[Federal Register Volume 64, Number 132 (Monday, July 12, 1999)]
[Rules and Regulations]
[Pages 37411-37417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17059]


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CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

45 CFR Parts 2522, 2525, 2526, 2527, 2528, and 2529

RIN 3045-AA09


AmeriCorps Education Awards

AGENCY: Corporation for National and Community Service.

ACTION: Final rule.

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SUMMARY: The Corporation adopts interim rules published on June 15, 
1994, regarding AmeriCorps education awards as final rules. The 
Corporation is also issuing final rules amending several provisions 
relating to the AmeriCorps education award, including those governing a 
participant's eligibility and the ways in which a participant may use 
the award. These changes will promote efficiency and consistency in 
providing education awards to AmeriCorps participants.

DATES: The final rules are effective August 11, 1999.

FOR FURTHER INFORMATION CONTACT: Gary Kowalczyk, Coordinator of 
National Service Programs, Corporation for National and Community 
Service, (202) 606-5000, ext. 340. T.D.D. (202) 565-2799.

SUPPLEMENTARY INFORMATION:

Background

    Through this document, the Corporation adopts as final, with 
changes, rules regarding AmeriCorps education awards. On March 23, 1994 
(59 FR 13772), the Corporation published final rules covering its grant 
programs, including general provisions regarding the provision of a 
partial education award for participants who are released because of 
compelling personal circumstances before completing their terms of 
service. On June 15, 1994 (59 FR 30709), the Corporation published 
interim final rules for the National Service Trust governing the 
AmeriCorps education award and related interest benefits. The 
Corporation did not receive any comments from the public concerning the 
interim rules. The Corporation published a proposed rule on April 9, 
1999 (64 FR 17302), designed to clarify the rules applicable to the 
determination of compelling personal circumstances as well as several 
National Service Trust rules concerning the education award.

Discussion of the Final Rule

    The proposed rule gave the public sixty days to submit comments. 
The Corporation received comments from two persons.

Welfare to Work Transition as Compelling Personal Circumstances

    One commenter expressed concern that allowing programs to approve a 
pro-rated education award for welfare recipients who enroll as 
AmeriCorps members and thereafter leave their term of service as part 
of a transition from welfare (e.g., to accept permanent employment) 
would undermine both an ethic of work and an ethic of service and might 
cause morale problems among other members who are not welfare 
recipients. The Corporation has concluded that, on balance, the 
overriding public policy objective of fostering self-sufficiency among 
welfare recipients outweighs these concerns.

Transfers by Members From One Program To Another

    One commenter urged the Corporation to include in its rules 
guidance on transfers by members between programs. The commenter 
believes that this is necessary to ensure consistent policies and 
procedures in this area. The Corporation believes that these policies 
and procedures do not rise to the level of a regulation and may be 
addressed through avenues other than a rule.

Release for Cause

    One commenter stated that the Corporation had proposed a definition 
of ``for cause'' that is too broad. The commenter also objected to the 
removal

[[Page 37412]]

of a requirement that programs explicitly state in advance the 
circumstances under which members may be released for cause. The 
Corporation believes that definition of ``for cause'' is consistent 
with the statutory framework. Section 139(c) of the National and 
Community Service Act (42 U.S.C. 12593(c)) recognizes only two types of 
releases from completing a term of service: (1) For compelling personal 
circumstances; and (2) for cause. The rules spell out in detail the 
types of situations that constitute compelling personal circumstances 
and provide that a release for cause ``encompasses any circumstances 
other than compelling personal circumstances that warrant an 
individual's release from completing a term of service.'' This does not 
provide programs unlimited discretion to release a member for cause for 
any reason other than compelling personal circumstances or convert 
members into an ``at will'' status. The rule requires that the reason 
be sufficient to ``warrant an individual's release from completing a 
term of service.'' If a member objects to such a determination, the 
member may pursue a grievance through the process available under the 
Act to all members.

Benefits for Reinstated Members

    One commenter objected to the elimination of a requirement that all 
members who are reinstated as part of a grievance be credited with 
missed service hours and be paid the full amount of living allowance 
withheld during the grievance process. Because there may be instances 
in which it may not be equitable or appropriate to require a program to 
provide a reinstated member with credit for missed service hours and 
the amount of withheld living allowance, the Corporation believes that 
the statutory grievance process is a better mechanism to resolve these 
issues on an case-by-case basis.

Explanation of Change Regarding Fair and Equitable Refund Policy 
Requirement

    In several sections regarding the requirement that educational 
institution receiving disbursements from the National Service Trust 
first provide verification that they have in effect a fair and 
equitable refund policy consistent with section 484B of the Higher 
Education Act of 1965 (20 U.S.C. 1091b), the Corporation has added a 
reference to the relevant U.S. Department of Education regulations. 
This reference is informational and is intended to improve clarity.

Implementation

    These rules will apply to any member who enrolls in a position 
approved by the Corporation beginning the 1999-2000 program year.

Regulatory Matters

Executive Order 12866

    Because this regulatory action makes only minor amendments to 
existing rules and will involve only small adjustments in operating 
national service programs, the Corporation has determined that it is 
not a ``significant'' rule within the meaning of Executive Order 12866 
because it is not likely to result in: (1) An annual effect on the 
economy of $100 million or more, or an adverse and material effect on a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
government or communities; (2) the creation of a serious inconsistency 
or interference with an action taken or planned by another agency; (3) 
a material alteration in the budgetary impacts of entitlement, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) the raising of novel legal or policy issues arising out 
of legal mandates, the President's priorities, or the principles set 
forth in Executive Order 12866.
    In addition, the Corporation has concluded that the benefits of 
this regulatory action (greater consistency, predictability, and 
equity) outweigh the relatively small costs of implementing the 
changes.

Regulatory Flexibility Act

    Because this regulatory action makes only minor amendments to 
existing rules and will involve only small adjustments in operating 
national service programs, the Corporation certifies that it will not 
result in (1) an annual effect on the economy of $100 million or more; 
(2) a major increase in costs or prices for consumers, individual 
industries, Federal, State, or local government agencies, or geographic 
regions; or (3) significant adverse effects on competition, employment, 
investment, productivity, innovation, or on the ability of United 
States-based enterprises to compete with foreign-based enterprises in 
domestic and export markets. Therefore, the Corporation has not 
performed the regulatory flexibility analyses that are required under 
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) for major rules 
that are expected to have such results.

Other Impact Analyses

    Because the rules do not authorize any information collection 
activity outside the scope of existing regulations, this regulatory 
action is not subject to review and approval under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3500 et seq.). If the Corporation 
proposes to modify any of the forms used in connection with determining 
eligibility of individuals for payments from the National Service 
Trust, the Corporation will comply with clearance procedures as 
provided under the Paperwork Reduction Act.
    For purposes of Title II of the Unfunded Mandates Reform Act of 
1995, 2 U.S.C. 1531-1538, as well as Executive Order 12875, this 
regulatory action does not contain any federal mandate that may result 
in increased expenditures in either Federal, State, local, or tribal 
governments in the aggregate, or impose an annual burden exceeding $100 
million on the private sector.
    This regulatory action does not establish requirements that will 
adversely affect the Year 2000 readiness of national service programs.

List of Subjects

45 CFR Part 2522

    AmeriCorps, Grant programs--social programs, Reporting and 
recordkeeping requirements, Volunteers.

45 CFR Part 2525

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

45 CFR Part 2526

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

45 CFR Part 2527

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

45 CFR Part 2528

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

45 CFR Part 2529

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

    Accordingly, the Corporation for National and Community Service 
adopts as final its interim rule adding 45 CFR parts 2525, 2526, 2527, 
2528, and 2529, published in the Federal Register at 59 FR 30709, June 
15, 1994, and amends 45 CFR chapter XXV as follows:

[[Page 37413]]

PART 2522--AMERICORPS PARTICIPANTS, PROGRAMS, AND APPLICANTS

    1. The authority citation for part 2522 continues to read as 
follows:

    Authority: 42 U.S.C. 12501 et seq.

    2. Section 2522.200 is revised to read as follows:


Sec. 2522.200  What are the eligibility requirements for an AmeriCorps 
participant?

    (a) Eligibility. An AmeriCorps participant must--
    (1)(i) Be at least 17 years of age at the commencement of service; 
or
    (ii) Be an out-of-school youth 16 years of age at the commencement 
of service participating in a program described in Sec. 2522.110(b)(3) 
or (g);
    (2)(i) Have a high school diploma or its equivalent; or
    (ii) Not have dropped out of elementary or secondary school to 
enroll as an AmeriCorps participant and must agree to obtain a high 
school diploma or its equivalent prior to using the education award; or
    (iii) Obtain a waiver from the Corporation of the requirements in 
paragraphs (a)(2)(i) and (a)(2)(ii) of this section based on an 
independent evaluation secured by the program demonstrating that the 
individual is not capable of obtaining a high school diploma or its 
equivalent; or
    (iv) Be enrolled in an institution of higher education on an 
ability to benefit basis and be considered eligible for funds under 
section 484 of the Higher Education Act of 1965 (20 U.S.C. 1091);
    (3) Be a citizen, national, or lawful permanent resident alien of 
the United States.
    (b) Primary documentation of status as a U.S. citizen or national. 
The following are acceptable forms of certifying status as a U.S. 
citizen or national:
    (1) A birth certificate showing that the individual was born in one 
of the 50 states, the District of Columbia, Puerto Rico, Guam, the U.S. 
Virgin Islands, American Samoa, or the Northern Mariana Islands;
    (2) A United States passport;
    (3) A report of birth abroad of a U.S. Citizen (FS-240) issued by 
the State Department;
    (4) A certificate of birth-foreign service (FS 545) issued by the 
State Department;
    (5) A certification of report of birth (DS-1350) issued by the 
State Department;
    (6) A certificate of naturalization (Form N-550 or N-570) issued by 
the Immigration and Naturalization Service; or
    (7) A certificate of citizenship (Form N-560 or N-561) issued by 
the Immigration and Naturalization Service.
    (c) Primary documentation of status as a lawful permanent resident 
alien of the United States. The following are acceptable forms of 
certifying status as a lawful permanent resident alien of the United 
States:
    (1) Permanent Resident Card, INS Form I-551;
    (2) Alien Registration Receipt Card, INS Form I-551;
    (3) A passport indicating that the INS has approved it as temporary 
evidence of lawful admission for permanent residence; or
    (4) A Departure Record (INS Form I-94) indicating that the INS has 
approved it as temporary evidence of lawful admission for permanent 
residence.
    (d) Secondary documentation. If primary documentation is not 
available, the program must obtain written approval from the 
Corporation that other documentation is sufficient to demonstrate the 
individual's status as a U.S. citizen, U.S. national, or lawful 
permanent resident alien.
    3. Section 2522.230 is revised to read as follows:


Sec. 2522.230  Under what circumstances may AmeriCorps participants be 
released from completing a term of service, and what are the 
consequences?

    An AmeriCorps program may release a participant from completing a 
term of service for compelling personal circumstances as demonstrated 
by the participant, or for cause.
    (a) Release for compelling personal circumstances. (1) An 
AmeriCorps program may release a participant upon a determination by 
the program, consistent with the criteria listed in paragraphs (a)(5) 
through (a)(6) of this section, that the participant is unable to 
complete the term of service because of compelling personal 
circumstances.
    (2) A participant who is released for compelling personal 
circumstances and who completes at least 15 percent of the required 
term of service is eligible for a pro-rated education award.
    (3) The participant has the primary responsibility for 
demonstrating that compelling personal circumstances prevent the 
participant from completing the term of service.
    (4) The program must document the basis for any determination that 
compelling personal circumstances prevent a participant from completing 
a term of service.
    (5) Compelling personal circumstances include:
    (i) Those that are beyond the participant's control, such as, but 
not limited to:
    (A) A participant's disability or serious illness;
    (B) Disability, serious illness, or death of a participant's family 
member if this makes completing a term unreasonably difficult or 
impossible; or
    (C) Conditions attributable to the program or otherwise 
unforeseeable and beyond the participant's control, such as a natural 
disaster, a strike, relocation of a spouse, or the nonrenewal or 
premature closing of a project or program, that make completing a term 
unreasonably difficult or impossible;
    (ii) Those that the Corporation, has for public policy reasons, 
determined as such, including:
    (A) Military service obligations;
    (B) Acceptance by a participant of an opportunity to make the 
transition from welfare to work; or
    (C) Acceptance of an employment opportunity by a participant 
serving in a program that includes in its approved objectives the 
promotion of employment among its participants.
    (6) Compelling personal circumstances do not include leaving a 
program:
    (i) To enroll in school;
    (ii) To obtain employment, other than in moving from welfare to 
work or in leaving a program that includes in its approved objectives 
the promotion of employment among its participants; or
    (iii) Because of dissatisfaction with the program.
    (7) As an alternative to releasing a participant, an 
AmeriCorps*State/National program may, after determining that 
compelling personal circumstances exist, suspend the participant's term 
of service for up to two years (or longer if approved by the 
Corporation based on extenuating circumstances) to allow the 
participant to complete service with the same or similar AmeriCorps 
program at a later time.
    (b) Release for cause. (1) A release for cause encompasses any 
circumstances other than compelling personal circumstances that warrant 
an individual's release from completing a term of service.
    (2) AmeriCorps programs must release for cause any participant who 
is convicted of a felony or the sale or distribution of a controlled 
substance during a term of service.
    (3) A participant who is released for cause may not receive any 
portion of the AmeriCorps education award or any other payment from the 
National Service Trust.
    (4) An individual who is released for cause must disclose that fact 
in any subsequent applications to participate in an AmeriCorps program. 
Failure to

[[Page 37414]]

do so disqualifies the individual for an education award, regardless of 
whether the individual completes a term of service.
    (5) An AmeriCorps*State/National participant released for cause may 
contest the program's decision by filing a grievance. Pending the 
resolution of a grievance procedure filed by an individual to contest a 
determination by a program to release the individual for cause, the 
individual's service is considered to be suspended. For this type of 
grievance, a program may not--while the grievance is pending or as part 
of its resolution--provide a participant with federally-funded benefits 
(including payments from the National Service Trust) beyond those 
attributable to service actually performed, without the program 
receiving written approval from the Corporation.
    (c) Suspended service. (1) A program must suspend the service of an 
individual who faces an official charge of a violent felony (e.g., 
rape, homicide) or sale or distribution of a controlled substance.
    (2) A program must suspend the service of an individual who is 
convicted of possession of a controlled substance.
    (3) An individual may not receive a living allowance or other 
benefits, and may not accrue service hours, during a period of 
suspension under this provision.
    (d) Reinstatement. (1) A program may reinstate an individual whose 
service was suspended under paragraph (c)(1) of this section if the 
individual is found not guilty or if the charge is dismissed.
    (2) A program may reinstate an individual whose service was 
suspended under paragraph (c)(2) of this section only if the individual 
demonstrates the following:
    (i) For an individual who has been convicted of a first offense of 
the possession of a controlled substance, the individual must have 
enrolled in a drug rehabilitation program;
    (ii) For an individual who has been convicted for more than one 
offense of the possession of a controlled substance, the individual 
must have successfully completed a drug rehabilitation program.

PART 2525--NATIONAL SERVICE TRUST: PURPOSE AND DEFINITIONS

    1. The authority citation for part 2525 continues to read as 
follows:

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

    2. Section 2525.10 is revised to read as follows:


Sec. 2525.10  What is the National Service Trust?

    The National Service Trust is an account in the Treasury of the 
United States from which the Corporation makes payments of education 
awards, pays interest that accrues on qualified student loans for 
AmeriCorps participants during terms of service in approved national 
service positions, and makes other payments authorized by Congress.
    3. Section 2525.20 is amended by revising the definitions for 
``Approved school-to-work program,'' ``Education award,'' and 
``Qualified student loan'' and by adding a definition for ``Current 
educational expenses'' in alphabetical order to read as follows:


Sec. 2525.20  Definitions.

* * * * *
    Approved school-to-work program. The term approved school-to-work 
program means a program that is involved in a federally-approved 
school-to-work system, as certified by a State, designated local 
partnership, or other entity that receives a grant under the School-to-
Work Opportunities Act of 1994 (20 U.S.C. 6101 et seq.).
* * * * *
    Current educational expenses. The term current educational expenses 
means the cost of attendance for a period of enrollment that begins 
after an individual receives an education award.
    Education award. The term education award means the financial 
assistance available under parts 2526 and 2528 of this chapter for 
which an individual in an approved AmeriCorps position may be eligible.
* * * * *
    Qualified student loan. The term qualified student loan means any 
loan made, insured, or guaranteed pursuant to title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1070 et seq.), other than a loan to a 
parent of a student pursuant to section 428B of such Act (20 U.S.C. 
1078-2), any loan made pursuant to title VII or VIII of the Public 
Service Health Act (42 U.S.C. 292a et seq.), or any other loan 
designated as such by Congress. This includes, but is not necessarily 
limited to, the following:
    (1) Federal Family Education Loans. (i) Subsidized and Unsubsidized 
Stafford Loans.
    (ii) Supplemental Loans to Students (SLS).
    (iii) Federal Consolidation Loans.
    (iv) Guaranteed Student Loans (predecessor to Stafford Loans).
    (v) Federally Insured Student Loans (FISL).
    (2) William D. Ford Federal Direct Loans. (i) Direct Subsidized and 
Unsubsidized Stafford Loans.
    (ii) Direct Subsidized and Unsubsidized Ford Loans.
    (iii) Direct Consolidation Loans.
    (3) Federal Perkins Loans. (i) National Direct Student Loans.
    (ii) National Defense Student Loans.
    (4) Public Health Service Act Loans. (i) Health Education 
Assistance Loans (HEAL).
    (ii) Health Professions Student Loans (HPSL).
    (iii) Loans for Disadvantaged Students (LDS).
    (iv) Nursing Student Loans (NSL).
    (v) Primary Care Loans (PCL).
* * * * *

PART 2526--ELIGIBILITY FOR AN EDUCATION AWARD

    1. The heading for part 2526 is revised to read as set forth above.
    1a. The authority citation for part 2526 continues to read as 
follows:

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

    2. Section 2526.10 is revised to read as follows:


Sec. 2526.10  Who is eligible to receive an education award from the 
National Service Trust?

    (a) General. An individual is eligible to receive an education 
award from the National Service Trust if the individual--
    (1) Is a citizen, national, or lawful permanent resident alien of 
the United States;
    (2) Is either at least 17 years of age at the commencement of 
service or is an out-of-school youth 16 years of age at the 
commencement of service participating in a program described in 
Sec. 2522.110(b)(3) or (g) of this chapter;
    (3) Successfully completes a term of service in an approved 
national service position.
    (b) High school diploma or equivalent. To use an education award, 
an individual must--
    (1) Have received a high school diploma or its equivalent; or
    (2) Be enrolled at an institution of higher education on the basis 
of meeting the standard described in paragraph (1) or (2) of subsection 
(a) of section 484 of the Higher Education Act of 1965 (20 U.S.C. 1091) 
and meet the requirements of subsection of section 484; or
    (3) Have received a waiver described in Sec. 2522.200(b) of this 
chapter.
    (c) Prohibition on duplicate benefits. An individual who receives a 
post-service benefit in lieu of an education award may not receive an 
education award for the same term of service.

[[Page 37415]]

    (d) Penalties for false information. Any individual who makes a 
materially false statement or representation in connection with the 
approval or disbursement of an education award or other payment from 
the National Service Trust may be liable for the recovery of funds and 
subject to civil and criminal sanctions.
    3. Section 2526.20 is revised to read as follows:


Sec. 2526.20  Is an AmeriCorps participant who does not complete an 
originally-approved term of service eligible to receive a pro-rated 
education award?

    (a) Compelling personal circumstances. A participant who is 
released prior to completing an originally-approved term of service for 
compelling personal circumstances and who completes at least 15 percent 
of the originally-approved term of service is eligible for a pro-rated 
education award.
    (b) Release for cause. A participant who is released prior to 
completing an originally-approved term of service for cause is not 
eligible for any portion of an education award.


Sec. 2526.30  [Removed]


Sec. 2526.60  [Redesignated as Sec. 2526.30]

    4. Section 2526.30 is removed and Sec. 2526.60 is redesignated as 
Sec. 2526.30.


Sec. 2526.40  [Removed]


Sec. 2526.70  [Redesignated as Sec. 2526.40]

    5. Section 2526.40 is removed and Sec. 2526.70 is redesignated as 
Sec. 2526.40.


Sec. 2526.40  [Amended]

    6. Newly redesignated Sec. 2526.40 is amended in paragraph (b)(2) 
by removing the words ``under Sec. 2526.40''.


Sec. 2526.50  [Removed]


Sec. 2526.80  [Redesignated as Sec. 2526.50]

    7. Section 2526.50 is removed and Sec. 2526.80 is redesignated as 
Sec. 2526.50 and revised to read as follows:


Sec. 2526.50  Is there a limit on the number of education awards an 
individual may receive?

    (a) First and second terms of service. An individual may receive an 
education award for only the first and second terms of service for 
which an education award is available, regardless of the length of the 
term.
    (b) Release for cause. Except as provided in paragraph (c) of this 
section, a term of service from which an individual is released for 
cause counts as one of the two terms of service for which an individual 
may receive an education award.
    (c) Early release. If a participant is released for reasons other 
than misconduct prior to completing fifteen percent of a term of 
service, the term will not be considered one of the two terms of 
service for which an individual may receive an education award.


Sec. 2526.90  [Redesignated as Sec. 2526.60]

    8. Section 2526.90 is redesignated as Sec. 2526.60 and revised to 
read as follows:


Sec. 2526.60  May an individual receive an education award and related 
interest benefits from the National Service Trust as well as other loan 
cancellation benefits for the same service?

    No. An individual may not receive an education award and related 
interest benefits from the National Service Trust for a term of service 
and have that same service credited toward repayment, discharge, or 
cancellation of other student loans.


Sec. 2526.100  [Removed]

    9. Section 2526.100 is removed.

PART 2527--DETERMINING THE AMOUNT OF AN EDUCATION AWARD

    1. The heading for part 2527 is revised to read as set forth above.
    1a. The authority citation for part 2527 continues to read as 
follows:

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

    2. Section 2527.10 is revised to read as follows:


Sec. 2527.10  What is the amount of an AmeriCorps education award?

    (a) Full-time term of service. The education award for a full-time 
term of service of at least 1,700 hours is $4,725.
    (b) Part-time term of service. The education award for a part-time 
term of service of at least 900 hours is $2,362.50.
    (c) Reduced part-time term of service. The education award for a 
reduced part-time term of service of fewer than 900 hours is--
    (1) An amount equal to the product of--
    (i) The number of hours of service required to complete the reduced 
part-time term of service divided by 900; and
    (ii) 2,362.50; or
    (2) An amount as determined otherwise by the Corporation.
    (d) Release for compelling personal circumstances. The education 
award for an individual who is released from completing an originally-
approved term of service for compelling personal circumstances is equal 
to the product of--
    (1) The number of hours completed divided by the number of hours in 
the originally-approved term of service; and
    (2) The amount of the education award for the originally-approved 
term of service.
    1. Revise part 2528 to read as follows:

PART 2528--USING AN EDUCATION AWARD

Sec.
2528.10  For what purposes may an education award be used?
2528.20  What steps are necessary to use an education award to repay 
a qualified student loan?
2528.30  What steps are necessary to use an education award to pay 
all or part of the current cost of attendance at an institution of 
higher education?
2528.40  Is there a limit on the amount of an individual's education 
award that the Corporation will disburse to an institution of higher 
education for a given period of enrollment?
2528.50  What happens if an individual withdraws or fails to 
complete the period of enrollment in an institution of higher 
education for which the Corporation has disbursed all or part of 
that individual's education award?
2528.60  What steps are necessary to use an education award to pay 
expenses incurred in participating in an approved school-to-work 
program?
2528.70  What happens if an individual withdraws or fails to 
complete the period of enrollment in an approved school-to-work 
program for which the Corporation has disbursed all or part of that 
individual's education award?

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


Sec. 2528.10  For what purposes may an education award be used?

    (a) Authorized uses. An education award may be used--
    (1) To repay qualified student loans in accordance with 
Sec. 2528.20;
    (2) To pay all or part of the current cost of attendance at an 
institution of higher education in accordance with Sec. 2528.30 through 
Sec. 2528.50;
    (3) To pay expenses incurred in participating in an approved 
school-to-work program in accordance with Sec. 2528.60 through 
Sec. 2528.70.
    (b) Multiple uses. An education award is divisible and may be 
applied to any combination of loans, costs, or expenses described in 
paragraph (a) of this section.


Sec. 2528.20  What steps are necessary to use an education award to 
repay a qualified student loan?

    (a) Required information. Before disbursing an amount from an 
education award to repay a qualified student loan, the Corporation must 
receive--
    (1) An individual's written authorization and request for a 
specific payment amount;
    (2) Identifying and other information from the holder of the loan 
as requested by the Corporation and necessary to ensure compliance with 
this part.

[[Page 37416]]

    (b) Payment. When the Corporation receives the information required 
under paragraph (a) of this section, the Corporation will pay the 
holder of the loan and notify the individual of the payment.
    (c) Aggregate payments. The Corporation may establish procedures to 
aggregate payments to holders of loans for more than a single 
individual.


Sec. 2528.30  What steps are necessary to use an education award to pay 
all or part of the current cost of attendance at an institution of 
higher education?

    (a) Required information. Before disbursing an amount from an 
education award to pay all or part of the current cost of attendance at 
an institution of higher education, the Corporation must receive--
    (1) An individual's written authorization and request for a 
specific payment amount;
    (2) Information from the institution of higher education as 
requested by the Corporation, including verification that--
    (i) It has in effect a program participation agreement under 
section 487 of the Higher Education Act of 1965 (20 U.S.C. 1094);
    (ii) Its eligibility to participate in any of the programs under 
title IV of the Higher Education Act of 1965 has not been limited, 
suspended, or terminated;
    (iii) It has in effect a fair and equitable refund policy, 
consistent with the requirements of paragraphs (b) and (c) of section 
484B of the Higher Education Act of 1965 (20 U.S.C. 1091b) and 34 CFR 
668.22, and must ensure an appropriate refund to the Corporation if an 
individual who has used an education award withdraws or otherwise fails 
to complete the period of enrollment for which the education award was 
provided;
    (iv) Individuals using education awards to pay for the current cost 
of attendance at that institution do not comprise more than 15 percent 
of the institution's total student population;
    (v) The amount requested will be used to pay all or part of the 
individual's cost of attendance;
    (vi) The amount requested does not exceed the difference between:
    (A) The individual's cost of attendance; and
    (B) The sum of the individual's estimated student financial 
assistance for that period under part A of title IV of the Higher 
Education Act and the individual's veterans' education benefits as 
defined in section 480(c) of the Higher Education Act (20 U.S.C. 
1087vv(c)).
    (b) Payment. When the Corporation receives the information required 
under paragraph (a) of this section, the Corporation will pay the 
institution and notify the individual of the payment.
    (c) Installment payments. The Corporation will disburse the 
education award to the institution of higher education in at least two 
separate installments, none of which exceeds 50 percent of the total 
amount. The interval between installments may not be less than one-half 
of the period of enrollment, except as necessary to permit the second 
installment to be paid at the beginning of the second semester, 
quarter, or other division of a period of enrollment.


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

    Yes. The Corporation's disbursement from an individual's education 
award for any period of enrollment may not exceed the difference 
between--
    (a) The individual's cost of attendance for that period of 
enrollment, determined by the institution of higher education in 
accordance with section 472 of the Higher Education Act of 1965 (20 
U.S.C. 1987ll); and
    (b) The sum of--
    (1) The individual's estimated financial assistance for that period 
under part A of title IV of the Higher Education Act; and
    (2) The individual's veterans' education benefits as defined under 
section 480(c) of the Higher Education Act (20 U.S.C. 1087vv(c)).


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

    (a)(1) An institution of higher education that receives a 
disbursement of education award funds from the Corporation must have in 
effect, and must comply with, a fair and equitable refund policy that 
includes procedures for providing a refund to the Corporation if an 
individual for whom the Corporation has disbursed education award funds 
withdraws or otherwise fails to complete a period of enrollment.
    (2) For purposes of this part, an institution of higher education's 
refund policy is deemed ``fair and equitable'' if it is consistent with 
the requirements of paragraphs (b) and (c) of section 484B of the 
Higher Education Act of 1965 (20 U.S.C. 1091b) and 34 CFR 668.22.
    (b) The Corporation will credit any refund received for an 
individual under paragraph (a) of this section to the individual's 
education award allocation in the National Service Trust.


Sec. 2528.60  What steps are necessary to use an education award to pay 
expenses incurred in participating in an approved school-to-work 
program?

    (a) Required information. Before disbursing an amount from an 
education award to pay expenses incurred in participating in an 
approved school-to-work program, the Corporation must receive--
    (1) An individual's written authorization and request for a 
specific payment amount;
    (2) Information from the school-to-work program as requested by the 
Corporation, including verification that--
    (i) It is involved in a federally-approved school-to-work system, 
as certified by a State, designated local partnership, or other entity 
that receives a grant under the School-to-Work Opportunities Act of 
1994 (20 U.S.C. 6101);
    (ii) The amount requested will be used to pay all or part of the 
individual's cost of participating in the school-to-work program;
    (iii) It will ensure an appropriate refund, consistent with the 
requirements of paragraphs (b) and (c) of section 484B of the Higher 
Education Act of 1965 (20 U.S.C. 1091b) and 34 CFR 668.22, to the 
Corporation if an individual who has used an education award withdraws 
or otherwise fails to complete the period of enrollment for which the 
education award was provided.
    (b) Payment. When the Corporation receives the information required 
under paragraph (a) of this section, the Corporation will pay the 
program and notify the individual of the payment.


Sec. 2528.70  What happens if an individual withdraws or fails to 
complete the period of enrollment in an approved school-to-work program 
for which the Corporation has disbursed all or part of that 
individual's education award?

    (a)(1) An approved school-to-work program that receives a 
disbursement of education award funds from the Corporation must provide 
a fair and equitable refund to the Corporation if an individual for 
whom the Corporation has disbursed education award funds withdraws or 
otherwise fails to complete a period of enrollment.
    (2) For purposes of this part, a refund is deemed ``fair and 
equitable'' if it is an amount consistent with the requirements of 
paragraphs (b) and (c) of section 484B of the Higher Education Act of 
1965 (20 U.S.C. 1091b) and 34 CFR 668.22.

[[Page 37417]]

    (b) The Corporation will credit any refund received for an 
individual under paragraph (a) of this section to the individual's 
education award allocation in the National Service Trust.
    1. Revise part 2529 to read as follows:

PART 2529--PAYMENT OF ACCRUED INTEREST

Sec.
2529.10  Under what circumstances will the Corporation pay interest 
that accrues on qualified student loans during an individual's term 
of service in an approved AmeriCorps position?
2529.20  What steps are necessary to obtain forbearance in the 
repayment of a qualified student loan during an individual's term of 
service in an approved AmeriCorps position?
2529.30  What steps are necessary for using funds in the National 
Service Trust to pay interest that has accrued on a qualified 
student loan during a term of service for which the individual has 
obtained forbearance?

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


Sec. 2529.10  Under what circumstances will the Corporation pay 
interest that accrues on qualified student loans during an individual's 
term of service in an approved AmeriCorps position?

    (a) Eligibility. The Corporation will pay interest that accrues on 
an individual's qualified student loan, subject to the limitation on 
amount in paragraph (b) of this section, if--
    (1) The individual successfully completes a term of service in an 
approved AmeriCorps position; and
    (2) The holder of the loan approves the individual's request for 
forbearance during the term of service.
    (b) Amount. The percentage of accrued interest that the Corporation 
will pay is the lesser of--
    (1) The product of--
    (i) The number of hours of service completed divided by the number 
of days for which forbearance was granted; and
    (ii) 365 divided by 17; and (2) 100.
    (c) Supplemental to education award. A payment of accrued interest 
under this part is supplemental to an education award received by an 
individual under parts 2526 through 2528 of this chapter.
    (d) Limitation. The Corporation is not responsible for the 
repayment of any accrued interest in excess of the amount determined in 
accordance with paragraph (b) of this section.
    (e) Suspended service. The Corporation will not pay any interest 
expenses that accrue on an individual's qualified student loan during a 
period of suspended service.


Sec. 2529.20  What steps are necessary to obtain forbearance in the 
repayment of a qualified student loan during an individual's term of 
service in an approved AmeriCorps position?

    (a) An individual seeking forbearance must submit a request to the 
holder of the loan.
    (b) If, before approving a request for forbearance, the holder of 
the loan requires verification that the individual is serving in an 
approved AmeriCorps position, the Corporation will provide verification 
upon a request from the individual or the holder of the loan.


Sec. 2529.30  What steps are necessary for using funds in the National 
Service Trust to pay interest that has accrued on a qualified student 
loan during a term of service for which an individual has obtained 
forbearance?

    (a) The Corporation will make payments from the National Service 
Trust for interest that has accrued on a qualified student loan during 
a term of service which the individual has successfully completed and 
for which an individual has obtained forbearance, after the following:
    (1) The program verifies that the individual has successfully 
completed the term of service and the dates upon which the term of 
service began and ended;
    (2) The holder of the loan verifies the amount of interest that has 
accrued during the term of service.
    (b) When the Corporation receives all necessary information from 
the program and the holder of the loan, the Corporation will pay the 
holder of the loan and notify the individual of the payment.

    Dated: June 28, 1999.
Wendy Zenker,
Chief Operating Officer.
[FR Doc. 99-17059 Filed 7-9-99; 8:45 am]
BILLING CODE 6050-28-U