[Federal Register Volume 70, Number 119 (Wednesday, June 22, 2005)]
[Rules and Regulations]
[Pages 36036-36040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-12235]


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HARRY S. TRUMAN SCHOLARSHIP FOUNDATION

45 CFR Part 1801


Scholar Accountability Policy

AGENCY: Harry S. Truman Scholarship Foundation.

ACTION: Final rule.

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SUMMARY: This final rule adopts the Truman Scholarship Foundation 
[Foundation] Scholar Accountability Policy. This Accountability Policy 
clarifies and standardizes Foundation rules governing accountability of 
an individual selected as a Harry S. Truman Scholar [Scholar] to 
fulfill his or her obligation to become employed in public service. It 
requires any Scholar who is selected after January 2005 and who is not 
employed in public service for three of the seven years immediately 
following completion of his or her Foundation-funded graduate education 
to repay to the Foundation an amount equal to the Scholarship stipends 
received, with interest and any costs of collection.

DATES: This rule is effective July 22, 2005.

ADDRESSES: The final rule and supplemental information will also be 
posted on the Foundation Web site with links from the For Scholars, For 
Candidates, and For Fac Reps sections. They also may be obtained by 
written request to Louis H. Blair, Executive Secretary, Harry S. Truman 
Scholarship Foundation, 712 Jackson Place, NW., Washington, DC 20006.

FOR FURTHER INFORMATION CONTACT: Louis Blair, Harry S. Truman 
Scholarship Foundation, 202-395-4831.

SUPPLEMENTARY INFORMATION:

Table of Contents

1. Background of the Harry S. Truman Scholarship
2. History of the Accountability Policy
3. Summary of Comments Received and Foundation Responses
4. Text of Final Rule

1. Harry S. Truman Scholarship Foundation Directives

    The Harry S. Truman Memorial Scholarship Act [Act] honored former 
President Truman by creating ``a perpetual education scholarship 
program to develop increased opportunities for young Americans to 
prepare for and pursue careers in public service.'' 20 U.S.C. 2001. 
These scholarships are administered by the Foundation, whose purpose is 
to ``[encourage] young people to recognize and provide service in the 
highest and best traditions of the American political system at all 
levels of government * * * [and] to develop increased opportunities for 
young Americans to prepare and pursue careers in public service.'' 20 
U.S.C. 2001. The Act authorizes the Foundation to ``award scholarships 
to persons who demonstrate outstanding potential for and who plan to 
pursue a career in public service.'' 20 U.S.C. 2005(a)
    Under this scholarship program, the Foundation annually selects 
Scholars from among outstanding college juniors nominated by their 
college or university. Those selected receive educational stipends from 
the Foundation.
    The Act requires those nominated and selected for a Truman 
Scholarship to ``[indicate] a serious intent to enter the public 
service upon the completion of his or her educational program.'' 20 
U.S.C. 2005(d). The Foundation finds evidence of this intent in the 
nominee's previous record of public service and in his or her signing 
of a scholarship acceptance agreement, which in past years acknowledged 
an obligation to ``enter public service immediately upon graduation or 
immediately upon completion of any judicial clerkships(s) after 
graduation.'' A Scholar may continue to receive Foundation financial 
support only while ``devoting full time to study or research designed 
to prepare him or her for a career in public service.'' 20 U.S.C. 
2008(a).
    While the Foundation's regulations provide that it may suspend or 
terminate the Scholarship for a student who has a ``* * * loss of 
interest in a career in public service,'' 45 CFR 1801.61, it has only 
done so rarely. As detailed below, the Foundation has lacked an 
effective mechanism for assuring that Scholars who receive the 
Foundation's financial support are actually employed in public service.

2. History of the Accountability Policy

    While many Scholars pursue a public service career after completing 
their graduate education, a significant number do not. Because the 
Foundation has not imposed any reporting requirements on those whose 
scholarship funding has been completed, the Foundation's knowledge of 
former Scholars' career choices relies largely on informal contacts 
with former Scholars. Additionally, a mid-1990's survey (with a 60% 
response rate) of former Scholars revealed that two-thirds of the 
Scholars with law school degrees were employed in the private sector at 
the time of the survey. One quarter of former Scholars with other kinds 
of graduate degrees were employed in the private sector. This survey 
confirmed the impressions gleaned from less formal contacts.
    The Foundation, using the authority grated in 20 U.S.C. 2012, made 
several program changes to address the issue of Scholar Accountability.
    First, in 1991 the Foundation began selecting Scholars later in 
their academic career in anticipation that their career plans would be 
more definitive.
    Second, the Foundation established increased public service 
opportunities for Scholars through programming, Foundation staffing, 
and enhanced Scholar networks. The Foundation instituted Truman 
Scholars Leadership Week, Summer Institute, the Public Service Law 
Conference, and the Truman Fellows program in an effort to increase 
awareness of additional public service opportunities. The Foundation 
has also expanded its Web site to include fellowship, scholarship, and 
employment listings as well as a Scholar database. The Foundation has 
established relationships with graduate schools, graduate fellowships, 
and other public service programs in an effort to

[[Page 36037]]

expand opportunities for Scholars. The Foundation's Associate Executive 
Secretary maintains contact with the Truman Scholar Association (an 
organization of Truman Scholar alumni) to further build the Scholar 
network.
    Third, the Foundation attempted to impose repayment requirements--
to varying degrees and successes--on some Scholars believed to be 
particularly at-risk for a loss of interest in the public service.
    The first two of these program changes were successful in 
encouraging more Scholars to pursue public service careers; the last 
was not and was abandoned. But the success of these programs was not 
sufficient; a large number of Scholars still failed to enter public 
service.
    In response to Scholar concern, the Foundation convened a forum for 
interested parties on Saturday, March 22, 2003 in Washington, DC. 
Approximately 40 people--mostly current or former Scholars--attended. 
Comments received at that forum, as well as comments solicited through 
Scholar listservs and on the Web site, were incorporated into a 
presentation for the Board of Trustees on April 7, 2003.
    At that April meeting, the President of the Board of Trustees 
created the Task Force on Accountability to study the problem of 
Scholar accountability and make policy recommendations. The Task Force 
was chaired by a former Truman Scholar who serves also as a member of 
the Board of Trustees and the Treasurer of the Foundation. The Task 
Force also included three Truman Scholars and a representative of 
Foundation Trustee Senator Max Baucus. The Task Force reviewed data 
provided by the Foundation (including past surveys of Scholars), 
analyzed material from the Scholar Forum, conducted a survey of past 
Truman Scholars, and evaluated a variety of approaches to 
accountability.
    The Task Force provided an interim report to the Board of Trustees 
on August 26, 2003. After discussion, the Board directed the Task Force 
to produce a final report for the next Board meeting in spring of 2004. 
The draft report of the Task Force was posted on the Foundation Web 
site for public comment.
    The final report of the Task Force was presented to the Board, 
along with Scholar comments, on May 7, 2004. The Task Force proposed 
the policy expressed in this Rule. After unanimous approval by the 
Board of Trustees, the Foundation staff was directed to develop an 
implementation strategy for presentation to the Board of Trustees at 
the fall meeting.
    On September 24, 2004, the Associate Executive Secretary presented 
the implementation strategy to the Board of Trustees. The plan was 
unanimously approved.
    This rule was first published in the Federal Register [January 21, 
2005 (Volume 70, Number 13), page 3178-3179], and no comments were 
received. This rule was published again in the Federal Register [March 
14, 2005 (Volume 70, Number 48), page 12436-12437], and twenty-three 
comments were received. Nine supported and eight opposed the 
accountability policy. Six commenters posed questions about the 
proposed rule.

3. Summary of Comments Received and Foundation Responses

    Several commenters made more than one point in their comment. As a 
result, the number of responses listed below exceeds the total number 
of comments received.
    Comment: Nine commenters suggested that the Foundation should focus 
its efforts elsewhere. Of these responses, five made specific 
recommendations. Two commenters suggested that the Foundation develop 
more programs and post-graduate opportunities for Scholars. Another 
suggested that the Foundation pursue increased funding for the 
scholarship trust. Another suggested that Scholars be required to file 
additional annual reports with the Foundation. Another suggested that 
the Foundation provide funding for the Truman Scholar Association. The 
remaining four responses did not make specific suggestions.
    Foundation Response: The Foundation will continue its efforts to 
develop and support means in addition to the accountability policy to 
encourage Scholars to pursue public service careers. For example, 
concurrent with the development of the accountability policy, the 
Foundation initiated a one-year fellowship program designed to help 
Scholars find public service employment in Washington, DC. This 
fellowship will also allow Scholars to take a graduate level course in 
public policy development and administration. The Foundation also has 
developed a new Web site which provides additional post-graduate 
opportunities for Scholars and enhances Scholar database options to 
allow alumni to stay in better touch with the Foundation and each 
other. The Foundation's first priority remains to encourage Scholars to 
continue with a career in public service, rather than to collect 
repayments from those who fail to do so.
    Increased scholarship funding was considered. However, the Act's 
legislative history suggests that Congress considered the Foundation's 
original endowment to be a one-time appropriation. Additionally, 
members of the Board of Trustees currently serving in Congress advised 
that current budget deficits made an additional federal funding highly 
unlikely.
    This rule does expand to a limited degree the Foundation's annual 
report requirements: a Scholar will be required to provide employment 
information annually to the Foundation until it can be determined 
whether he or she fulfilled his or her public service commitment. After 
that, former Scholars are encouraged to submit updates--but are not 
required to do so under this rule.
    Given limited financial resources, the Foundation is not able to 
provide significant funding to the Truman Scholars Association (TSA) at 
this time. The Foundation will be providing TSA with access to 
Foundation databases and will include in the Foundation's Web site a 
link to the TSA Web site currently under development. The Foundation 
has also hopes to work with TSA to establish a Scholar mentoring 
program.
    Comment: Three commenters questioned how this policy would be 
communicated to potential applicants.
    Foundation Response: Information regarding the policy is included 
on the Web site in both the For Candidates and For Fac Reps sections. 
The policy has also been included in e-mails to Faculty 
Representatives, on the application materials, and in the Bulletin of 
Information. The Executive Secretary and Associate Executive Secretary 
included the policy in talks to potential applicants, Faculty 
Representatives, and to those engaged in the interview and selection 
process. The accountability policy also will be explained to newly 
selected Scholars participating in Truman Scholar Leadership Week.
    Comment: Three commenters suggested that there has not been 
sufficient proof that such a change is needed.
    Foundation Response: Perfect data will never be available. While 
acknowledging the limitations on readily available data, both the Task 
Force and the Board of Trustees determined that the available 
information about the ultimate careers chosen by Truman Scholars showed 
that far too many were eschewing public service careers. Additionally, 
both the Foundation staff and the Board of Trustees believe that every 
Truman

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Scholar should be accountable for fulfilling his or her commitment to 
public service.
    Comment: Two commenters felt that the amount of money given by the 
program was too little to merit such a policy.
    Foundation Response: The Foundation recognizes that the amount of 
the grant (currently $30,000) is only a portion of the cost of graduate 
school education. But these are public funds, and the Foundation 
believes that greater accountability for their use is appropriate.
    Comment: One commenter suggested that a former Scholar who was made 
to repay his or her scholarship stipend would then be unlikely to offer 
mentoring or assistance to other Scholars.
    Foundation Response: This concern is somewhat speculative. A former 
Scholar may mentor or assist other Scholars, or not, for a host of 
reasons unrelated to an accountability policy. Those Scholars who are 
asked to repay scholarship funds under the act are still entitled to 
identify themselves as Truman Scholars. A Scholar's decision to be 
employed in the private sector does not diminish the achievements that 
caused him or her to be selected as a Truman Scholar.
    Comment: One commenter suggested that the Foundation should offer a 
smaller initial grant to all Scholars and provide additional grants to 
those Scholars who go into careers in public service.
    Foundation Response: This option was discussed several times during 
the development of the accountability policy; it was ultimately 
rejected for several reasons. First, the Act provides that Scholar may 
continue to receive Foundation financial support only while ``devoting 
full time to study or research designed to prepare him or her for a 
career in public service,'' (20 U.S.C. 2008(a)), and thus may limit the 
Foundation's ability to provide financial support to a Scholar not 
meting that criterion. Second, receiving funds from the Foundation 
after a former Scholar completes his or her graduate study may create 
adverse tax consequences and may interfere with his or her ability to 
participate in loan-forgiveness programs that are income sensitive. 
Third, a reduction in the Scholarship award would likely lead to fewer 
and less prestigious applicants. Fourth, this type of active monitoring 
of Scholars would involve far more Foundation resources and discretion 
than the passive reporting method selected in the current Rule.
    Comment: One commenter stated that the proposed rule is contrary to 
the language of the ``Harry S. Truman Memorial Scholarship Act'' and 
the legislative history surrounding the Act.
    Foundation Response: The Act neither expressly requires nor 
expressly forbids the Foundation from adopting a financial incentive to 
encourage a Scholar to accept public service employment. Based on a 
thorough review of the Act's provisions and its legislative history, 
the Foundation's General Counsel in August 2003 advised the Board of 
Trustees that the Act authorized the Foundation to adopt a regulation 
imposing on every scholar who did not enter public service within a 
specified period after completing his or her graduate studies an 
obligation to repay the Foundation a specified portion of the funding 
receive from the Foundation. In adopting this final rule, the 
Foundation has accepted and relies on this opinion.

Summary of Comments Regarding Specific Sections of the Policy

    Regarding 1801.63 (a): A Scholar selected after January 2005 must 
be employed in public service for three of the seven years following 
completion of his or her Foundation funded graduate education.
    Comment: Seven commenters asked how the Foundation would define 
public service. Five commenters expressed concern that a narrow 
definition of public service would lead to either fewer or less 
prestigious applicants.
    Foundation Response: The proposed rule is to be included with other 
regulations governing the Foundation (45 CFR 1801, et seq.). The 
Foundation will rely on the definition of public service currently 
found and codified at 45 CFR 1801.45:

    Public service means employment in: governments at any level, 
the uniformed services, public interest organizations, non-
governmental research and/or educational organizations, and non-
profit organizations such as those whose primary purposes are to 
help needy or disadvantaged persons or to protect the environment.

    The Foundation adopted this expanded definition of public service 
to recognize the important contribution to the public interest made by 
those employed by non-government organizations. The Foundation intends 
to continue using this broad definition of public service.
    Since the Truman Scholarship is, and will continue to be, an award 
given for public service achievement, it is unlikely that further 
emphasis on public service will attract less prestigious applicants. 
Moreover, the more important measure of Scholarship program success is 
not how many applications are received, but how many of the applicants 
who are awarded Scholarships actually pursue a career in public 
service.
    Finally, the Foundation notes that those Scholars who are required 
to repay Scholarship funds still enjoy the prestige associated with 
having been selected as a Truman Scholar.
    Comment: Three commenters suggested that the Foundation should 
require a Scholar to be employed in public service for a greater period 
than three of the first seven years following the completion of 
Foundation funding; and two suggested that the periods chosen were 
arbitrary.
    Foundation Response: The Task Force on Accountability examined 
various public service career paths and discussed alternatives with 
Scholars, Board Members, and Foundation staff. The Task Force believe 
that the accountability policy should provide sufficient flexibility to 
accommodate a Scholar who needed a period of private sector employment 
to pay off debt or gain experience, who required time away from 
employment for family or other reasons, or who wished to change 
careers. The Task Force recommended these periods of required public 
service as a way to provide that flexibility, and the Trustees accepted 
that recommendation.
    Regarding 1801.63(b): Following completion of Foundation funded 
graduate education, Scholars must submit a report to the Foundation by 
July 15 of each year. This report will include the Scholar's current 
contact information as well as a brief description of his or her 
employment during the past twelve months. This reporting requirement 
ends when the Foundation determines that a Scholar has reported three 
years of public service employment and the Foundation notifies him or 
her that he or she no longer is required to submit reports. Scholars 
who fail for two consecutive years to submit the required report to the 
Foundation will be considered to have failed to complete the three-year 
public service requirement of paragraph (a) of this section.
    Comment: Four commenters expressed concern over how, and by whom, 
public or private service would be determined.
    Foundation Response: Each Scholar will be asked to fill out an on-
line survey on his or her employment, including his or her belief as to 
whether this employment is in the public or private sector. The 
Foundation will review the responses, and follow up as appropriate. Any 
disputed case will be

[[Page 36039]]

decided by the Executive Secretary. A Scholar will be notified of the 
decision and given time to appeal to an Appeals Committee made up of 
non-Foundation staff. Additional guidelines on the appeals process will 
be posted on the Foundation Web site.
    Comment: One commenter stated that the Foundation should keep 
better data in order to better track whether there is a need for such a 
policy.
    Foundation Response: This policy has been motivated, in part, by a 
need for the Foundation to be more accountable--both to the Scholars 
and to the public--by keeping better information on the activities of 
its Scholars. Currently, the Foundation only requires annual reports 
from Scholars still eligible to receive scholarship stipends. Once 
funding is complete, Scholars have no obligation to keep the Foundation 
informed of their activities. The Accountability Policy will enable the 
Foundation to keep better data--including information on graduate 
school, area of employment, additional fellowship or scholarship 
opportunities, and current contact information. This enhanced Scholar 
database will be available to all Scholars. The Foundation has expanded 
the Web site to better keep track of this information.
    Regarding 1801.63(c): A Scholar who fails to be employed in public 
service for three out of the first seven years following completion of 
his or her Foundation funded graduate education must repay to the 
Foundation an amount equal to:
    (1) All of the Scholarship stipends received,
    (2) Interest at the rate of 6% per annum from the date of receipt 
of each payment until repayment is made to the Foundation, and
    (3) Reasonable collection fees.
    Comment: Two commenters suggested that the 6% interest rate is 
arbitrary.
    Foundation Response: This figure was selected after reviewing other 
Federal grants of this type. The repayment schedule most closely 
resembles that of the James Madison Memorial Foundation (a program 
which awards grants to educators). After discussion with members of the 
Board of Trustees, Foundation Legal Counsel, and a consultant hired by 
the Foundation, the Foundation determined that a low, fixed rate would 
be most appropriate. Should prevailing interest rates be below 6%--a 
Scholar can obtain a loan with more favorable terms. Should prevailing 
interest rates be higher, the Scholar will be protected from having 
overly burdensome repayment obligations. Additionally, the fixed rate 
simplifies administration of the repayment program.
    Regarding 1801.63(f): Upon application by the Scholar showing good 
cause for doing so, the Foundation may waive or modify the repayment 
obligation established by paragraph (c) of this section.
    Comment: Three commenters suggested that the Policy would penalize 
individuals for taking time off to raise a family.
    Foundation Response: To the contrary, the waiver provision is 
intended to provide the Foundation flexibility in accommodating 
Scholars who are unemployed or who are acting as caregivers. However, 
these Scholars will still need to report their current activities.
    Comment: One commenter suggested that the Foundation should count 
public service employment before graduate school toward the 3-year 
service requirement.
    Foundation Response: While the Foundation encourages those selected 
as Scholars (all of whom are undergraduates) to spend time in public 
service before continuing to graduate school, that service occurs 
before the Scholar receives the bulk of his or her educational stipend 
from the Foundation. The Foundation's purpose, and the intent of the 
accountability policy, is to encourage a public service career after a 
Scholar completes his or her graduate education. This purpose is best 
achieved by focusing only on employment in the public service after 
graduate school.
    Comment: One commenter believed that the Foundation should count 
employment as a law clerk as public service.
    Foundation Comment: Under the accountability policy now being 
adopted, employment as a law clerk would count toward the 3-year 
service requirement.
    Regarding 1801.63(g): The Foundation will establish a process for 
appealing any disputes concerning the accrual of the repayment 
obligation imposed by paragraph (c) of this section. The Foundation 
will publish on its Web site http://www.truman.gov information about 
this appeals process and other information pertinent to repayment 
obligations accruing under this Sec.  1801.63.
    Comment: Five commenters believed that more guidelines regarding 
the policy need to be available to potential Scholars.
    Foundation Response: The Foundation will develop additional 
guidelines and rules to implement this policy. Since the policy 
repayment obligations are unlikely to accrue before 2010, the 
Foundation is able to begin with a basic outline of the policy. The 
Foundation intends at a later time to publish additional guidelines on 
its Web site. Instructions for those wishing to comment on the 
guidelines will be posted on the Web site as well.

List of Subjects in 45 CFR Part 1801

    Grant programs--education, Scholarships and fellowships.

4. Text of Final Rule

0
The Foundation amends 45 CFR part 1801 as follows:

PART 1801--HARRY S. TRUMAN SCHOLARSHIP PROGRAM

0
1. The authority citation for 45 CFR part 1801 continues to read as 
follows:

    Authority: Pub L. 93-642, 88 Stat. 2276 (20 U.S.C. 2001-2012).


0
2. Add Sec.  1801.63 to read as follows:


Sec.  1801.63  Scholar Accountability

    (a) A Scholar selected after January 2005 must be employed in 
public service for three of the seven years following completion of his 
or her Foundation funded graduate education.
    (b) Following completion of Foundation funded graduate education, 
Scholars must submit a report to the Foundation by July 15 of each 
year. This report will include the Scholar's current contact 
information as well as a brief description of his or her employment 
during the past twelve months. This reporting requirement ends when the 
Foundation determines that a Scholar has reported three years of public 
service employment and the Foundation notifies him or her that he or 
she no longer is required to submit reports. Scholars who fail for two 
consecutive years to submit the required report to the Foundation will 
be considered to have failed to complete the three year public service 
requirement of paragraph (a) of this section.
    (c) A Scholar who fails to be employed in public service for three 
out of the first seven years following completion of his or her 
Foundation funded graduate education must repay to the Foundation an 
amount equal to:
    (1) All of the Scholarship stipends received,
    (2) Interest at the rate of 6% per annum from the date of receipt 
of each payment until repayment is made to the Foundation, and
    (3) Reasonable collection fees.
    (d)(1) The repayment obligation of paragraph (c) of this section 
accrues on the first July 15 on which it becomes impossible for a 
Scholar to fulfill the

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three year public service requirement of paragraph (a) of this section. 
For example, the repayment obligation would accrue on July 15 of the 
sixth year following completion of Foundation funded graduate education 
for a Scholar who has been employed in the public service for only one 
of those six years.
    (2) The Foundation will send to the Scholar's last known address a 
notice that his or her repayment obligation has accrued. The failure, 
however, of the Foundation to send, or the Scholar to receive, such a 
notice does not alter or delay the Scholar's repayment obligation.
    (e) The Foundation may employ whatever remedies are available to it 
to collect any unpaid obligation accruing under this Sec.  1801.63.
    (f) Upon application by the Scholar showing good cause for doing 
so, the Foundation may waive or modify the repayment obligation 
established by paragraph (c) of this section.
    (g) The Foundation will establish a process for appealing any 
disputes concerning the accrual of the repayment obligation imposed by 
paragraph (c) of this section. The Foundation will publish on its Web 
site http://www.truman.gov information about this appeals process and 
other information pertinent to repayment obligations accruing under 
this Sec.  1801.63.

    Dated: June 16, 2005.
Louis H. Blair,
Executive Secretary.
[FR Doc. 05-12235 Filed 6-21-05; 8:45 am]
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