[Federal Register Volume 64, Number 148 (Tuesday, August 3, 1999)]
[Proposed Rules]
[Pages 42206-42219]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19724]



[[Page 42205]]

_______________________________________________________________________

Part III





Department of Education





_______________________________________________________________________



34 CFR Parts 668, 673, 674, 675, 676, and 690



Student Assistance General Provisions; General Provisions for the 
Federal Perkins Loan Program, Federal Work-Study Program, Federal 
Supplemental Educational Opportunity Grant Program, and Federal Pell 
Grant Program; Proposed Rule

  Federal Register / Vol. 64, No. 148 / Tuesday, August 3, 1999 / 
Proposed Rules  

[[Page 42206]]



DEPARTMENT OF EDUCATION

34 CFR Parts 668, 673, 674, 675, 676, and 690

RIN 1845-AA01


Student Assistance General Provisions; General Provisions for the 
Federal Perkins Loan Program, Federal Work-Study Program, and Federal 
Supplemental Educational Opportunity Grant Program; and Federal Pell 
Grant Program

AGENCY: Department of Education.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The proposed regulations would amend the regulations governing 
the Student Assistance General Provisions, the Campus-Based programs 
(Federal Perkins Loan, Federal Work-Study (FWS), and Federal 
Supplemental Educational Opportunity Grant (FSEOG) programs), and the 
Federal Pell Grant Program. These proposed amendments are a result of 
recently enacted changes to the Higher Education Act of 1965, as 
amended (HEA), made by the Higher Education Amendments of 1998 (1998 
Amendments).

DATES: We must receive your comments on or before September 15, 1999.

ADDRESSES: Address all comments about these proposed regulations to: 
Ms. Kathy Gause, U.S. Department of Education, P.O. Box 23272, 
Washington, D.C. 20026-3272. If you prefer to send your comments 
through the Internet use the following address: [email protected]
    If you want to comment on the information collection requirements 
you must send your comments to the Office of Management and Budget at 
the address listed in the Paperwork Reduction Act section of this 
preamble. You may also send a copy of these comments to the Department 
representative named in this section.

FOR FURTHER INFORMATION CONTACT:
    1. For the Federal Perkins Loan, FWS, and FSEOG programs: Ms. Kathy 
Gause, U.S. Department of Education, 400 Maryland Avenue, S.W., 
Regional Office Building 3, Room 3045, Washington, DC 20202-5447. 
Telephone: (202) 708-8242.
    2. For the Student Assistance General Provisions and the Federal 
Pell Grant Program: Ms. Monica Woods, U.S. Department of Education, 400 
Maryland Avenue, S.W., Regional Office Building 3, Room 3045, 
Washington, DC 20202-5447. Telephone: (202) 708-8242.
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
    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 persons listed in the preceding 
paragraphs.

SUPPLEMENTARY INFORMATION:

Invitation to Comment

    We invite you to submit comments regarding these proposed 
regulations. To ensure that your comments have maximum effect in 
developing the final regulations, we urge you to identify clearly the 
specific section or sections of the proposed regulations that each of 
your comments addresses and to arrange your comments in the same order 
as the proposed regulations.
    We invite you to assist us in complying with the specific 
requirements of Executive Order 12866 and its overall requirement of 
reducing regulatory burden that might result from these proposed 
regulations. Please let us know of any further opportunities we should 
take to reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of the programs.
    During and after the comment period, you may inspect all public 
comments about these proposed regulations in Room 3053, ROB-3, 7th & D 
Streets, SW, Washington, DC, between the hours of 8:30 a.m. and 4 p.m., 
Eastern time, Monday through Friday of each week except Federal 
holidays.

Assistance to Individuals With Disabilities in Reviewing the 
Rulemaking Record

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments or other documents in the public 
rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of aid you may call (202) 205-
8113 or (202) 260-9895. If you use a TDD, you may call the Federal 
Information Relay Service at 1-800-877-8339.

Negotiated Rulemaking Process

    Section 492 of the HEA requires that, before publishing any 
proposed regulations to implement programs under Title IV of the Act, 
the Secretary obtain public involvement in the development of the 
proposed regulations. After obtaining advice and recommendations, the 
Secretary must conduct a negotiated rulemaking process to develop the 
proposed regulations. All published proposed regulations must conform 
to agreements resulting from the negotiated rulemaking process unless 
the Secretary reopens the negotiated rulemaking process or provides a 
written explanation to the participants in that process why the 
Secretary has decided to depart from the agreements.
    To obtain public involvement in the development of the proposed 
regulations, we published a notice in the Federal Register (63 FR 
59922, November 6, 1998) requesting advice and recommendations from 
interested parties concerning what regulations were necessary to 
implement Title IV of the HEA. We also invited advice and 
recommendations concerning which regulated issues should be subjected 
to a negotiated rulemaking process. We further requested advice and 
recommendations concerning ways to prioritize the numerous issues in 
Title IV, in order to meet statutory deadlines. Additionally, we 
requested advice and recommendations concerning how to conduct the 
negotiated rulemaking process, given the time available and the number 
of regulations that needed to be developed.
    In addition to soliciting written comments, we held three public 
hearings and several informal meetings to give interested parties an 
opportunity to share advice and recommendations with the Department. 
The hearings were held in Washington, DC, Chicago, and Los Angeles, and 
we posted transcripts of those hearings to the Department's Information 
for Financial Aid Professionals' website (http://ifap.ed.gov).
    We then published a second notice in the Federal Register (63 FR 
71206, December 23, 1998) to announce the Department's intention to 
establish four negotiated rulemaking committees to draft proposed 
regulations implementing Title IV of the HEA. The notice announced the 
organizations or groups believed to represent the interests that should 
participate in the negotiated rulemaking process and announced that the 
Department would select participants for the process from nominees of 
those organizations or groups. We requested nominations for additional 
participants from anyone who believed that the organizations or groups 
listed did not adequately represent the list of interests outlined in 
section 492. Once the four committees were established they met to 
develop proposed regulations over the course of several months, 
beginning in January.
    The proposed regulations contained in this notice of proposed 
rulemaking (NPRM) reflect the final consensus of Committee III, which 
was made up of the following members:


[[Page 42207]]


Accrediting Commission of Career Schools and Colleges of Technology
American Association of Collegiate Registrars and Admissions Officers
American Association of Community Colleges
American Association of Cosmetology Schools
American Association of State Colleges and Universities
American Council on Education
Association of American Universities
Career College Association
Coalition of Higher Education Assistance Organizations
Education Finance Council
Legal Services Counsel (a coalition)
National Association of College and University Business Officers
National Association of Equal Opportunity in Higher Education
National Association of Graduate/Professional Students
National Association of Independent Colleges and Universities
National Association of State Student Grant and Aid Programs/National 
Council of Higher Education Loan Programs (a coalition)
National Association of State Universities and Land-Grant Colleges
National Association of Student Financial Aid Administrators
National Direct Student Loan Coalition
The College Board
The College Fund/United Negro College Fund
United States Department of Education
United States Student Association
US Public Interest Research Group

    As stated in the Committee protocols, consensus means that there 
must be no dissent by any member in order for the committee to be 
considered to have reached agreement. Consensus was reached on all of 
the proposed regulations in this document.

Affected Programs

    The student financial assistance programs under Title IV of the 
Higher Education Act of 1965, as amended (HEA), affected by these 
proposed regulations are the Federal Perkins Loan, FWS, FSEOG, and the 
Federal Pell Grant programs. These proposed regulations also affect the 
Student Assistance General Provisions regulations.
    The term ``campus-based programs'' refers to the Federal Perkins 
Loan, FWS, and FSEOG programs. A description of the major proposed 
changes to these program regulations follows. The proposed changes that 
pertain to more than one program are described first, followed by 
descriptions of provisions that pertain to only a specific program. We 
will begin with a discussion of the proposed changes to the Student 
Assistance General Provisions regulations followed by the ``campus-
based programs'' discussion, and end with proposed changes to the 
Federal Pell Grant Program.

Summary of Proposed Regulatory Changes

Student Assistance General Provisions

Section 668.8 Eligible Program and Section 668.32 Student Eligibility--
General

    Section 401(c) of the HEA was amended by the 1998 Amendments to 
allow students enrolled in a postbaccalaureate teacher certificate or 
licensing program to receive a Federal Pell Grant. For purposes of the 
Federal Pell Grant Program, the current Student Assistance General 
Provisions regulations require an educational program to be an 
undergraduate program in order to qualify as an eligible program. The 
current regulations also require that a student not have a 
baccalaureate degree or first professional degree in order to receive a 
Federal Pell Grant. These proposed regulations would amend the eligible 
program provision in Sec. 668.8 and the student eligibility provision 
in Sec. 668.32 of the Student Assistance General Provisions to conform 
with the amended HEA.

Section 668.161  Scope and Purpose.

    Amended section 445(c) of the HEA allows an institution, upon the 
written request of a student, to make payments of FWS funds directly to 
the student's account at a financial institution or account at the 
institution for tuition and fees, contracted room and board, and other 
institutionally provided educational related goods and services. 
Currently Secs. 668.164 and 668.165 of the Subpart K--Cash Management 
regulations establish the rules and procedures under which a 
participating institution disburses Title IV, HEA program funds. 
However, Subpart K does not specifically address the crediting of FWS 
earnings to a student's account at the institution. Section 675.16 of 
the FWS regulations would be amended to establish the disbursement 
procedures for paying a student his or her wages. Therefore, these 
proposed regulations would amend Sec. 668.161 to indicate that an 
institution must follow Sec. 675.16 for paying a student under the FWS 
Program instead of Secs. 668.164 and 668.165.

Federal Perkins Loan, Federal Work-Study, and Federal Supplemental 
Educational Opportunity Grant Programs

Section 673.5  Overaward

    These proposed regulations would modify the overaward provisions in 
Sec. 673.5 of the regulations for the campus-based programs. Section 
428(a)(2)(C) of the HEA was amended to change the definition of 
estimated financial assistance to exclude veterans education benefits 
under Title 38, Chapter 30 (Montgomery GI Bill) and national service 
education awards or post-service benefits under Title I of the National 
and Community Service Act of 1990 (AmeriCorps) in determining a 
student's eligibility for subsidized loans. This applies to a 
subsidized Federal Stafford Loan (subsidized Stafford Loan) under the 
Federal Family Education Loan (FFEL) Program and a Federal Direct 
Stafford/Ford Loan (Direct Subsidized Loan) under the William D. Ford 
Federal Direct Loan (Direct Loan) Program.
    Under current campus-based regulations, if a student has both a 
subsidized loan and campus-based aid the most stringent requirement 
regarding resources becomes operative since the student's eligibility 
for campus-based funds is reduced by the amount of subsidized loans and 
any Montgomery GI Bill benefits and AmeriCorps funds, or both, paid for 
the cost of attendance. Thus, students receiving subsidized loans 
because of the new exclusion of these benefits may have their 
eligibility for campus-based aid reduced. The Committee concluded that, 
under the new statute, a student should not lose campus-based 
eligibility because of the interaction of the various Title IV 
programs. Therefore, in order to allow students to have the full 
advantage of this statutory exclusion of benefits without losing 
campus-based eligibility, these proposed regulations would change the 
definition of ``resources'' for the campus-based programs in cases 
where a student receives both a subsidized loan and Montgomery GI Bill 
veterans education benefits and/or an AmeriCorps education award. These 
regulations are proposing that when packaging a student's financial aid 
under the campus-based programs, an institution may exclude as a 
resource any portion of a subsidized Stafford Loan or a Direct 
Subsidized Loan that is equal to or less than the amount of the 
student's Montgomery GI Bill veterans education benefits and AmeriCorps 
education awards or post-service benefits paid for the cost of 
attendance.

Sections 674.10, 675.10, and 676.10  Selection of Students

    Current regulations require institutions to offer to less-than-
full-time and independent students at least five percent of its FWS 
allotment, five percent of its FSEOG allotment, or five percent of the 
dollar amount of the

[[Page 42208]]

loans made under the Federal Perkins Loan Program if the need of all 
these students exceeds five percent of the total need of all students 
at an institution. These proposed regulations would amend Secs. 674.10, 
675.10, and 676.10 in accordance with amended sections 413C(d), 
443(b)(3), and 464(b)(2) of the HEA, to provide that if an 
institution's FWS, FSEOG, or Federal Perkins Loan (respectively) 
allocation is directly or indirectly based in part on the financial 
need of less-than-full-time or independent students, then the 
institution must offer to those students a reasonable portion of the 
FWS allocation, FSEOG allocation, or dollar amount of Federal Perkins 
Loans made.
    The language in the sections of the HEA referred to above require 
institutions to ``make available'' campus-based funds to less-than-
full-time and independent students. The Committee realized that in some 
circumstances it may be difficult for an institution actually to 
disburse funds to these students because institutions have no control 
over whether students will accept aid. Therefore, to accommodate these 
circumstances and prevent a burden on institutions, the Committee 
agreed that the words ``make available'' should be interpreted to mean 
that the institution must ``offer'' the funds to less-than-full-time 
and independent students.
    These proposed regulations contain no definition of the statutory 
words ``reasonable portion''. Institutions are expected to have 
reasonable packaging policies for awarding campus-based funds. A policy 
of exclusion for less-than-full-time and independent students would not 
be acceptable for purposes of this requirement.

Federal Work-Study Programs

Section 675.2  Definitions

    In an effort to increase participation of FWS students in community 
service activities, the definition of ``community services,'' in 
section 441(c) of the HEA has been amended. The definition of 
``community services'' now includes child care services provided on 
campus that are ``open and accessible to the community'' and services 
to students with disabilities who ``are enrolled at the institution.'' 
These proposed regulations would amend Sec. 675.2 of the FWS 
regulations to reflect these statutory changes.
    Child care services. The statutory changes do not alter the 
Secretary's current policy on the inclusion of child care services 
provided on campus as ``community service''.
    This policy is described in Part 3 of The 1999-2000 Student 
Financial Aid Handbook and in ``Dear Colleague'' letters CB-94-4, dated 
March 1994, and CB-97-12, dated July 1997. On-campus jobs can meet the 
definition of community service jobs if the services provided are open 
and accessible to the community. A university or college in and of 
itself is not considered the community for this purpose.
    A service (i.e., child care) is considered open to the community if 
the service is publicized to the community and the general public uses 
the service. These regulations are not proposing to set a numerical 
count or percentage requirement for institutions to demonstrate public 
use of the service. However, if the service is provided only to 
students, faculty, staff, and their families, an FWS job does not meet 
the definition of ``community service'' under the FWS Program.
    Services for students with disabilities. The 1998 Amendments also 
amended the definition of ``community services'' to include the 
provision of support services for students with disabilities who are 
enrolled at the institution. Current regulations provide that on-campus 
jobs providing support services for students with disabilities could 
meet the definition of ``community services'' only if those services 
were provided to the community as well. Under section 441(c)(3) of the 
amended HEA, services to students with disabilities are to be 
considered as community service activities, even if the services are 
provided exclusively to students with disabilities who are enrolled at 
the institution. This is the only statutory exception to the 
requirement that community services must be open and accessible to the 
community.

Section 675.8  Program Participation Agreement

    These proposed regulations would amend the provisions governing the 
program participation agreement between the Secretary and the 
institution in Sec. 675.8 in accordance with the statutory change in 
section 443(b)(6) of the HEA. The statutory change eliminates the 
requirement that institutions employing FWS students must make 
``equivalent employment'' offered or arranged by the institution 
reasonably available to all students at the institution who desire to 
work.

Section 675.16  Payments Directly to the Student's Account

    These proposed regulations would amend Sec. 675.16, in accordance 
with amended section 445(c) of the HEA, to allow an institution, upon 
the written request of a student, to make payments of FWS funds 
directly to the student's account at a financial institution or the 
student's account at the educational institution for tuition and fees, 
contracted room and board, and other institutionally-provided 
educationally-related goods and services.
    Currently, the FWS regulations prohibit an institution from 
directly transferring the Federal share of FWS earnings to a student's 
account at the institution. Since the FWS Program regulations allow for 
payment to the student by check or similar instrument, the Department 
in the past eased the administrative burden for institutions by 
allowing for the electronic transfer of FWS compensation to the 
student's bank account. This procedure was acceptable if the student 
signed an authorization for the electronic transfer and the institution 
maintained that authorization on file. The institution could not 
require a student to use this method as a condition for receiving FWS 
funds.
    The 1998 Amendments broaden the institution's authority concerning 
students who want their FWS earnings credited to their accounts at the 
institution to cover institutional charges. Institutions already had 
this authority for all other Title IV, HEA program funds under 
Secs. 668.164 and 668.165 of the Subpart K--Cash Management 
regulations.
    Under Sec. 668.165 of the current regulations an institution is 
required to provide specific award information to a student before it 
starts disbursing Title IV, HEA funds for any award year. However, 
under the proposed regulations Sec. 668.165 will not apply to the FWS 
Program. Therefore, to have this requirement continue to apply to the 
FWS Program, these regulations are proposing that this student 
notification requirement be added to the FWS regulations in 
Sec. 675.16. These regulations also propose that an institution, before 
making an initial disbursement of FWS compensation for an ``award 
period'' to a student, must notify the student of the amount of FWS 
compensation he or she is authorized to earn, and how and when the 
compensation will be paid.
    An ``award period'' is the period of time covered by the FWS award 
made to a specific student. For example, if an institution makes an FWS 
award to a student for only the summer, the ``award period'' is that 
period of time. In this example, the period of time crosses over two 
award years and the portion of compensation earned up to June 30 is 
reported for one award year and the compensation earned after that

[[Page 42209]]

date is reported for the next award year. It is not the intention of 
the proposed regulations to require that an institution inform the 
student about the summer award again even though a new award year has 
started. Because of this factor, the proposed FWS regulations for the 
student notification refer to an ``award period'' and not an award 
year.
    FWS Program student rights and responsibilities. The FWS Program's 
purpose is to provide part-time employment to needy undergraduate and 
graduate students. The important distinction to be made between FWS 
Program funds and other Title IV program funds is that under the FWS 
Program, the students hold jobs and their compensation is earned and 
governed by the same applicable Federal, State, or local laws as any 
other type of earnings from employment. These proposed regulations 
would allow institutions to credit FWS earnings to a student's account 
at the institution or to initiate an EFT to a bank account designated 
by the student under the following conditions:
     The institution must obtain a written authorization from 
the student;
     The authorization to transfer funds to a student's account 
at the institution must be separate from the authorization to have 
funds transferred to his or her bank account;
     For purposes of the authorization to transfer FWS funds to 
a student's bank account, the bank forms required to initiate a direct 
EFT deposit can be considered the authorization;
     The authorization cannot be included as part of a list or 
in combination with other types of authorizations signed by the 
student;
     The student may not be required or coerced to provide the 
authorization;
     The student must be allowed to cancel or modify the 
authorization at any time;
     The institution must clearly explain how it will use the 
authorization; and
     If an institution credits a student's account and the 
total amount of FWS funds credited exceeds the amount of tuition and 
fees, contracted room and board, and charges for other institutionally-
provided educationally-related goods and services, the student must be 
paid the balance as soon as possible by the institution. However, a 
credit balance must be paid no later than 14 days after the balance 
occurred on the student's account.
    Holding excess FWS funds on behalf of students. These proposed 
regulations would also allow an institution to hold, on behalf of a 
student, FWS funds that would otherwise be paid directly to the student 
after a balance occurred on the student's account unless specifically 
prohibited by the Secretary under the terms of a reimbursement payment 
method.
    To hold FWS funds for a student, an institution must:
     Obtain a written authorization from the student for this 
specific purpose;
     Identify the amount of FWS funds held in excess for each 
student in a designated subsidiary ledger account;
     Maintain cash in its bank account that is always at a 
minimum equal to the FWS funds being held for students; and
     Pay any remaining balance by the end of the institution's 
final FWS payroll period for an award period.

Section 675.18  Use of Funds

    These regulations propose several amendments to Sec. 675.18.
    Carry back funds for summer employment. First, to provide 
consistency with the new authority in the FSEOG Program to carry back 
FSEOG funds, these regulations are proposing to change the date of May 
15 in Sec. 675.18(f) to May 1. Currently, an institution is authorized 
to make payments of FWS funds from the succeeding award year's 
allocation to students for services performed on or after May 15 of the 
previous award year but prior to the beginning of the succeeding award 
year (that is, for summer employment). The HEA now provides this same 
additional ``carry-back'' authority for the FSEOG Program. After 
discussion of various possible dates, the Committee agreed that May 1 
is a more realistic date. This is the only proposed change for the FWS 
carry-forward/carry-back provision.
    Community service percentage requirement: Second, in accordance 
with amended section 443(b)(2) of the HEA, these regulations are 
proposing to amend Sec. 675.18(g) to provide that institutions are 
required to use at least seven percent of the total funds granted to 
the institution to compensate students employed in community service 
activities for the 2000-2001 and subsequent award years. Currently, 
institutions are required to use at least five percent of those funds 
to compensate those students.
    New reading tutoring and family literacy project requirement. 
Third, in accordance with amended section 443(b)(2) of the HEA, these 
regulations also propose to amend Sec. 675.18(g) to require that, 
beginning with the 2000-2001 award year, an institution must ensure 
that one or more of its FWS students is employed (1) in a reading 
tutoring project as a reading tutor for children who are preschool age 
or are in elementary school, or (2) in a family literacy project 
performing family literacy activities. As discussed in the preceding 
paragraph, the HEA previously required that an institution use a 
specified percentage of its annual FWS allocation to employ students in 
community service jobs. Although the types of community service jobs 
were not specified, employing students to tutor children in reading or 
to work in a family literacy program was recommended to institutions 
because of the national critical needs in these areas. Encouragement is 
provided to institutions to employ students in these areas in 
Sec. 675.26 of the FWS regulations through waivers of the FWS 
institutional-share requirement.
    Family literacy projects. As defined in ``Dear Colleague'' letter 
CB-98-6, dated May 1998, a family literacy project integrates four 
components. It provides:
     Literacy or pre-literacy education to children;
     Literacy training for parents or other caregivers of 
children in the program;
     A means of equipping parents or other caregivers with the 
skills needed to partner with their children in learning; and
     Literacy activities between parents or other caregivers 
and their children.
    This definition is consistent with the Even Start and Head Start 
definitions of family literacy programs. The four parts make up a 
comprehensive family literacy project. The interaction between parent 
(or caregiver) and child is very important. The family literacy concept 
recognizes the family as an institution for education and learning and 
the role of parents as their children's first teachers. The family 
literacy concept also is based on the premise that an investment in the 
education of adults in a family is, simultaneously, an investment in 
improving the chances for academic success for the children in that 
family. For more information about family literacy projects, you can 
review ``Dear Colleague'' letter CB-98-6 on the Information for 
Financial Aid Professionals (IFAP) web site at: http://IFAP.ed.gov
    Waiver--Employment of students as reading tutors or in a family 
literacy project: Section 443(b)(2) of the HEA provides for a waiver of 
the community service requirement if the Secretary determines that 
enforcing the requirement would cause hardship for students at the 
institution. Institutions seeking a waiver of the community service 
requirement are required to follow the Department's procedure. This 
procedure requires institutions to submit a written waiver request and 
any supporting information or documents by

[[Page 42210]]

a date established by the Secretary and published in the Federal 
Register each year.
    The 1998 Amendments revised section 443(b)(2) of the HEA to grant 
the Secretary the same waiver authority with respect to the new 
statutory requirement that institutions must ensure that one or more of 
its FWS students is employed in a reading tutoring project as a reading 
tutor for children or in a family literacy project performing family 
literacy activities. Therefore, these proposed regulations would 
provide for a waiver if the Secretary determines that enforcing this 
requirement would create a hardship for students at the institution. 
The Department would use a waiver procedure that requires institutions 
seeking a waiver of this new requirement to apply for this waiver in 
the same manner as for the community service requirement waiver. The 
institution would be required to submit a written waiver request and 
any supporting information or documents by the date established by the 
Secretary and published in the Federal Register each year.
    The Secretary has approved some waivers to institutions of the 
community service requirement. In the waiver requests that received 
approval, the institutions stated that their FWS allocation was very 
small. It was noted that five percent (increase to seven percent 
beginning with the 2000-2001 award year) of the FWS allocation only 
provided enough funds for a student to work for a short period; 
therefore, the schools were unable to find short-term placement for 
community service. This was considered a hardship to the student. The 
fact that it may be difficult for the institution to comply with this 
provision is not in and of itself a basis for granting a waiver.
    Reading tutoring requirement--Priority for schools. Fourth, if an 
institution employs FWS students as reading tutors in elementary 
schools, section 443(d)(2) of the HEA requires the institution, to the 
extent practicable, to give priority to employing students in schools 
that are participating in a reading reform project. The 1998 Amendments 
require that the reading reform project be one that is designed to 
train teachers how to teach reading on the basis of scientifically-
based research on reading and funded under the Elementary and Secondary 
Education Act of 1965, as amended (ESEA). Under the new tutoring and 
literacy activities, the amended HEA also requires that the FWS 
students tutoring reading in a school participating in a reading reform 
project described above receive training from the employing school in 
the instructional practices used by the school. The Secretary 
recommends that institutions contact their local educational agency to 
find out if any elementary schools in their area participate in a 
reading reform project funded under the ESEA.
    This new provision supports the President's ``America Reads 
Challenge'' which is designed to ensure that all children read 
independently and well by the end of the third grade, and also targets 
at-risk children.
    Reading reform projects. The Reading Excellence Act amended Title 
II of the ESEA by adding a component to improve students' reading 
ability. The Reading Excellence Act recognizes a reading reform project 
to be a project that supports the improvement of reading instruction. 
The projects are funded by the Department of Education through 
competitive grants to State educational agencies. The Secretary 
believes that most educational policy makers and practitioners have 
come to agree that school reform can result in increased student 
achievement only to the extent that the following four principles are 
implemented: (1) Set high academic standards that all students are 
expected to achieve; (2) Measure student progress; (3) Ensure that 
there is a well-qualified teacher in every classroom; and (4) Hold 
schools accountable for results.
    Payment for time spent in training and travel. Fifth, in accordance 
with amended section 443(b)(2)(A) of the HEA, these proposed 
regulations would amend Sec. 675.18 to provide that an institution may 
pay FWS students for a reasonable amount of time spent for training for 
any FWS employment, and for travel that is directly related to 
employment in community service activities (including tutoring in 
reading and family literacy activities).
    Since every job consists of some type of training, whether formal 
or informal, it has been the Department's policy to allow FWS students 
to be paid wages during a training period conducted for a reasonable 
length of time. This policy has applied whether the student was 
employed in community service activities or not. Therefore, this 
provision of the proposed regulations is not a change to previous 
Department policy. The Secretary recognizes that jobs such as math or 
reading tutors may require more training than other FWS positions. A 
training period of an academic term would not be considered reasonable 
because the goal of the FWS Program is to optimize the number of hours 
an FWS student spends working. The Secretary would consider a 
reasonable training period to be one that occurs before the student 
begins the duties of tutoring and that does not exceed approximately 20 
hours. Students may also be compensated for a reasonable amount of time 
to perform on-going activities (i.e., preparation and evaluation time) 
necessary to accomplish their tutoring jobs.
    The new provision in section 443(b)(2)(A) for compensating FWS 
students for time spent traveling to and from their community service 
job does change current policy. Beginning with the 1999-2000 award 
year, institutions will be allowed to pay students for a reasonable 
amount of time spent for travel that is directly related to employment 
in community service activities. The Department's policy would require 
that the time spent for travel be reported on the student's FWS time 
record as the hours worked are currently reported. The Secretary 
recommends that institutions use a time record that shows a separation 
for the time spent in travel from hours worked.

Section 675.20  Eligible Employers and General Conditions and 
Limitation on Employment

    In accordance with amended section 443(b)(1) of the HEA, the 
proposed regulations amend Sec. 675.20 to clarify that FWS employment 
may include internships, practicums, or assistantships (e.g., research 
or teaching assistantships). The 1998 Amendments do not alter the 
Secretary's current policy on an FWS student receiving academic credit 
from the work performed in an FWS job. This policy as discussed below 
is described in Part 3 of The 1999-2000 Student Financial Aid Handbook. 

    It has been the Department's longstanding policy that a student 
could receive academic credit from the work performed under the FWS 
Program. However, certain restrictions apply to this type of 
employment. An internship, practicum, or assistantship does not qualify 
for FWS employment unless the employer would normally pay the student 
for the same work even if that student were not FWS eligible. If the 
employer normally pays or has paid such persons, the internship, 
practicum, or assistantship qualifies as an FWS job. An example of an 
internship that normally does not qualify as an FWS job is student 
teaching because student teachers are not usually compensated for that 
activity. Also, current Department policy is that a student who 
receives academic credit for an FWS job cannot be paid any less than he 
or she would be paid if no academic credit were received.

[[Page 42211]]

    The 1998 Amendments allow a student to earn FWS funds while earning 
academic credit in the jobs listed in the prior paragraph because these 
types of jobs are considered to be outside the normal realm of 
classroom experience. The list of jobs in these proposed regulations is 
not meant to be exhaustive. However, Department policy does not allow a 
student to be paid for receiving instruction in a classroom, 
laboratory, or other academic setting. Institutions must continue to 
ensure that students are not being paid for attending class.
    Department policy allows an FWS student to be assigned to assist an 
instructor at any private nonprofit or public institution if the 
student is doing work the institution would normally support under its 
own employment program. For example, having a student serve as a 
research assistant to a professor is appropriate, so long as the work 
is in line with the professor's official duties and is considered work 
for the institution itself. However, at a proprietary institution a 
student may not assist an instructor because instructional activities 
are not considered student services under Sec. 675.2(b) of the current 
regulations.

Section 675.23  Employment Provided by a Private For-Profit 
Organization

    Current regulations provide that if a student is employed by a 
private for-profit organization the work that the student performs must 
be academically relevant to the student's educational program. In 
accordance with amended section 443(c)(4) of the HEA, these proposed 
regulations would amend Sec. 675.23(b) to provide that jobs in a 
private for-profit organization must be academically relevant only to 
the maximum extent possible. This change would allow some students to 
pursue other employment opportunities that provide other valuable 
experiences outside their field of study.

Section 675.26  FWS Federal Share Limitations

    Current regulations provide that the Federal share of FWS 
compensation paid to a student employed other than by a for-profit 
organization may not exceed 75 percent. In accordance with amended 
section 443(b)(5) of the HEA, these regulations propose to amend 
Sec. 675.26 to provide that the Federal share of an FWS student's 
compensation may exceed 75 percent, but may not exceed 90 percent, if 
the student is employed at a nonprofit or a public organization that 
cannot afford to pay the regular non-Federal share. Institutions that 
choose to use this provision would have to meet several requirements as 
prescribed in amended section 443(b)(5) of the HEA:
     No placement at the institution itself would be eligible 
for the 90 percent match, nor at any agency owned, operated or 
controlled by the institution. It is the Secretary's view and the 
Committee agreed that a statement in the institution's file, signed by 
both the organization and the institution, stating that they have no 
relationship would satisfy this requirement.
     The organization would have to be selected by the 
institution on an individual case-by-case basis. It is the Secretary's 
view and the Committee agreed that an institution would satisfy this 
requirement by selecting the nonprofit or public organization that 
meets the requirements of this provision through its normal process of 
selecting potential employers.
     The nonprofit or public organization must be otherwise 
unable to afford the costs of this employment. In the Secretary's view 
and the Committee agreed, a signed letter in the institution's file 
from an official of the organization stating that the organization 
cannot afford to pay the regular non-Federal share would be sufficient 
evidence of the organization's inability to pay.
     This 90 percent funding level would be limited to no more 
than 10 percent of the students paid under the FWS program. For 
purposes of this calculation, the 1998 Amendments provide that the 
institution must use the total number of students paid under the FWS 
Program during the current award year.
    It is important to note that this proposed 10 percent limit on the 
number of students paid at the 90 percent funding level does not 
include students whose FWS wages have been exempted from the full 
institutional match due to current regulations in Sec. 675.26(d) that 
establish waiver criteria. These proposed regulations would continue to 
authorize a Federal share of 100 percent of the FWS funds awarded to 
students by an institution for an award year if the following 
provisions in the current regulations apply:
     The institution requests the increased Federal share on 
the Fiscal Operations Report and Application to Participate for that 
year and is designated as an eligible institution under the 
Strengthening Institutions Program (34 CFR part 607), the Strengthening 
Historically Black Colleges and Universities Program (34 CFR part 608), 
or the Strengthening Historically Black Graduate Institutions Program 
(34 CFR part 609);
     The student is employed as a reading tutor for preschool 
age children or children who are in elementary school;
     The student is employed in a family literacy program that 
provides services to families with preschool age children or children 
who are in elementary school; or
     The student is employed as a mathematics tutor for 
children who are in elementary school through the ninth grade.

Work-Colleges Program (Subpart C)

Section 675.45  Allowable Costs, Federal, Share, and Institutional 
Share

    The Work-Colleges Program was created by the Higher Education 
Amendments of 1992 to encourage comprehensive work-learning programs 
and recognize the special nature of institutions that choose to make 
work-learning a central part of their educational programs. These 
proposed regulations would amend Sec. 675.45(a) of the current 
regulations in accordance with amended section 448 of the HEA to 
provide Work-Colleges with more flexibility in the use of their funds. 
These proposed regulations would allow participants in the Work-
Colleges Program to coordinate and carry out joint projects and 
activities to promote work service learning.
    These proposed regulations would also allow Work-Colleges to use 
funds available to them to conduct a comprehensive longitudinal study 
of academic progress and academic and career outcomes, relative to 
student self-sufficiency in financing their higher education, repayment 
of student loans, continued community service, kind and quality of 
service performed and career choice and community service selected 
after graduation. The Secretary and the Committee expect that the 
results of this study will provide valuable information about the work-
learning experience.

Federal Supplemental Educational Opportunity Grant Program

Section 676.18  Use of Funds

    In accordance with amended section 413E of the HEA, these proposed 
regulations would amend Sec. 676.18 to add a new authority for an 
institution to carry up to ten percent of its current award year FSEOG 
allocation forward to spend in the next award year and to carry back up 
to ten percent of its current award year allocation to spend in the 
prior award year. Current regulations provide institutions with this 
flexibility under the FWS Program, but not under the FSEOG Program.

[[Page 42212]]

    In accordance with amended section 413E, the proposed amendments 
would also permit institutions to carry back any portion of its current 
award year FSEOG allocation to make awards to students for payment 
periods that begin on or after May 1 of the prior award year but end 
prior to the start of the current award year (summer enrollment through 
June 30). This carry-back authority would be in addition to the 
authority to carry back ten percent of the succeeding year's allocation 
for use at any time during the preceding award year.

Authority to Carry Forward and Carry Back FSEOG Funds During the 1998-
99 Award Year

    Under proposed Sec. 676.18, institutions would be allowed to use 
the new authority provided by amended section 413E beginning with the 
1998-99 award year. The Secretary has decided and the Committee agreed 
that the new carry-forward/carry-back authority for the FSEOG Program 
may be implemented using the same general concepts used for the FWS 
Program. Under the proposed regulations, the official allocation letter 
for a specific award period would be the institution's authority to 
exercise this option. Any of the funds carried forward or back must be 
reported on the institution's Fiscal Operations and Application to 
Participate (FISAP). For example, if an institution carried forward 10 
percent of its 1998-99 FSEOG allocation to spend in award year 1999-
2000, the institution would be required to report this amount on the 
FISAP to be submitted by October 1, 1999. Before an institution may 
spend its current year's allocation, it must spend any funds carried 
forward from the previous year.

    Note: Due to the timing of the effective date of the law, an 
institution is not able to carry back 1998-1999 FSEOG funds to spend 
in the 1997-98 award year or carry forward 1997-1998 FSEOG funds to 
spend in the 1998-1999 award year.

    These proposed changes will give institutions the flexibility to 
provide additional FSEOG funds to students at a time when traditionally 
there were no FSEOG funds available, and also help prevent the need for 
an institution to return unused FSEOG funds for a particular award 
year.

Federal Pell Grant Program

Section 690.6  Duration of Student Eligibility--Undergraduate Course of 
Study and Eligible Postbaccalaureate Program

    The current regulations restrict Federal Pell Grant eligibility to 
students who have not earned a baccalaureate degree. The 1998 
Amendments revised section 401(c) of the HEA to extend Federal Pell 
Grant eligibility to students enrolled in a postbaccalaureate teacher 
certificate or licensing program even if they have earned a bachelor's 
degree.
    In order to teach in most States, students must complete teacher 
preparation courses. Some institutions incorporate these courses into a 
baccalaureate program, while others offer these courses upon completion 
of a baccalaureate program. To complete the teacher preparation courses 
after earning a baccalaureate degree requires a fifth year of 
undergraduate study. This fifth year of undergraduate study is 
comparable to a fourth year of undergraduate study for a baccalaureate 
program that incorporates teacher preparation. The 1998 Amendments 
modified the HEA to allow certain students with a baccalaureate degree 
to receive a Federal Pell Grant while completing a teacher preparation 
program. As a result of this statutory change, these proposed 
regulations would amend the duration of the student eligibility 
provision of the Federal Pell Grant Program regulations. In addition, 
these proposed regulations would make corresponding changes to the 
eligible program provision in Sec. 668.8(h) and the student eligibility 
provision in Sec. 668.32(c) of the Student Assistance General 
Provisions regulations.
Conditions for Determining Eligibility
    The 1998 Amendments provide that on a case-by-case basis, students 
enrolled in a postbaccalaureate teacher certificate or licensing 
program may be eligible to receive a Federal Pell Grant. To address 
this case-by-case determination, the Secretary and the Committee agreed 
to establish a set of conditions to be applied to each student enrolled 
in a postbaccalaureate teacher certificate or licensing program. Under 
the proposed regulations, if a student meets these conditions, and is 
otherwise eligible, he or she may receive a Federal Pell Grant. These 
conditions are discussed below and proposed in Sec. 690.6(c).
    To be eligible for a Federal Pell Grant, the 1998 Amendments 
require that an otherwise eligible student must be:
     Enrolled in a postbaccalaureate program that consists of 
courses required by a State to receive a professional certification or 
licensing credential necessary for employment as a teacher in an 
elementary or secondary school in that State;
     Enrolled in a postbaccalaureate program that does not lead 
to a graduate degree;
     Enrolled at a postsecondary institution that does not 
offer a baccalaureate degree in education; and
     Enrolled as at least a half-time student.
    The 1998 Amendments do not address whether students seeking to 
renew their current teacher certification or licensure, or obtain a 
teacher certification or licensure in another subject matter, are 
eligible to receive a Federal Pell Grant. The Committee reached 
consensus regarding the scope of eligibility for a Federal Pell Grant 
under this provision; namely, to provide Federal Pell Grant funds to 
students seeking to obtain certification or licensure to begin teaching 
within a State. Thus, the proposed regulations limit Federal Pell Grant 
eligibility to only those students pursuing an initial teacher 
certification or licensing credential within a State.
    The proposed regulations would also allow students enrolled in a 
postbaccalaureate teacher certificate or licensing program to be 
eligible to receive a Federal Pell Grant for the period of time 
necessary to complete the program.
Treatment of Students Enrolled in the Postbaccalaureate Program as 
Undergraduate Students Enrolled in an Undergraduate Program.
    The 1998 Amendments do not address whether students enrolled in a 
postbaccalaureate teacher certificate or licensing program are enrolled 
in an undergraduate or graduate program. Historically, the Federal Pell 
Grant Program has been preserved as a source of financial assistance 
for undergraduate students enrolled in an undergraduate program. As 
previously discussed, the postbaccalaureate teacher certificate or 
licensing program is comparable to a baccalaureate program that 
incorporates teacher preparation into the fourth year of undergraduate 
study. For this reason, the Secretary and the Committee agreed that 
institutions must treat students who receive a Federal Pell Grant under 
this provision as undergraduate students enrolled in an undergraduate 
program.
    Under these proposed regulations a student would be treated as an 
undergraduate student enrolled in an undergraduate program. Therefore, 
the student is not automatically independent for purposes of 
calculating the expected family contribution. Whether the student is 
dependent or independent, the student must maintain the same dependency 
status for all Title IV, student financial aid programs. Furthermore, 
the student is only eligible for fifth year undergraduate Perkins, 
FFEL, and Direct loan amounts.

[[Page 42213]]

Requirement to be a Regular Student in Order to Receive a Federal Pell 
Grant
    The 1998 Amendments do not change the requirement that a Federal 
Pell Grant recipient must be a regular student. A regular student is a 
person who is enrolled in an eligible program for the purpose of 
obtaining a degree, certificate, or other recognized educational 
credential offered by the institution. Therefore, the institution must 
provide a student enrolled in a postbaccalaureate teacher certificate 
or licensing program with a certificate or other recognized educational 
credential. This is true even if the State provides the student with a 
certificate upon completion of the postbaccalaureate program. For the 
purpose of this provision only, it is the view of the Secretary and the 
Committee agreed that an acceptable recognized educational credential 
may be an official transcript that documents the student's enrollment 
in or completion of a postbaccalaureate teacher certificate or 
licensing program.
Simultaneous Enrollment in Both the Postbaccalaureate Teacher 
Certificate or Licensing Program and a Graduate or Professional Degree 
Program
    Neither the 1998 Amendments nor the proposed regulations in 
Sec. 690.6 address simultaneous enrollment in both the 
postbaccalaureate program (as described here) and a graduate or 
professional degree program.
    The Secretary and the Committee agreed to allow Pell Grant 
eligibility to a student who is enrolled in a postbaccalaureate program 
and a separate graduate or professional degree program. However, to be 
consistent with the proposed changes in Sec. 690.6, the proposed 
regulations would require an institution to consider the following when 
determining a student's eligibility for a Federal Pell Grant:
     A student who is enrolled in a postbaccalaureate teacher 
certificate or licensing program and receives a Federal Pell Grant is 
treated as an undergraduate student enrolled in an undergraduate 
program. Thus, the student must be treated as an undergraduate student 
for the other Title IV programs; e.g., a student who receives a Federal 
Pell Grant is only eligible for fifth year undergraduate loan amounts;
     A student is not eligible for a Federal Pell Grant if he 
or she is solely enrolled in a graduate or professional degree program, 
even if the program's courses are the same as those required for the 
postbaccalaureate teacher certificate or licensing program;
     A student is not eligible for a Federal Pell Grant if his 
or her enrollment status, based on the hours required for the 
postbaccalaureate teacher certificate or licensing program, is less 
than half-time; and
     Only those courses required for the postbaccalaureate 
teacher certificate or licensing program can be considered when 
determining the student's enrollment status.

Section 690.7  Institutional Participation

    The 1998 Amendments provide that an institution is ineligible to 
participate in the Federal Pell Grant Program upon losing its 
eligibility to participate in the FFEL or Direct Loan programs because 
of its default rate. This provision is effective after the Secretary's 
final publication of the cohort default rates for fiscal year 1996. 
(These rates were published on October 26, 1998). This new provision, 
in section 401(j) of the HEA, applies to institutions participating in 
the FFEL or Direct Loan program on or after October 7, 1998. As a 
result of this statutory change, these regulations propose to amend 
Sec. 690.7 to provide for this loss of eligibility to participate in 
the Federal Pell Grant Program. Specific information on the loss of 
eligibility is provided in proposed Sec. 668.17(b)(4) in a recently 
published NPRM.

Goals 2000: Educate America Act

    The Goals 2000: Educate America Act (Goals 2000) focuses the 
Nation's education reform efforts on the eight National Education Goals 
and provides a framework for meeting them. Goals 2000 promotes new 
partnerships to strengthen schools and expands the Department's 
capacities for helping communities to exchange ideas and obtain 
information needed to achieve the goals.
    These proposed regulations would address the National Education 
Goals that (1) all children will start school ready to learn and that 
student achievement will be enhanced; (2) call for increasing the rate 
at which students graduate from high school and pursue high quality 
postsecondary education and for supporting life-long learning; (3) 
every adult American will be literate and will possess the knowledge 
and skills necessary to compete in a global economy and exercise the 
rights and responsibilities of citizenship; and (4) the Nation's 
teaching force will have access to programs for the continued 
improvement of their professional skills and the opportunity to acquire 
the knowledge and skills needed to instruct and prepare all American 
students for the next century. The proposed regulations in 
Sec. 675.18(g) would further the objectives of these Goals by requiring 
FWS student participation in reading tutoring and in family literacy 
projects where the family is recognized as an institution for education 
and learning and the parent is recognized as their children's first 
teachers. The objectives of the Goals would also be addressed by the 
proposal to extend eligibility for Federal Pell Grants to those 
students who are pursuing a teacher certification or licensing 
credential through a State approved non-degree postbaccalaureate 
program.

Executive Order 12866:

1. Potential Costs and Benefits

    Under Executive Order 12866, we have assessed the potential costs 
and benefits of this regulatory action.
    The potential costs associated with the proposed regulations are 
those resulting from statutory requirements and those we have 
determined as necessary for administering these programs effectively 
and efficiently.
    In assessing the potential costs and benefits of this regulatory 
action--both quantitative and qualitative--we have determined that the 
benefits would justify the costs.
    We have also determined that this regulatory action would not 
unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.
    We note that, as these proposed regulations were subject to 
negotiated rulemaking, the costs and benefits of the various 
requirements were discussed thoroughly by negotiators. The consensus 
reached on a particular requirement generally reflected agreement on 
the best possible approach to that requirement in terms of cost and 
benefit.
    To assist the Department in complying with the specific 
requirements of Executive Order 12866, the Secretary invites comments 
on whether there may be further opportunities to reduce any potential 
costs or to increase any potential benefits resulting from these 
proposed regulations without impeding the effective and efficient 
administration of the Title IV, HEA programs.

2. Clarity of the Regulations

    Executive Order 12866 and the President's Memorandum of June 1, 
1998 on ``Plain Language in Government Writing'' require each agency to 
write regulations that are easy to understand.
    We invite comments on how to make these proposed regulations easier 
to understand, including answers to questions such as the following:

[[Page 42214]]

      Are the requirements in the proposed regulations clearly 
stated?
      Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
      Does the format of the proposed regulations (grouping and 
order of sections, use of headings, paragraphing, etc.) aid or reduce 
their clarity?
      Would the proposed regulations be easier to understand if 
we divided them into more (but shorter) sections? (A ``section'' is 
preceded by the symbol ``Sec. '' and a numbered heading; for example, 
Sec. 668.8 Eligible Program.)
      Could the description of the proposed regulations in the 
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in 
making the proposed regulations easier to understand? If so, how?
      What else could we do to make the proposed regulations 
easier to understand?
    Send any comments that concern how the Department could make these 
proposed regulations easier to understand to the person listed in the 
ADDRESSES section of the preamble.

Regulatory Flexibility Act Certification

    We certify 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 the Title IV, HEA programs. The 
institutions are defined as small entities, according to the U.S. Small 
Business Administration, if they are: for-profit or nonprofit entities 
with total revenue of $5,000,000 or less; or entities controlled by 
governmental entities with populations of 50,000 or less. These 
proposed regulations would not impose a significant economic impact on 
a substantial number of small entities. The regulations would benefit 
both small and large institutions by providing additional flexibility 
in the administration of the Federal Pell Grant and Campus-Based 
programs without requiring significant changes to current institutional 
system operations. These proposed regulations would ease administrative 
burden and augment student benefits by: expanding Federal Pell Grant 
eligibility to allow students enrolled in a postbaccalaureate teacher 
certification or licensing program to receive a Federal Pell Grant; 
allowing an institution, upon request of a student, to make payments of 
FWS funds directly to the student's account at the institution; 
revising the definition of ``resources'' in the Campus-Based programs 
to maximize student benefits and augment institutional flexibility in 
aid packaging; and implementing new carry-forward and carry-back 
authorities for the FSEOG Program.
    We invite comments from small institutions as to whether the 
proposed changes would have a significant economic impact on them.

Paperwork Reduction Act of 1995

    Proposed Secs. 673.5, 675.10, 675.16, and 675.20 contain 
information collection requirements. Under the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3507(d)), the Department of Education has submitted 
a copy of these sections to the Office of Management and Budget (OMB) 
for its review. Collection of information: General Provisions for the 
Federal Perkins Loan, FWS, and FSEOG Programs--Section 673.5--
Overaward--The Department currently has this section approved under OMB 
control number 1845-0535. We propose to change the definition of the 
term ``resources'' for a student who receives campus-based aid, a 
subsidized Stafford Loan or a Direct Subsidized Loan, and Montgomery GI 
Bill veterans educational benefits and/or an AmeriCorps education award 
paid for the cost of attendance. The institution would be able to 
exclude as a resource any portion of the subsidized loans that is equal 
to or less that the amount of the veterans education or AmeriCorps 
benefits received. This provision does not change the information 
collection contained in this section.
    Section 675.10--Selection of students for FWS employment--We 
propose under Sec. 675.10(c) that if an institution's allocation of FWS 
funds is based in part on the financial need of students attending the 
institution as less-than-full-time or independent students, the 
institution must offer a reasonable portion of the allocation for FWS 
to those students. The requirement for offering 5 percent of the FWS 
allocation would be eliminated. This requirement does not change the 
information collection contained in this section regarding the 
maintaining of an institution's procedures for selecting students for 
FWS employment.
    Section 675.16--Payments to students--We are proposing under 
Sec. 675.16(a)(2) that before an institution pays FWS compensation to a 
student, the institution will be required to send the student a notice 
informing the student of the amount of funds he or she is eligible to 
earn, and how and when the FWS funds will be paid. To provide the 
student with this notice is standard institutional practice. The 
institutions that participate in the Title IV, HEA programs normally 
send this notice out to all students that have applied to their school 
for Title IV, HEA funds. Students generally receive one notice listing 
all Title IV, HEA program funds they can expect to receive. FWS funds 
are earned compensation. Therefore, we have concluded that the 
requirement for the notice should be reiterated in Sec. 675.16. There 
are 3,282 institutions of higher education currently participating in 
the FWS Program, with 747,913 total FWS recipients. We understand that 
the majority of these 747,913 FWS recipients receive some other type of 
Title IV, HEA program funds and that institutions are already providing 
FWS students this information along with information on other types of 
aid the student can expect to receive in one notice.
    Subpart K of the Student Assistance General Provisions regulations 
(34 CFR Part 668) under the OMB control number 1845-0697 governs the 
cash management regulations as authorized by section 487 of the HEA. 
Amendments to this section were part of a Division-wide package--Cash 
Management/Easy Access for Students and Institutions (EASI)--intended 
to clarify and consolidate current policies and requirements, and make 
necessary changes in the regulatory framework for us to improve 
significantly the delivery of Title IV, HEA program funds to students 
and institutions. Burden hours for Sec. 668.165(a)(1) were calculated 
and cleared under 1845-0697 to determine the cost to institutions for 
notifying students once an award year of: the amounts of Title IV, HEA 
program funds a student can expect to receive; how and when those funds 
will be paid; and, whether any Title IV, HEA program loans are 
subsidized or unsubsidized. There are 6,576 institutions sending this 
notice to 6,223,450 Title IV aid recipients with an average of 946.4 
responses per institution. With each institution taking approximately 
five minutes to retrieve and mail the information the total average 
hour burden for each institution is calculated as 78.9 hours. 
Therefore, annual recordkeeping and reporting burden contained in this 
collection total 518,846.4 (6,576 respondents  x  78.9 hours) hours. 
Any further calculation of burden hours for Sec. 675.16 for providing a 
student a notice of the amount of FWS program funds he or she can 
expect to receive would duplicate hours already calculated for this 
procedure in Sec. 668.165(a)(1) and cleared under OMB 1845-0697.
    Section 675.16 also includes a proposal that upon the written 
request of a student, an institution may make payments of FWS funds 
directly to the

[[Page 42215]]

student's account at the institution for tuition and fees, room and 
board, and other institutional provided goods and services. This 
practice is prohibited by current regulations, so it is difficult to 
estimate an accurate number of respondents that would be submitting 
this request. Some institutions have informed the Department that they 
will not implement this procedure, but will continue to pay FWS 
students by check or electronic fund transfer to the student's bank 
account. Other institutions have expressed to the Department that the 
use of this procedure will be minimal at their institutions.
    There are 3,282 institutions currently participating in the FWS 
Program. A total of 747,913 students receive FWS funds at these 
institutions. We estimate that 74,791 (10 percent of) respondents may 
sign a written request to have their FWS earnings credited to their 
account at an institution and that request will average 1 minute per 
response. Total annual burden hours for the respondents are estimated 
to be 1,247 hours. The annual recordkeeping burden hours for 3,282 
institutions to obtain signatures and maintain a record of the request 
in their recordkeeping system are estimated to be 12,472 hours. Annual 
recordkeeping and reporting burden contained in this collection of 
information as proposed in these regulations are estimated to be 13,719 
hours. The total annual recordkeeping and reporting burden hours for 
Sec. 675.16 equals 13,963 hours.
    Section 675.20--Eligible employers and general conditions and 
limitation on employment--We propose under Sec. 675.20(d) to clarify 
that employment under the FWS Program may include internships, 
practicums, and research, teaching, or other assistantships as 
determined by the Secretary. This proposed change does not affect the 
information collection requirement in this section for a written 
agreement between the institution and the employer that is initiated as 
part of an institution's normal business practices.
    If you want to comment on the information collection requirements 
please send your comments to the Office of Information and Regulatory 
Affairs, OMB, room 10235, New Executive Office Building, Washington, DC 
20503; Attention: Desk Officer for U.S. Department of Education. You 
may also send a copy of these comments to the Department representative 
named in the ADDRESSES section of this preamble.
    We consider your comments on these proposed collections of 
information in--
     Deciding whether the proposed collections are necessary 
for the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden of 
the proposed collections, including the validity of our methodology and 
assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology; e.g., permitting electronic submission of 
responses.
    OMB is required to make a decision concerning the collections of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives the comments within 30 days of 
publication. This does not affect the deadline for your comments to us 
on the proposed regulations.

Intergovernmental Review

    The Federal Supplemental Educational Opportunity Grant program is 
subject to Executive Order 12372 and the regulations in 34 CFR part 79. 
One of the objectives of the Executive order is to foster an 
intergovernmental partnership and a strengthened federalism. The 
Executive order relies on processes developed by State and local 
governments for coordination and review of proposed Federal financial 
assistance.
    This document provides early notification of our specific plans and 
actions for this program.
    The Federal Work-Study and Federal Pell Grant programs are not 
subject to the requirements of Executive Order 12372 and the 
regulations in 34 CFR part 79.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether the 
proposed regulations would require transmission of information that any 
other agency or authority of the United States gathers or makes 
available.

Electronic Access to This Document

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Catalog of Federal Domestic Assistance Numbers: 84.033 Federal Work-
Study Program; 84.007 Federal Supplemental Educational Opportunity 
Grant Program; and 84.063 Federal Pell Grant Program)

List of Subjects

34 CFR Parts 668, 673, 674 and 675

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

34 CFR Part 676

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

34 CFR Part 690

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

    Dated: July 27, 1999.
Richard W. Riley,
Secretary of Education.
    For the reasons stated in the preamble, the Secretary proposes to 
amend title 34 of the Code of Federal Regulations by amending Parts 
668, 673, 674, 675, 676, and 690 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 668.8 is amended by revising paragraph (h) to read as 
follows:


Sec. 668.8  Eligible program.

* * * * *
    (h) Eligibility for Federal Pell Grant and FSEOG programs. In 
addition to satisfying other relevant provisions of this section--

[[Page 42216]]

    (1) An educational program qualifies as an eligible program for 
purposes of the Federal Pell Grant Program only if the educational 
program is an undergraduate program or a postbaccalaureate teacher 
certificate or licensing program as described in 34 CFR 690.6(c); and
    (2) An educational program qualifies as an eligible program for 
purposes of the FSEOG Program only if the educational program is an 
undergraduate program.
* * * * *
    3. Section 668.32 is amended by revising paragraph (c) to read as 
follows:


Sec. 668.32  Student eligibility--general.

* * * * *
    (c)(1) For purposes of the FSEOG Program, does not have a 
baccalaureate or first professional degree;
    (2) For purposes of the Federal Pell Grant Program--
    (i) Does not have a baccalaureate or first professional degree; or
    (ii) Is enrolled in a postbaccalaureate teacher certificate or 
licensing program as described in 34 CFR 690.6(c); and
    (iii) Is not incarcerated in a Federal or State penal institution; 
and
    (3) For purposes of the Federal Perkins Loan, FFEL, and Direct Loan 
programs, is not incarcerated;
* * * * *
    4. Section 668.161 is amended by revising paragraph (a)(4) to read 
as follows:


Sec. 668.161  Scope and purpose.

    (a) * * *
    (4) FWS Program. An institution must follow the disbursement 
procedures in 34 CFR 675.16 for paying a student his or her wages under 
the FWS Program instead of the disbursement procedures in 34 CFR 
668.164 and 668.165.
* * * * *

PART 673--GENERAL PROVISIONS FOR THE FEDERAL PERKINS LOAN PROGRAM, 
FEDERAL WORK-STUDY PROGRAM, AND FEDERAL SUPPLEMENTAL EDUCATIONAL 
OPPORTUNITY GRANT PROGRAM

    5. The authority citation for part 673 continues to read as 
follows:

    Authority: 20 U.S.C 421-429, 1070b-1070b-3, and 1087aa-1087ii; 
42 U.S.C. 2751-2756b, unless otherwise noted.

    6. Section 673.5 is amended by revising paragraph (c)(1) 
introductory text and paragraph (c)(1)(ix); by redesignating paragraphs 
(c)(1)(x) and (c)(1)(xi) as paragraphs (c)(1)(xi) and (c)(1)(xii), 
respectively; and by adding new paragraphs (c)(1)(x) and (c)(4) to read 
as follows:


Sec. 673.5  Overaward.

* * * * *
    (c) Resources. (1) Except as provided in paragraphs (c)(2), (c)(3), 
and (c)(4) of this section, the Secretary considers that ``resources'' 
include, but are not limited to, any--
* * * * *
    (ix) Veterans educational benefits paid under Chapters 30, 31, 32, 
and 35 of title 38 of the United States Code;
    (x) National service education awards or post-service benefits paid 
for the cost of attendance under title I of the National and Community 
Service Act of 1990 (AmeriCorps);
* * * * *
    (4) The institution may exclude as a resource any portion of a 
Federal Direct Stafford/Ford Loan and subsidized Federal Stafford Loan 
that is equal to or less than the amount of a student's veterans 
education benefits paid under Chapter 30 of title 38 of the United 
States Code (Montgomery GI Bill) and national service education awards 
or post service benefits paid for the cost of attendance under title I 
of the National and Community Service Act of 1990 (AmeriCorps).
* * * * *

PART 674--FEDERAL PERKINS LOAN PROGRAM

    7. 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.

    8. Section 674.10 is amended by revising paragraph (b) to read as 
follows:


Sec. 674.10  Selection of students for loans.

* * * * *
    (b) If an institution's allocation of Federal Capital Contribution 
is directly or indirectly based in part on the financial need 
demonstrated by students attending the institution as less-than-full-
time or independent students, a reasonable portion of the dollar amount 
of loans made under this part must be offered to those students.
* * * * *

PART 675--FEDERAL WORK-STUDY PROGRAMS

    9. The authority citation for part 675 is revised to read as 
follows:

    Authority: 42 U.S.C. 2751-2756b, unless otherwise noted.

    10. In Sec. 675.2 paragraph (b) is amended by revising paragraphs 
(1) and (3) of the definition of ``community services'' to read as 
follows:


Sec. 675.2  Definitions.

* * * * *
    (b) * * *
    (1) Such fields as health care, child care (including child care 
services provided on campus that are open and accessible to the 
community), literacy training, education (including tutorial services), 
welfare, social services, transportation, housing and neighborhood 
improvement, public safety, crime prevention and control, recreation, 
rural development, and community improvement;
* * * * *
    (3) Support services to students with disabilities, including 
students with disabilities who are enrolled at the institution; and
* * * * *


Sec. 675.8  [Amended]

    11. Section 675.8 is amended by removing paragraph (d), and 
redesignating paragraphs (e), (f), and (g) as paragraphs (d), (e), and 
(f), respectively.
    12. Section 675.10 is amended by revising paragraph (c) to read as 
follows:


Sec. 675.10  Selection of students for FWS employment.

* * * * *
    (c) Part-time and independent students. If an institution's 
allocation of FWS funds is directly or indirectly based in part on the 
financial need demonstrated by students attending the institution as 
less-than-full-time or independent students, a reasonable portion of 
the allocation must be offered to those students.
    13. Section 675.16 is amended to read as follows by:
    A. Redesignating paragraphs (a)(2), (a)(3), and (a)(4), as 
paragraphs (a)(9), (a)(10), and (a)(11), respectively;
    B. Revising paragraph (a)(1) and adding new paragraphs (a)(2) 
through (a)(8);
    C. In newly redesignated paragraph (a)(10) by removing ``wages 
are'' and adding, in its place, ``compensation is'';
    D. In newly redesignated paragraph (a)(11) by removing ``wages'' 
and adding, in its place, ``compensation'';
    E. Revising paragraph (b)(1); and
    F. In paragraphs (b)(2), (b)(3), and (c), removing ``shall'' and 
adding, in its place, ``must''.


Sec. 675.16  Payments to students.

    (a)(1) An institution must pay a student FWS compensation at least 
once a month.
    (2) Before an institution makes an initial disbursement of FWS 
compensation to a student for an award period, the institution must 
notify the student of the amount of funds the student is authorized to 
earn, and how

[[Page 42217]]

and when the FWS compensation will be paid.
    (3) An institution must pay FWS compensation to a student by--
    (i) Check or similar instrument that the student can cash on his or 
her own endorsement;
    (ii) Initiating an electronic funds transfer (EFT) to a bank 
account designated by the student after obtaining the authorization 
described in paragraph (a)(4)(i) of this section;
    (iii) Crediting the student's account at the institution after 
obtaining the authorization described in paragraph (a)(4)(i) of this 
section. The institution may only credit the student's account at the 
institution to satisfy current award year charges for--
    (A) Tuition and fees;
    (B) Board, if the student contracts with the institution for board;
    (C) Room, if the student contracts with the institution for room; 
and
    (D) Other institutionally provided educationally related goods and 
services; or
    (iv) Crediting the student's account at the institution to satisfy 
minor prior award year authorized charges if these charges are less 
than $100 or if the payment of these charges does not, and will not, 
prevent the student from paying his or her current educational costs 
after obtaining the authorization described in paragraph (a)(4)(i) of 
this section.
    (4)(i) Except for the noncash contributions allowed under 
paragraphs (b)(2) and (b)(3) of this section, an institution must 
obtain a separate written authorization from the student if the student 
is paid FWS compensation by--
    (A) Crediting the student's account at the institution; or
    (B) Initiating an EFT to a bank account designated by the student.
    (ii) If an institution obtains a written authorization from the 
student, the institution may hold excess FWS funds under paragraph 
(a)(8) of this section.
    (iii) The institution must obtain and use the written authorization 
in accordance with the requirements of paragraphs (a)(5) and (a)(6) of 
this section.
    (5) In obtaining the student's written authorization described in 
paragraph (a)(4) of this section, an institution--
    (i) May not require or coerce the student to provide that 
authorization;
    (ii) Must allow the student to cancel or modify that authorization 
at any time; and
    (iii) Must clearly explain how it will carry out that activity.
    (6)(i) If a student modifies the written authorization described in 
paragraph (a)(4) of this section, the modification takes effect on the 
date the institution receives the modification notice.
    (ii) If a student cancels the written authorization described in 
paragraph (a)(4)(i)(A) of this section, the institution may use the FWS 
compensation to pay only those authorized charges incurred by the 
student before the institution received the notice.
    (7) If an institution pays a student FWS compensation by crediting 
the student's account, and the result is a credit balance, the 
institution must pay the credit balance directly to the student as soon 
as possible but no later than 14 days after the balance occurred on the 
account.
    (8) Except if prohibited by the Secretary under the reimbursement 
payment method, an institution may hold, on behalf of the student, FWS 
funds that would otherwise be paid directly to the student under 
paragraph (a)(7) of this section, if the institution obtains the 
authorization described in paragraph (a)(4)(ii) of this section. If an 
institution holds excess FWS funds, the institution must--
    (i) Identify the amount of FWS funds the institution holds for each 
student in a subsidiary ledger account designated for that purpose;
    (ii) Maintain, at all times, cash in its bank account in an amount 
at least equal to the amount of FWS funds the institution holds for the 
student; and
    (iii) Pay any remaining balance by the end of the institution's 
final FWS payroll period for an award period.
* * * * *
    (b)(1) Except for the noncash contributions allowed under 
paragraphs (b)(2) or (b)(3) of this section, an institution must pay 
the student its share of his or her FWS compensation at the same time 
it pays the Federal share.
* * * * *
    14. Section 675.18 is amended as follows by:
    A. Revising paragraph (a)(2);
    B. In paragraph (f), removing, ``May 15'' and adding, in its place, 
``May 1'';
    C. Revising paragraphs (g)(1) and (g)(2); and adding new paragraphs 
(g)(3) and (h).


Sec. 675.18  Use of funds.

    (a) * * *
    (2) Paying administrative expenses as provided for in 34 CFR 673.7;
* * * * *
    (g) Community service. (1) For the 2000-2001 award year and 
subsequent award years, an institution must use at least seven percent 
of the sum of its initial and supplemental FWS allocations for an award 
year to compensate students employed in community service activities. 
In meeting this community service requirement, an institution must 
include at least one--
    (i) Reading tutoring project that employs one or more FWS students 
as reading tutors for children who are preschool age or are in 
elementary school; or
    (ii) Family literacy project that employs one or more FWS students 
in family literacy activities.
    (2) The Secretary may waive the requirements in paragraph (g)(1) of 
this section if the Secretary determines that an institution has 
demonstrated that enforcing the requirements in paragraph (g)(1) of 
this section would cause a hardship for students at the institution.
    (3) To the extent practicable, in providing reading tutors for 
children under paragraph (g)(1)(i), an institution must--
    (i) Give priority to the employment of students to tutor in reading 
in schools that are participating in a reading reform project that--
    (A) Is designed to train teachers how to teach reading on the basis 
of scientifically-based research on reading; and
    (B) Is funded under the Elementary and Secondary Education Act of 
1965; and
    (ii) Ensure that any student who is employed in a school 
participating in a reading reform project described in paragraph 
(g)(3)(i) of this section receives training from the employing school 
in the instructional practices used by the school.
    (h)(1) Payment for time spent in training and travel. For any award 
year, an institution may pay students for a reasonable amount of time 
spent for training that is directly related to FWS employment.
    (2) Beginning with the 1999-2000 award year, an institution may pay 
students for a reasonable amount of time spent for travel that is 
directly related to employment in community service activities 
(including tutoring in reading and family literacy activities).
    15. Section 675.20 is amended by adding a new paragraph (d) to read 
as follows:


Sec. 675.20  Eligible employers and general conditions and limitation 
on employment.

* * * * *
    (d) Academic credit and work-study. (1) A student may be employed 
under the FWS program and also receive academic credit for the work 
performed. Such jobs include, but are not limited to, work performed 
when the student is--

[[Page 42218]]

    (i) Enrolled in an internship;
    (ii) Enrolled in a practicum; or
    (iii) Employed in a research, teaching, or other assistantship.
    (2) A student employed in an FWS job and receiving academic credit 
for that job may not be--
    (i) Paid less than he or she would be if no academic credit were 
received;
    (ii) Paid for receiving instruction in a classroom, laboratory, or 
other academic setting; and
    (iii) Paid unless the employer would normally pay the person for 
the same position.
    16. Section 675.23 is amended by revising paragraph (b)(1) to read 
as follows:


Sec. 675.23  Employment provided by a private for-profit organization.

* * * * *
    (b) * * *
    (1) The work that the student performs must be academically 
relevant to the student's educational program, to the maximum extent 
practicable; and
* * * * *
    17. Section 675.26 is amended by revising paragraph (a)(1), by 
redesignating paragraphs (a)(2) and (a)(3) as paragraphs (a)(3) and 
(a)(4), by adding a new paragraph (a)(2), and by revising paragraph 
(d)(2)(iii) to read as follows:


Sec. 675.26  FWS Federal share limitations.

    (a)(1) The Federal share of FWS compensation paid to a student 
employed other than by a private for-profit organization, as described 
in Sec. 675.23, may not exceed 75 percent unless the Secretary approves 
a higher share under paragraph (a)(2) or (d) of this section.
    (2) The Federal share of the compensation paid to a student may 
exceed 75 percent, but may not exceed 90 percent, if--
    (i) The student is employed at a private nonprofit organization or 
a Federal, State, or local public agency that--
    (A) Is not a part of, and is not owned, operated, or controlled by, 
or under common ownership, operation, or control with, the institution;
    (B) Is selected by the institution on an individual case-by-case 
basis;
    (C) Would otherwise be unable to afford the costs of this 
employment; and
    (ii) The number of students compensated under paragraph (a)(2)(i) 
of this section is not more than 10 percent of the total number of 
students paid under the FWS Program at the institution.
* * * * *
    (d) * * *
    (2) * * *
    (iii) The student is employed in a family literacy project that 
provides services to families with preschool age children or children 
who are in elementary school; or
* * * * *

Subpart C--Work-Colleges Program

    18. Section 675.45 is amended by adding new paragraphs (a)(5) and 
(a)(6) to read as follows:


Sec. 675.45  Allowable costs, Federal share, and institutional share.

    (a) * * *
    (5) Coordinate and carry out joint projects and activities to 
promote work service learning.
    (6) Carry out a comprehensive, longitudinal study of student 
academic progress and academic and career outcomes, relative to student 
self-sufficiency in financing their higher education, repayment of 
student loans, continued community service, kind and quality of service 
performed, and career choice and community service selected after 
graduation.
* * * * *

PART 676--SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT PROGRAM

    19. The authority citation for part 676 continues to read as 
follows:

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

    20. Section 676.10 is amended by revising paragraph (b) to read as 
follows:


Sec. 676.10  Selection of students for FSEOG awards.

* * * * *
    (b) Part-time and independent students. If an institution's 
allocation of FSEOG funds is directly or indirectly based in part on 
the financial need demonstrated by students attending the institution 
as less-than-full-time or independent students, a reasonable portion of 
the allocation must be offered to those students.
    21. Section 676.18 is amended by revising paragraph (a)(2), and 
adding new paragraphs (c), (d), (e) and (f) to read as follows:


Sec. 676.18  Use of funds.

    (a) * * *
    (2) Paying administrative expenses as provided for in 34 CFR 673.7.
* * * * *
    (c) Carry forward funds. (1) An institution may carry forward and 
expend in the next award year up to 10 percent of the sum of its 
initial and supplemental FSEOG allocations for the current award year.
    (2) Before an institution may spend its current year FSEOG 
allocation, it must spend any funds carried forward from the previous 
year.
    (d) Carry back funds. An institution may carry back and expend in 
the previous award year up to 10 percent of the sum of its initial and 
supplemental FSEOG allocations for the current award year. The 
institution's official allocation letter represents the Secretary's 
approval to carry back funds.
    (e) Use of funds carried forward and carried back. An institution 
may use the funds carried forward or carried back under paragraphs (c) 
and (d) of this section, respectively, for activities described in 
paragraph (a) of this section.
    (f) Carry back funds for summer FSEOG awards. An institution may 
carry back and expend in the previous award year any portion of its 
initial and supplemental FSEOG allocations for the current award year 
to make awards to eligible students for payment periods that begin on 
or after May 1 of the previous award year but end prior to the 
beginning of the current award year.

PART 690--FEDERAL PELL GRANT PROGRAM

    22. The authority citation for part 690 continues to read as 
follows:

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

    23. Section 690.6 is amended by revising the heading and paragraph 
(a), and adding new paragraphs (c) and (d) to read as follows:


Sec. 690.6  Duration of student eligibility--undergraduate course of 
study and eligible postbaccalaureate program.

    (a) Except as provided in paragraphs (c) and (d) of this section, a 
student is eligible to receive a Federal Pell Grant for the period of 
time required to complete his or her first undergraduate baccalaureate 
course of study.
* * * * *
    (c) An otherwise eligible student who has a baccalaureate degree 
and is enrolled in a postbaccalaureate program is eligible to receive a 
Federal Pell Grant for the period of time necessary to complete the 
program if--
    (1) The postbaccalaureate program consists of courses that are 
required by a State for the student to receive a professional 
certification or licensing credential that is required for employment 
as a teacher in an elementary or secondary school in that State;

[[Page 42219]]

    (2) The postbaccalaureate program does not lead to a graduate 
degree;
    (3) The institution offering the postbaccalaureate program does not 
also offer a baccalaureate degree in education;
    (4) The student is enrolled as at least a half-time student; and
    (5) The student is pursuing an initial teacher certification or 
licensing credential within a State.
    (d) An institution must treat a student who receives a Federal Pell 
Grant under paragraph (c) of this section as an undergraduate student 
enrolled in an undergraduate program for title IV purposes.
    24. In Sec. 690.7 paragraph (c) is redesignated as paragraph (d), 
and a new paragraph (c) is added to read as follows:


Sec. 690.7  Institutional participation.

* * * * *
    (c)(1) If an institution loses its eligibility to participate in 
the FFEL or Direct Loan program under the provisions of 34 CFR 668.17, 
it also loses its eligibility to participate in the Federal Pell Grant 
Program for the same period of time.
    (2) That loss of eligibility must be in accordance with the 
provisions of 34 CFR 668.17(b).
* * * * *
[FR Doc. 99-19724 Filed 8-2-99; 8:45 am]
BILLING CODE 4000-01-U