaced.
    The regulations also detail the relationship of a GEAR UP 
scholarship to other financial assistance received by a student, and 
the GEAR UP scholarship amount provided to a part-time student. As 
provided in the statute, GEAR UP scholarships must not be considered 
when awarding other Title IV grant assistance (for example, Federal 
Pell Grants or Federal Supplemental Educational Opportunity Grants). 
However, the statute also provides that the total amount of Title IV 
assistance awarded to a student must not exceed the student's total 
cost of attendance. A student's cost of attendance is, in part, related 
to whether the student attends an institution on a full-time or part-
time basis. The regulations clarify that a State or Partnership that 
awards a GEAR UP scholarship to a student attending an institution on a 
less than full-time basis must reduce the scholarship amount 
proportionately. This proportionate reduction is similar to the 
reduction of Federal Pell Grants awarded to part-time students. The 
Secretary believes that it is important to clarify the GEAR UP 
scholarship amount for part-time students in the regulations in order 
to ensure that these nontraditional students are appropriately served 
under GEAR UP.
    As required by the statute, the regulations also give a priority 
under the scholarship component to students who will receive Federal 
Pell grants for the academic year in which the GEAR UP scholarship is 
being awarded. The regulations also address how to award any remaining 
scholarship funds, once eligible students who will receive Federal Pell 
Grants have received their awards. Under the regulations, if a State or 
Partnership has GEAR UP scholarship funds remaining after awarding 
scholarships to all eligible Federal Pell Grant recipients, the State 
or Partnership must award those funds to eligible students after 
considering the need of those students for GEAR UP scholarships. Since 
this program is targeted at students at schools in low-income areas, 
the Secretary believes it is important that scholarship funds go to the 
students with the greatest need.
    The regulations state that a State or Partnership must award 
continuation scholarships in successive award years to each student who 
received an initial scholarship, and who continues to be eligible. This 
is a provision from the NEISP regulations that the Secretary believes 
is important to apply also to the GEAR UP program. The Secretary 
believes that, once students receive a GEAR UP scholarship, they should 
be confident that they will continue to receive their scholarship money 
for as long as they remain eligible.
    In order to assist institutions of higher education package the 
amounts and types of aid that a particular student receives, the 
regulations also outline the order in which financial assistance should 
be given to help institutions of higher education package the amounts 
and types of aid that a particular student receives. These regulations 
are also based on the NEISP regulations. Specifying the order in which 
financial aid is awarded is necessary because the Secretary intends 
that GEAR UP scholarships be ``last dollar'' grant assistance, and not 
be used to reduce any other grants (Federal or non-Federal) or tuition 
discounts.
    The regulations also address the circumstances under which a 
Partnership may provide scholarship assistance to students who have 
participated in the GEAR UP early intervention component, if the 
Partnership decides not to participate in the GEAR UP scholarship 
component. Under the statute, only States are required to participate 
in the scholarship component. Partnerships may offer scholarships using 
GEAR UP funds to students who have participated in the GEAR UP early 
intervention component. However, if they choose to offer scholarships 
without participating in the scholarship component, they may offer 
scholarships using GEAR UP funds only if certain requirements are met. 
The regulations address those requirements.

[[Page 10186]]

    Under the regulations, the Partnership may provide financial 
assistance for postsecondary education to students who participate in 
the early intervention component only if the financial assistance is 
directly related to, and in support of, other activities of the 
Partnership under the early intervention component of GEAR UP. The 
Secretary believes that it would be inconsistent with the statutory 
requirements applicable to the scholarship component for a Partnership 
to use its GEAR UP funds under the early intervention component to 
provide financial assistance unless there is a strong link between that 
financial assistance and the particular GEAR UP activities in which the 
student has participated.
    For example, students could be awarded financial assistance based 
on the successful completion of academic milestones they specifically 
committed themselves to as part of the GEAR UP project. However, 
students may not be awarded financial assistance as part of a GEAR UP 
project that is independent of the GEAR UP early intervention component 
activities, or that does not meet the requirements of the GEAR UP 
scholarship component.
    The Secretary recognizes that since GEAR UP projects must start not 
later than the 7th grade, scholarships for postsecondary education 
won't be a concern for most GEAR UP students for at least six years. 
However, under the statute, students who have been participating in 
either the NEISP or TRIO programs may be eligible to receive 
scholarship money during the first years of the program. Additionally, 
the Secretary feels that it is important that applicants are aware of 
any requirements that might affect the way in which they shape their 
projects, even if the requirements do not have an immediate impact.
    The regulations also provide that the Governor of a State must 
designate which State agency shall apply for, and administer, a State 
grant under GEAR UP. As with the NEISP program, the Secretary believes 
that the best way to ensure that the Department receives the best 
possible application from each State is to ask the Governor to 
designate which State agency will apply on behalf of that State. The 
Secretary believes that Governors are in a unique position to bring 
about coordination among State and local agencies, educational 
institutions, and others to develop State GEAR UP plans that marshal 
resources and add support to States' efforts to raise academic 
standards.
    The regulations also state the requirements that a Partnership or 
State participating in GEAR UP must meet with respect to 21st Century 
Scholarship Certificates. Under the statute, the Secretary must ensure 
that each student participating in a GEAR UP program receives a 21st 
Century Scholarship Certificate that is personalized, and that 
indicates the amount of Federal financial aid for college that the 
student may be eligible to receive. The regulations therefore require 
that a State or Partnership must provide each student with a 
certificate. The Secretary believes that the best and most efficient 
way to award the certificates, which will be from the Secretary, is to 
involve the States and Partnerships in awarding them. The Secretary 
believes that the students' personalized information is most readily 
available to the project grantees and that awarding the students their 
certificates complements other early college awareness activities by 
States and Partnerships as part of their GEAR UP projects.
    Finally, the regulations address the priorities the Secretary must 
establish, and the priorities that the Secretary may choose to 
establish each year in making GEAR UP awards. Under the statute, the 
Secretary is required to give a priority to any State grant applicant 
that had carried out successful educational opportunity programs under 
NEISP, and that has a demonstrated commitment to early intervention 
leading to college access. In addition to that priority, the Secretary 
may also give a funding priority to a Partnership or State applicant 
that proposes to serve a substantial number or percentage of students 
who reside in an Empowerment Zone, including a Supplemental Empowerment 
Zone, or Enterprise Community, as designated by the U.S. Department of 
Housing and Urban Development or the U.S. Department of Agriculture. 
The Secretary believes that applicants proposing to serve Empowerment 
Zones or Enterprise Communities demonstrate a commitment to serving the 
students with the greatest need for encouragement and motivation to 
attend institutions of higher education and may decide to give 
applicants who serve those students a priority.
    The Secretary may also give a priority to a Partnership that 
establishes or maintains a financial assistance program to award 
scholarships either under the GEAR UP scholarship component, or in 
accordance with the regulations that apply to Partnerships. The 
Secretary believes that the knowledge that scholarships will be 
available is a powerful way to encourage students to go on to 
postsecondary education. The Secretary may therefore decide to give 
Partnership applicants that show a commitment to providing scholarships 
to GEAR UP students a funding priority.

Executive Order 12866

    These final regulations have been reviewed in accordance with 
Executive Order 12866. Under the terms of the order the Secretary has 
assessed the potential costs and benefits of this regulatory action. 
The potential costs associated with the final regulations are those 
resulting from statutory requirements and those determined by the 
Secretary to be necessary for administering this program effectively 
and efficiently.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these final regulations, the Secretary has 
determined that the benefits of the regulations justify the costs. 
Potential costs and benefits of the final regulations are discussed 
elsewhere in this preamble under the heading ``Supplementary 
Information''.
    The Secretary has also determined that this regulatory action does 
not unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.

Regulatory Flexibility Act Certification

    The Secretary certifies that these final regulations would not have 
a significant economic impact on a substantial number of small 
entities. Entities that would be affected by these regulations are 
States and State agencies, local educational agencies (LEAs), local 
community organizations, and institutions of higher education. States 
and state agencies are not ``small entities'' under the Regulatory 
Flexibility Act.
    Institutions of higher education are defined as ``small entities,'' 
according to U.S. Small Business Administration Size Standards if they 
are for-profit or nonprofit institutions with total annual revenue 
below $5,000,000 or if they are institutions controlled by governmental 
entities with populations below 50,000. Small LEAs and local community 
organizations are small entities for the purposes of the Regulatory 
Flexibility Act. The final regulations would not have a significant 
economic impact on the small entities affected because the regulations 
would not impose excessive regulatory burdens or require unnecessary 
Federal supervision.
    The regulations would impose minimal requirements to ensure the 
proper expenditure of program funds.

[[Page 10187]]

Paperwork Reduction Act of 1995

    Under the Paperwork Reduction Act of 1995, no persons are required 
to respond to a collection of information unless it displays a valid 
OMB control number. The valid OMB control numbers assigned to the 
collections of information in these final regulations are displayed at 
the end of the affected sections of the regulations.

Intergovernmental Review

    This program is subject to the requirements of Executive Order 
12372 and the regulations in 34 CFR Part 79. The objective of the 
Executive order is to foster intergovernmental partnership and a 
strengthened federalism by relying on processes developed by State and 
local governments for coordination and review of proposed Federal 
financial assistance. In accordance with the order, this document is 
intended to provide early notification of the Department's specific 
plans and actions for this program.

Assessment of Educational Impact

    Based on its own review, the Department has determined that the 
regulations in this document do not require transmission of information 
that is being gathered by or is available from any other agency or 
authority of the United States.

Waiver of Rulemaking

    In accordance with the Administrative Procedure Act (APA) (5 U.S.C. 
553), it is generally the practice of the Secretary to offer interested 
parties the opportunity to comment on proposed rules. However, section 
437(d) of the General Education Provisions Act exempts from these 
rulemaking requirements regulations governing the first grant 
competition under a new or substantially revised program authority (20 
U.S.C. 1232(d)(1)). In order to make awards on a timely basis, the 
Secretary has decided to publish this regulation in final under the 
authority of section 437(d). Further, the Secretary has determined 
that, to make grants under this competition before the funds expire, 
the use of negotiated rulemaking would be impracticable and contrary to 
the public interest under section 492(b)(2) of the HEA. The Department 
did consult with the public, however, throughout the development of 
this program.

Electronic Access to This Document

    Anyone may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or 
portable document format (pdf) on the World Wide Web at either of the 
following sites:

http://gcs.ed.gov/fedreg.htm
http://www.ed.gov/news.html

To use the pdf you must have the Adobe Acrobat Reader Program with 
Search, which is available free at either of the previous sites. If you 
have questions about using the pdf, call the U.S. Government Printing 
Office, at (202) 512-1530 or, toll free at 1-888-293-6498.
    Anyone may also view these documents in text copy only on an 
electronic bulletin board of the Department. Telephone: (202) 219-1511 
or, toll free, 1-800-222-4922. The documents are located under Option 
G--Files/Announcements, Bulletins and Press Releases.

    Note: The official version of this document is the document 
published in the Federal Register.

List of Subjects in 34 CFR Part 694

    Colleges and universities, Elementary and secondary education, 
Grant programs--education, Student aid.

(Catalog of Federal Domestic Assistance Number: 84.334 Gaining Early 
Awareness and Readiness for Undergraduate Programs)

    Dated: February 19, 1999.
Maureen A. McLaughlin,
Acting Assistant Secretary for Postsecondary Education.
    The Secretary amends Chapter VI of Title 34 of the Code of Federal 
Regulations by adding the following new part:

PART 694--GAINING EARLY AWARENESS AND READINESS FOR UNDERGRADUATE 
PROGRAMS

Sec.
694.1  To what fiscal year do these regulations apply?
694.2  What is the maximum amount that the Secretary may award each 
year to a Partnership or a State under this program?
694.3  Which students must a Partnership, or a State that chooses to 
use the cohort approach in its project, serve under the program's 
early intervention component?
694.4  What are the requirements for a cohort?
694.5  Which students must a State or Partnership serve when there 
are changes in the cohort?
694.6  What requirements must be met by a Partnership or State that 
chooses to provide services to private school students under the 
program's early intervention component?
694.7  Who may provide GEAR UP services to students attending 
private schools?
694.8  What are the matching requirements for a GEAR UP partnership?
694.9  What are the requirements that a Partnership must meet in 
designating a fiscal agent for its project under this program?
694.10  What are the requirements regarding the amount of a GEAR UP 
scholarship, and its relationship to other Federal student financial 
assistance?
694.11  What requirements must a State, or a Partnership that 
chooses to include a scholarship component in its project, follow in 
awarding scholarships under the program's scholarship component?
694.12  Under what conditions may a Partnership that does not 
participate in the GEAR UP scholarship component provide financial 
assistance to students under the GEAR UP early intervention 
component?
694.13  How does a State determine which State agency will apply 
for, and administer, a State grant under this program?
694.14  What requirements must be met by a Partnership or State 
participating in GEAR UP with respect to 21st Century Scholar 
Certificates?
694.15  What requirements apply to a State that served students 
under the National Early Intervention Scholarship and Partnership 
Program (NEISP) and that receives a GEAR UP grant?
694.16  What priority must the Secretary establish?
694.17 What priorities may the Secretary establish?

    Authority: 20 U.S.C. 1070a-21 to 1070a-28, unless otherwise 
noted.


Sec. 694.1  To what fiscal year do these regulations apply?

    The regulations in this part apply to the fiscal year 1999 grant 
competition.

(Authority: 20 U.S.C. 1070a-21)


Sec. 694.2  What is the maximum amount that the Secretary may award 
each year to a Partnership or a State under this program?

    (a) Partnership grants. The maximum amount that the Secretary may 
award each year for a GEAR UP Partnership grant is calculated by 
multiplying--
    (1) Eight hundred dollars ($800); by
    (2) The number of students the Partnership proposes to serve that 
year, as stated in the Partnership's plan.
    (b) State grants. The maximum amount that the Secretary may award 
each year for a GEAR UP State grant is $5 million.

(Authority: 20 U.S.C. 1070a-23)


Sec. 694.3  Which students must a Partnership, or a State that chooses 
to use the cohort approach in its project, serve under the program's 
early intervention component?

    A Partnership, or a State that chooses to use the cohort approach 
in its GEAR UP early intervention component, must, except as provided 
in Sec. 694.5--
    (a) Provide services to at least one entire grade level (cohort) of 
students

[[Page 10188]]

(subject to Sec. 694.04(b)) beginning not later than the 7th grade; and
    (b) Ensure that services are provided through the 12th grade to 
those students.

(Authority: 20 U.S.C. 1070a-21 to 1070a-28)


Sec. 694.4  What are the requirements for a cohort?

    (a) In general. Each cohort to be served by a Partnership or State 
must be from a participating school--
    (1) That has a 7th grade; and
    (2) In which at least 50 percent of the students are eligible for 
free or reduced-price lunch under the National School Lunch Act; or
    (b) Public housing exception. If the Partnership or State 
determines it would promote program effectiveness, a cohort may consist 
of all of the students in a particular grade level at one or more 
participating schools who reside in public housing, as defined in 
section 3(b)(1) of the United States Housing Act of 1937.

(Authority: 20 U.S.C. 1070a-21 to 1070a-28)


Sec. 694.5  Which students must a State or Partnership serve when there 
are changes in the cohort?

    (a) At the school where the cohort began. A Partnership or State 
must serve, as part of the cohort, any additional students who--
    (1) Are at the grade level of the students in the cohort; and
    (2) Begin attending the participating school at which the cohort 
began to receive GEAR UP services.
    (b) At a subsequent participating school. If not all of the 
students in the cohort attend the same school after the cohort 
completes the last grade level offered by the school at which the 
cohort began to receive GEAR UP services, a Partnership or a State--
    (1) May continue to provide GEAR UP services to all students in the 
cohort; and
    (2) Must continue to provide GEAR UP services to at least those 
students in the cohort that attend participating schools that enroll a 
substantial majority of the students in the cohort.

(Authority: 20 U.S.C. 1070a-22)


Sec. 694.6  What requirements must be met by a Partnership or State 
that chooses to provide services to private school students under the 
program's early intervention component?

    (a) Secular, neutral, and nonideological services or benefits. 
Educational services or other benefits, including materials and 
equipment, provided under GEAR UP by a Partnership or State that 
chooses to provide those services or benefits to students attending 
private schools, must be secular, neutral, and nonideological.
    (b) Control of funds. In the case of a Partnership or State that 
chooses to provide services under GEAR UP to students attending private 
schools, the fiscal agent (in the case of a Partnership) or a State 
agency (in the case of a State) must--
    (1) Control the funds used to provide services under GEAR UP to 
those students; and
    (2) Hold title to materials, equipment, and property purchased with 
GEAR UP funds for GEAR UP program uses and purposes related to those 
students; and
    (3) Administer those GEAR UP funds and property.

(Authority: 20 U.S.C. 1070a-21 to 1070a-28)


Sec. 694.7  Who may provide GEAR UP services to students attending 
private schools?

    (a) GEAR UP services to students attending private schools must be 
provided--
    (1) By employees of a public agency; or
    (2) Through contract by the public agency with an individual, 
association, agency, or organization.
    (b) In providing GEAR UP services to students attending private 
schools, the employee, individual, association, agency, or organization 
must be independent of the private school that the students attend, and 
of any religious organization affiliated with the school, and that 
employment or contract must be under the control and supervision of the 
public agency.
    (c) Federal funds used to provide GEAR UP services to students 
attending private schools may not be commingled with non-Federal funds.

(Authority: 20 U.S.C. 1070a-21 to 1070a-28)


Sec. 694.8  What are the matching requirements for a GEAR UP 
Partnership?

    (a) In general. A Partnership must--
    (1) State in its application the percentage of the cost of the GEAR 
UP project the Partnership will provide for each year from non-Federal 
funds, subject to the requirements in paragraph (b) of this section; 
and
    (2) Comply with the matching percentage stated in its application 
for each year of the project period.
    (b) Matching requirements. (1) A Partnership must provide not less 
than 20 percent of the cost of the project from non-Federal funds for 
any year in the project period.
    (2) The non-Federal share of the cost of the GEAR UP project must 
be not less than 50 percent of the total cost over the project period.
    (3) The non-Federal share of the cost of a GEAR UP project may be 
provided in cash or in-kind.

(Authority: 20 U.S.C. 1070a-23)

(Approved by the Office of Management and Budget under control 
number 1840-0740)


Sec. 694.9  What are the requirements that a Partnership must meet in 
designating a fiscal agent for its project under this program?

    A Partnership must designate as the fiscal agent for its project 
under GEAR UP--
    (a) A local educational agency; or
    (b) An institution of higher education that is not pervasively 
sectarian.

(Authority: 20 U.S.C. 1070a-22)


Sec. 694.10  What are the requirements regarding the amount of a GEAR 
UP scholarship, and its relationship to other Federal student financial 
assistance?

    (a) In general. Except as provided in paragraph (b) of this 
section, a State, or a Partnership that chooses to include a 
scholarship component in its GEAR UP project--
    (1) Must award a scholarship under the scholarship component that 
is at least the lesser of--
    (i) Seventy-five (75) percent of the average cost of attendance, as 
determined under section 472 of the Higher Education Act of 1965, as 
amended (HEA), for in-State students in a 4-year program of instruction 
at public institutions of higher education in the State; or
    (ii) The maximum Federal Pell Grant award funded for that fiscal 
year.
    (2) Must not award a GEAR UP scholarship to a student in an amount 
that, in combination with other student financial assistance awarded 
under title IV of the HEA, exceeds the student's cost of attendance, as 
defined in section 472 of that Act.
    (b) If a student who is awarded a GEAR UP scholarship attends an 
institution on a less than full-time basis during any academic year, 
the State or Partnership awarding the GEAR UP scholarship must reduce 
the scholarship amount proportionately.
    (c) A GEAR UP scholarship must not be considered in the 
determination of a student's eligibility for other grant assistance 
provided under title IV of the HEA.

(Authority: 20 U.S.C. 1070a-25)


Sec. 694.11  What requirements must a State, or a Partnership that 
chooses to include a scholarship component in its project, follow in 
awarding scholarships under the program's scholarship component?

    (a) Pell Grant recipient priority. A State, or a Partnership that 
chooses to

[[Page 10189]]

include a scholarship component in its GEAR UP project, must award GEAR 
UP scholarships--
    (1) To students who--
    (i) Are eligible for a GEAR UP scholarship; and
    (ii) Will receive a Federal Pell Grant for the academic year for 
which the GEAR UP scholarship is being awarded; and
    (2) If the State or Partnership has GEAR UP scholarship funds 
remaining after awarding scholarships to students under paragraph 
(a)(1) of this section, to other eligible students (who will not 
receive a Federal Pell Grant) after considering the need of those 
students for GEAR UP scholarships.
    (b) Continuation scholarships. A State or a Partnership must award 
continuation scholarships in successive award years to each student who 
received an initial scholarship and who continues to be eligible for a 
scholarship.
    (c) Order of scholarships. In awarding GEAR UP scholarships, a 
State or Partnership must ensure that, for each recipient of a 
scholarship under this part who is eligible for and receiving other 
postsecondary student financial assistance, a Federal Pell Grant be 
awarded first, other public and private grants, scholarships, or 
tuition discounts be awarded second, a GEAR UP scholarship be awarded 
third, and then other financial assistance be awarded.

(Authority: 20 U.S.C. 1070a-25)


Sec. 694.12  Under what conditions may a Partnership that does not 
participate in the GEAR UP scholarship component provide financial 
assistance to students under the GEAR UP early intervention component?

    A GEAR UP Partnership that does not participate in the GEAR UP 
scholarship component may provide financial assistance for 
postsecondary education to students who participate in the early 
intervention component only if the financial assistance is directly 
related to, and in support of, other activities of the Partnership 
under the early intervention component of GEAR UP.

(Authority: 20 U.S.C. 1070a-21 to 1070a-28)


Sec. 694.13  How does a State determine which State agency will apply 
for, and administer, a State grant under this program?

    The Governor of a State must designate which State agency applies 
for, and administers, a State grant under GEAR UP.

(Authority: 20 U.S.C. 1070a-21 to 1070a-28)


Sec. 694.14  What requirements must be met by a Partnership or State 
participating in GEAR UP with respect to 21st Century Scholar 
Certificates?

    (a) A State or Partnership must provide, in accordance with such 
procedures as the Secretary may specify, a 21st Century Scholar 
Certificate from the Secretary of Education to each student 
participating in the early intervention component of its GEAR UP 
project.
    (b) 21st Century Scholar Certificates must be personalized and 
indicate the amount of Federal financial aid for college that a student 
may be eligible to receive.

(Authority: 20 U.S.C. 1070a-26)


Sec. 694.15  What requirements apply to a State that served students 
under the National Early Intervention Scholarship and Partnership 
program (NEISP) and that receives a GEAR UP grant?

    Any State that receives a grant under this part and that served 
students under the NEISP program on October 6, 1998 must continue to 
provide services under this part to those students until they complete 
secondary school.

(Authority: 20 U.S.C. 1070a-21)


Sec. 694.16  What priority must the Secretary establish?

    For any fiscal year, the Secretary must select any State grant 
applicant that--
    (a) On October 6, 1998, carried out successful educational 
opportunity programs under the National Early Intervention Scholarship 
and Partnership program (as that program was in effect on that date); 
and
    (b) Has a prior, demonstrated commitment to early intervention 
leading to college access through collaboration and replication of 
successful strategies.

(Authority: 20 U.S.C. 1070a-21)


Sec. 694.17  What priorities may the Secretary establish?

    For fiscal year 1999, the Secretary may select one or more of the 
following priorities:
    (a) Projects by Partnerships or States that serve a substantial 
number or percentage of students who reside in an Empowerment Zone, 
including a Supplemental Empowerment Zone, or Enterprise Community 
designated by the U.S. Department of Housing and Urban Development or 
the U.S. Department of Agriculture.
    (b) Partnerships that establish or maintain a financial assistance 
program that awards scholarships to students either in accordance with 
section 404E of the HEA, or in accordance with Sec. 694.12.

(Authority: 20 U.S.C. 1070a-21 to 1070a-28)

[FR Doc. 99-4886 Filed 3-1-99; 8:45 am]
BILLING CODE 4000-01-P