[Federal Register Volume 73, Number 56 (Friday, March 21, 2008)]
[Proposed Rules]
[Pages 15336-15374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-5196]



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Part III





Department of Education





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34 CFR Parts 668, 673, 674, et al.



The Teacher Education Assistance for College and Higher Education 
(TEACH) Grant Program and Other Federal Student Aid Programs; Proposed 
Rule

  Federal Register / Vol. 73, No. 56 / Friday, March 21, 2008 / 
Proposed Rules  

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DEPARTMENT OF EDUCATION

34 CFR Parts 668, 673, 674, 675, 676, 682, 685, 686, and 690

RIN 1840-AC93
[Docket ID ED-2008-OPE-0001]


The Teacher Education Assistance for College and Higher Education 
(TEACH) Grant Program and Other Federal Student Aid Programs

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to amend title 34 of the Code of 
Federal Regulations to establish regulations for the Teacher Education 
Assistance for College and Higher Education (TEACH) Grant Program. The 
TEACH Grant program is a non-need-based grant program that provides up 
to $4,000 per year to students who are enrolled in an eligible program 
and who agree to teach in a high-need field, at a low-income elementary 
or secondary school for at least four years within eight years of 
completing the program for which the TEACH Grant was awarded. If the 
grant recipient fails to complete the required teaching service, the 
TEACH grant is treated as a Federal Direct Unsubsidized Stafford Loan 
(Federal Direct Unsubsidized Loan). The Secretary also proposes to 
amend the regulations related to the Student Assistance General 
Provisions; the General Provisions for the Federal Perkins Loan 
Program, the Federal Work-Study Program, the Federal Supplemental 
Educational Opportunity Grant Program; the Federal Perkins Loan 
Program; the Federal Work-Study Programs; the Federal Supplemental 
Educational Opportunity Grant Program; the Federal Family Education 
Loan (FFEL) Program; the William D. Ford Federal Direct Loan Program; 
and the Federal Pell Grant Program to implement the TEACH Grant 
Program. These proposed regulations are needed to implement provisions 
of the Higher Education Act of 1965 (HEA), as amended by the College 
Cost Reduction and Access Act of 2007 (CCRAA).

DATES: We must receive your comments on or before April 21, 2008.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via postal mail, commercial delivery, or hand delivery. We will not 
accept comments by fax or by e-mail. Please submit your comments only 
one time, in order to ensure that we do not receive duplicate copies. 
In addition, please include the Docket ID at the top of your comments.
     Federal eRulemaking Portal: Go to http://www.regulations.gov to submit your comments electronically. Information 
on using Regulations.gov, including instructions for accessing agency 
documents, submitting comments, and viewing the docket, is available on 
the site under ``How To Use This Site.''
     Postal Mail, Commercial Delivery, or Hand Delivery. If you 
mail or deliver your comments about these proposed regulations, address 
them to Michelle Belton, U.S. Department of Education, 1990 K Street, 
NW., room 8031, Washington, DC 20006-8502.

    Privacy Note: The Department's policy for comments received from 
members of the public (including those comments submitted by mail, 
commercial delivery, or hand delivery) is to make these submissions 
available for public viewing on the Federal eRulemaking Portal at 
http://www.regulations.gov. All submissions will be posted to the 
Federal eRulemaking Portal without change, including personal 
identifiers and contact information.


FOR FURTHER INFORMATION CONTACT: Michelle Belton, U.S. Department of 
Education, 1990 K Street, NW., room 8031, Washington, DC 20006-8502. 
Telephone: (202) 502-7821 or via the Internet at: 
[email protected].
    If you use a telecommunications device for the deaf, call the 
Federal Relay Service (FRS), toll free, at 1-800-877-8339.
    Individuals with disabilities can obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed under FOR FURTHER 
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION: 

Invitation To Comment

    As outlined in the section of this notice entitled ``Negotiated 
Rulemaking,'' significant public participation, through three public 
hearings and three negotiated rulemaking sessions, has occurred in 
developing this notice of proposed rulemaking (NPRM). Therefore, in 
accordance with the requirements of the Administrative Procedure Act, 
the Department invites you to submit comments regarding these proposed 
regulations on or before April 21, 2008. 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, including its overall 
requirements to assess both the costs and the benefits of the intended 
regulation and feasible alternatives, and to make a reasoned 
determination that the benefits of this intended regulation justify its 
costs. 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 by accessing Regulations.gov. 
You may also inspect the comments, in person, in room 8031, 1990 K 
Street, NW., 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, please contact the person 
listed under FOR FURTHER INFORMATION CONTACT.

Negotiated Rulemaking

    Section 492 of the HEA requires the Secretary, before publishing 
any proposed regulations for programs authorized by Title IV of the 
HEA, to obtain public involvement in the development of the proposed 
regulations. After obtaining advice and recommendations from the 
public, including individuals and representatives of groups involved in 
the Federal student financial assistance programs, the Secretary must 
subject the proposed regulations to a negotiated rulemaking process. 
All proposed regulations that the Department publishes on which the 
negotiators reached consensus must conform to final agreements 
resulting from that process unless the Secretary reopens the process or 
provides a written explanation to the participants stating why the 
Secretary has decided to depart from the agreements. Further 
information on the negotiated rulemaking process can be found at:

[[Page 15337]]

http://www.ed.gov/policy/highered/reg/hearulemaking/2008/index2008.html.
    On October 22, 2007, the Department published a notice in the 
Federal Register (72 FR 59494) announcing our intent to establish up to 
two negotiated rulemaking committees to prepare proposed regulations. 
One committee would focus on issues related to the new TEACH Grant 
program (TEACH Grant Committee). A second committee would address 
Federal student loans. The notice requested nominations of individuals 
for membership on the committees who could represent the interests of 
key stakeholder constituencies on each committee. The TEACH Grant 
Committee met to develop proposed regulations twice during the month of 
January, 2008 and once in early February, 2008. This NPRM proposes 
regulations relating to the administration of the TEACH Grant program.
    The Department developed a list of proposed regulatory provisions 
for the TEACH Grant program from advice and recommendations submitted 
by individuals and organizations in testimony submitted to the 
Department in a series of three public hearings held on:
     November 2, 2007, at the Sheraton New Orleans, New 
Orleans, Louisiana.
     November 16, 2007, at the U.S. Department of Education in 
Washington, DC.
     November 29, 2007, at the Manchester Grand Hyatt San 
Diego, San Diego, California.
    In addition, the Department accepted written comments on possible 
regulatory provisions submitted directly to the Department by 
interested parties and organizations. A summary of all comments 
received orally and in writing is posted as background material in the 
docket. Transcripts of the regional meetings can be accessed at http://www.ed.gov/policy/highered/reg/hearulemaking/2008/index2008.html.
    Staff within the Department also identified issues for discussion 
and negotiation.
    At its first meeting, the TEACH Grant Committee reached agreement 
on its protocols and proposed agenda. These protocols provided that the 
non-Federal negotiators would participate in the negotiated rulemaking 
process based on their experience and expertise.
    The TEACH Grant Committee included the following members:
     Dr. Nell Ingram, Dallas Independent School District and 
Judy Corcillo (alternate), National Association for Alternative 
Certification.
     Donna Harris-Aikens, National Education Association and 
James Rice (alternate), Quinsigamond Community College.
     Dr. William H. Graves, III, Darden College of Education, 
Old Dominion University and Dr. J. Roberts Hendricks (alternate), 
College of Education, University of Arizona.
     Dr. Sandra Robinson, College of Education, University of 
Central Florida and Dr. Jane West (alternate), American Association of 
Colleges for Teacher Education.
     Joseph Pettibon, Texas A&M University and Beth Stack 
(alternate), University of Pittsburgh.
     Dr. Herbert Brunkhorst, California State University San 
Bernardino and Janis Lariviere (alternate), Teacher Development Center 
for Science Education, University of Kansas.
     Janet Dodson, Doane College and Bernard A. Pekala, Jr. 
(alternate), Boston College.
     Ellis Salim, Baker College and Maureen Budetti 
(alternate), National Association of Independent Colleges and 
Universities.
     Scott Fleming, Georgetown University and Thomas O'Neill 
(alternate), Association of Independent Colleges and Universities of 
Nebraska.
     Mary Dorrell, Career Education Corporation and Tammy 
Halligan (alternate), Career College Association.
     Patrick Moore, Delaware Technical and Community College.
     Jim Hermes, American Association of Community Colleges and 
Julia Brown (alternate), Northern Virginia Community College.
     Carmen Berkley, United States Student Association and 
Cedric Lawson (alternate), United Council of University of Wisconsin 
Students.
     Terry Hartle, American Council on Education and Cyndy 
Littlefield (alternate), Association of Jesuit Colleges and 
Universities.
     Gail McLarnon, U.S. Department of Education.
    During its meetings, the TEACH Grant Committee reviewed and 
discussed drafts of proposed regulations. At the final meeting in 
February 2008, the TEACH Grant Committee reached consensus on all of 
the proposed regulations in this document. More information on the work 
of the TEACH Grant Committee can be found at: http://www.ed.gov/policy/highered/reg/hearulemaking/2008/teach.html.
    The Secretary bases these proposed regulations for the TEACH Grant 
program on the regulations of the Federal Pell Grant program or the 
William D. Ford Federal Direct Loan (Direct Loan) program as 
appropriate given the similar nature of these programs. Like the 
Federal Pell Grant program, the TEACH Grant program provides for direct 
grants from the Federal government to students to assist in paying 
their college expenses. However, unlike the Federal Pell Grant program, 
the TEACH Grant program requires grant recipients to complete a service 
obligation consisting of four years of teaching in a high-need field at 
a low-income elementary or secondary school within eight years of 
completing the program of study for which the TEACH Grant was given. If 
a recipient fails to complete this service obligation, the TEACH Grant 
converts to a Federal Direct Unsubsidized Loan.
    Under the proposed regulations, the Secretary would deliver funds 
using the same system as used for the Federal Pell Grant and Direct 
Loan programs. This will allow the coordination of administrative 
requirements and will assist participating institutions in 
administering the program, reduce the institutional administrative 
burden and paperwork, and simplify the application process for 
students. Accordingly, these proposed regulations would include the 
following definitions, without changes, from the Federal Pell Grant 
program regulations in 34 CFR 690.2:

Institutional Student Information Record (ISIR) Payment Data

Student Aid Report (SAR)

    In addition, the substance of proposed Sec. Sec.  686.5, 686.22(a) 
through (f), 686.25, 686.30, 686.33, 686.34, 686.35, 686.36 and 686.38 
reflect the Pell Grant requirements in 34 CFR 690.8, 690.63(a) through 
(f), 690.66, 690.71, 690.76, 690.79, 690.80(a) and (b), 690.81, and 
690.82. We have included these specific Pell Grant requirements in the 
text of the proposed TEACH Grant regulations to provide a complete 
description in part 686 of the program-specific requirements for the 
TEACH Grant program. Other sections of the proposed TEACH Grant program 
regulations reflect the Federal Pell Grant program requirements and the 
William D. Ford Federal Direct Loan program requirements to the extent 
practicable.

Significant Proposed Regulations

    We group major issues according to subject, with appropriate 
sections of the proposed regulations referenced in parenthesis. We 
discuss substantive issues under the sections of the proposed 
regulations to which they pertain.

Late Disbursements (Sec.  668.164(g))

    Statute: The HEA does not specifically address the issue of late 
disbursements of TEACH Grants.

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    Proposed Regulations: Current 34 CFR 668.164(g) allows a student 
who is no longer eligible to receive Title IV, HEA program funds to 
qualify for those funds if certain conditions are satisfied; for 
example, the institution receiving a SAR or an ISIR with an official 
expected family contribution. Current Sec.  668.164(g) also specifies 
the affected programs. The proposed regulations would add the TEACH 
Grant program to the list in Sec.  668.164(g) of programs for which a 
student becomes ineligible when the student is no longer enrolled at 
the institution for the award year. The proposed regulations would also 
describe how TEACH Grant recipients may qualify for a late 
disbursement.
    Reason: For a student to be considered eligible for a late 
disbursement of Title IV aid, the institution must have received a SAR 
or an ISIR with an official expected family contribution (EFC) and must 
originate the award before the student became ineligible. For TEACH 
Grant purposes, ``originate'' means that the student meets the 
eligibility requirements of Sec.  686.11, including signing the service 
agreement.

Calculating and Applying Cohort Default Rates (Sec.  668.183)

    Statute: Section 435(m) of the HEA defines cohort default rate 
calculation procedures.
    Proposed Regulations: We are proposing to amend current 34 CFR 
668.183 to specify that for purposes of calculating an institution's 
cohort default rate, a TEACH Grant that has been converted to a Federal 
Direct Unsubsidized Loan is not included.
    Reason: In the case of a student whose TEACH Grant is converted to 
a Federal Direct Unsubsidized Loan and who defaults on that loan, the 
Secretary does not believe that the loan should be included in the 
institution's cohort default rate calculation. The TEACH Grant award is 
originally made to the student as a grant and converts to a loan only 
after the student takes (or fails to take) certain actions. This 
conversion may occur many years after the award is made. Including the 
loan in the calculation of the rate at this stage in the process would 
not serve the purposes of the cohort default rate. The cohort default 
rates are a measure of an institution's administrative capability to 
control defaults to the extent the rates are calculated on data 
reasonably related to the period of a student's attendance at an 
institution. The conversion of TEACH Grants to Direct Loans will 
generally occur at a significantly later point in time than would be 
reasonable to include in an institution's cohort default rate.

Overaward (Sec.  673.5)

    Statute: Section 420M(c)(2) of the HEA provides that the TEACH 
Grant, in combination with Federal assistance and other student 
assistance, may not exceed the student's cost of attendance.
    Proposed Regulations: We are proposing to amend current 34 CFR 
673.5(c) to include the amount of any TEACH Grant in the types of funds 
that may be used to replace a student's EFC and to clarify that any 
amount in excess of a student's EFC is considered estimated financial 
assistance.
    Reason: TEACH Grants are not awarded based on need and therefore 
are permitted to replace a student's EFC. As with other forms of aid 
that may replace EFC, any TEACH Grant amount in excess of the EFC is 
considered estimated financial assistance.

Part 686--Teacher Education Assistance for College and Higher Education 
(TEACH) Grant Program

Definitions (Sec.  686.2)

Academic Year or Its Equivalent for Elementary and Secondary Schools 
(Elementary or Secondary Academic Year)

    Statute: Section 420N(b)(1)(A) of the HEA provides that a grant 
recipient must serve as a full-time teacher for a total of not less 
than four academic years within eight years after completing the 
program of study for which he or she received a TEACH grant.
    Proposed Regulations: Proposed Sec.  686.2 would provide a 
definition of academic year or its equivalent for elementary and 
secondary schools (elementary or secondary academic year) for purposes 
of the TEACH Grant program. An academic year for elementary and 
secondary schools would be one complete school year or two complete and 
consecutive half-years from different school years, excluding summer 
sessions, that generally fall within a 12-month period. If a school has 
a year-round program of instruction, the Secretary would consider a 
minimum of nine consecutive months to be the equivalent of an academic 
year.
    Reasons: This proposed definition is adopted from the definition of 
the term ``academic year'' used for purposes of determining teacher 
loan forgiveness in the Federal Family Education Loan (FFEL) program 
regulations in 34 CFR 682.215(b). Using the same definition for the 
TEACH Grant program would ensure equity in that the service performed 
by participants in both of these programs would be calculated in the 
same manner. Several non-Federal negotiators suggested removing the 
word ``consecutive'' from the first paragraph of the definition and 
eliminating the exclusion of summer sessions. The Secretary believes 
that these suggested changes would effectively allow a grant recipient 
to complete the four-year service obligation in less than four years, 
contrary to the TEACH Grant provisions in the statute. The Secretary is 
further concerned that full-time teaching in a summer session is not 
equivalent to full-time teaching in a regular school term.
    Some non-Federal negotiators requested that the term 
``consecutive'' be removed from the second paragraph of the definition, 
which deals with a year-round program of instruction. These negotiators 
expressed concern that, because some year-round calendars punctuate the 
months of instruction with breaks of several weeks in length, year-
round calendars may not technically meet the requirement for a minimum 
of nine consecutive months to be the equivalent of an academic year. 
The Department has decided not to remove the word ``consecutive'' 
because that would make this definition inconsistent with the one used 
for purposes of the teacher loan forgiveness in the FFEL program. That 
definition has been in use for several years without causing any 
difficulties. However, the Secretary would consider nine months of 
full-time teaching within a 12-month period in a year-round program the 
equivalent of an academic year for purposes of the TEACH Grant program.

Annual Award and Scheduled Award

    Statute: Section 420M(a)(1) of the HEA establishes $4,000 as the 
amount a TEACH Grant-eligible student may receive for a year, and 
section 420M(c)(1) of the HEA provides that awards for part-time 
attendance are reduced in proportion to a student's less-than-full-time 
enrollment status.
    Proposed Regulations: Proposed Sec.  686.2 would define the term 
Scheduled Award as the maximum amount of a TEACH Grant that a full-time 
student could receive for a year and the term an annual award as the 
maximum TEACH Grant amount a student would receive for enrolling as a 
full-time, three-quarter-time, half-time, or less-than-half-time 
student and remaining in that enrollment status for a year.
    Reason: These definitions, in conjunction with the provisions of 
subpart C of the proposed regulations (Determination of Awards) would

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ensure compliance with the statutory requirements that a TEACH Grant-
eligible student receive an award of $4,000 for attendance during a 
year and that a student's payments be adjusted based on the student's 
enrollment status during a payment period.

Elementary School

    Statute: Section 420N(b)(1)(A) and (B) of the HEA provides that a 
TEACH Grant recipient must serve as a full-time teacher for a total of 
not less than four academic years within eight years after completing 
the course of study for which he or she received a TEACH Grant in an 
elementary or secondary school that serves low-income students.
    Proposed Regulations: Proposed Sec.  686.2 would provide a 
definition of elementary school for TEACH Grant purposes. The term 
elementary school would be defined as a nonprofit institutional day or 
residential school, including a public elementary charter school, which 
provides elementary education, as determined under State law.
    Reason: This proposed definition, which would implement the 
statutory requirement that a TEACH Grant recipient teach in an 
elementary or secondary school, is from section 9101(18) of the 
Elementary and Secondary Education Act of 1965 (ESEA).

High-Need Field

    Statute: Section 420N(b)(1)(C) of the HEA provides that a grant 
recipient must teach in one of the high-need fields of mathematics, 
science, a foreign language, bilingual education, special education, as 
a reading specialist or in another field documented as high-need by the 
Federal Government, State government, or local educational agency 
(LEA), and approved by the Secretary. Section 420N(a)(2)(B)(i) 
identifies English language acquisition as a high-need field.
    Proposed Regulations: Proposed Sec.  686.2 would define the term 
high-need field for the purposes of the TEACH Grant program. A high-
need field would include bilingual education and English language 
acquisition, foreign language, mathematics, reading specialist, 
science, special education, and any other field documented as high-need 
by the Federal Government, a State government or an LEA, and approved 
by the Secretary and listed in the Department's annual Teacher Shortage 
Area Nationwide Listing (Nationwide List).
    Reason: This proposed definition would implement the statutory 
requirement that, to meet the service obligation, a TEACH Grant 
recipient must teach in a high-need field.

Highly-Qualified

    Statute: Section 420N(b)(1)(E) of the HEA provides that a TEACH 
Grant recipient must comply with the requirements for being a highly-
qualified teacher, as defined in section 9101 of the ESEA.
    Proposed Regulations: Proposed Sec.  686.2 would define the term 
highly-qualified for purposes of the TEACH Grant program. The term 
would have the meaning set forth in section 9101(23) of the ESEA or in 
section 602(10) of the Individuals with Disabilities Education Act 
(IDEA).
    Reason: This proposed definition would implement the statutory 
requirement that a TEACH Grant recipient serve as a highly-qualified 
teacher. The Secretary considers it appropriate to use the definition 
of highly-qualified from the ESEA for teachers in all of the high-need 
fields listed in the HEA with the exception of special education 
teachers. Special education teachers must satisfy the definition of 
highly-qualified in section 602(10) of the IDEA.

Numeric Equivalent

    Statute: Section 420N(a)(2)(A)(ii)(I) of the HEA provides that a 
student may be eligible for a TEACH Grant based, in part, on a grade 
point average (GPA) comparable to a 3.25 average on a 4.0 scale under 
standards prescribed by the Secretary.
    Proposed regulations: Under proposed Sec.  686.11(a)(1)(v), a 
student may be eligible for a TEACH Grant based on a cumulative GPA at 
an institution (or, in the case of a first year student, at a secondary 
school) of at least 3.25 on a 4.0 scale, or the numeric equivalent. We 
are proposing to define the term numeric equivalent, for purposes of 
the TEACH Grant program, in a manner consistent with the definition of 
that term in 34 CFR 691.15(g) of the Academic Competitiveness Grant 
(ACG) program and National Science and Mathematics Access to Retain 
Talent (SMART) Grant program regulations.
    As in the ACG and National SMART Grant programs, to determine a 
numeric equivalent, an institution that has one or more academic 
programs that measure academic performance using alternatives to 
standard numeric grading procedures would be required to develop and 
apply an academically defensible equivalency policy with a numeric 
scale for purposes of determining student eligibility. That equivalency 
policy would need to be in writing and available to students upon 
request. The policy would also need to include clear differentiations 
of student performance to support a determination that a student has 
performed, in his or her TEACH Grant-eligible program, at a level 
commensurate with at least a 3.25 GPA on a 4.0 scale. Generally, a 
grading policy that includes only ``satisfactory/unsatisfactory'', 
``pass/fail'', or other similar nonnumeric assessments would not be a 
numeric equivalent under the proposed regulations. However, such 
assessments would be considered numeric equivalents if the institution 
could demonstrate that the ``pass'' or ``satisfactory'' standard has 
the numeric equivalent of at least a 3.25 GPA on a 4.0 scale, or that a 
student's performance for tests and assignments yielded a numeric 
equivalent of a 3.25 GPA on a 4.0 scale. Under the proposed definition 
of the term numeric equivalent, the institution's equivalency policies 
would need to be consistent with any other standards that the 
institution may have developed for academic and other Title IV, HEA 
program purposes, such as graduate school applications and scholarship 
eligibility, to the extent such standards distinguish among various 
levels of a student's academic performance.
    Reason: During negotiated rulemaking, the non-Federal negotiators 
requested clarification of the term ``numeric equivalent'' as it is 
used to determine comparability to a 3.25 GPA on a 4.0 scale. We agreed 
to incorporate the definition of the term as it is used in the ACG and 
National SMART Grant programs. The ACG and National SMART Grant 
programs have GPA requirements that are similar to those of TEACH 
Grants in that students are required to maintain minimum GPAs to retain 
eligibility for a TEACH Grant. The Department has had a successful 
experience implementing the ACG/National SMART Grant programs' 
definition of ``numeric equivalent,'' and thus believes that this 
definition should be applied to GPA calculations for the TEACH Grant 
program. In addition, maintaining a consistent definition between 
programs minimizes burden for institutions and provides a consistent 
standard between programs.

Post-Baccalaureate Program

    Statute: Section 420L(2) of the HEA defines post-baccalaureate as a 
program of instruction for teacher candidates who have completed a 
baccalaureate degree, that does not lead to a graduate degree, and that 
consists of courses required by a State in order for a teacher 
candidate to receive a professional certification or licensing 
credential that

[[Page 15340]]

is required for employment as a teacher in an elementary school or 
secondary school in that State, but does not include any program of 
instruction offered by a TEACH Grant-eligible institution that offers a 
baccalaureate degree in education.
    Proposed Regulations: Proposed Sec.  686.2 would define the term 
post-baccalaureate program for purposes of the TEACH Grant program 
using the statutory language and stating that a post-baccalaureate 
program would be treated as an undergraduate program for TEACH Grant 
purposes.
    Reason: This proposed definition is necessary to implement the HEA 
and to clarify that the Secretary considers a post-baccalaureate 
program to be an undergraduate program for TEACH Grant purposes.

Retiree

    Statute: Section 420N(2)(B)(i) of the HEA provides that a retiree 
from another occupation with expertise in a field in which there is a 
shortage of teachers who is pursuing a master's degree to prepare to 
teach would be eligible for a TEACH Grant.
    Proposed Regulations: Proposed Sec.  686.2 would define the term 
retiree, for purposes of the TEACH Grant program, as an individual who 
has decided to change his or her occupation for any reason and who has 
expertise, as determined by the institution, in a high-need field.
    Reason: This proposed definition would implement the statutory 
provision specifying that individuals who are seeking a master's degree 
and are retirees from another occupation with expertise in a field in 
which there is a shortage of teachers may be eligible for a TEACH 
Grant.

School Serving Low-Income Students (Low-Income School)

    Statute: Section 420N(b)(1)(B) of the HEA provides that a TEACH 
Grant recipient must agree to teach in a school described in section 
465(a)(2)(A) of the HEA.
    Proposed Regulations: Proposed Sec.  686.2 would define a school 
serving low-income students (low-income school), for purposes of the 
TEACH Grant program, as an elementary or secondary school that is in 
the school district of an LEA that is eligible for assistance pursuant 
to Title I of the ESEA; that has been determined by the Secretary to be 
a school in which more than 30 percent of the school's total enrollment 
is made up of children who qualify for services provided under Title I 
of the ESEA; and that is listed in the Department's Annual Directory of 
Designated Low-Income Schools for Teacher Cancellation Benefits. The 
Secretary would consider all elementary and secondary schools operated 
by the Bureau of Indian Education (BIE) or operated on Indian 
reservations by Indian tribal groups under contract or grant with the 
BIE to qualify as schools serving low-income students.
    Reason: The proposed definition is drawn from section 465(a)(2)(A) 
of the HEA, which provides for loan cancellation for teachers in the 
Federal Perkins Loan Program. The non-Federal negotiators questioned 
whether the designation of a low-income school would be made by the 
school district or by the individual school. As is clearly specified in 
section 465(a)(2)(A) of the HEA, the designation of a low-income school 
is made at the level of the individual school.

Secondary School

    Statute: Section 420N(b)(1)(A) and (B) of the HEA provides that a 
TEACH Grant recipient must serve as a full-time teacher in an 
elementary or secondary school that serves low-income students for a 
total of not less than four academic years within eight years after 
completing the course of study for which he or she received a TEACH 
Grant.
    Proposed Regulations: Proposed Sec.  686.2 would define the term 
secondary school, for TEACH Grant purposes, as a secondary school would 
be a nonprofit institutional day or residential school, including a 
public secondary charter school, that provides secondary education, as 
determined under State law, but does not include any education beyond 
grade 12.
    Reason: This proposed definition, which is taken from section 
9101(38) of the ESEA, would implement the statutory requirement that a 
TEACH Grant recipient teach in an elementary or secondary school.

Service Agreement

    Statute: Section 420N(b) of the HEA provides that each applicant 
for a TEACH Grant must sign an agreement to serve as a full-time 
teacher in a low-income school in a high-need field for a total of not 
less than four academic years within eight years after completing the 
course of study for which the individual received a TEACH Grant, submit 
evidence of such employment in the form of a certification by the chief 
administrative officer of the school upon completion of each year of 
service, and comply with the requirements for being a highly-qualified 
teacher.
    Proposed Regulations: Proposed Sec.  686.2 would define the term 
service agreement, for purposes of the TEACH Grant program, as an 
agreement under which the individual receiving a TEACH Grant commits to 
meet the service obligation described in Sec.  686.12 and to comply 
with the notification requirements and other provisions of the 
agreement.
    Reason: This proposed definition would implement the statutory 
requirement that a service agreement accompany each TEACH Grant 
application.

TEACH Grant-Eligible Institution

    Statute: Section 420L(1) and (2) of the HEA provides that an 
eligible institution for purposes of the TEACH Grant program is an 
institution of higher education as defined in section 102 of the HEA 
that is financially responsible and that provides: High-quality teacher 
preparation and professional development services, including extensive 
clinical experience as part of pre-service preparation; pedagogical 
coursework, or assistance in the provision of such coursework; and 
supervision and support services to teachers, or assistance in the 
provision of such services, or that provides a post-baccalaureate 
program of instruction.
    Proposed Regulations: The proposed definition of TEACH Grant-
eligible institution in Sec.  686.2 would implement the statutory 
requirement that an institution must be financially responsible by 
using the current standards for institutions participating in the Title 
IV HEA programs in 34 CFR part 668, subpart L. Under the proposed 
definition, an institution must meet this financial responsibility 
requirement and provide a high-quality teacher preparation program at 
the baccalaureate or master's degree level that is (1) accredited by a 
specialized accrediting agency recognized by the Secretary for the 
accreditation of professional teacher education programs; or (2) 
approved by a State, includes extensive pre-service clinical 
experience, and provides pedagogical coursework, or the assistance in 
the provision of such coursework. In both cases, the institution must 
provide supervision and support services to teachers or assist in the 
provision of services to teachers.
    Under the proposed definition of TEACH Grant-eligible institution, 
an institution that is financially responsible would also be eligible 
to participate in the TEACH Grant program under any of the following 
conditions:
    (A) The institution offers a post-baccalaureate program but not a

[[Page 15341]]

baccalaureate teacher preparation program.
    (B) The institution offers a baccalaureate degree that, in 
combination with other training or experience, will prepare an 
individual to teach in a high-need field and has entered into an 
agreement with a TEACH Grant-eligible institution that offers a teacher 
preparation program or one that offers a post-baccalaureate program.
    (C) The institution provides either a two-year program that is 
acceptable for full credit toward a high-quality baccalaureate teacher 
preparation program at a TEACH Grant-eligible institution, as 
demonstrated by the institutions, or a two-year program that is 
acceptable for full credit toward a baccalaureate degree in a high-need 
field at a TEACH Grant-eligible institution, as demonstrated by the 
institutions.
    Reasons: For TEACH Grant purposes, section 420L of the HEA 
specifies that an eligible institution must be financially responsible. 
Unlike the current regulations that allow an institution that is not 
financially responsible to continue to participate in all of the other 
title IV, HEA programs under an alternate financial standard in Sec.  
668.175, the proposed regulations would not permit that institution to 
participate in the TEACH Grant program under alternate standards in 
Sec.  668.175(d)(1)(ii), (f), or (g).
    The proposed definition of TEACH Grant-eligible institution would 
make several kinds of institutions TEACH Grant-eligible. In some cases 
eligibility would be based on an institution's offering a teacher 
preparation program. In other cases, eligibility would be based on the 
relationships institutions establish with one another. This would 
provide for several pathways for students to acquire the education and 
knowledge needed to serve as highly-qualified teachers in high-need 
fields. One such pathway would be completion of a baccalaureate or 
master's degree teacher preparation program. The Department initially 
considered requiring that the teacher preparation program offered by an 
institution be accredited by a specialized accrediting agency 
recognized by the Secretary for the accreditation of teacher education 
programs or be approved by a State. However, because section 420L(1)(A) 
of the HEA stipulates that teacher preparation must include extensive 
clinical experience, and some States approve programs that do not 
include extensive clinical experience, the Department proposes instead 
that a teacher preparation program must either be accredited by a 
specialized accrediting agency or approved by a State and include 
extensive pre-service clinical experience and pedagogical coursework.
    The proposed definition of TEACH Grant-eligible program would 
clarify that, in order to be eligible under this program, an 
institution offering a teacher preparation program must also provide 
supervision and support services to teachers, or assist in the 
provision of services to teachers. Several non-Federal negotiators 
noted that most institutions do not directly supervise teachers in the 
classroom, if the term ``supervise'' is understood in the employment 
sense. However, institutions do provide services in the form of 
providing information and resources to teachers and school districts, 
and direct observation and coaching, to strengthen the classroom 
performance of novice teachers. The definition of TEACH Grant-eligible 
program includes examples of the kinds of services that an institution 
might offer as its supervision and support services.
    A second pathway for a student to prepare to teach in a high-need 
field would be either completion of a baccalaureate program at one 
institution and a master's level teacher preparation program at another 
institution or a post-baccalaureate program at an institution that does 
not offer a teacher preparation program. Under the proposed definition, 
in order for the first institution to be eligible, it would need to 
have entered into an agreement with an institution offering a teacher 
preparation program or a post-baccalaureate program.
    Two pathways are identified for students who initially enroll in a 
two-year institution. The Department initially considered making such 
an institution eligible if it offered a program that was fully 
transferable to a four-year TEACH Grant-eligible institution offering a 
teacher preparation program or one offering a baccalaureate program in 
a high-need field. The non-Federal negotiators recommended using the 
phrase ``acceptable for full credit toward a baccalaureate degree'' in 
place of ``fully transferable to a four-year institution.'' We used the 
language recommended by the non-Federal negotiators in the proposed 
definition because it would mirror language from section 101 of the 
HEA. We would consider that an institution meets this requirement if it 
can demonstrate upon the request of the Secretary that its two-year 
program is fully-acceptable by at least one four-year institution. 
Examples of documents institutions might use to demonstrate that the 
two-year program is acceptable for full credit toward a baccalaureate 
program would include both formal articulation agreements with four-
year institutions and actual student records demonstrating that four-
year institutions fully accept transfer credits from the two-year 
institution.

TEACH Grant-Eligible Program

    Statute: The HEA does not define the term eligible program for the 
TEACH Grant program.
    Proposed Regulations: Proposed Sec.  686.2 would define the term 
TEACH Grant-eligible program as an eligible program as defined in 34 
CFR 668.8 that is a program of study that prepares an individual to 
teach in a high-need field and that leads to a baccalaureate or 
master's degree, or is a post-baccalaureate program of study. Under the 
proposed definition for the term TEACH Grant-eligible program, a two-
year program of study that is acceptable for full credit toward a 
baccalaureate degree would be considered to be a program of study that 
leads to a baccalaureate degree.
    Reasons: The proposed definition is based on provisions in section 
420L of the HEA and the proposed definition of TEACH Grant-eligible 
institution in proposed Sec.  686.2. While supporting the definition, 
some non-Federal negotiators were concerned that it would not be 
readily apparent to students which programs at an institution would be 
TEACH Grant-eligible programs because of the various pathways that a 
student might follow in preparing to teach as a highly-qualified 
teacher in a high-need field. The Department believes that each 
institution would need to define which of its programs would be TEACH 
Grant-eligible programs. A couple of the non-Federal negotiators 
suggested that their institutions would likely require students to 
develop an academic plan indicating how they would gain the education 
needed to begin a teaching career as a highly-qualified teacher in a 
high-need field. Based on that plan, they would be able to determine 
whether the student's program of study meets the definition 
requirements of a TEACH Grant-eligible program. Other non-Federal 
negotiators agreed and suggested that it would be helpful to include 
the appropriate academic departments in the review of academic plans. 
All members of the negotiating committee agreed that these suggestions 
made sense.

Teacher

    Statute: The HEA does not define the term teacher.
    Proposed Regulations: Proposed Sec.  686.2 would define the term 
teacher

[[Page 15342]]

for purposes of the TEACH Grant program as a person who provides direct 
classroom teaching or classroom-type teaching in a non-classroom 
setting, including special education teachers and reading specialists.
    Reason: The proposed definition of teacher in Sec.  686.2 is taken 
from the FFEL program regulations for teacher loan forgiveness in 34 
CFR 682.215. The Secretary believes that it would be appropriate to use 
the same definition for both the TEACH Grant program and the FFEL 
teacher loan forgiveness program. Under the proposed definition, the 
term would not include counselors, administrators or other types of 
school personnel who may be listed in the Department's annual Teacher 
Shortage Area Nationwide Listing but who do not provide classroom or 
classroom-type teaching.

Teacher Preparation Program

    Statute: Section 420L of the HEA refers to teacher preparation 
program in the context of an eligible institution.
    Proposed Regulations: Proposed Sec.  686.2 would define the term 
teacher preparation program, for TEACH Grant program purposes, as a 
State-approved course of study, the completion of which signifies that 
a student has met all the State's educational or training requirements 
for initial certification or licensure to teach in the State's 
elementary or secondary schools. Under this definition, a teacher 
preparation program could be a regular program or an alternative route 
to certification, as defined by the State. Under the proposed 
definition, the teacher preparation program must be provided by an 
institution of higher education.
    Reason: The proposed definition of teacher preparation program 
would be adopted from the Reporting Reference and User Manual, the 
accountability system mandated under Title II (sections 207 and 208) of 
the HEA. The manual, which was subject to public comment, has been in 
use since 2000. Using the same definition in the TEACH Grant program 
would ensure consistency across programs that focus on enhancing 
teacher quality.

Duration of Student Eligibility (Sec.  686.3)

    Statute: Section 420M(d)(1) and (2) of the HEA provides that the 
maximum amount an undergraduate or post-baccalaureate student may 
receive in TEACH Grants is $16,000 and that the maximum amount a 
graduate student may receive in TEACH Grants is $8,000.
    Proposed Regulations: Section 686.3 of the proposed regulations 
would implement the statutory maximums. An undergraduate or post-
baccalaureate student would be eligible to receive the equivalent of up 
to four Scheduled Awards during the period required for the completion 
of the first undergraduate TEACH Grant-eligible baccalaureate program 
of study and the first post-baccalaureate program of study combined. A 
graduate student would be eligible to receive the equivalent of up to 
two Scheduled Awards during the period required for the completion of a 
TEACH Grant-eligible master's degree program of study.
    Reason: The proposed regulations would implement the statutory 
requirements related to the duration of student eligibility from 
section 420M(d)(1) and (2) of the HEA.

Institutional Participation (Sec.  686.4)

    Statute: The HEA does not specify whether an institution is 
required to participate in the TEACH Grant program.
    Proposed Regulations: Section 686.4 of the proposed regulations 
would provide that a TEACH Grant-eligible institution that offers one 
or more TEACH Grant-eligible programs may elect to participate in the 
TEACH Grant program. If an institution begins participation in the 
TEACH Grant program during an award year, a student enrolled at and 
attending that institution would be eligible to receive a TEACH grant 
for the payment period during which the institution begins 
participation and any subsequent payment period.
    An institution may cease to participate in the TEACH Grant program 
or may become ineligible to participate in the TEACH Grant program 
during an award year. A student who was attending the institution and 
who submitted a SAR with an official EFC to the institution, or for 
whom the institution obtained an ISIR with an official EFC, before the 
date the institution became ineligible would still be eligible to 
receive a TEACH Grant for the award year. The student would be eligible 
for the payment periods that the student completed before the 
institution ceased participation or became ineligible to participate 
and the payment period in which the institution ceased participation or 
became ineligible to participate.
    An institution that ceases to participate in the TEACH Grant 
program or becomes ineligible to participate in the TEACH Grant program 
would be required to provide to the Secretary, within 45 days after the 
effective date of the loss of eligibility: (1) The name and other 
student identifiers of each eligible student under Sec.  686.11 who, 
during the award year, submitted a SAR with an official EFC to the 
institution or for whom it obtained an ISIR with an official EFC before 
it ceased to participate in the TEACH Grant program or became 
ineligible to participate; (2) the amount of TEACH Grant funds paid to 
each student during the award year; (3) the amount due each student 
eligible to receive a TEACH Grant through the end of the payment period 
during which the institution ceased to participate in the TEACH Grant 
program or became ineligible to participate; and (4) an accounting of 
the TEACH Grant program expenditures for that award year to the date of 
termination.
    Reasons: The proposed regulations for this section would generally 
follow the Federal Pell Grant Program regulations in 34 CFR 690.7. 
Using these established procedures and processes that are already 
understood by institutions would simplify delivery for institutions and 
reduce institutional burden.

Enrollment Status for Students Taking Regular and Correspondence 
Courses (Sec.  686.5)

    Statute: The HEA does not specifically address enrollment status 
for regular and correspondence courses.
    Proposed Regulations: Section 686.5 of the proposed regulations 
would specify how an institution would treat correspondence courses for 
purposes of the TEACH Grant program. In determining a student's 
enrollment status, an institution could include correspondence courses 
a student takes from either his or her own institution or from another 
institution having an arrangement for this purpose with the student's 
institution.
    Except as specified in proposed Sec.  686.5(c), the correspondence 
work that could be included in determining a student's enrollment 
status would be that amount of work that: (a) Applies toward a 
student's degree or post-baccalaureate program of study or is remedial 
work taken by the student to help in his or her TEACH Grant-eligible 
program; (b) is completed within the period of time required for 
regular coursework; and (c) does not exceed the amount of a student's 
regular coursework for the payment period for which enrollment status 
is being calculated.
    Under proposed Sec.  686.5(c), a student who would be a half-time 
student based solely on his or her correspondence work would be 
considered a half-time student unless the calculation in the preceding 
paragraph produces an enrollment status greater than half-time. A 
student who would be a less-than-half-time student based solely on his 
or

[[Page 15343]]

her correspondence work or a combination of correspondence work and 
regular coursework would be considered a less-than-half-time student.
    Reason: As is the case with the Federal Pell Grant Program, a 
student's award for a TEACH Grant is considered to be awarded based on 
the student's enrollment status. Accordingly, we believe it is 
appropriate for proposed Sec.  686.5 to follow the corresponding 
Federal Pell Grant Program regulations in 34 CFR 690.8 for determining 
enrollment status for students taking correspondence courses.

Payment From More Than One Institution (Sec.  686.6)

    Statute: The HEA does not address the issue of receipt of TEACH 
Grants from more than one institution.
    Proposed Regulations: Proposed Sec.  686.6 would stipulate that a 
student may not receive TEACH Grant payments concurrently from more 
than one institution.
    Reason: Under the Federal Pell Grant program and the ACG and 
National SMART Grant programs, a student cannot receive payments from 
more than one institution at the same time. To ensure coordination with 
the Federal Pell Grant program and the ACG and National SMART Grant 
programs programs, proposed Sec.  686.6 would provide that a student 
can only receive a TEACH Grant from one institution for the same 
payment period.

Application (Sec.  686.10)

    Statute: Section 420N(a) of the HEA contains the student 
eligibility requirements for the TEACH Grant program. Section 
420N(a)(1) requires that to receive a TEACH Grant, a student must 
apply. Section 420N(a)(2) provides for additional information that a 
student may need to submit as part of the application process. Section 
420N(b) provides that a service agreement must accompany the 
application. In addition, the TEACH Grant program, along with the other 
Title IV, HEA programs, is subject to the provisions of section 483 of 
the HEA, which establishes a common financial aid form for these 
programs.
    Proposed Regulations: Section 686.10 of the proposed regulations 
would specify the procedures that a student must follow when applying 
for a TEACH Grant, and in particular, would require that a student must 
submit a Free Application for Federal Student Aid (FAFSA); complete and 
sign a service agreement and promise to repay; and provide any 
additional information requested by the Secretary.
    Reasons: Under section 483(a) of the HEA, the FAFSA is the standard 
form used by all students applying for Title IV, HEA program aid. 
Although the TEACH Grant program is not need-based, using the FAFSA and 
procedures that are similar to those used in the Federal Pell Grant 
program would enable institutions to make a determination of student 
eligibility for the TEACH Grant program until a streamlined application 
can be developed. Completion of a service agreement and promise to 
repay are considered to be part of the application process. Further 
requirements regarding the service agreement would be set forth in 
proposed Sec.  686.12. The promise to repay describes the terms and 
conditions of the Federal Direct Unsubsidized Loan to which the TEACH 
Grant is converted if the grant recipient fails to meet the service 
obligation. Finally, the regulations provide for the collection of 
additional information, such as test scores, to ensure that students 
are eligible.

Eligibility to Receive a Grant (Sec.  686.11)

Undergraduate, Post-Baccalaureate, and Graduate Students

    Statute: Section 420N(a) of the HEA provides student eligibility 
requirements for the TEACH Grant program.
    Proposed Regulations: Section 686.11(a)(1)(i) through (iv) of these 
proposed regulations would set forth the TEACH Grant student 
eligibility requirements common to all students who are enrolled in 
undergraduate, post-baccalaureate, and graduate programs. All students 
would have to meet the student eligibility requirements under 34 CFR 
part 668, subpart C; have submitted a completed application along with 
a signed service agreement; and be enrolled in a TEACH Grant-eligible 
institution in a TEACH Grant-eligible program. All students would also 
be required to be completing coursework and other requirements 
necessary to begin a career in teaching or plan to do so before 
graduating.
    Reason: An otherwise eligible student remains eligible for a TEACH 
Grant as long as that student is still completing coursework and other 
requirements necessary to begin a career in teaching or plans to 
complete such coursework and requirements prior to graduating. However, 
simply graduating from a program does not necessarily mean the same as 
completing all of the coursework necessary to begin a career in 
teaching. For example, a student may graduate with an undergraduate 
degree, but must complete a post-baccalaureate program or other 
coursework before the student can begin a career in teaching. Thus, 
where the proposed regulations refer to completion of coursework and 
other requirements before graduating, the Secretary would interpret the 
term ``graduating'' to mean the point at which the student has 
completed all the coursework and other requirements necessary to 
prepare that student to begin a career in teaching.
    Statute: Section 420N(a) of the HEA provides student eligibility 
requirements for the TEACH Grant program. Section 420N(a)(2)(A)(ii) of 
the HEA contains requirements related to academic achievement that 
enrolled students receiving TEACH Grants must meet.
    Proposed Regulations: Section 686.11(a)(1)(v) of the proposed 
regulations would set forth additional TEACH Grant student eligibility 
requirements. Proposed Sec.  686.11(a)(1)(v)(E) would stipulate that 
all students, regardless of postsecondary level, may qualify for a 
TEACH Grant by scoring above the 75th percentile of scores on at least 
one of the batteries from a nationally-normed standardized 
undergraduate, graduate, or post-baccalaureate admissions test. The 
student's test score would be compared to the test score achieved by 
all students taking the same test during the same period the student 
took the test. Students who do not meet this requirement must meet the 
GPA requirements under proposed Sec.  686.11(a)(1)(v)(A) through (D) to 
either initially qualify for or maintain eligibility for a TEACH Grant.
    Reason: Proposed Sec.  686.11(a)(1)(v)(E) would implement the 
statutory requirement under section 420N(a)(2)(A)(ii)(II) of the HEA 
that a student may qualify for a TEACH Grant by displaying high 
academic aptitude as demonstrated by scoring above the 75th percentile 
on at least one battery on a standardized admissions test. Thus, for 
example, a student who scored above the 75th percentile on the math 
section of the SAT Reasoning Test (SAT), but who scored below the 75th 
percentile on the other sections of the SAT, could qualify for a TEACH 
Grant, if otherwise eligible, because the student displayed high 
academic aptitude by scoring above the 75th percentile on one of the 
SAT batteries.
    The proposed regulations would not restrict the applicability of 
qualifying test scores by educational level. A qualifying test score 
from an undergraduate admissions test could qualify an otherwise 
eligible student for a TEACH Grant regardless of whether the student 
would be an undergraduate

[[Page 15344]]

or graduate student. The proposed regulations would also not place a 
limit on the period of time that has elapsed since the student earned 
the qualifying test score. The qualifying test score is intended to 
demonstrate high academic aptitude and the negotiators believed that 
there is no reason to suppose that there would be a time limitation on 
such demonstration of academic aptitude or that one should be set. An 
otherwise eligible student who qualified with a test score would not 
need to meet additional GPA requirements to retain eligibility for a 
TEACH Grant. However, tests used exclusively as placement tests by the 
institution could not be used to qualify a student for a TEACH Grant.
    Proposed Sec.  686.11(a)(1)(v)(A)(1) would implement the statutory 
provision that a student in the first year of a program of 
undergraduate education can qualify for a TEACH Grant with a cumulative 
secondary school GPA of 3.25 on a 4.0 scale, or the numeric equivalent. 
A student qualifying with such a GPA for the first year would need to 
meet additional GPA requirements to retain eligibility for a TEACH 
Grant once that student is beyond the first year of his or her 
undergraduate program.
    Proposed Sec.  686.11(a)(1)(v)(A)(2), (B), (C), and (D) would 
implement the statutory requirement that a student who did not achieve 
the requisite test score under proposed Sec.  686.11(a)(1)(v)(E) must 
maintain a 3.25 GPA on a 4.0 scale, or the numeric equivalent, in order 
to maintain eligibility for a TEACH Grant. Under proposed Sec.  
686.11(a)(1)(v)(A)(2), students in the first year of a program of 
undergraduate education, as determined by the institution, who did not 
qualify under proposed Sec.  686.11(a)(1)(v)(A)(1), would need to 
achieve an undergraduate GPA of 3.25 on a 4.0 scale, or the numeric 
equivalent, through the most recently completed payment period, to be 
eligible for a TEACH Grant. Similarly, under proposed Sec.  
686.11(a)(1)(v)(B), a student beyond the first year of a program of 
undergraduate education (including a post-baccalaureate program), as 
determined by the institution, would need to maintain an undergraduate 
GPA of 3.25 on a 4.0 scale, or the numeric equivalent, through the 
most-recently completed payment period, to continue to be eligible.
    For graduate students, proposed Sec.  686.11(a)(1)(v)(C) would 
provide that the student may qualify for a TEACH Grant in the first 
payment period of graduate study based on a cumulative undergraduate 
GPA of at least 3.25 on a 4.0 scale, or the numeric equivalent. Under 
proposed Sec.  686.11(a)(1)(v)(D), graduate students beyond the first 
payment period would need to achieve a cumulative graduate GPA of at 
least 3.25 on a 4.0 scale, or the numeric equivalent, through the most-
recently completed payment period.

Current or Former Teachers or Retirees (Sec.  686.11(b))

    Statute: Section 420N(a) of the HEA provides student eligibility 
requirements for the TEACH Grant program. Section 420N(a)(2)(B) 
provides student eligibility requirements for students who are current 
or former teachers or retirees.
    Proposed Regulations: Proposed Sec.  686.11(b) would set forth the 
TEACH Grant student eligibility requirements for current or former 
teachers and retirees. A current or former teacher or retiree would 
need to meet the student eligibility requirements under 34 CFR part 
668, subpart C and have submitted a completed application along with a 
signed service agreement, and be applying for a TEACH Grant to obtain a 
master's degree. The applicant would need to be a teacher or retiree or 
be a current or former teacher pursuing certification through a high-
quality alternative certification route. The applicant also would need 
to be enrolled in a TEACH Grant-eligible institution in a TEACH Grant-
eligible program during the time period required for completion of a 
master's degree.
    Reason: Proposed Sec.  686.11(b) would implement the statutory 
requirements related to student eligibility for current and former 
teachers and retirees in 420N(a)(2)(B) of the HEA.

Transfer Student GPA (Sec.  686.11(c))

    Statute: Section 420N(a)(2)(A)(ii)(I) of the HEA provides that an 
undergraduate, post-baccalaureate or graduate student's eligibility for 
a TEACH Grant may be based on the student maintaining a cumulative GPA 
of at least 3.25 on a 4.0 scale.
    Proposed Regulations: Proposed Sec.  686.11(c) would be based on 
the transfer student GPA requirements in the National SMART Grant 
program for institutions that do or do not incorporate transfer grades 
from coursework accepted by the new institution, except that for 
purposes of the TEACH Grant program, the GPA would be calculated based 
on the coursework accepted by the institution on transfer without 
determination of whether the transferred coursework will actually be 
considered part of the TEACH Grant-eligible program.
    Reasons: The proposed regulations would ensure that a transfer 
student could meet the GPA requirement to receive a TEACH Grant for his 
or her first payment period at the institution to which the student has 
transferred by calculating the student's transfer GPA using a 
methodology similar to that already used by the institution to 
determine a transfer student's GPA for the National SMART Grant 
program. The Secretary believes that allowing the new institution to 
use grades assigned to coursework accepted by the new institution for 
initial GPA calculation purposes for that transfer student instead of 
using grades assigned only to coursework accepted into the TEACH Grant-
eligible program would decrease the burden on institutions and students 
because institutions will not have to take the extra step of 
determining which of the transferred courses will actually apply to the 
TEACH Grant-eligible program at the time of the student's admission.

Service Agreement (Sec.  686.12)

    Statute: Section 420N(b) requires that each application for a TEACH 
Grant contain or be accompanied by a service agreement. In accordance 
with section 420N(b)(1)(A) through (C) and (E) of the HEA, the service 
agreement must state that the TEACH Grant recipient will serve as a 
full-time teacher for a total of not less than four academic years 
within eight years of completing the course of study for which the 
applicant received a TEACH Grant in a low-income school as a highly-
qualified teacher in a high-need field. Under section 420N(b)(1)(D) of 
the HEA, the service agreement must require the grant recipient to 
submit evidence of his or her service, upon completion of each year of 
such service, in the form of a certification by the chief 
administrative officer of the school in which the recipient is 
teaching. Lastly, section 420N(c) of the HEA provides that if the 
recipient fails or refuses to carry out the service obligation, any 
TEACH Grants received shall be treated as a Federal Direct Unsubsidized 
Loan under part D of Title IV of the HEA, with interest accruing from 
the date that each TEACH Grant was disbursed.
    Proposed Regulations: Section 686.12(a) of the proposed regulations 
would provide that an applicant may receive a TEACH Grant only after 
signing a service agreement and receiving counseling in accordance with 
proposed Sec.  686.32.
    Section 686.12(b) of the proposed regulations would describe the 
requirements a grant recipient must satisfy in order to fulfill the 
service obligation. The grant recipient must--

[[Page 15345]]

     Serve as a full-time teacher for a total of not less than 
four elementary or secondary academic years within eight calendar years 
after completing the program for which the recipient received the TEACH 
Grant or otherwise ceased enrollment;
     Teach in a low-income school;
     Be a highly-qualified teacher;
     Teach in a high-need field in the majority of classes 
taught during each elementary or secondary academic year;
     Submit documentation of such service each year certified 
by the chief administrative officer of the school in which the grant 
recipient teaches; and
     Comply with the terms, conditions, and other requirements 
of the proposed regulations in Sec. Sec.  686.40-686.43.
    Section 686.12(c) of the proposed regulations would (1) require the 
completion of a service obligation for each program of study for which 
the recipient received a TEACH Grant; (2) stipulate that such service 
obligation begins following the completion or other cessation of 
enrollment in a TEACH Grant-eligible program; and (3) provide that 
creditable teaching service may apply to more than one service 
obligation. Proposed Sec.  686.12(c) would provide that a grant 
recipient may request a suspension of the eight-year time period during 
which the service obligation must be completed in accordance with 
proposed Sec.  686.41.
    Lastly, proposed Sec.  686.12(d) would provide that a grant 
recipient who completes a TEACH Grant-eligible program in a high-need 
field listed in the Nationwide List cannot satisfy his or her service 
obligation to teach in that high-need field unless the field is listed 
in the Nationwide List for the State in which the grant recipient 
begins to teach at the time the recipient begins teaching.
    Reasons: The purpose of proposed Sec.  686.12 would be to implement 
the statutory requirements regarding the content of the service 
agreement and to serve as a source of information about the service 
obligations associated with the TEACH Grant program. The service 
agreement is a legally-binding document, the terms of which must be met 
for a TEACH Grant recipient to satisfy the service obligation. The 
service agreement contains information on the terms, conditions and 
other requirements in proposed Sec. Sec.  686.40 through 686.43 with 
which the grant recipient must comply, such as: how to document the 
service obligation; under what conditions a suspension of the eight-
year period for completion of the service obligation may be granted; 
under what conditions a service agreement can be discharged; and under 
what conditions a TEACH Grant is converted to a Federal Direct 
Unsubsidized Loan.
    In recognition of a recent trend to re-structure elementary schools 
on a Kindergarten-Eighth Grade model and to promote the math and 
science skills of elementary school teachers, one of the non-Federal 
negotiators proposed that the Department consider allowing a teacher to 
fulfill the requirement to teach in a high-need field if the majority 
of classes taught by the grant recipient were in a high-need field. 
This non-Federal negotiator believed that adopting such a policy would 
allow more elementary school teachers to benefit from the TEACH Grant 
program. The Department agreed. We reflect this suggestion in proposed 
Sec.  686.12(b)(1)(iii) and also in the proposed regulations on 
documenting the service obligation in Sec.  686.40(c)(1)(i) and (ii).
    Section 686.12(c)(1) of the proposed regulations would provide that 
creditable teaching service performed by a TEACH Grant recipient may 
apply to more than one service obligation. At the request of the non-
Federal negotiators, we are including in this discussion several 
examples that illustrate when the application of creditable teaching 
service would apply to more than one service obligation. For instance, 
if a grant recipient completes a TEACH Grant-eligible program at a 
TEACH Grant-eligible institution and immediately enrolls in another 
TEACH Grant-eligible program at a TEACH Grant-eligible institution 
before beginning a career in teaching, the recipient may request a 
suspension of the eight-year time period under proposed Sec.  
686.41(a)(1) for the period of enrollment in the subsequent program and 
upon completion of the subsequent program, apply all qualified teaching 
service to both service obligations.
    Another example would be when a grant recipient completes a TEACH 
Grant-eligible program at a TEACH Grant-eligible institution and begins 
qualified teaching service to meet the service obligation before 
enrolling in a subsequent TEACH Grant-eligible program. In this case, 
the recipient may request a suspension of the eight-year time period 
associated with the first service obligation under proposed Sec.  
686.41(a)(1) for the period of enrollment in a subsequent program and, 
upon completion of the subsequent program, apply qualified teaching 
service performed after the completion of the subsequent program to 
both service obligations. The qualified teaching service performed 
before the suspension would count only toward fulfillment of the first 
service obligation.
    It is important to note that a TEACH grant recipient who fully 
satisfies the service obligation associated with the program for which 
TEACH Grants were received and subsequently enrolls in another TEACH 
Grant-eligible program cannot apply to the second service obligation 
any of the qualified service completed prior to enrolling in the 
subsequent program.
    Finally, a grant recipient who has completed a TEACH Grant-eligible 
program and who begins qualified full-time teaching service toward the 
service obligation associated with that program, and then concurrently 
enrolls in another TEACH Grant-eligible program may, upon completing 
the subsequent TEACH Grant-eligible program, apply only qualified 
teaching service performed after the completion of the subsequent TEACH 
Grant-eligible program to both service obligations.
    Because of the importance of the service agreement and because it 
is a source of information for the TEACH Grant recipient, several non-
Federal negotiators believed that the agreement was the appropriate 
place to include language describing the risk a TEACH Grant recipient 
takes when majoring in a high-need field listed in the Nationwide List 
with the intent to teach in the high-need field upon completion of his 
or her program of study. The Department agreed. Therefore, we are 
proposing regulations in Sec.  686.12(d) (Service agreement) stating 
that a grant recipient who completes a TEACH Grant-eligible program in 
a high-need field listed in the Nationwide List cannot satisfy his or 
her service obligation to teach in that high-need field unless the 
high-need field in which he or she has prepared to teach continues to 
be listed for the State in which the grant recipient begins teaching in 
fulfillment of his or her service obligation.

Submission Process and Deadline for a SAR or ISIR (Sec.  686.20)

    Statute: Section 420M provides that the Secretary shall pay a grant 
to each TEACH Grant-eligible student who files an application and a 
service agreement for attendance in a TEACH Grant-eligible program.
    Proposed Regulations: Proposed Sec.  686.20 would provide that, as 
in the Federal Pell Grant program, a student must submit a SAR, or the 
institution must receive an ISIR, within established deadlines. The 
Federal Pell Grant Program requires that the student's SAR or ISIR be a 
valid SAR or valid ISIR with an EFC based on accurate application 
information. Unlike the Federal Pell Grant program, proposed Sec.  
686.20

[[Page 15346]]

would provide that the SAR or ISIR need only be a record with an 
official EFC, i.e., an EFC computed by the Central Processing System 
(CPS) of the Department that may or may not be based on verified 
application information. Further, the proposed regulations, unlike the 
Federal Pell Grant program regulations, would not reference the 
deadlines for completing verification of application information under 
34 CFR 668.60.
    Reason: Unlike the Federal Pell Grant program, the TEACH Grant 
program is not need-based. It would, therefore, not be necessary that 
an institution receive a valid SAR or valid ISIR, nor would it be 
necessary to subject the TEACH Grant program to the verification 
requirements under 34 CFR part 688, subpart E. However, to determine 
the amount of a student's TEACH Grant in accordance with Sec.  
686.21(c), an institution would need an EFC based on accurate 
information even though the EFC is not computed by the CPS.

Calculation of a Grant (Sec.  686.21)

Maximum and Annual Award Amounts

    Statute: Section 420M(a)(1) of the HEA establishes $4,000 as the 
amount a TEACH Grant-eligible student may receive for a year, and 
section 420M(c)(1) of the HEA provides that awards for part-time 
attendance shall be reduced in proportion to a student's less-than-
full-time enrollment status.
    Proposed Regulations: Proposed Sec.  686.21 would provide for a 
Scheduled Award of $4,000, the maximum amount a student may receive in 
a year, and annual awards of $4,000 for full-time enrollment status, 
$3,000 for three-quarter-time enrollment status, $2,000 for half-time 
enrollment status, and $1,000 for less-than-half-time enrollment 
status.
    Reason: The Secretary proposes to establish the TEACH Grant 
Scheduled Award and annual award amounts to implement the statutory 
requirements regarding maximum awards and awards for part-time 
attendance.

Treatment in Relation to Other Aid Received (Sec.  686.21)

    Statute: Section 420M(c)(2) of the HEA provides that the amount of 
a student's TEACH Grant, in combination with Federal and other student 
financial assistance the student may receive, may not exceed the 
student's cost of attendance.
    Proposed Regulations: Section 686.21(c) of the proposed regulations 
would provide that a student's TEACH Grant, when combined with the 
student's Federal Pell Grant eligibility and other estimated financial 
assistance as defined in 34 CFR 673.5(c), may not exceed the student's 
cost of attendance under section 472 of the HEA. Further, proposed 
Sec.  686.21(d) would provide that a student's TEACH Grant may replace 
the student's EFC. Any amount in excess of the EFC would be considered 
estimated financial assistance as defined in 34 CFR 673.5(c).
    Reason: TEACH Grants are not awarded based on need and, therefore, 
are permitted to replace a student's EFC toward a student's 
postsecondary expenses. As with other forms of aid that may replace 
EFC, any TEACH Grant amount in excess of the EFC is considered 
estimated financial assistance.

Calculation of a Grant for a Payment Period (Sec. Sec.  686.22 and 
686.25)

    Statute: Section 420M(a)(1) of the HEA establishes the amount a 
TEACH Grant-eligible student may receive for a year, and section 
420M(c)(1) of the HEA provides that awards for part-time attendance 
shall be reduced in proportion to a student's less-than-full-time 
enrollment status.
    Proposed Regulations: Proposed Sec. Sec.  686.22 and 686.25 would 
detail how an institution would calculate a TEACH Grant payment for a 
payment period for an eligible student depending on the academic 
calendar of the eligible program, the student's enrollment status, and 
the amount of the student's annual award.
    Reasons: As is the case with the Federal Pell Grant Program, a 
student's award for a TEACH Grant would be based on the student's 
enrollment status, a status that is based on attendance over a portion 
of an academic year. Proposed Sec. Sec.  686.22 and 686.25 would 
generally correspond to the Federal Pell Grant Program regulations in 
34 CFR 690.63 and 690.66, including amendments to these sections 
published in the Federal Register on November 1, 2007 (72 FR 62014-
62034), for calculating payments for payment periods to distribute a 
student's award based on the student's enrollment status.
    As in 34 CFR 690.63(a)(1) and (2) of the Federal Pell Grant Program 
regulations, Sec.  686.22(a)(1) and (2) of the proposed regulations 
would establish the criteria for programs eligible to use the payment 
calculations under proposed Sec.  686.22(b) and (c). For an 
undergraduate program including a post-baccalaureate program, Sec.  
686.22(a)(1)(i)(C)(1) and (2)(i)(C)(1) of the proposed regulations 
would provide that all terms in the award year must have a minimum 
full-time enrollment standard of 12 credit hours. In addition, proposed 
Sec.  686.22(a)(1)(i)(C)(2) and (2)(i)(C)(2) would provide that, for a 
graduate program, all terms in the award year must have the same 
minimum full-time enrollment status as determined by the institution 
for a semester, trimester, or quarter in that program. The provision 
for graduate programs would assure equivalency among all terms in the 
award year for purposes of calculating payments for payment periods.

Minimum Payment

    Statute: The statute does not establish a minimum TEACH Grant 
payment.
    Proposed Regulations: Section 686.22(g) of the proposed regulations 
would provide that the minimum payment for a payment period would be 
$25.
    Reason: Because awards must be adjusted not to exceed cost of 
attendance, a payment for a payment period may be reduced to a minimal 
amount. Setting a small minimum payment for a payment period would not 
adversely affect a student's eligibility for an award, and a smaller 
payment for a payment period would not be cost effective.

Definition of an Academic Year

    Statute: Section 420M(a)(1) of the HEA establishes the amount a 
TEACH Grant-eligible student may receive for a year, and section 
420M(c)(1) of the HEA provides that awards for part-time attendance 
shall be reduced in proportion to a student's less-than-full-time 
enrollment status. In addition, section 481(a)(2) of the HEA defines 
the term academic year.
    Proposed Regulations: Section 686.22(h) of the proposed regulations 
would require an institution to define the term academic year for 
purposes of calculating payments for payment periods under proposed 
Sec. Sec.  686.22 and 686.25. For an undergraduate TEACH Grant-eligible 
program, including post-baccalaureate programs, the institution would 
define the program's Title IV, HEA academic year in terms of credit or 
clock hours and weeks of instructional time in accordance with 34 CFR 
668.3. For a TEACH Grant-eligible master's degree program, the 
institution would need to define the program's Title IV, HEA academic 
year in accordance with 34 CFR 668.3, i.e., in terms of weeks of 
instructional time, and, for purposes of determining payments for TEACH 
Grant awards, in terms of the minimum number of credit or clock hours a 
full-time student would be expected to complete in the weeks of 
instructional

[[Page 15347]]

time of the program's Title IV, HEA academic year.
    Reasons: Under the proposed regulations, a TEACH Grant-eligible 
program's Title IV, HEA academic year based on both weeks of 
instructional time and credit or clock hours is integral to determining 
the payment formula applicable to the program as well as the 
calculation of payments under the appropriate payment formula based on 
a student's enrollment status. While a Title IV, HEA academic year for 
an undergraduate TEACH Grant-eligible program, including a post-
baccalaureate program, would be defined based on both weeks of 
instructional time and credit or clock hours under 34 CFR 668.3, a 
Title IV, HEA academic year for a graduate TEACH Grant-eligible 
program, such as a master's degree program, would be defined under 34 
CFR 668.3 based only on weeks of instructional time. Proposed Sec.  
686.22(h)(2) would, therefore, add a credit or clock hour measure to 
the Title IV, HEA academic year of a master's degree program for 
purposes of calculating a payment for a payment period under proposed 
Sec. Sec.  686.22 or 686.25, as applicable, to implement the provisions 
of these sections for a TEACH Grant-eligible master's degree program.

Calculation of a Grant for a Payment Period From Two Scheduled Awards 
(Sec.  686.22(i))

    Statute: The HEA does not address payments from two Scheduled 
Awards.
    Proposed Regulations: Under Sec.  686.22(i) of the proposed 
regulations, if a student is completing the remaining portion of a 
Scheduled Award in a payment period, the student's payment would be 
calculated using the annual award for his or her enrollment status for 
the payment period. The student's payment would be the remaining amount 
of the Scheduled Award being completed plus an amount from the next 
Scheduled Award, if available, up to the total amount of the payment 
for the payment period.
    Reason: In certain circumstances, a student may, within the same 
payment period, be completing his or her eligibility for the remaining 
balance of a Scheduled Award while also having eligibility to receive 
another Scheduled Award. This provision would provide guidance to 
institutions in calculating a student's payment for the payment period 
in this circumstance and would ensure that eligible students receive 
their awards.

Calculation of a Grant for a Payment Period That Occurs in Two Award 
Years (Sec.  686.23)

    Statute: The HEA does not address a payment period that occurs in 
two award years.
    Proposed Regulations: This section would address how an institution 
calculates a TEACH Grant payment for an eligible student's payment 
period when the student is enrolled in a payment period that overlaps 
two award years. These proposed regulations would generally be the same 
as the Federal Pell Grant program regulations. As is required in the 
Federal Pell Grant, ACG, and National SMART Grant programs, an 
institution is required to assign, at its option, a ``cross-over'' 
payment period to one of the two award years. However, it must place a 
payment period with more than six months scheduled in an award year 
within that award year.
    Reason: A Federal Pell Grant Scheduled Award is available only for 
a specific award year. A student's TEACH Grant Scheduled Award would 
remain available without respect to award years until the student uses 
all of the Scheduled Award, and an eligible student would be able to 
receive more than one TEACH Grant in an award year.

Transfer Student: Attendance at More Than One Institution During an 
Award Year (Sec.  686.24)

    Statute: The HEA does not address the issue of attendance at more 
than one institution during an award year.
    Proposed Regulations: Proposed Sec.  686.24 would specify how an 
institution calculates a payment for an eligible student who transfers 
from another postsecondary institution within the same award year. The 
proposed regulations would be generally similar to the corresponding 
provisions in 34 CFR 690.65 under the Federal Pell Grant program 
regulations with one exception. Proposed Sec.  686.24(d) would provide 
that a student would only receive the remaining balance of the 
student's last Scheduled Award if the balance would be less than the 
amount of the payment for the payment period calculated under proposed 
Sec. Sec.  686.22 or 686.25.
    Reason: To ensure that a student who attends more than one 
institution in an award year does not receive an overaward, we are 
providing the procedures for an institution to determine the TEACH 
Grant payment for a payment period for a transfer student.

Determination of Eligibility for Payment (Sec.  686.31)

    Statute: Section 420M of the HEA provides that the Secretary shall 
pay a grant to each TEACH Grant-eligible student who files an 
application and a service agreement for attendance in a TEACH Grant-
eligible program and who demonstrates TEACH Grant eligibility under 
section 420N of the HEA.
    Proposed regulations: Proposed Sec.  686.31 would provide that, 
similar to the Federal Pell Grant, ACG, and National SMART Grant 
program regulations, an institution may pay a student a TEACH Grant 
only after determining that the student is an eligible student, is 
enrolled in a TEACH Grant-eligible program, and has completed the 
payment period for which he or she has received a TEACH Grant if 
enrolled in a credit-hour program without terms or a clock-hour 
program. In addition, the proposed regulations would require an 
institution to ensure that the student has signed a service agreement 
described in proposed Sec.  686.12 and has completed relevant 
counseling requirements prior to paying a student.
    The proposed regulations would mirror similar requirements in the 
Federal Pell Grant, ACG, and National SMART Grant program regulations 
concerning determinations that a student is not maintaining 
satisfactory academic progress or the necessary GPA for a TEACH Grant 
or is not pursuing a career in teaching. In addition, similar to the 
ACG and National SMART Grant program regulations, the proposed 
regulations would allow an institution to make one disbursement for a 
payment period to an otherwise eligible student if the student's final 
high school GPA is not yet available or if the student's cumulative GPA 
through the prior payment period is not yet available and the 
institution assumes the liability for any overpayment if the student 
fails to meet the required GPA to receive that disbursement.
    Reasons: The Secretary believes that it is important to ensure that 
the student has completed the relevant counseling requirements and has 
signed the service agreement prior to receiving a TEACH Grant. In 
addition, as with the case of the Federal Pell Grant, ACG, and National 
SMART Grant programs, the proposed regulations would specify how to 
handle situations in which the student is not maintaining satisfactory 
progress or the required GPA or is not pursuing a career in teaching 
and allow institutions flexibility to make one disbursement for a 
payment period when the relevant GPA for a student is

[[Page 15348]]

not yet available. The proposed regulations for this section would 
follow the corresponding Federal Pell Grant, ACG, and National SMART 
Grant program regulations in 34 CFR 690.75 and 691.75.

Counseling Requirements (Sec.  686.32)

    Statute: The HEA does not address student counseling issues related 
to the TEACH Grant program.
    Proposed Regulations: Proposed Sec.  686.32 would require 
institutions to ensure that each TEACH Grant recipient receives 
counseling prior to each grant disbursement as well as prior to leaving 
the institution. Counseling requirements are broken into three 
sections: Initial counseling, Subsequent counseling, and Exit 
counseling.
    Institutions would be required to provide initial counseling in 
person, by audiovisual presentation, or by interactive electronic 
means, prior to the first disbursement of a TEACH Grant. Additionally, 
schools would be required to ensure that an individual with expertise 
in Title IV, HEA programs is available to students shortly after the 
initial counseling session to answer questions. Initial counseling 
would include information about: The terms and conditions of a TEACH 
Grant service agreement; how to access information about low-income 
schools and documented high-need fields; the opportunity to request a 
service obligation suspension; conditions that could preclude the 
student from completing the service obligation attached to a TEACH 
Grant; conversion of a grant to a Federal Direct Unsubsidized Loan; and 
the rights and responsibilities that apply to any grant recipient whose 
TEACH Grant converts to a loan. Initial counseling would also notify 
students that in order to receive credit for teaching service the field 
in which they teach must be a high-need field at that time and in the 
State where the recipient begins teaching that subject.
    If a student receives more than one TEACH Grant, he or she would be 
required to complete subsequent counseling prior to any additional 
grant disbursements. Similar to initial counseling, institutions would 
be able to provide counseling for subsequent disbursements in person, 
by audiovisual presentation, or by interactive electronic means and 
would be required to have an expert in Title IV, HEA programs available 
to answer questions shortly after counseling occurs. Subsequent 
counseling would coincide with the student's renewal of the annual 
service agreement. The information that would be provided by subsequent 
counseling would not be as comprehensive as the information required in 
initial counseling. Students would be reminded of: The terms and 
conditions of a TEACH Grant service agreement; the consequences of not 
completing the service obligation; and the responsibility to repay any 
grant amount, plus interest, that is converted to a loan.
    Institutions would also be required to ensure that TEACH Grant 
recipients receive exit counseling prior to leaving the institution. 
Counseling would be required to be provided in person, by audiovisual 
presentation, or by interactive electronic means and institutions would 
need to ensure that an expert in Title IV, HEA programs is available 
shortly after the exit counseling to answer any questions. If a student 
withdraws from the institution without an institution's knowledge or is 
no longer enrolled in a TEACH Grant-eligible program and fails to 
complete exit counseling, the institution is required to provide exit 
counseling within 30 days after the date that the institution learned 
that the student withdrew or that the student is no longer enrolled in 
a TEACH Grant-eligible program.
    The information provided to students during exit counseling would 
be similar to the information that students receive during initial and 
subsequent counseling. However, exit counseling would also remind 
students that they must teach as a highly-qualified teacher in a high-
need field at a low-income school in order to fulfill the service 
obligation of the TEACH Grant. In addition, students would be reminded 
that they are required to submit written documentation to the Secretary 
on an annual basis showing that they are fulfilling their service 
obligation by teaching in a high-need field at a low-income school or 
that they intend to complete the service obligation within eight years 
of completing their TEACH Grant program. Furthermore exit counseling 
would provide TEACH Grant recipients with information about available 
repayment options for grants that convert to a loan as well as 
information about loan deferments, discharges, default, how to view 
student aid information in the National Student Loan Data System 
(NSLDS), and how to contact the Secretary.
    Reasons: Sharing information with students about the TEACH Grant 
program and the obligations that acceptance of a TEACH Grant entails is 
essential. The non-Federal negotiators stressed the need to disclose as 
much information as possible to students in a clear and concise manner 
on an on-going basis. In addition to sending quarterly interest 
statements to students and requiring that recipients complete an annual 
service agreement to re-affirm their consent, the Department proposed 
annual in-person counseling sessions prior to grant disbursements. The 
non-Federal negotiators agreed that counseling students is important; 
however, some negotiators argued that requiring institutions to perform 
in-person counseling with each TEACH Grant recipient prior to each 
grant disbursement would not only be burdensome, but could also delay 
disbursements. Additionally, many non-Federal negotiators argued that 
there is little proof that in-person counseling is more effective than 
interactive electronic counseling and cited several personal accounts 
where students who participated in in-person, group counseling sessions 
did not pay attention to the presenter. In response to these concerns, 
the Department proposed revised language that would allow institutions 
to provide counseling in-person, by audiovisual presentation, or by 
interactive electronic means with the stipulation that institutions 
must ensure that an expert on Title IV, HEA programs is available 
shortly after the counseling session to answer any questions.
    The non-Federal negotiators raised another concern about the amount 
of counseling that the TEACH Grant program requires. Some argued that 
requiring counseling annually is too much and goes above and beyond 
what is necessary. Others noted that annual counseling is acceptable, 
but only if the counseling could be completed electronically. In 
response to these concerns, the Department clarified the proposed 
regulations and added language to indicate that subsequent counseling 
could be provided in an interactive electronic format or as an 
audiovisual presentation.
    Additionally, one negotiator recommended that the Department 
consider creating an online interactive counseling program that would 
be completed when the student completes the annual service agreement. 
The Department intends to create an interactive electronic counseling 
program that will be connected to the annual renewal of the service 
agreement, though this program will not be available in the first year 
of the TEACH Grant program. Institutions would be required to provide 
counseling until the Department notifies schools that an interactive 
online program has been included as part of the renewal of the service 
agreement.

[[Page 15349]]

    The non-Federal negotiators were also concerned about the 
information that would be required in each counseling session. Several 
non-Federal negotiators asked the Department to add a requirement that 
institutions convey specific information to students to notify them of 
the various conditions that could preclude them from completing the 
service obligation. Some non-Federal negotiators also asked the 
Department to require institutions to provide information to students 
about how to find low-income schools and high-need fields in initial 
counseling as well as in exit counseling. In addition, non-Federal 
negotiators asked the Department to clarify that if a student chooses 
to study a field that is removed from the high-need field list before 
the grant recipient begins teaching, that subject area is no longer a 
high-need field and thus the recipient may not be able to use this 
teaching in this field to fulfill the service obligation. The 
Department added specific language to the initial and exit counseling 
sections to address these concerns and reminded the non-Federal 
negotiators that institutions will be able to direct students to the 
Nationwide List that is published annually and available on the 
Department's Web site. Also, Sec.  686.32(b) of the proposed 
regulations would delineate the particular requirements for subsequent 
counseling sessions, which are less comprehensive than the initial and 
exit counseling session.
    The counseling requirement is an institutional responsibility. As 
such, the Department encourages institutions to establish collaborative 
working relationships between their financial aid office and the entity 
that would be most knowledgeable about teaching requirements for TEACH 
Grant recipients. For instance, several non-Federal negotiators 
recommended that an institution's college of education or teacher 
preparation program work closely with the financial aid office to 
ensure that students receive the best information available about 
financial aid as well as about academic requirements, teaching 
opportunities, and teacher certification.

Frequency of Payment (Sec.  686.33)

    Statute: The HEA does not address this issue.
    Proposed regulations: Proposed Sec.  686.33 would provide that, 
similar to the Federal Pell Grant, ACG, and National SMART Grant 
program regulations, an institution may pay a student a TEACH Grant at 
such times and in such installments that best meet the student's needs. 
In addition, under this proposed section, the institution could pay the 
student in a lump sum for all prior payment periods for which the 
student was eligible and would have to determine the amount of the 
payment based on the student's enrollment status according to the work 
completed by the student for the payment period. To be eligible to 
receive a lump sum payment for prior payment periods, the student would 
have had to meet the eligibility criteria in proposed Sec.  686.11 for 
the prior payment period with the exception that the student would not 
have needed to sign the service agreement during that payment period. 
However, the student would need to sign a service agreement prior to 
receiving a disbursement as described in proposed Sec.  686.31.
    Reason: As is the case with the Federal Pell Grant, ACG, and 
National SMART Grant programs, an institution should have the 
flexibility to determine the timing and the amounts of any installments 
of a student's TEACH Grant to best meet the needs of the student. Also, 
consistent with the Federal Pell Grant, ACG, and National SMART Grant 
programs, the institution should have the discretion to pay a student 
in a lump sum for all prior payment periods for which the student was 
eligible based on the coursework the student completed for the payment 
period.

Institutional Reporting Requirements (Sec.  686.37)

    Statute: The HEA does not address the issue of institutional 
reporting requirements in the TEACH Grant program.
    Proposed Regulations: Proposed Sec.  686.37 would require 
institutions to provide the Secretary with information pertaining to a 
student's eligibility to receive a TEACH Grant, the student's TEACH 
grant amounts, and the actual disbursement dates and amounts of the 
grants. This proposed section would also establish a submission 
timeline for institutions.
    Reasons: The proposed regulations would require institutions to 
submit eligibility and disbursement data to the Secretary because the 
Department intends to contact TEACH Grant recipients on a quarterly 
basis by sending interest statements and to collect annual service 
agreements. To make this process work, the Department would need 
eligibility and disbursement information.

Documenting the Service Obligation (Sec.  686.40)

    Statute: Section 420N(b)(1)(D) of the HEA requires that a TEACH 
Grant recipient must, upon completion of each of the four required 
elementary or secondary academic years of teaching service, provide 
evidence of that teaching service in the form of a certification by the 
chief administrative officer of the school in which the grant recipient 
is teaching.
    Proposed Regulations: Proposed regulations in Sec.  686.40(a) would 
provide that a TEACH Grant recipient must confirm to the Secretary in 
writing that he or she has either begun employment as a full-time 
teacher in accordance with the terms and conditions of the service 
agreement, or that he or she is not yet employed as a full-time 
teacher, but intends to meet the terms and conditions of the service 
agreement.
    Proposed regulations in Sec.  686.40(b) would require that, if a 
grant recipient has begun full-time teaching service in accordance with 
the service agreement, he or she must provide documentation of that 
service to the Secretary on an approved form certified by the chief 
administrative officer of the school in which the grant recipient is 
teaching. The documentation required under this proposed section would 
need to show that the grant recipient is teaching in a high-need field 
in the majority of classes taught during each elementary or secondary 
academic year in a low-income school as a highly-qualified teacher.
    In addition to addressing documentation requirements for creditable 
service performed by the grant recipient, proposed Sec.  686.40(b) 
would provide that if the school at which the grant recipient is 
employed meets the requirements of a low-income school in the first 
year of the grant recipient's four academic years of teaching but fails 
to meet those requirements in subsequent years, the subsequent years of 
teaching would count toward fulfillment of the service agreement. 
Similarly, proposed Sec.  686.40(c)(2) would provide that if a grant 
recipient begins teaching in a high-need field listed in the Nationwide 
List and in subsequent years the high-need field is no longer 
designated as such, the subsequent years of teaching in that field 
would count toward the service agreement.
    Proposed Sec.  686.40(e) would provide that if a grant recipient is 
able to complete only one-half of an elementary or secondary academic 
year because of a condition covered under the Family and Medical Leave 
Act of 1993 (FMLA) for a qualifying serious health condition or 
exigency, or because of a call to military service, either as a reserve 
of the Armed Forces or a member of the National Guard, that half year 
is counted as a complete year for purposes of completing the service 
agreement as

[[Page 15350]]

long as the grant recipient's school employer considers the grant 
recipient to have fulfilled his or her contract requirements.
    Lastly, proposed Sec.  686.40(f) would provide that a grant 
recipient may teach in more than one low-income school during an 
elementary or secondary academic year as long as the combined teaching 
service is the equivalent of full-time teaching.
    Reasons: The purpose of proposed Sec.  686.40 would be to implement 
the statutory requirements regarding the evidence a grant recipient 
must submit to show compliance with the terms of his or her service 
agreement. Proposed Sec.  686.40(b), (c)(2), (e), and (f) would be 
consistent with regulations in the Title IV, HEA loan programs related 
to teacher loan forgiveness so that TEACH Grant recipients who may be 
performing teaching service to meet both their service agreement and 
the requirements to receive loan forgiveness have only one set of 
requirements.
    Several of the non-Federal negotiators voiced concern that the 
Nationwide List that TEACH Grant recipients will use to document their 
teaching service may not reflect high-need field shortages at the local 
level. One of the non-Federal negotiators suggested that the Department 
specify in proposed Sec.  686.40(c)(ii) a process whereby States would 
be required to consult with LEAs so that high-need field shortages at 
the local level are reflected. The Department declined to regulate in 
this area because the process currently in place under 34 CFR 
682.210(q) provides for the designation of high-need fields by an LEA 
and because mandating such a process would be a Federal intrusion on an 
inherently State function.
    During the negotiations, the Department suggested specifying in 
proposed Sec.  686.40(e)(1) the conditions under which a grant 
recipient may count an academic year of teaching service if that year 
is interrupted by a condition that is covered under the FMLA. The non-
Federal negotiators agreed. For that reason, proposed Sec.  
686.40(e)(1) would list the FMLA conditions as follows:
     The birth and subsequent care of a son or daughter.
     The adoption of a child or provision of foster care by a 
grant recipient.
     Caring for a spouse, child or parent of the grant 
recipient who has a serious health condition.
     A serious health condition that renders the grant 
recipient unable to meet the requirements of the service agreement.
    The Department became aware after negotiations concluded that the 
U.S. Department of Labor had developed new proposed regulations for the 
FMLA that are currently out for public comment. To ensure that the 
TEACH Grant regulations reflect all of the conditions covered by the 
FLMA, we will consult with the Department of Labor when we develop 
final regulations.

Periods of Suspension (Sec.  686.41)

    Statute: The statute does not address periods of suspension of the 
eight-year period for completion of the TEACH Grant service obligation.
    Proposed Regulations: Proposed Sec.  686.41 would provide that a 
TEACH Grant recipient who has completed or otherwise ceased enrollment 
in a TEACH Grant-eligible program may request a suspension of the 
eight-year time period for completion of his or her service obligation. 
Proposed Sec.  686.41(a)(1)(i) and (ii) would require that a suspension 
be based on enrollment in a TEACH Grant-eligible program of study or a 
State-approved teacher certification program, or a condition under the 
FMLA, respectively. Proposed Sec.  686.41(a)(2)(i) would require that 
suspensions granted under these two conditions could not exceed a 
combined total of three years. Proposed Sec.  686.41(a)(1)(iii) would 
allow a suspension to be based on a call to active duty status for 
members of the Armed Forces reserve or the National Guard. Proposed 
Sec.  686.41(a)(2) would provide that suspensions granted because of a 
military call-up would be granted in one-year increments and would end 
upon the completion of the grant recipient's military service. Proposed 
Sec.  686.41(b) would require a grant recipient to request a suspension 
on an approved form within six months after completing or terminating 
enrollment in a TEACH Grant-eligible program or within six months after 
the date he or she stops teaching. Lastly, proposed Sec.  686.41(c) 
would require grant recipients to provide the Secretary with 
documentation supporting the suspension.
    Reasons: Although the HEA does not explicitly provide for a 
suspension of the eight-year period for completion of a TEACH Grant 
service obligation, the Secretary is proposing regulations in Sec.  
686.41 that would provide TEACH Grant recipients with some flexibility 
in limited circumstances with respect to the eight-year period for 
completion. These limited circumstances would include enrollment in a 
program of study for which the recipient would be eligible for a TEACH 
Grant or enrollment in a program of study to obtain a certificate or 
license to begin teaching. This flexibility would prevent TEACH Grant 
recipients who, because of State requirements, must complete an 
undergraduate degree and subsequently obtain the credential that 
actually allows them to begin teaching, from being penalized with 
regard to completion of their first service obligation. These limited 
circumstances also would include conditions covered under the FMLA and 
a call to military service as part of the Armed Forces reserve or the 
National Guard, because the Secretary believes that TEACH Grant 
recipients should not be placed at a disadvantage in completing their 
service obligations as a result of a significant family illness or 
situation or while defending their country in the event of a call to 
active service in connection with a war, military operation, or a 
national emergency.
    The non-Federal negotiators believed that the proposed regulations 
in Sec.  686.41 would not adequately address situations that could 
affect a TEACH Grant recipient's ability to meet the terms of his or 
her service obligation within eight years after completing a TEACH 
Grant-eligible program. Some non-Federal negotiators suggested that the 
Secretary should allow a TEACH Grant recipient to suspend his or her 
service obligation in the event of extenuating circumstances that 
preclude the TEACH Grant recipient from completing his or her service 
obligation in the required eight-year timeframe. The Secretary declined 
to expand the circumstances for suspension. The Secretary believes such 
an expansion would contradict the intent of the TEACH Grant program by 
delaying the entry of highly-qualified teachers into high-need fields 
in low-income schools where they are badly needed. The negotiating 
committee agreed to the language in proposed Sec.  686.41.
    As noted elsewhere in this preamble, the portion of the language 
related to the conditions covered by the FMLA will need to be 
consistent with the Department of Labor regulations.
    While these regulations reflect FMLA regulations with regard to the 
conditions under which a TEACH Grant recipient may request a 
suspension, we would not require a TEACH Grant recipient to go through 
the certification process specified in the FMLA regulations.

Discharge of Service Agreement (Sec.  686.42)

    Statute: The statute does not address the discharge of a service 
obligation if a TEACH Grant recipient dies or becomes totally and 
permanently disabled.

[[Page 15351]]

    Proposed Regulations: In the case of a TEACH Grant recipient who 
dies, proposed Sec.  686.42(a) would require the discharge of the grant 
recipient's service obligation upon receipt of an original or certified 
copy of the TEACH Grant recipient's death certificate, an accurate and 
complete photocopy of the original or certified copy of the grant 
recipient's death certificate, or, on a case-by-case basis, reliable 
information acceptable to the Secretary.
    In the case of a TEACH Grant recipient who becomes totally and 
permanently disabled as that term is defined in 34 CFR 682.200(b), 
proposed Sec.  686.42(b) would provide for a discharge of the service 
obligation if the TEACH Grant recipient applies for and satisfies the 
same eligibility requirements for a total and permanent disability 
discharge of a Direct Loan in 34 CFR 685.213.
    Proposed Sec.  686.42(b)(2) would provide that the eight-year time 
period in which the grant recipient must complete the service 
obligation remain in effect during the conditional discharge period 
described in 34 CFR 685.213(c)(2) unless the grant recipient is 
eligible for a suspension based on the conditions covered by the FMLA. 
Proposed Sec.  686.42(b)(3) would provide that interest continues to 
accrue on each TEACH Grant disbursement received unless and until the 
grant recipient's service agreement is discharged by the Secretary. 
Lastly, proposed Sec.  686.42(b)(4) and (5) would provide that if the 
grant recipient meets the eligibility requirements throughout the 
three-year conditional discharge period, the service obligation is 
discharged; if not, the grant recipient is once again subject to the 
terms of the service agreement.
    Reasons: The Secretary believes that it would be appropriate to 
provide a discharge of a TEACH Grant recipient's service obligation in 
cases when the grant recipient cannot comply with his or her service 
agreement because of death or total and permanent disability. Although 
grant aid does not have to be repaid, the service agreement signed by a 
TEACH Grant recipient is a binding, legal document requiring the 
repayment of each TEACH Grant, along with interest accrued from the 
date of disbursement, as a Federal Direct Unsubsidized Loan if the 
service obligation is not met. A discharge of the service obligation 
for death and total and permanent disability relieves the grant 
recipient of a potential repayment obligation and is also consistent 
with the treatment of Title IV, HEA loans.
    Proposed Sec.  686.42(b) would adopt the definition of totally and 
permanently disabled already used in the Federal Direct Loan program 
regulations. The definition of totally and permanently disabled (in 34 
CFR 682.200(b)) is ``the condition of an individual who is unable to 
work and earn money because of an injury or illness that is expected to 
continue indefinitely or result in death.'' A TEACH Grant recipient who 
meets this definition of totally and permanently disabled cannot comply 
with the service agreement because he or she cannot work and earn 
money. The Department considered proposing regulations that would have 
required a TEACH Grant recipient who became totally and permanently 
disabled to request a conversion of his or her TEACH Grants to a 
Federal Direct Unsubsidized Loan so that the existing process under 
which the Secretary grants a total and permanent disability discharge 
in the Direct Loan program would be available to the TEACH Grant 
recipient. However, non-Federal negotiators persuaded the Department to 
adopt a total and permanent disability discharge process that would 
preserve the grant status of the TEACH Grant rather than mandate the 
conversion of the TEACH Grant to a loan. The non-Federal negotiators 
felt that a TEACH Grant recipient should have the opportunity to 
fulfill his or her service obligation, if time remained in the eight-
year period, if the TEACH Grant recipient does not receive a final 
total and permanent disability discharge. The non-Federal negotiators 
also noted that if the eight-year time period elapsed while the grant 
recipient was in a conditional discharge status, the TEACH Grant would 
convert to a loan anyway.

Obligation To Repay the Grant (Sec.  686.43)

    Statute: Section 420N(c) of the HEA provides that if a TEACH Grant 
recipient fails or refuses to comply with the service obligation, the 
sum of the amounts of any TEACH Grants received by the recipient shall, 
upon a determination of such failure or refusal in such service 
obligation, be treated as a Federal Direct Unsubsidized Loan under part 
D of Title IV of the HEA, and shall be subject to repayment, together 
with interest thereon accruing from the date of the grant award.
    Proposed Regulations: Proposed Sec.  686.43 would require that 
TEACH Grant amounts be converted into a Federal Direct Unsubsidized 
Loan, with interest accruing from the date of each grant disbursement 
if--
     The grant recipient, regardless of enrollment status, 
requests the conversion for any reason;
     Within 120 days of ceasing enrollment in the institution 
prior to completing the TEACH Grant-eligible program, the grant 
recipient has failed to notify the Secretary in accordance with 
proposed Sec.  686.40(a);
     Within one year of ceasing enrollment in the institution 
prior to completing a TEACH Grant-eligible program, the grant recipient 
has not been determined eligible for a suspension of the eight-year 
completion period, has not re-enrolled in a TEACH Grant-eligible 
program, or has not begun creditable teaching service to meet his or 
her service agreement;
     The grant recipient completes the course of study for 
which a TEACH Grant was received and does not actively confirm to the 
Secretary, at least annually, his or her intention to satisfy the 
service agreement; or
     The grant recipient completed a TEACH Grant-eligible 
program but failed to begin or maintain teaching service in accordance 
with the Service Agreement within the timeframe that would allow that 
individual to complete the service obligation within the eight-year 
completion period.
    Under proposed Sec.  686.43(b), a TEACH Grant that converts to a 
Federal Direct Unsubsidized Loan would not be counted against the grant 
recipient's annual or aggregate Stafford Loan limits.
    Under proposed Sec.  686.43(c), a grant recipient whose TEACH Grant 
has been converted to a Federal Direct Unsubsidized Loan would enter 
repayment immediately, would be eligible for all of the benefits of the 
Direct Loan Program, and would not be eligible for any grace period.
    Finally, proposed Sec.  686.43(d) would provide that once a TEACH 
Grant is converted to a loan, it cannot be reconverted to a grant.
    Reasons: The purpose of proposed Sec.  686.43 would be to implement 
the statutory directive that a TEACH Grant converts to a Federal Direct 
Unsubsidized Loan if the grant recipient fails or refuses to carry out 
the terms of his or her service agreement. Because the conversion of a 
TEACH Grant to a loan has the potential to subject a grant recipient to 
a heavy debt burden, the Secretary believes that it is essential to 
specify in the proposed regulations the circumstances under which a 
TEACH Grant would convert to a loan so that a grant recipient is aware 
of this essential information.
    The Secretary believes that TEACH Grants that are converted to 
loans should not count against the grant recipient's annual or any 
aggregate Stafford Loan limit because, in some cases, the conversion of 
loans would

[[Page 15352]]

immediately render the grant recipient ineligible for further financial 
aid should annual or aggregate loan limits be exceeded as a result of 
the conversion of TEACH Grants. The Secretary believes such an outcome 
would be unfair to a grant recipient, who for reasons beyond his or her 
control, may be unable to comply with the service obligation. The 
negotiating committee agreed to the language in proposed Sec.  686.43.
    Finally, the Secretary notes that the conversion of a TEACH Grant 
to a loan creates a new legally-binding agreement with the TEACH grant 
recipient requiring repayment of the grant amounts as a Federal Direct 
Unsubsidized Loan. This legally-binding agreement would reflect the 
terms and conditions of the repayment of the loan under part D of Title 
IV of the HEA. There are no provisions in the promise to repay signed 
by the grant recipient under part D of Title IV of the HEA that would 
allow for the discharge and reconversion of the loan debt to a grant.
    The non-Federal negotiators expressed concern that the proposed 
regulations would not provide for an appeal process should the grant 
recipient's TEACH Grants be converted to a Federal Direct Unsubsidized 
Loan by mistake or through some omission or error on the part of either 
the Secretary or the grant recipient. The Secretary did not agree that 
an appeals process was necessary and instead agreed to provide a 
reference in the counseling requirements in proposed Sec.  686.32 to 
the Student Loan Ombudsman as an alternative resource should the 
conversion be contested by the grant recipient.

Conforming Amendments (34 CFR Parts 668, 673, 674, 675, 676, 682, 685, 
and 690)

    Statute: The HEA, as amended by the CCRAA, does not specifically 
address the need for conforming amendments to the Department's 
regulations to reflect the implementation of the TEACH Grant program.
    Proposed Regulations: The Department would propose conforming 
amendments to the regulations in 34 CFR parts 668, 673, 674, 675, 676, 
682, 685, and 690 to consistently reference and implement the new 
proposed TEACH Grant program.
    Reasons: These proposed conforming amendments to 34 CFR parts 668, 
673, 674, 675, 676, 682, 685, and 690 are needed to consistently 
reference and implement the TEACH Grant program in all applicable 
regulations of the Department. These conforming amendments were 
discussed with and received consensus from the negotiating committee.

Executive Order 12866

Regulatory Impact Analysis

    Under Executive Order 12866, the Secretary must determine whether 
this regulatory action is ``significant'' and therefore subject to the 
requirements of the Executive order and subject to review by the OMB. 
Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action likely to result in a rule that may 
(1) have an annual effect on the economy of $100 million or more, or 
adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local or 
tribal governments or communities in a material way (also referred to 
as an ``economically significant'' rule); (2) create serious 
inconsistency or otherwise interfere with an action taken or planned by 
another agency; (3) materially alter the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raise novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive order.
    Pursuant to the terms of the Executive order, it has been 
determined that this regulatory action will have an annual effect on 
the economy of more than $100 million. Therefore, this action is 
``economically significant'' and subject to OMB review under section 
3(f)(1) of Executive Order 12866. Accordingly, the Secretary has 
assessed potential costs and benefits of this regulatory action and has 
determined the benefits justify the costs.

Need for Federal Regulatory Action

    These proposed regulations are needed to implement provisions of 
the HEA, as amended by the CCRAA, that established the TEACH Grant 
program. The Secretary has limited discretion in implementing the new 
TEACH Grant program; these proposed regulations also modify the 
Department's existing regulations to reflect statutory changes made by 
the CCRAA.
    The Secretary has exercised limited discretion in implementing the 
CCRAA provisions in the following areas:
     Definition of elementary and secondary academic year: The 
CCRAA provides that a grant recipient must serve as a full-time teacher 
for a total of not less than four academic years within eight years 
after completing the program of study for which he or she received a 
TEACH Grant.
     TEACH Grant-eligible institution: The CCRAA provides that 
an eligible institution for purposes of the TEACH Grant program must be 
an institution of higher education as defined in section 102 of the HEA 
that is financially responsible and that provides: high-quality teacher 
preparation and professional development services, including extensive 
clinical experience as part of pre-service preparation; pedagogical 
coursework, or assistance in the provision of such coursework; and 
supervision and support services to teachers, or assistance in the 
provision of such services, or that provides a post-baccalaureate 
program of instruction.
     Calculation of Grade-Point Average for Transfer Students: 
The CCRAA requires students to have a grade-point average of 3.25 on a 
4.0 scale to be eligible to receive a TEACH Grant; and
     Counseling: The CCRAA requires schools to provide 
counseling at a number of points to provide participating students with 
information on the program and, in particular, to underscore the 
student's responsibilities in the event the program's service 
requirements are not fulfilled.
     Discharge of Service Agreement: The CCRAA does not address 
the discharge of a service obligation if a TEACH Grant recipient dies 
or becomes totally and permanently disabled.
    The following section addresses the alternatives that the Secretary 
considered in implementing these discretionary portions of the CCRAA 
provisions. These alternatives are also discussed in the Reasons 
sections of this preamble related to the specific regulatory 
provisions.

Regulatory Alternatives Considered

    Definition of elementary and secondary academic year: The 
Department chose to define an academic year for elementary and 
secondary schools as one complete school year or two complete and 
consecutive half-years from different school years, excluding summer 
sessions, that generally fall within a 12-month period. If a school has 
a year-round program of instruction, the Secretary would consider a 
minimum of nine consecutive months to be the equivalent of an academic 
year.
    As discussed in more detail in the Reasons section for this 
provision, several non-Federal negotiators suggested removing the word 
``consecutive'' from the definition and eliminating the exclusion of 
summer sessions. The Secretary considered these alternatives but 
decided against making the changes to maintain consistency with other 
similar definitions under the

[[Page 15353]]

HEA and avoid allowing recipients to complete the four-year service 
obligation in less than four years, which would be contrary to the 
TEACH Grant provisions in the statute. None of these alternatives were 
estimated to affect Federal cost or burden estimates.
    TEACH Grant-eligible institution: In developing regulations related 
to the statutory institutional eligibility requirements established in 
the CCRAA, the Department and the non-Federal negotiators established a 
number of pathways for students to acquire the education and knowledge 
needed to serve as highly-qualified teachers in high-need fields. As 
discussed in more detail in the Reasons section for this provision, 
these pathways include completion of a baccalaureate or master's degree 
teacher preparation program; completion of a baccalaureate program at 
one institution and a master's level teacher preparation program at 
another institution or a post-baccalaureate program at an institution 
that does not offer a teacher preparation program; and completion of a 
baccalaureate program at one institution after transferring from a two-
year institution offering a program acceptable for full credit toward a 
baccalaureate degree.
    These pathways are consistent with the purpose of the TEACH Grant 
program and with program cost estimates developed by the Administration 
at the time of the passage of the CCRAA.
    Calculation of Grade-Point Average for Transfer Students: Section 
420N(a)(2)(A)(ii)(I) of the HEA provides that an undergraduate, post-
baccalaureate or graduate student's eligibility for a TEACH Grant may 
be based on the student maintaining a cumulative GPA of at least 3.25 
on a 4.0 scale.
    The Department initially considered proposed regulations under 
which a transfer student could meet the GPA requirement to receive a 
TEACH Grant for his or her first payment period at the institution to 
which the student has transferred by calculating the student's transfer 
GPA using the methodology already in use by institutions to determine a 
transfer student's GPA for the National SMART Grant program. Under the 
National SMART Grant program, institutions incorporate transfer grades 
from coursework accepted by the new institution for the SMART Grant-
eligible program.
    Upon consideration and discussion with negotiators, the Secretary 
believes allowing the new institution to use grades assigned to 
coursework accepted by the new institution for initial GPA calculation 
purposes for that transfer student instead of using grades assigned 
only to coursework accepted into the TEACH Grant-eligible program would 
decrease the burden on institutions and students because institutions 
will not have to take the extra step of determining which of the 
transferred courses will actually apply to the TEACH Grant-eligible 
program at the time of the student's admission. The proposed 
regulations have been revised accordingly to reflect this approach. 
While the Department and non-Federal negotiators agreed on the efficacy 
of this approach based on anecdotal information, the Department lacks 
the detailed data to quantify the reduced burden associated with this 
policy choice. Accordingly, we are particularly interested in receiving 
comments and accompanying data that would facilitate the development of 
a more definitive assessment.
    Counseling: The Department and negotiators strongly agreed on the 
need for students to be fully informed about the TEACH Grant program 
and the obligations acceptance of a TEACH Grant entails. In considering 
the most effective approach to provide students with clear, concise 
information on a regular basis, the Department initially proposed 
annual in-person counseling sessions prior to grant disbursements.
    When this issue was discussed during negotiated rule-making 
sessions, non-Federal negotiators pointed out that the Department's 
proposed approach imposed significant burdens on both the student and 
institution--including possibly delaying grant disbursements--while 
there is no evidence that in-person counseling is more effective than 
interactive electronic counseling. After consideration and further 
discussion, the group developed a consensus position under which 
institutions must provide initial, subsequent, and exit counseling, but 
have the option of providing in-person, audiovisual, or interactive 
electronic counseling, with the stipulation that institutions must 
ensure an expert on Title IV, HEA programs is available shortly after 
the counseling session to answer any questions. This is consistent with 
the requirements in the FFEL and Direct Student Loan programs.
    The Department and non-Federal negotiators agreed on the efficacy 
of this approach based on anecdotal information, as the Department 
lacks the detailed data in this area. Accordingly, we are particularly 
interested in receiving comments and accompanying data that would 
facilitate the development of a more definitive assessment of reduced 
burden associated with this policy choice.
    Discharge of a Service Agreement: Although the HEA is silent on 
this issue, as discussed in the Reasons section for this provision, the 
Department chose to provide a discharge of a TEACH Grant recipient's 
service obligation in cases when the grant recipient cannot comply with 
his or her service agreement because of death or total and permanent 
disability. Providing such discharge is consistent with the treatment 
of Title IV, HEA loans, so there is no additional Federal cost 
associated with this provision.
    Other Areas: In addition to these specific issues, there were a 
number of areas, such as institutional participation, payment from more 
than one institution, correspondence courses, calculation of a grant, 
where the Department chose to base TEACH Grant requirements on existing 
regulations and processes for the Pell Grant program or other Federal 
student aid programs. (See appropriate Reasons sections for a more 
detailed discussion.) While other approaches were considered in some of 
these areas, this approach ensures consistency, facilitates program 
implementation, and avoids burden associated with the development of 
new requirements, systems, or processes. It was widely supported by 
both Federal and non-Federal negotiators and quickly adopted.

Amount of TEACH Grants Awarded

    The Department estimates that the TEACH Grant program will provide 
$86 million in aid to 31,000 students in 2008, its first year of 
operation, with an average award of $2,800. (The average award reflects 
expected reductions in the $4,000 maximum award due to part-time 
attendance and cost of attendance restrictions.) Amounts awarded and 
recipients are expected to increase over time, rising to $143 million 
and 51,000 respectively by 2011. Total aid awarded over 2008-2012 is 
estimated at $615 million.
    Demand for TEACH Grants was estimated based on the number of 
students teaching in one of the eligible fields within 10 years of 
college graduation who had a Grade Point Average of 3.25 or higher and 
who borrowed a Federal loan. This figure was adjusted upward to reflect 
similar students who did not complete their degree. Each student was 
estimated to receive two TEACH Grant awards prior to leaving school. 
Stafford loan borrowers take out a median of three loans prior to 
graduation but this number was lowered because we anticipate TEACH 
Grant recipients

[[Page 15354]]

delaying their award decision until their career plans are further 
developed. The above estimates were then adjusted downward for school 
years 2008-09 through 2010-11 to reflect lower demand for the program 
in the first years of implementation. Steady state is expected to be 
reached by the 2011-12 school year.
    As these estimates show, the TEACH Grant program implemented by 
these proposed regulations would offer an extremely significant 
incentive to help address longstanding national and regional elementary 
and secondary school staffing problems. Many studies (Boe, Bobbitt, & 
Cook, 1997; Grissmer & Kirby, 1992; Murnane et al., 1991; Rumberger, 
1987 and extensive research prepared for the National Commission on 
Mathematics and Science Teaching) have found math, science, and special 
education to be fields with especially high turnover and those 
predicted most likely to suffer shortages. More broadly, research 
indicates that rural and urban high-poverty schools face a particular 
challenge in recruiting and retaining highly-qualified teachers, 
especially in high-need subjects. There is little definitive data 
indicating the efficacy of other Federal initiatives, such as student 
loan forgiveness, intended to address this issue. This may be because 
the benefit is greatly deferred (loans are generally not forgiven until 
after up to five years of qualifying service) or because the benefit 
itself is not sufficient to outweigh other factors such as job 
dissatisfaction or better-paying opportunities in other fields or 
areas. Unlike these other programs, however, TEACH Grants offer both a 
large upfront incentive--up to $16,000 in grant aid--to encourage 
teaching in these subjects and schools and a significant disincentive--
the requirement to repay these grants, with interest, if the service 
obligations are not fulfilled. Accordingly, the program should offer a 
powerful incentive for recruitment and retention, especially given the 
additional eligibility requirement that recipients teach for four years 
to maintain the benefit.
    In general, the Department believes the benefits provided under 
these proposed regulations through increased student aid and additional 
incentives to address teacher shortages would outweigh the relatively 
small additional burdens discussed in the following section. This 
belief is strongly supported by the fact that the negotiated rulemaking 
committee reached consensus on the proposed regulations. Nonetheless, 
the Department is interested in comments on possible administrative 
burdens related to the proposed regulations.

Net Budget Impacts

    The TEACH Grant program is estimated to have a net budget impact of 
$7 million in 2008 and $74 million over FY 2008-2012. For budget, 
financial management, and cost estimation purposes, TEACH Grants will 
be operated as a loan program with 100 percent forgiveness of 
outstanding principal and interest upon completion of a student's 
service requirement. Consistent with the requirements of the Credit 
Reform Act of 1990, budget cost estimates for this program reflect the 
estimated net present value of all future non-administrative Federal 
costs associated with awards made in a given fiscal year.
    These estimates were developed using the Office of Management and 
Budget's Credit Subsidy Calculator. (This calculator will also be used 
for re-estimates of prior-year costs, which will be performed each year 
beginning in FY 2009). The OMB calculator takes projected future cash 
flows from the Department's student loan cost estimation model and 
produces discounted subsidy rates reflecting the net present value of 
all future Federal costs associated with awards made in a given fiscal 
year. Values are calculated using a ``basket of zeros'' methodology 
under which each cash flow is discounted using the interest rate of a 
zero-coupon Treasury bond with the same maturity as that cash flow. To 
ensure comparability across programs, this methodology is incorporated 
into the calculator and used government-wide to develop estimates of 
the Federal cost of credit programs. Accordingly, the Department 
believes it is the appropriate methodology to pursue in developing 
estimates for this regulations. That said, however, in developing the 
Accounting Statement included below, the Department consulted with OMB 
on how to integrate our discounting methodology with the discounting 
methodology traditionally used in developing regulatory impact 
analyses.
    Absent evidence on the impact of TEACH Grants on student behavior, 
budget cost estimates were based on behavior as reflected in various 
longitudinal surveys listed under Assumptions, Limitations, and Data 
Sources. As discussed elsewhere in this preamble, program cost 
estimates reflect data on recent college graduates entering eligible 
teaching fields, adjusted for the percentage of students who graduate, 
maintain a 3.25 grade-point-average and take out a Federal loan. (In 
the absence of any need-based eligibility criteria, Federal borrowing 
was used as a proxy for unmet financial need.) Data from longitudinal 
studies were used to estimate the percentage of recipients who 
graduated from college, were highly qualified, and taught in high 
poverty schools for four out of the eight years following graduation. 
Based on this data, the Department assumed 80 percent of recipients 
will eventually fail to fulfill their service requirements and have 
their grants converted into Federal Direct Unsubsidized Stafford Loans.
    Program cost estimates were generated by running projected grant 
disbursements through the Department's student loan cost estimation 
model with no repayments for the 20 percent of recipients expected to 
fulfill their service requirement. For those recipients expected not to 
fulfill their service requirements, repayment was assumed to be similar 
to Federal Direct Unsubsidized Stafford Loans with two exceptions: the 
distribution of awards across risk category and the time before a loan 
enters repayment.
    Student loan cost estimates are normally developed across five risk 
categories: proprietary schools, two-year schools, freshmen/sophomores 
at four-year schools, juniors/seniors at four-year schools, and 
graduate students. Risk categories have separate assumptions based on 
the historical pattern of behavior--for example, the likelihood of 
default or the likelihood to use statutory deferment or discharge 
benefits--of borrowers in each category. In estimating TEACH Grant 
costs, disbursements were limited to three risk groups, with 20 percent 
of volume estimated to be for four-year freshman and sophomores, 60 
percent for four-year juniors and seniors, and 20 percent for graduate 
students.
    In addition, the time to enter repayment was significantly 
lengthened for TEACH Grants converting to loans. This reflects the fact 
that many grants will not become loans until at least five years after 
college graduation, when it becomes clear that the service requirement 
will not be met.
    Because entities that would be affected by these proposed 
regulations already participate in the Title IV, HEA programs, 
participating schools would have already established systems and 
procedures in place to meet program eligibility requirements. To the 
extent possible, existing processes, procedures, and systems for other 
Federal student aid programs have been used as the basis for the TEACH 
Grant program. These proposed regulations generally would require a 
relatively small number

[[Page 15355]]

of discrete changes in specific parameters associated with existing 
guidance--such as changes in entrance and exit counseling, or the need 
to track student grade-point average--rather than wholly new 
requirements. Accordingly, institutions wishing to continue to 
participate in the student aid programs have already absorbed most of 
the administrative costs related to implementing these regulations. 
Marginal costs over this baseline are primarily related to one-time 
changes in areas such as counseling materials; the Department has no 
data to indicate such changes would impose significant additional 
costs. There was little indication by negotiators that these 
requirements were seen as excessively burdensome. The Department is 
particularly interested, however, in comments on possible 
administrative burdens related to this or other proposed regulatory 
requirements.

Assumptions, Limitations, and Data Sources

    Because these proposed regulations would largely restate statutory 
requirements that would be self-implementing in the absence of 
regulatory action, impact estimates provided in the preceding section 
reflect a pre-statutory baseline in which the CCRAA and other statutory 
changes implemented in these proposed regulations do not exist. Costs 
have been quantified for five years.
    In developing these estimates, a wide range of data sources were 
used, including the National Student Loan Data System, operational and 
financial data from Department of Education systems, and data from a 
range of surveys conducted by the National Center for Education 
Statistics such as the Baccalaureate and Beyond, Schools and Staffing, 
and the 1996 Beginning Postsecondary Student surveys.
    Elsewhere in this SUPPLEMENTARY INFORMATION section we identify and 
explain burdens specifically associated with information collection 
requirements. See the heading Paperwork Reduction Act of 1995.

Accounting Statement

    As required by OMB Circular A-4 (available at http://www.Whitehouse.gov/omb/Circulars/a004/a-4.pdf), in Table 2 below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with the provisions of these proposed 
regulations. This table provides our best estimate of the changes in 
Federal student aid payments as a result of these proposed regulations. 
Expenditures are classified as transfers to postsecondary students.

Table 2.--Accounting Statement: Classification of Estimated Expenditures
                              [In millions]
------------------------------------------------------------------------
              Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers        $17
From Whom to Whom?                    Federal Government to
                                       Postsecondary Students.
------------------------------------------------------------------------

2. Clarity of the Regulations

    Executive Order 12866 and the Presidential memorandum on ``Plain 
Language in Government Writing'' require each agency to write 
regulations that are easy to understand.
    The Secretary invites comments on how to make these proposed 
regulations easier to understand, including answers to questions such 
as the following:
     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.  686.32.)
     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?
    To send any comments that concern how the Department could make 
these proposed regulations easier to understand, see the instructions 
in the ADDRESSES section of this preamble.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities. These proposed regulations would affect institutions of 
higher education and individual students and loan borrowers. The U.S. 
Small Business Administration Size Standards define these institutions 
as ``small entities'' if they are for-profit or nonprofit institutions 
with total annual revenue below $5,000,000 or if they are institutions 
controlled by governmental entities with populations below 50,000. 
Individuals are also not defined as ``small entities'' under the 
Regulatory Flexibility Act.
    A significant percentage of the schools participating in the 
Federal student loan programs meet the definition of ``small 
entities.'' In general, the Department believes the benefits provided 
under these proposed regulations through increased Federal student aid 
and additional incentives to address teacher shortages would outweigh 
the relatively small additional burdens, including economic burdens, 
particularly given that institutions finding the program's requirements 
onerous have the option of not participating. This belief is strongly 
supported by the fact that the negotiated rulemaking committee reached 
consensus on the proposed regulations.
    The Secretary invites comments from small institutions as to 
whether they believe the proposed regulations would have a significant 
economic impact on them and, if so, requests evidence to support that 
belief.

Paperwork Reduction Act of 1995

    Proposed 686.4, 686.10, 686.11, 686.12, 686.20, 686.32, 686.34, 
686.36, 686.37, 686.38, 686.40, 686.41, 686.42 and 686.43 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.

Section 686.4--Institutional Participation

    The proposed regulations would require an institution that ceases 
to participate in the TEACH Grant program or becomes ineligible to 
participate during an award year, to report to the Department of 
Education within 45 days after the effective date of the loss of 
eligibility. The contents of the report would include the name of each 
TEACH Grant eligible student; the amount of the TEACH Grant funds paid 
to each student for that award year; and the amount of TEACH Grant 
funds due each eligible student through the end of the payment period. 
Also, the institution would be required to provide an accounting of all 
TEACH Grant expenditures for that award year to the date of 
termination. We estimate that proposed Sec.  686.4 would increase 
burden for institutions by 81 hours in OMB 1845-XXXX.

[[Page 15356]]

Section 686.10--Application

    Under the proposed regulations, a potential grant recipient would 
be required to complete and submit an approved application form, as 
designated by the Secretary prior to the published deadline. Currently, 
the Free Application for Federal Student Aid (FAFSA) is the designated 
application form for Title IV, HEA program assistance. Because all 
undergraduate applicants for Title IV, HEA program assistance must 
complete and submit the FAFSA and most graduate students also apply for 
Title IV, HEA program assistance, there would be no additional burden 
associated with indicating one's interest in the TEACH Grant program on 
the designated form. Therefore, there would not be any new burden 
associated with this provision in the proposed regulations.

Section 686.11--Eligibility To Receive a Grant

    The proposed regulations would establish that in order to receive a 
TEACH Grant, an applicant would, in addition to meeting the student 
eligibility requirements, need to submit the designated application, 
sign a TEACH Grant service agreement, and enroll in a TEACH Grant-
eligible institution. Under the proposed regulations, grant recipients 
would need to maintain a grade point average of 3.25 on a 4.0 scale 
during each payment period, score above the 75th percentile on at least 
one of a battery of nationally-normed standardized tests, or qualify as 
a current or retired teacher obtaining a master's degree in a TEACH 
Grant-eligible program. There would be several categories of grant 
recipients where the cumulative grade point average of 3.25 must be 
maintained each payment period. Those categories are:
    I. During the initial payment period:
    The final cumulative high school GPA for a first term undergraduate 
recipient--
    The TEACH Grant-eligible institution would need to document the 
student's secondary school GPA from an LEA, an SEA or other State 
agency; a public or private high school; or in the case of a home 
schooled student, obtain documentation of the secondary school GPA from 
the parent or guardian.
    The undergraduate cumulative GPA for either the post-baccalaureate 
or graduate student recipient--
    The TEACH Grant-eligible institution would need to document the 
student's undergraduate school cumulative GPA.
    The transfer student cumulative GPA, as determined by the current 
TEACH Grant-eligible institution--
    The TEACH eligible institution would need to document the student's 
cumulative GPA based upon the method established by the institution to 
accept coursework completed from any prior postsecondary institution 
that it accepts.
    II. During payment periods:
    The cumulative GPA would be based on courses taken at the TEACH 
Grant-eligible institution through the most-recently completed payment 
period, or
    III. Alternatives to the cumulative GPA:
    Scoring above the 75th percentile of at least one of the battery of 
tests from a nationally-normed standardized test, or
    The grant recipient is currently a teacher or retiree who is 
applying for a TEACH Grant to obtain a master's degree in a TEACH 
Grant-eligible program. We estimate that the proposed regulation would 
increase burden for individuals and institutions by 77,263 hours in OMB 
1845-XXXX.

Section 686.12--Service Agreement

    Under the proposed regulations, a student would be required to sign 
a service agreement before receiving a TEACH Grant. The service 
agreement would require the student to fulfill a service obligation for 
each program for which the student received a TEACH Grant. The service 
agreement would explain the terms of the service obligation and would 
provide that if a TEACH Grant recipient does not fulfill the service 
obligation or otherwise does not meet the requirements of 34 CFR part 
686, any TEACH Grant the student received will be converted to a 
Federal Direct Unsubsidized Loan that the student must repay in full to 
the Secretary, with interest.
    The burden associated with the service agreement would be reported 
under a new collection. A separate 60-day Federal Register notice will 
be published to solicit comment on the service agreement once it is 
developed.

Section 686.20--Submission Process and Deadline for a SAR or ISIR

    The proposed regulations would require participating institutions 
who disburse TEACH Grant funds to students to electronically transmit 
data as required by the Secretary. The burden associated with the 
collection and transmission of the required data would be assessed and 
attributed in 34 CFR 686.37. Therefore, there would be no burden 
associated with proposed Sec.  686.20.

Section 686.32--Counseling Requirements

    The proposed regulations would require an institution to provide 
initial, subsequent, and exit counseling to each TEACH Grant recipient. 
The initial counseling would be required prior to making the first 
disbursement of the grant. Initial counseling would need to include, 
but not be limited to explaining the terms and conditions of the TEACH 
Grant service agreement; providing information on how to identify low-
income schools and documented high need fields; informing grant 
recipients of the possibility of a suspension of the eight-year period 
for completion of the service agreement; and describing the conditions 
under which a suspension may be granted. Subsequent counseling, which 
would be required to occur prior to the first disbursement of a TEACH 
Grant in a subsequent award year, would need to include, but not be 
limited to reviewing the terms and conditions of the service agreement; 
and an emphasis on the fact that if the student fails or refuses to 
complete the service agreement, the TEACH Grant will convert into a 
Federal Direct Unsubsidized Loan. Under the proposed regulations, 
institutions would be required to provide exit counseling before the 
recipient ceases to attend the institution. Written exit counseling 
materials could be provided within 30 days after completing a study 
abroad program or after a student withdraws without notifying the 
institution. We estimate that the proposed regulations would increase 
burden for individuals and institutions by 390,068 hours in OMB 1845-
XXXX.

Section 686.34--Liability for and Recovery of TEACH Grant Overpayments

    The proposed regulations would require the institution to promptly 
provide written notification to a student requesting repayment of any 
overpayment that the institution does not have responsibility to repay. 
These proposed regulations also would require that the institution 
refer the student to the Department if the student does not take 
positive action to promptly resolve the TEACH Grant overpayment. We 
estimate that proposed Sec.  686.34 would increase burden for 
individuals and institutions by 855 hours in OMB 1845-XXXX.

Section 686.36--Fiscal Control and Accounting Procedures

    The proposed regulations would provide that participating 
institutions must account for the receipt and expenditure of Title IV, 
HEA program funds in accordance with generally accepted accounting 
principles. Further, participating institutions would be required to 
disburse TEACH Grant

[[Page 15357]]

funds consistent with the cash management regulations in 34 CFR 
668.164. Participating institutions already are required to comply with 
these requirements for other Title IV, HEA programs and, therefore, 
there would be no additional burden placed upon institutions 
participating in the TEACH Grant program.

Section 686.37--Institutional Reporting Requirements

    Under the proposed regulations, a participating institution would 
be required to provide the Secretary information about each TEACH Grant 
recipient that includes, but is not limited to, the student's 
eligibility for a TEACH Grant; the amounts of the TEACH Grant 
disbursed; the anticipated and actual disbursement dates; and the 
disbursement amounts of the TEACH Grants provided. The initial 
disbursement information would need to be submitted to the Department 
no later than 30 days following the initial disbursement of TEACH Grant 
funds. Subsequent disbursements, cancellations, and adjustments would 
need to be submitted to the Department within 30 days after the 
transaction. Participating institutions already are required to comply 
with these requirements for other Title IV, HEA programs and, 
therefore, there would be no additional burden placed upon institutions 
participating in the TEACH Grant program.

Section 686.38--Maintenance and Retention of Records

    The proposed regulations would require participating institutions 
to maintain the fiscal records for the TEACH Grant program for three 
years after the end of the award year for which the TEACH Grant was 
awarded. Participating institutions already are required to comply with 
these requirements for other Title IV, HEA programs and, therefore, 
there would be no additional burden placed upon institutions 
participating in the TEACH Grant program.

Section 686.40--Documenting the Service Obligation

    The proposed regulations would require, except as provided in 
proposed Sec.  686.40 and Sec.  686.42, a student to confirm to the 
Secretary in writing, within 120-days of completing or otherwise 
ceasing enrollment in a program for which the student received a TEACH 
Grant, that he or she is employed as a full-time teacher in accordance 
with the TEACH Grant service agreement, or is not yet employed, but 
intends to meet the terms and conditions of the service agreement.
    The burden associated with this notification requirement would be 
covered under a new collection. A separate 60-day Federal Register 
notice will be published to solicit comment on a notification form once 
it is developed.

Section 686.41--Periods of Suspension

    The proposed regulations would provide that a TEACH Grant recipient 
may request a suspension of the eight-year period for completion of the 
TEACH Grant service agreement based on one of the conditions described 
in proposed Sec.  668.41. The grant recipient would be required to 
apply for a suspension on a form approved by the Secretary.
    The burden associated with this notification requirement would be 
covered under a new collection. A separate 60-day Federal Register 
notice will be published to solicit comment on a suspension request 
form once it is developed.

Section 686.42--Discharge of Service Agreement

    Under the proposed regulations, a TEACH Grant recipient's service 
obligation would be discharged if the recipient dies, or if the 
recipient becomes totally and permanently disabled and meets the 
eligibility requirements for a total and permanent disability discharge 
in 34 CFR 685.213.
    The burden associated with the discharge of a TEACH Grant service 
obligation based on the grant recipient's death would be covered under 
OMB 1845-0021. The burden associated with the discharge of a TEACH 
Grant service obligation based on the grant recipient's total and 
permanent disability would be covered under OMB 1845-0065.

Section 686.43--Obligation To Repay the Grant

    The proposed regulations would specify the conditions under which a 
TEACH Grant would be converted to a Federal Direct Unsubsidized Loan 
that the grant recipient must repay. One of these conditions is when a 
TEACH Grant recipient who has completed a program for which he or she 
received a TEACH Grant does not notify the Secretary at least annually 
of his or her intent to satisfy the TEACH Grant service agreement.
    The burden associated with the notification requirement in proposed 
Sec.  686.43 would be covered under the same new collection associated 
with the notification requirement in proposed Sec.  686.40.
    Consistent with the discussion in this section, the following chart 
describes the sections of the proposed regulations that involve 
information collections, the information that would be collected, and 
the collections the Department would submit to the Office of Management 
and Budget for approval and public comment under the Paperwork 
Reduction Act.

------------------------------------------------------------------------
 Regulatory section    Information collection          Collection
------------------------------------------------------------------------
686.4...............  Institutions that cease   OMB 1845-XXXX. This
                       participation in the      would be a new
                       TEACH Grant program or    collection.
                       otherwise lose
                       eligibility would be
                       required to report
                       program data to the
                       Department within 45
                       days of the change in
                       eligibility.
686.11..............  A TEACH Grant recipient   OMB 1845-XXXX. This
                       would be required to      would be a new
                       (a) score above the       collection.
                       75th percentile on a
                       battery of a
                       standardized nationally-
                       normed test, (b)
                       maintain a 3.25
                       cumulative GPA, or (c)
                       currently be a teacher
                       or retiree obtaining a
                       master's degree in a
                       TEACH Grant-eligible
                       program.

[[Page 15358]]

 
686.12..............  Before receiving a TEACH  OMB 1845-XXXX. This
                       Grant, a student would    would be a new
                       be required to sign a     collection. A separate
                       service agreement. The    60-day Federal Register
                       service agreement would   notice will be
                       provide that a student    published to solicit
                       must fulfill a service    comment on this form
                       obligation for each       once it is developed.
                       program for which the
                       student received a
                       TEACH Grant. The
                       service agreement would
                       explain the terms of
                       the service obligation
                       and provide that if a
                       TEACH Grant recipient
                       does not fulfill the
                       service obligation or
                       otherwise does not meet
                       the requirements of 34
                       CFR part 686, any TEACH
                       Grant the student
                       received will be
                       converted to a Federal
                       Direct Unsubsidized
                       Loan that the student
                       must repay in full to
                       the Secretary, with
                       interest.
686.32..............  A participating           OMB 1845-XXXX. This
                       institution would be      would be a new
                       required to provide       collection.
                       initial, subsequent,
                       and exit counseling for
                       all TEACH Grant
                       recipients.
686.34..............  A participating           OMB 1845-XXXX. This
                       institution would be      would be a new
                       required to provide       collection.
                       written notice to any
                       TEACH Grant recipient
                       when he or she owes a
                       TEACH Grant
                       overpayment. Moreover,
                       if the recipient does
                       not take positive
                       action to resolve the
                       overpayment within the
                       deadline, the
                       institution would be
                       required to report the
                       overpayment to the
                       Department.
686.40..............  Except as provided in     OMB 1845-XXXX. This
                       proposed Sec.  Sec.       would be a new
                       686.40 and 686.42,        collection. A separate
                       within 120-days of        60-day Federal Register
                       completing or otherwise   notice will be
                       ceasing enrollment in a   published to solicit
                       program for which the     comment on this form
                       student received a        once it is developed.
                       TEACH Grant, the
                       student would be
                       required to confirm to
                       the Secretary in
                       writing that he or she
                       is employed as a full-
                       time teacher in
                       accordance with the
                       TEACH Grant service
                       agreement, or is not
                       yet employed, but
                       intends to meet the
                       terms and conditions of
                       the service agreement.
686.41..............  A TEACH Grant recipient   OMB 1845-XXXX. This
                       may request a             would be a new
                       suspension of the eight-  collection. A separate
                       year period for           60-day Federal Register
                       completion of the TEACH   notice will be
                       Grant service agreement   published to solicit
                       based on one of the       comment on this form
                       conditions described in   once it is developed.
                       proposed Sec.   668.41.
                       The grant recipient
                       would be required to
                       apply for a suspension
                       on a form approved by
                       the Secretary.
686.42..............  A TEACH Grant             Discharge of a TEACH
                       recipient's service       Grant service
                       obligation would be       obligation based on the
                       discharged if the         grant recipient's death
                       recipient dies, or if     would be covered under
                       the recipient becomes     OMB 1845-0021.
                       totally and permanently   Discharge of a TEACH
                       disabled and meets the    Grant service
                       eligibility               obligation based on the
                       requirements for a        grant recipient's total
                       total and permanent       and permanent
                       disability discharge in   disability would be
                       34 CFR 685.213.           covered under OMB 1845-
                                                 0065.
686.43..............  One of the conditions     This would be covered by
                       under which a TEACH       the same new collection
                       Grant would be            as described for
                       converted to a Federal    686.40.
                       Direct Unsubsidized
                       Loan is if a grant
                       recipient who has
                       completed a program for
                       which he or she
                       received a TEACH Grant
                       does not notify the
                       Secretary at least
                       annually of his or her
                       intent to satisfy the
                       TEACH Grant service
                       agreement.
------------------------------------------------------------------------

    If you want to comment on the proposed information collection 
requirements, please send your comments to the Office of Information 
and Regulatory Affairs, OMB, Attention: Desk Officer for U.S. 
Department of Education. Send these comments by e-mail to [email protected] or by fax to (202) 395-6974. You may also send a 
copy of these comments to the Department contact 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

    These programs are not subject to Executive Order 12372 and the 
regulations in 34 CFR part 79.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether these 
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

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site: 
http://www.ed.gov/news/fedregister.
    To use PDF you must have Adobe Acrobat Reader, which is available 
free

[[Page 15359]]

at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in 
the Washington, DC, area at (202) 512-1530.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://www.gpoaccess.gov/nara/index.html.

(Catalog of Federal Domestic Assistance Numbers: 84.007 Supplemental 
Educational Opportunity Grants; 84.032 Federal Family Education Loan 
Program; 84.033 Federal Work Study; 84.038 Federal Perkins Loan 
Program; 84.063 Federal Pell Grants; 84.069 Leveraging Educational 
Assistance Partnerships; 84.268 William D. Ford Federal Direct Loan 
Program; 84.379 TEACH Grant Program)

List of Subjects

34 CFR Part 668

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

34 CFR Parts 673, 675 and 676

    Administrative practice and procedure, Colleges and universities, 
Consumer protection, Education, Employment, Grant programs-education, 
Loan programs-education, Reporting and recordkeeping requirements, 
Student aid, Vocational education.

34 CFR Parts 674, 682 and 685

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

34 CFR Part 686

    Administrative practice and procedure, Colleges and universities, 
Education, Elementary and secondary education, Grant programs-
education, Reporting and recordkeeping requirements, Student aid.

34 CFR Part 690

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

    Dated: March 11, 2008.
Margaret Spellings,
Secretary of Education.
    For the reasons discussed in the preamble, the Secretary proposes 
to amend 34 CFR chapter VI as follows:

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

    1. The authority citation for part 668 is revised to read as 
follows:

    Authority: 20 U.S.C. 1001, 1002, 1003, 1070g, 1085, 1088, 1091, 
1092, 1094, 1099c, and 1099c-1, unless otherwise noted.

    2. Section 668.1 is amended by:
    A. Removing the word ``and'' that appears after the punctuation 
``;'' in paragraph (c)(10).
    B. Removing the punctuation ``.'' at the end of the paragraph 
(c)(11) and adding, in its place, the words ``; and''.
    C. Adding a new paragraph (c)(12) to read as follows:


Sec.  668.1  Scope.

* * * * *
    (c) * * *
    (12) The Teacher Education Assistance for College and Higher 
Education (TEACH) Grant program.
* * * * *
    3. Section 668.2(b), as amended November 1, 2007 (72 FR 62024), is 
further amended by:
    A. Adding, in alphabetical order, the definitions for ``Teacher 
Education Assistance for College and Higher Education (TEACH) Grant 
program'' and ``TEACH Grant''.
    B. Amending paragraph (2) of the definition of ``Undergraduate 
student'' by:
    i. Removing the word ``and'' following ``(ACG) Program''.
    ii. Adding ``, and TEACH Grant Program'' after ``(SMART) Grant 
Program''.
    iii. Adding ``and 686.3(a)'' after ``690.6(c)(5)''.
    C. Revising the authority citation for the definition of 
``undergraduate student.''
    The additions and revision read as follows:


Sec.  668.2  General definitions.

* * * * *
    (b) * * *
    Teacher Education Assistance for College and Higher Education 
(TEACH) Grant Program: A grant program authorized by title IV of the 
HEA under which grants are awarded by an institution to students who 
are completing, or intend to complete, coursework to begin a career in 
teaching and who agree to serve for not less than four years as a full-
time, highly-qualified, high-need field teacher in a low-income school. 
If the recipient of a TEACH Grant does not complete four years of 
qualified teaching service within eight years of completing the course 
of study for which the TEACH Grant was received or otherwise fails to 
meet the requirements of 34 CFR 686.12, the amount of the TEACH Grant 
converts into a Federal Direct Unsubsidized Loan.

(Authority: 20 U.S.C. 1070g)

    TEACH Grant: A grant authorized under Title IV-A-9 of the HEA and 
awarded to students in exchange for prospective teaching service.

(Authority: 20 U.S.C. 1070g)

* * * * *
    Undergraduate student:
* * * * *

(Authority: 20 U.S.C. 1070g)

* * * * *


Sec.  668.4  [Amended]

    4. Section 668.4(b)(1), as amended November 1, 2007 (72 FR 62025), 
is further amended by removing the word ``and'' that appears after 
``FSEOG,'' and adding ``, and TEACH Grant'' after ``Perkins Loan''.
    5. Section 668.8 is amended by:
    A. Adding ``TEACH Grant,'' after ``National SMART Grant,'' in the 
heading of paragraph (h) introductory text.
    B. Removing the word ``and'' that appears after the punctuation 
``;'' in paragraph (h)(1).
    C. Removing the punctuation ``.'' At the end of paragraph (h)(2) 
and adding, in its place, the words ``; and''.
    D. Adding a new paragraph (h)(3).
    E. Revising the authority citation.
    The addition and revision read as follows:


Sec.  668.8  Eligible programs.

* * * * *
    (h) * * *
    (3) An educational program qualifies as an eligible program for 
purposes of the TEACH Grant program only if the program is--
    (i) A teacher preparation program or a program in a high-need field 
in accordance with 34 CFR 686.2(d); and
    (ii) Offered by a TEACH Grant-eligible institution as defined in 34 
CFR 686.2(d).
* * * * *

(Authority: 20 U.S.C. 1070a, 1070a-1, 1070b, 1070c-1, 1070c-2, 
1070g, 1085, 1087aa-1087hh, 1088, 1091; 42 U.S.C. 2753)

    6. Section 668.19 is amended by:
    A. Removing the word ``or'' the first two times this word appears 
after the acronym ``ACG,'' and in each instance, adding the words ``, 
or a TEACH Grant'' after ``National SMART Grant'' in paragraph (a)(3).
    B. Removing the word ``or'' the third time this word appears after 
the acronym ``ACG,'' and adding the words

[[Page 15360]]

``, or TEACH Grant'' after the third appearance of ``National SMART 
Grant'' in paragraph (a)(3).
    C. Revising the authority citation to read as follows:


Sec.  668.19  Financial aid history.

* * * * *

(Authority: 20 U.S.C. 1070g, 1091, 1094)

    7. Section 668.21, as amended November 1, 2007 (72 FR 62027), is 
further amended by:
    A. Adding the words ``TEACH Grant,'' immediately after the word 
``FSEOG,'' in paragraph (a)(1).
    B. Revising the authority citation to read as follows:


Sec.  668.21  Treatment of title IV grant and loan funds if the 
recipient does not begin attendance at the institution.

* * * * *
(Authority: 20 U.S.C. 1070g, 1094)

    8. Section 668.22 is amended by:
    A. Adding the words ``TEACH Grant,'' immediately after the words 
``National SMART Grant,'' in paragraph (a)(2).
    B. Adding a new paragraph (i)(2)(v).
    C. Revising the authority citation.
    The addition and revision read as follows:


Sec.  668.22  Treatment of title IV funds when a student withdraws.

* * * * *
    (i) * * *
    (2) * * *
    (v) TEACH Grants.
* * * * *
(Authority: 20 U.S.C. 1070g, 1091b)

    9. Section 668.24 is amended by:
    A. Removing the word ``or'' which appears after ``ACG'' and adding 
the words ``, or TEACH Grant'' immediately in front of the word 
``Program'' in the introductory text of paragraph (e)(1).
    B. Revising the authority citation to read as follows:


Sec.  668.24  Record retention and examinations.

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

    10. Section 668.26 is amended by:
    A. Removing the word ``or'' the first time it appears and adding 
the words ``, or TEACH Grant'' immediately after the words ``National 
SMART Grant'' in paragraph (d)(1).
    B. Removing the word ``and'' the first time it appears and adding 
the words ``, and TEACH Grant'' immediately after the words ``National 
SMART Grant'' in paragraph (e)(1).
    C. Revising the authority citation to read as follows:


Sec.  668.26  End of an institution's participation in the Title IV, 
HEA programs.

* * * * *
(Authority: 20 U.S.C. 1070g, 1094, 1099a-3)

    11. Section 668.32 is amended by:
    A. Removing the word ``and'' in paragraph (c)(2)(ii).
    B. Adding the word ``and'' after the punctuation ``;'' in paragraph 
(c)(3).
    C. Adding a new paragraph (c)(4).
    D. Adding a new paragraph (k)(9).
    E. Revising the authority citation.
    The additions and revision read as follows:


Sec.  668.32  Student eligibility--general.

* * * * *
    (c) * * *
    (4) For the purposes of the TEACH Grant program--
    (i) For an undergraduate student other than a student enrolled in a 
post-baccalaureate program, has not completed the requirements for a 
first baccalaureate degree; or
    (ii) For the purposes of a student in a first post-baccalaureate 
program, has not completed the requirements for a post-baccalaureate 
program as described in 34 CFR 686.2(d);
* * * * *
    (k) * * *
    (9) 34 CFR 686.11 for the TEACH Grant program; and
* * * * *
(Authority: 20 U.S.C. 1070g, 1091; 28 U.S.C. 3201(e))

    12. Section 668.35 is amended by:
    A. Redesignating paragraph (g)(4) as paragraph (g)(5).
    B. Adding a new paragraph (g)(4).
    C. Revising the authority citation.
    The addition and revision read as follows:


Sec.  668.35  Student debts under the HEA and to the U.S.

* * * * *
    (g) * * *
    (4) A student is not liable for a TEACH Grant overpayment received 
in an award year if--
    (i) The institution can eliminate that overpayment by adjusting 
subsequent title IV, HEA program (other than Federal Pell Grant, ACG, 
National SMART Grant, or TEACH Grant) payments in that same award year; 
or
    (ii) The institution cannot eliminate the overpayment under 
paragraph (g)(4)(i) of this section but can eliminate that overpayment 
by adjusting subsequent TEACH Grant payments in that same award year.
* * * * *
(Authority: 20 U.S.C. 1070g, 1091; 11 U.S.C. 523, 525)

    13. Section 668.138 is amended by:
    A. Removing the word ``or'' the first time it appears and adding 
the words ``, or TEACH Grant'' immediately after the words ``National 
SMART Grant'' in paragraph (a).
    B. Revising the authority citation to read as follows:


Sec.  668.138  Liability.

* * * * *
(Authority: 20 U.S.C. 1070g, 1091, 1094)

    14. Section 668.139 is amended by:
    A. Adding the words ``TEACH Grant,'' immediately after the words 
``National SMART Grant,'' in paragraph (c).
    B. Revising the authority citation to read as follows:


Sec.  668.139  Recovery of payments and loan disbursements to 
ineligible students.

* * * * *
(Authority: 20 U.S.C. 1070g, 1091, 1094)

    15. Section 668.161 is amended by:
    A. Adding the words ``TEACH Grant,'' immediately after the words 
``National SMART Grant,'' in paragraph (a)(3)(i).
    B. Revising the authority citation to read as follows:


Sec.  668.161  Scope and purpose.

* * * * *
(Authority: 20 U.S.C. 1070g, 1094)

    16. Section 668.162 is amended by:
    A. Adding the words ``TEACH Grant,'' immediately after the words 
``National SMART Grant,'' in paragraph (d)(1).
    B. Revising the authority citation to read as follows:


Sec.  668.162  Requesting funds.

* * * * *
(Authority: 20 U.S.C. 1070g, 1094)

    17. Section 668.163 is amended by:
    A. Adding the words ``TEACH Grant,'' immediately after the words 
``National SMART Grant,'' in paragraph (c)(2).
    B. Adding the words ``TEACH Grant,'' immediately after the words 
``National SMART Grant,'' in paragraph (c)(3) introductory text.
    C. Adding the words ``TEACH Grant,'' immediately after the words 
``National SMART Grant,'' in paragraph (c)(4).
    D. Revising the authority citation to read as follows:


Sec.  668.163  Maintaining and accounting for funds.

* * * * *
(Authority: 20 U.S.C. 1070g, 1091, 1094)

    18. Section 668.164, as amended November 1, 2007 (72 FR 62029), is 
further amended by:
    A. Removing the word ``and'' after ``FSEOG,'' and adding the words 
``, and

[[Page 15361]]

TEACH Grant,'' immediately after the words ``Federal Perkins Loan,'' in 
paragraph (g)(1)(ii) introductory text.
    B. Removing the word ``or'' that appears after the punctuation 
``;'' in paragraph (g)(1)(ii)(A).
    C. Removing the ``.'' after the words ``to the student'' and adding 
in its place ``; or'' in paragraph (g)(1)(ii)(B).
    D. Adding a new paragraph (g)(2)(ii)(C).
    E. Revising the authority citation.
    The addition and revision read as follows:


Sec.  668.164  Disbursing funds.

* * * * *
    (g) * * *
    (2) * * *
    (ii) * * *
    (C) For an award under the TEACH Grant program, the institution 
originates the award to the student.
* * * * *
(Authority: 20 U.S.C. 1070g, 1094)

    19. Section 668.183 is amended by:
    A. Removing the word ``Your'' the first time it appears and adding, 
in its place, the words ``Except as provided in paragraph (b)(3) of 
this section, your'' in paragraph (b)(1).
    B. Adding a new paragraph (b)(3).
    C. Revising the authority citation.
    The addition and revision read as follows:


Sec.  668.183  Calculating and applying cohort default rates.

* * * * *
    (b) * * *
    (3) A TEACH Grant that has been converted to a Direct Unsubsidized 
loan is not considered for the purpose of calculating and applying 
cohort default rates.
* * * * *
(Authority: 20 U.S.C. 1070g, 1082, 1085, 1094, 1099c)

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

    20. The authority citation for part 673 is revised to read as 
follows:

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

    21. Section 673.5 is amended by:
    A. Adding the words ``TEACH Grants,'' immediately after the words 
``the amounts of any'' and by removing the word ``loan'' which appears 
after the words ``if the sum of the'' in paragraph (c)(2)(iii).
    B. Revising the authority citation to read as follows:


Sec.  673.5  Overaward.

* * * * *
(Authority: 20 U.S.C. 1070b-1, 1070g, 1087dd, 1087hh; 42 U.S.C. 
2753)

PART 674--FEDERAL PERKINS LOAN PROGRAM

    22. The authority citation for part 674 is revised to read as 
follows:

    Authority: 20 U.S.C. 421-429, 1070g, 1087aa-1087hh, unless 
otherwise noted.

    23. Section 674.2 is amended by:
    A. Adding, in alphabetical order, the terms ``Teacher Education 
Assistance for College and Higher Education (TEACH) Grant Program'' and 
``TEACH Grant'' in paragraph (a).
    B. Revising the authority citation to read as follows:


Sec.  674.2  Definitions.

* * * * *
(Authority: 20 U.S.C. 1070g, 1094)

    24. Section 674.61 is amended by:
    A. Adding the words ``a new TEACH Grant or'' immediately after the 
words ``does not receive'' in paragraph (b)(2)(ii).
    B. Revising the authority citation to read as follows:


Sec.  674.61  Discharge for death or disability.

* * * * *
(Authority: 20 U.S.C. 425, 1070g, 1087dd; sec. 130(g)(2) of the 
Education Amendments of 1976, Pub. L. 94-482)

PART 675--FEDERAL WORK-STUDY PROGRAMS

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

    Authority: 20 U.S.C. 1070g; 42 U.S.C. 2751-2756b; unless 
otherwise noted.

    26. Section 675.2 is amended by:
    A. Adding, in alphabetical order, the terms ``Teacher Education 
Assistance for College and Higher Education (TEACH) Grant Program'' and 
``TEACH Grant'' in paragraph (a).
    B. Revising the authority citation to read as follows:


Sec.  675.2  Definitions.

* * * * *
(Authority: 20 U.S.C. 1070g, 1087aa-1087ii)

PART 676--FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT 
PROGRAM

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

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

    28. Section 676.2 is amended by:
    A. Adding, in alphabetical order, the terms ``Teacher Education 
Assistance for College and Higher Education (TEACH) Grant Program'' and 
``TEACH Grant'' in paragraph (a).
    B. Revising the authority citation to read as follows:


Sec.  676.2  Definitions.

* * * * *
(Authority: 20 U.S.C. 1070g, 1087aa-1087ii)

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

    29. The authority citation for part 682 is revised to read as 
follows:

    Authority: 20 U.S.C. 1070g, 1071 to 1087-2, unless otherwise 
noted.

    30. Section 682.200 is amended by:
    A. Adding, in alphabetical order, the terms ``Teacher Education 
Assistance for College and Higher Education (TEACH) Grant Program'' and 
``TEACH Grant'' in paragraph (a)(1).
    B. Adding the words ``TEACH Grant,'' after the words ``the amounts 
of any'' and removing the word ``loan'' immediately following the words 
``if the sum of the'' in paragraph (b) in paragraph (2)(i) of the 
definition of ``Estimated financial assistance''.
    31. Section 682.204 is amended by:
    A. Adding paragraph (m).
    B. Adding an authority citation to read as follows:


Sec.  682.204  Maximum loan amounts.

* * * * *
    (m) Any TEACH Grants that have been converted to Direct 
Unsubsidized Loans are not counted against annual or any aggregate loan 
limits under paragraghs (c), (d), (e), and (f) of this section.

(Authority: 20 U.S.C. 1070g, 1078, 1078-2, 1078-3, 1078-8)

    32. Section 682.402 is amended by:
    A. Adding the words ``a new TEACH Grant or'' immediately after the 
words ``does not receive'' in paragraph (c)(1)(ii)(B).
    B. Revising the authority citation to read as follows:


Sec.  682.402  Death, disability, closed school, false certification, 
unpaid refunds, and bankruptcy payments.

* * * * *
(Authority: 20 U.S.C. 1070g, 1078, 1078-1, 1078-2, 1078-3, 1082, 
1087)

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

    33. The authority citation for part 685 is revised to read as 
follows:

    Authority: 20 U.S.C. 1070g, 1087a et seq., unless otherwise 
noted.

    34. Section 685.102 is amended by:
    A. Adding, in alphabetical order, the terms ``Teacher Education 
Assistance

[[Page 15362]]

for College and Higher Education (TEACH) Grant Program'' and ``TEACH 
Grant'' in paragraph (a)(1).
    B. Adding the words ``TEACH Grant,'' after the words ``the amounts 
of any'' and removing the word ``loan'' immediately following the words 
``if the sum of the'' In paragraph (b), in paragraph (2)(i) of the 
definition of ``Estimated financial assistance''.
    C. Revising the authority citation to read as follows:


Sec.  685.102  Definitions.

* * * * *
(Authority: 20 U.S.C. 1070g, 1087a et seq.)

    35. Section 685.203 is amended by:
    A. Adding before the ``.'' the words ``, except that any TEACH 
Grants that have been converted to Direct Unsubsidized Loans are not 
counted against annual or any aggregate loan limits under this 
section'' in paragraph (b).
    B. Revising the authority citation to read as follows:


Sec.  685.203  Loan limits.

* * * * *
(Authority: 20 U.S.C. 1070g, 1087a et seq.)

    36. Section 685.213 is amended by:
    A. Adding the words ``a new TEACH Grant or'' immediately after the 
words ``does not receive'' in paragraph (c)(2).
    B. Revising the authority citation to read as follows:


Sec.  685.213  Total and permanent disability discharge.

* * * * *
(Authority: 20 U.S.C. 1070g, 1087a et seq.)

    37. A new part 686 is added to read as follows:
Subpart A--Scope, Purpose, and General

Definitions

Sec.
686.1 Scope and purpose.
686.2 Definitions.
686.3 Duration of student eligibility.
686.4 Institutional participation.
686.5 Enrollment status for students taking regular and 
correspondence courses.
686.6 Payment from more than one institution.
Subpart B--Application Procedures
686.10 Application.
686.11 Eligibility to receive a grant.
686.12 Service agreement.
Subpart C--Determination of Awards
686.20 Submission process and deadline for a SAR or ISIR.
686.21 Calculation of a grant.
686.22 Calculation of a grant for a payment period.
686.23 Calculation of a grant for a payment period that occurs in 
two award years.
686.24 Transfer student: attendance at more than one institution 
during an award year.
686.25 Correspondence study.
Subpart D--Administration of Grant Payments
686.30 Scope.
686.31 Determination of eligibility for payment.
686.32 Counseling requirements.
686.33 Frequency of payment.
686.34 Liability for and recovery of TEACH Grant overpayments.
686.35 Re-determination of eligibility for TEACH Grant award.
686.36 Fiscal control and fund accounting procedures.
686.37 Institutional reporting requirements.
686.38 Maintenance and retention of records.
Subpart E--Service and Repayment Obligations
686.40 Documenting the service obligation.
686.41 Periods of suspension.
686.42 Discharge of service agreement.
686.43 Obligation to repay the grant.

    Authority: 20 U.S.C. 1070g et seq., unless otherwise noted.

Subpart A--Scope, Purpose, and General Definitions


Sec.  686.1  Scope and purpose.

    The TEACH Grant program awards grants to students, who intend to 
teach, to help meet the cost of their postsecondary education. In 
exchange for the grant, the student must agree to serve as a full-time 
teacher in a high-need field, in a school serving low-income students 
for at least four academic years within eight years of completing the 
program of study for which the student received the grant. If the 
student does not satisfy the service obligation, the amounts of the 
TEACH Grants received are treated as a Federal Direct Unsubsidized 
Stafford Loan (Federal Direct Unsubsidized Loan) and must be repaid 
with interest.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.2  Definitions.

    (a) Definitions for the following terms used in this part are in 
the regulations for Institutional Eligibility under the Higher 
Education Act of 1965, as amended, (HEA) 34 CFR part 600:

Award year
Clock hour
Correspondence course
Eligible institution
Institution of higher education (institution)
Regular student
Secretary
State
Title IV, HEA program

    (b) Definitions for the following terms used in this part are in 
subpart A of the Student Assistance General Provisions, 34 CFR part 
668:

Academic year
Enrolled
Expected family contribution (EFC)
Full-time student
Graduate or professional student
Half-time student
HEA
Payment period
Three-quarter-time student
Undergraduate student
William D. Ford Federal Direct Loan (Direct Loan) Program

    (c) Definitions for the following terms used in this part are in 34 
CFR part 77:
    Local educational agency (LEA)
    State educational agency (SEA)
    (d) Other terms used in this part are defined as follows:
    Academic year or its equivalent for elementary and secondary 
schools (elementary or secondary academic year):
    (1) One complete school year, or two complete and consecutive half-
years from different school years, excluding summer sessions, that 
generally fall within a 12-month period.
    (2) If a school has a year-round program of instruction, the 
Secretary considers a minimum of nine consecutive months to be the 
equivalent of an academic year.
    Annual award: The maximum TEACH Grant amount a student would 
receive for enrolling as a full-time, three-quarter-time, half-time, or 
less-than-half-time student and remaining in that enrollment status for 
a year.
    Elementary school: A nonprofit institutional day or residential 
school, including a public elementary charter school, that provides 
elementary education, as determined under State law.
    Full-time teacher: A teacher who meets the standard used by a State 
in defining full-time employment as a teacher. For an individual 
teaching in more than one school, the determination of full-time is 
based on the combination of all qualifying employment.
    High-need field: Includes the following:
    (1) Bilingual education and English language acquisition.
    (2) Foreign language.
    (3) Mathematics.
    (4) Reading specialist.
    (5) Science.
    (6) Special education.
    (7) Another field documented as high-need by the Federal 
Government, a State government or an LEA, and approved by the Secretary 
and listed in the Department's annual Teacher Shortage Area Nationwide 
Listing (Nationwide List) in accordance with 34 CFR 682.210(q).

[[Page 15363]]

    Highly-qualified: Has the meaning set forth in section 9101(23) of 
the Elementary and Secondary Education Act of 1965 (ESEA) or in section 
602(10) of the Individuals With Disabilities Education Act.
    Institutional Student Information Record (ISIR): An electronic 
record that the Secretary transmits to an institution that includes an 
applicant's--
    (1) Personal identification information;
    (2) Application data used to calculate the applicant's EFC; and
    (3) EFC.
    Numeric equivalent: (1) If an otherwise eligible program measures 
academic performance using an alternative to standard numeric grading 
procedures, the institution must develop and apply an equivalency 
policy with a numeric scale for purposes of establishing TEACH Grant 
eligibility. That institution's equivalency policy must be in writing 
and available to students upon request and must include clear 
differentiations of student performance to support a determination that 
a student has performed at a level commensurate with at least a 3.25 
GPA on a 4.0 scale in that program.
    (2) A grading policy that includes only ``satisfactory/
unsatisfactory'', ``pass/fail'', or other similar nonnumeric 
assessments qualifies as a numeric equivalent only if--
    (i) The institution demonstrates that the ``pass'' or 
``satisfactory'' standard has the numeric equivalent of at least a 3.25 
GPA on a 4.0 scale awarded in that program, or that a student's 
performance for tests and assignments yielded a numeric equivalent of a 
3.25 GPA on a 4.0 scale; and
    (ii) For an eligible institution, the institution's equivalency 
policy is consistent with any other standards the institution may have 
developed for academic and other title IV, HEA program purposes, such 
as graduate school applications, scholarship eligibility, and insurance 
certifications, to the extent such standards distinguish among various 
levels of a student's academic performance.
    Payment data: An electronic record that is provided to the 
Secretary by an institution showing student disbursement information.
    Post-baccalaureate program: A program of instruction for 
individuals who have completed a baccalaureate degree, that--
    (1) Does not lead to a graduate degree;
    (2) Consists of courses required by a State in order for a student 
to receive a professional certification or licensing credential that is 
required for employment as a teacher in an elementary school or 
secondary school in that State, except that it does not include any 
program of instruction offered by a TEACH Grant-eligible institution 
that offers a baccalaureate degree in education; and
    (3) Is treated as an undergraduate program of study for the 
purposes of title IV of the HEA.
    Retiree: An individual who has decided to change his or her 
occupation for any reason and who has expertise, as determined by the 
institution, in a high-need field.
    Scheduled Award: The maximum amount of a TEACH Grant that a full-
time student could receive for a year.
    School serving low-income students (low-income school): An 
elementary or secondary school that--
    (1) Is in the school district of an LEA that is eligible for 
assistance pursuant to title I of the ESEA;
    (2) Has been determined by the Secretary to be a school in which 
more than 30 percent of the school's total enrollment is made up of 
children who qualify for services provided under title I of the ESEA; 
and
    (3) Is listed in the Department's Annual Directory of Designated 
Low-Income Schools for Teacher Cancellation Benefits. The Secretary 
considers all elementary and secondary schools operated by the Bureau 
of Indian Education (BIE) in the Department of the Interior or operated 
on Indian reservations by Indian tribal groups under contract or grant 
with the BIE to qualify as schools serving low-income students.
    Secondary school: A nonprofit institutional day or residential 
school, including a public secondary charter school, that provides 
secondary education, as determined under State law, except that the 
term does not include any education beyond grade 12.
    Service agreement: An agreement under which the individual 
receiving a TEACH Grant commits to meet the service obligation 
described in Sec.  686.12 and to comply with notification and other 
provisions of the agreement.
    Student Aid Report (SAR): A report provided to an applicant by the 
Secretary showing the amount of his or her expected family 
contribution.
    TEACH Grant-eligible institution: An eligible institution as 
defined in 34 CFR part 600 that, for purposes of the TEACH Grant 
program, is one that meets financial responsibility standards 
established in 34 CFR 668, subpart L and--
    (1) Provides a high-quality teacher preparation program at the 
baccalaureate or master's degree level that--
    (i)(A) Is accredited by a specialized accrediting agency recognized 
by the Secretary for the accreditation of professional teacher 
education programs; or
    (B) Is approved by a State and includes extensive pre-service 
clinical experience, and provides either pedagogical coursework or 
assistance in the provision of such coursework; and
    (ii) Provides supervision and support services to teachers, or 
assists in the provision of services to teachers, such as--
    (A) Identifying and making available information on effective 
teaching skills or strategies;
    (B) Identifying and making available information on effective 
practices in the supervision and coaching of novice teachers; and
    (C) Mentoring focused on developing effective teaching skills and 
strategies;
    (2) Provides a two-year program that--
    (i) Is acceptable for full credit in a baccalaureate teacher 
preparation program of study offered by an institution described in 
paragraph (1) of this definition, as demonstrated by the institutions; 
or
    (ii) Is acceptable for full credit in a baccalaureate degree 
program in a high-need field at an institution described in paragraph 
(3) of this definition, as demonstrated by the institutions;
    (3) Offers a baccalaureate degree that, in combination with other 
training or experience, will prepare an individual to teach in a high-
need field as defined in this part and has entered into an agreement 
with an institution described in paragraphs (1) or (4) of this 
definition to provide courses necessary for its students to begin a 
career in teaching; or
    (4) Provides a post-baccalaureate program of study.
    TEACH Grant-eligible program: An eligible program as defined in 34 
CFR 668.8 that is a program of study that prepares an individual to 
teach in a high-need field and that leads to a baccalaureate or 
master's degree, or is a post-baccalaureate program of study. A two-
year program of study that is acceptable for full credit toward a 
baccalaureate degree is considered to be a program of study that leads 
to a baccalaureate degree.
    Teacher: A person who provides direct classroom teaching or 
classroom-type teaching in a non-classroom setting, including special 
education teachers and reading specialists.
    Teacher preparation program: A State-approved course of study, the 
completion of which signifies that an

[[Page 15364]]

enrollee has met all the State's educational or training requirements 
for initial certification or licensure to teach in the State's 
elementary or secondary schools. A teacher preparation program may be a 
regular program or an alternative route to certification, as defined by 
the State. For purposes of a TEACH Grant, the program must be provided 
by an institution of higher education.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.3  Duration of student eligibility.

    (a) An undergraduate or post-baccalaureate student may receive the 
equivalent of up to four Scheduled Awards during the period required 
for the completion of the first undergraduate TEACH Grant-eligible 
baccalaureate program of study and first post-baccalaureate program of 
study combined.
    (b) A graduate student is eligible to receive the equivalent of up 
to two Scheduled Awards during the period required for the completion 
of a TEACH Grant-eligible master's degree program of study.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.4  Institutional participation.

    (a) A TEACH Grant-eligible institution that offers one or more 
TEACH Grant-eligible programs may elect to participate in the TEACH 
Grant program.
    (b) If an institution begins participation in the TEACH Grant 
program during an award year, a student enrolled at and attending that 
institution is eligible to receive a grant under this part for the 
payment period during which the institution begins participation and 
any subsequent payment period.
    (c) If an institution ceases to participate in the TEACH Grant 
program or becomes ineligible to participate in the TEACH Grant program 
during an award year, a student who was attending the institution and 
who submitted a SAR with an official EFC to the institution, or for 
whom the institution obtained an ISIR with an official EFC, before the 
date the institution became ineligible will receive a TEACH Grant for 
that award year for--
    (1) The payment periods that the student completed before the 
institution ceased participation or became ineligible to participate; 
and
    (2) The payment period in which the institution ceased 
participation or became ineligible to participate.
    (d) An institution that ceases to participate in the TEACH Grant 
program or becomes ineligible to participate in the TEACH Grant program 
must, within 45 days after the effective date of the loss of 
eligibility, provide to the Secretary--
    (1) The name and other student identifiers as required by the 
Secretary of each eligible student under Sec.  686.11 who, during the 
award year, submitted a SAR with an official EFC to the institution or 
for whom it obtained an ISIR with an official EFC before it ceased to 
participate in the TEACH Grant program or became ineligible to 
participate;
    (2) The amount of funds paid to each student for that award year;
    (3) The amount due each student eligible to receive a grant through 
the end of the payment period during which the institution ceased to 
participate in the TEACH Grant program or became ineligible to 
participate; and
    (4) An accounting of the TEACH Grant program expenditures for that 
award year to the date of termination.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.5  Enrollment status for students taking regular and 
correspondence courses.

    (a) If, in addition to regular coursework, a student takes 
correspondence courses from either his or her own institution or 
another institution having an arrangement for this purpose with the 
student's institution, the correspondence work may be included in 
determining the student's enrollment status to the extent permitted 
under paragraph (b) of this section.
    (b) Except as noted in paragraph (c) of this section, the 
correspondence work that may be included in determining a student's 
enrollment status is that amount of work that--
    (1) Applies toward a student's degree or post-baccalaureate program 
of study or is remedial work taken by the student to help in his or her 
TEACH Grant-eligible program;
    (2) Is completed within the period of time required for regular 
coursework; and
    (3) Does not exceed the amount of a student's regular coursework 
for the payment period for which enrollment status is being calculated.
    (c)(1) Notwithstanding the limitation in paragraph (b)(3) of this 
section, a student who would be a half-time student based solely on his 
or her correspondence work is considered a half-time student unless the 
calculation in paragraph (b) of this section produces an enrollment 
status greater than half-time.
    (2) A student who would be a less-than-half-time student based 
solely on his or her correspondence work or a combination of 
correspondence work and regular coursework is considered a less-than-
half-time student.
    (d) The following chart provides examples of the application of the 
regulations set forth in this section. It assumes that the institution 
defines full-time enrollment as 12 credits per term, making half-time 
enrollment equal to six credits per term.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Total course
                                                                                      load in credit
                                                   No. of credit     No. of credit       hours to
               Under Sec.   686.5                  hours regular         hours           determine                     Enrollment status
                                                       work         correspondence      enrollment
                                                                                          status
--------------------------------------------------------------------------------------------------------------------------------------------------------
(b)(3).........................................                 3                 3                 6  Half-time.
(b)(3).........................................                 3                 6                 6  Half-time.
(b)(3).........................................                 3                 9                 6  Half-time.
(b)(3).........................................                 6                 3                 9  Three-quarter-time.
(b)(3).........................................                 6                 6                12  Full-time.
(b)(3) and (c).................................                 2                 6                 6  Half-time.
(c)*...........................................  ................  ................  ................  Less-than-half-time.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Any combination of regular and correspondence work that is greater than zero, but less than six hours.


[[Page 15365]]

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.6  Payment from more than one institution.

    A student may not receive grant payments under this part 
concurrently from more than one institution.

(Authority: 20 U.S.C. 1070g et seq.)

Subpart B--Application Procedures


Sec.  686.10  Application.

    (a) To receive a grant under this part, a student must--
    (1) Complete and submit an approved signed application, as 
designated by the Secretary. A copy of this application is not 
acceptable;
    (2) Complete and sign a service agreement and promise to repay; and
    (3) Provide any additional information and assurances requested by 
the Secretary.
    (b) The student must submit an application to the Secretary by--
    (1) Sending the completed application to the Secretary; or
    (2) Providing the application, signed by all appropriate family 
members, to the institution which the student attends or plans to 
attend so that the institution can transmit the application information 
to the Secretary electronically.
    (c) The student must provide the address of his or her residence.
    (d) For each award year, the Secretary, through publication in the 
Federal Register, establishes deadline dates for submitting to the 
Department the application and additional information and for making 
corrections to the information provided.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.11  Eligibility to receive a grant.

    (a) Undergraduate, post-baccalaureate, and graduate students. (1) 
Except as provided in paragraph (b) of this section, a student who 
meets the requirements of 34 CFR part 668, subpart C, is eligible to 
receive a TEACH Grant if the student--
    (i) Has submitted a completed application;
    (ii) Has signed a service agreement as required under Sec.  686.12;
    (iii) Is enrolled in a TEACH Grant-eligible institution in a TEACH 
Grant-eligible program;
    (iv) Is completing coursework and other requirements necessary to 
begin a career in teaching or plans to complete such coursework and 
requirements prior to graduating; and
    (v) Has obtained--
    (A) If the student is in the first year of a program of 
undergraduate education as determined by the institution--
    (1) A final cumulative secondary school grade point average (GPA) 
upon graduation of at least 3.25 on a 4.0 scale, or the numeric 
equivalent; or
    (2) A cumulative GPA of at least 3.25 on a 4.0 scale, or the 
numeric equivalent, based on courses taken at the institution through 
the most-recently completed payment period;
    (B) If the student is beyond the first year of a program of 
undergraduate education as determined by the institution, a cumulative 
undergraduate GPA of at least 3.25 on a 4.0 scale, or the numeric 
equivalent, through the most-recently completed payment period;
    (C) If the student is a graduate student during the first payment 
period, a cumulative undergraduate GPA of at least 3.25 on a 4.0 scale, 
or the numeric equivalent;
    (D) If the student is a graduate student beyond the first payment 
period, a cumulative graduate GPA of at least 3.25 on a 4.0 scale, or 
the numeric equivalent, through the most-recently completed payment 
period; or
    (E) A score above the 75th percentile of scores achieved by all 
students taking the test during the period the student took the test on 
at least one of the batteries from a nationally-normed standardized 
undergraduate, graduate, or post-baccalaureate admissions test, except 
that such test may not include a placement test.
    (2)(i) An institution must document the student's secondary school 
GPA under Sec.  686.11(a)(1)(v)(A) using--
    (A) Documentation provided directly to the institution by the 
cognizant authority; or
    (B) Documentation from the cognizant authority provided by the 
student.
    (ii) A cognizant authority includes, but is not limited to--
    (A) An LEA;
    (B) An SEA or other State agency; or
    (C) A public or private secondary school.
    (iii) A home-schooled student's parent or guardian is the cognizant 
authority for purposes of providing the documentation of a home-
schooled student's secondary school GPA.
    (iv) If an institution has reason to believe the documentation 
provided by a student under paragraph (a)(2)(i)(B) of this section is 
inaccurate or incomplete, the institution must confirm the student's 
grades by using documentation provided directly to the institution by 
the cognizant authority.
    (b) Current or former teachers or retirees. A student who has 
submitted a completed application and meets the requirements of 34 CFR 
part 668, subpart C, is eligible to receive a TEACH Grant if the 
student--
    (1) Has signed a service agreement as required under Sec.  686.12;
    (2) Is a current teacher or retiree who is applying for a grant to 
obtain a master's degree or is or was a teacher who is pursuing 
certification through a high-quality alternative certification route; 
and
    (3) Is enrolled in a TEACH Grant-eligible institution in a TEACH 
Grant-eligible program during the period required for the completion of 
a master's degree.
    (c) Transfer students. If a student transfers from one institution 
to the current institution and does not qualify under Sec.  
686.11(a)(1)(v)(E), the current institution must determine that 
student's eligibility for a TEACH Grant for the first payment period 
using either the method described in paragraph (c)(1) of this section 
or the method described in paragraph (c)(2) of this section, whichever 
method coincides with the current institution's academic policy. For an 
eligible student who transfers to an institution that--
    (1) Does not incorporate grades from coursework that it accepts on 
transfer into the student's GPA at the current institution, the current 
institution, for the courses accepted upon transfer--
    (i) Must calculate the student's GPA for the first payment period 
of enrollment using the grades earned by the student in the coursework 
from any prior postsecondary institution that it accepts; and
    (ii) Must, for all subsequent payment periods, apply its academic 
policy and not incorporate the grades from the coursework that it 
accepts on transfer into the GPA at the current institution; or
    (2) Incorporates grades from the coursework that it accepts on 
transfer into the student's GPA at the current institution, the current 
institution must use the grades assigned to the coursework accepted by 
the current institution as the student's cumulative GPA to determine 
eligibility for the first payment period of enrollment and all 
subsequent payment periods in accordance with its academic policy.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.12  Service agreement.

    (a) General. A student who meets the eligibility requirements in 
Sec.  686.11 may receive a TEACH Grant only after he or she signs a 
service agreement provided by the Secretary and receives counseling in 
accordance with Sec.  686.32.
    (b) Contents of the service agreement. The service agreement 
provides that, for each TEACH Grant-eligible program for

[[Page 15366]]

which the student received TEACH Grant funds, the grant recipient must 
fulfill a service obligation by performing creditable teaching service 
by--
    (1) Serving as a full-time teacher for a total of not less than 
four elementary or secondary academic years within eight calendar years 
after completing the program or otherwise ceasing to be enrolled in the 
program for which the recipient received the TEACH Grant--
    (i) In a low-income school;
    (ii) As a highly-qualified teacher; and
    (iii) In a high-need field in the majority of classes taught during 
each elementary and secondary academic year.
    (2) Submitting, upon completion of each year of service, 
documentation of the service in the form of a certification by a chief 
administrative officer of the school; and
    (3) Complying with the terms, conditions, and other requirements 
consistent with Sec. Sec.  686.40-686.43 that the Secretary determines 
to be necessary.
    (c) Completion of more than one service obligation.
    (1) A grant recipient must complete a service obligation for each 
program of study for which he or she received TEACH Grants. Each 
service obligation begins following the completion or other cessation 
of enrollment by the student in the TEACH Grant-eligible program for 
which the student received TEACH grant funds. However, creditable 
teaching service may apply to more than one service obligation.
    (2) A grant recipient may request a suspension, in accordance with 
Sec.  686.41, of the eight-year time period in paragraph (b)(1) of this 
section.
    (d) Majoring and serving in a high-need field. A grant recipient 
who completes a TEACH Grant-eligible program in a field that is listed 
in the Nationwide List cannot satisfy his or her service obligation to 
teach in that high-need field unless the high-need field in which he or 
she has prepared to teach is listed in the Nationwide List for the 
State in which the grant recipient begins teaching at the time the 
recipient begins teaching in that field.
    (e) Repayment for failure to complete service obligation. If a 
grant recipient fails or refuses to carry out the required service 
obligation described in paragraph (b) of this section, the TEACH Grants 
received by the recipient must be repaid and will be treated as a 
Federal Direct Unsubsidized Loan, with interest accruing from the date 
of each TEACH Grant disbursement, in accordance with applicable 
sections of subpart B of 34 CFR part 685.

(Authority: 20 U.S.C. 1070g et seq.)

Subpart C--Determination of Awards


Sec.  686.20  Submission process and deadline for a SAR or ISIR.

    (a) Submission process. (1) Except as provided in paragraph (a)(2) 
of this section, an institution must disburse a TEACH Grant to a 
student who is eligible under Sec.  686.11 and is otherwise qualified 
to receive that disbursement and electronically transmit disbursement 
data to the Secretary for that student if--
    (i) The student submits a SAR with an official EFC to the 
institution; or
    (ii) The institution obtains an ISIR with an official EFC for the 
student.
    (2) In determining a student's eligibility to receive a grant under 
this part, an institution is entitled to assume that the SAR 
information or ISIR information is accurate and complete except under 
the conditions set forth in 34 CFR 668.16(f).
    (b) SAR or ISIR deadline. Except as provided in 34 CFR 668.164(g), 
for a student to receive a grant under this part in an award year, the 
student must submit the relevant parts of the SAR with an official EFC 
to his or her institution or the institution must obtain an ISIR with 
an official EFC by the earlier of--
    (1) The last date that the student is still enrolled and eligible 
for payment at that institution; or
    (2) By the deadline date established by the Secretary through 
publication of a notice in the Federal Register.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.21  Calculation of a grant.

    (a)(1)(i) The Scheduled Award for a TEACH Grant for an eligible 
student is $4,000.
    (ii) Each Scheduled Award remains available to an eligible student 
until the $4,000 is disbursed.
    (2)(i) The aggregate amount that a student may receive in TEACH 
Grants for undergraduate and post-baccalaureate study may not exceed 
$16,000.
    (ii) The aggregate amount that a student may receive in TEACH 
grants for a master's degree may not exceed $8,000.
    (b) The annual award for--
    (1) A full-time student is $4,000;
    (2) A three-quarter-time student is $3,000;
    (3) A half-time student is $2,000; and
    (4) A less-than-half-time student is $1,000.
    (c) Except as provided in paragraph (d) of this section, the amount 
of a student's grant under this part, in combination with the other 
student financial assistance available to the student, including the 
amount of a Federal Pell Grant for which the student is eligible, may 
not exceed the student's cost of attendance at a TEACH Grant-eligible 
institution. Other student financial assistance is estimated financial 
assistance as defined in 34 CFR 673.5(c).
    (d) A TEACH Grant may replace a student's EFC, but the amount of 
the grant that exceeds the student's EFC is considered estimated 
financial assistance as defined in 34 CFR 673.5(c).
    (e) In determining a student's payment for a payment period, an 
institution must include--
    (1) In accordance with 34 CFR 668.20, any noncredit or reduced 
credit courses that an institution determines are necessary--
    (i) To help a student be prepared for the pursuit of a first 
undergraduate baccalaureate or post-baccalaureate degree or 
certificate; or
    (ii) In the case of English language instruction, to enable the 
student to utilize already existing knowledge, training, or skills; and
    (2) In accordance with 34 CFR 668.5, a student's participation in a 
program of study abroad if it is approved for credit by the home 
institution at which the student is enrolled.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.22  Calculation of a grant for a payment period.

    (a) Eligibility for payment formula. (1) Programs using standard 
terms with at least 30 weeks of instructional time. A student's grant 
for a payment period is calculated under paragraphs (b) or (d) of this 
section if--
    (i) The student is enrolled in an eligible program that--
    (A) Measures progress in credit hours;
    (B) Is offered in semesters, trimesters, or quarters; and
    (C)(1) For an undergraduate student, requires the student to enroll 
for at least 12 credit hours in each term in the award year to qualify 
as a full-time student; or
    (2) For a graduate student, each term in the award year meets the 
minimum full-time enrollment status established by the institution for 
a semester, trimester, or quarter; and
    (ii) The program uses an academic calendar that provides at least 
30 weeks of instructional time in--
    (A) Two semesters or trimesters in the fall through the following 
spring, or three quarters in the fall, winter, and spring, none of 
which overlaps any other term (including a summer term) in the program; 
or
    (B) Any two semesters or trimesters, or any three quarters where--

[[Page 15367]]

    (1) The institution starts its terms for different cohorts of 
students on a periodic basis (e.g., monthly);
    (2) The program is offered exclusively in semesters, trimesters, or 
quarters; and
    (3) Students are not allowed to be enrolled simultaneously in 
overlapping terms and must stay with the cohort in which they start 
unless they withdraw from a term (or skip a term) and reenroll in a 
subsequent term.
    (2) Programs using standard terms with less than 30 weeks of 
instructional time. A student's payment for a payment period is 
calculated under paragraph (c) or (d) of this section if--
    (i) The student is enrolled in an eligible program that--
    (A) Measures progress in credit hours;
    (B) Is offered in semesters, trimesters, or quarters;
    (C)(1) For an undergraduate student, requires the student to enroll 
in at least 12 credit hours in each term in the award year to qualify 
as a full-time student; or
    (2) For a graduate student, each term in the award year meets the 
minimum full-time enrollment status established by the institution for 
a semester, trimester, or quarter; and
    (D) Is not offered with overlapping terms; and
    (ii) The institution offering the program--
    (A) Provides the program using an academic calendar that includes 
two semesters or trimesters in the fall through the following spring, 
or three quarters in the fall, winter, and spring; and
    (B) Does not provide at least 30 weeks of instructional time in the 
terms specified in paragraph (a)(2)(ii)(A) of this section.
    (3) Other programs using terms and credit hours. A student's 
payment for a payment period is calculated under paragraph (d) of this 
section if the student is enrolled in an eligible program that--
    (i) Measures progress in credit hours; and
    (ii) Is offered in academic terms other than those described in 
paragraphs (a)(1) and (a)(2) of this section.
    (4) Programs not using terms or using clock hours. A student's 
payment for any payment period is calculated under paragraph (e) of 
this section if the student is enrolled in an eligible program that--
    (i) Is offered in credit hours but is not offered in academic 
terms; or
    (ii) Is offered in clock hours.
    (5) Programs for which an exception to the academic year definition 
has been granted under 34 CFR 668.3. If an institution receives a 
waiver from the Secretary of the 30 weeks of instructional time 
requirement under 34 CFR 668.3, an institution may calculate a 
student's payment for a payment period using the following 
methodologies:
    (i) If the program is offered in terms and credit hours, the 
institution uses the methodology in--
    (A) Paragraph (b) of this section provided that the program meets 
all the criteria in paragraph (a)(1) of this section, except that in 
lieu of meeting the requirements in paragraph (a)(1)(ii)(B) of this 
section, the program provides at least the same number of weeks of 
instructional time in the terms specified in paragraph (a)(1)(ii)(A) of 
this section as are in the program's academic year; or
    (B) Paragraph (d) of this section.
    (ii) The institution uses the methodology described in paragraph 
(e) of this section if the program is offered in credit hours without 
terms.
    (b) Programs using standard terms with at least 30 weeks of 
instructional time. The payment for a payment period, i.e., an academic 
term, for a student in a program using standard terms with at least 30 
weeks of instructional time in two semesters or trimesters or in three 
quarters as described in paragraph (a)(1)(ii) of this section, is 
calculated by--
    (1) Determining his or her enrollment status for the term;
    (2) Based upon that enrollment status, determining his or her 
annual award; and
    (3) Dividing the amount described in paragraph (b)(2) of this 
section by--
    (i) Two at institutions using semesters or trimesters or three at 
institutions using quarters; or
    (ii) The number of terms over which the institution chooses to 
distribute the student's annual award if--
    (A) An institution chooses to distribute all of the student's 
annual award determined under paragraph (b)(2) of this section over 
more than two terms at institutions using semesters or trimesters or 
more than three quarters at institutions using quarters; and
    (B) The number of weeks of instructional time in the terms, 
including the additional term or terms, equals the weeks of 
instructional time in the program's academic year.
    (c) Programs using standard terms with less than 30 weeks of 
instructional time. The payment for a payment period, i.e., an academic 
term, for a student in a program using standard terms with less than 30 
weeks of instructional time in two semesters or trimesters or in three 
quarters as described in paragraph (a)(2)(ii)(A) of this section, is 
calculated by--
    (1) Determining his or her enrollment status for the term;
    (2) Based upon that enrollment status, determining his or her 
annual award;
    (3) Multiplying his or her annual award determined under paragraph 
(c)(2) of this section by the following fraction as applicable:
    (i) In a program using semesters or trimesters--
    [GRAPHIC] [TIFF OMITTED] TP21MR08.000
    
    (ii) In a program using quarters--
    [GRAPHIC] [TIFF OMITTED] TP21MR08.001
    

; and

    (4)(i) Dividing the amount determined under paragraph (c)(3) of 
this section by two for programs using semesters or trimesters or three 
for programs using quarters; or
    (ii) Dividing the student's annual award determined under paragraph 
(c)(2) of this section by the number of terms over which the 
institution chooses to distribute the student's annual award if--

[[Page 15368]]

    (A) An institution chooses to distribute all of the student's 
annual award determined under paragraph (c)(2) of this section over 
more than two terms for programs using semesters or trimesters or more 
than three quarters for programs using quarters; and
    (B) The number of weeks of instructional time in the terms, 
including the additional term or terms, equals the weeks of 
instructional time in the program's academic year definition.
    (d) Other programs using terms and credit hours. The payment for a 
payment period, i.e., an academic term, for a student in a program 
using terms and credit hours, other than those described in paragraphs 
(a)(1) or (2) of this section, is calculated by--
    (1) Determining his or her enrollment status for the term;
    (2) Based upon that enrollment status, determining his or her 
annual award; and
    (3) Multiplying his or her annual award determined under paragraph 
(d)(2) of this section by the following fraction:
[GRAPHIC] [TIFF OMITTED] TP21MR08.002

    (e) Programs using credit hours without terms or clock hours. The 
payment for a payment period for a student in a program using credit 
hours without terms or using clock hours is calculated by multiplying 
the Scheduled Award by the lesser of--
    (1)
    [GRAPHIC] [TIFF OMITTED] TP21MR08.003
    

; or
* * * * *
    (2)
    [GRAPHIC] [TIFF OMITTED] TP21MR08.004
    
    (f) Maximum disbursement. A single disbursement may not exceed 50 
percent of an award determined under paragraph (d) or (e) of this 
section. If a payment for a payment period calculated under paragraphs 
(d) or (e) of this section would require the disbursement of more than 
50 percent of a student's annual award in that payment period, the 
institution must make at least two disbursements to the student in that 
payment period. The institution may not disburse an amount that exceeds 
50 percent of the student's annual award until the student has 
completed the period of time in the payment period that equals, in 
terms of weeks of instructional time, 50 percent of the weeks of 
instructional time in the program's academic year.
    (g) Minimum payment. No payment for a payment period as determined 
under this section or Sec.  686.25 may be less than $25.
    (h) Definition of academic year. For purposes of this section and 
Sec.  686.25, an institution must define an academic year--
    (1) For each of its TEACH Grant-eligible undergraduate programs of 
study, including post-baccalaureate programs of study, in terms of the 
number of credit or clock hours and weeks of instructional time in 
accordance with the requirements of 34 CFR 668.3; and
    (2) For each of its TEACH Grant-eligible master's degree programs 
of study in terms of the number of weeks of instructional time in 
accordance with the requirements of 34 CFR 668.3 and the minimum number 
of credit or clock hours a full-time student would be expected to 
complete in the weeks of instructional time of the program's academic 
year.
    (i) Payment period completing a Scheduled Award. In a payment 
period, if a student is completing a Scheduled Award, the student's 
payment for the payment period--
    (1) Is calculated based on the total credit or clock hours and 
weeks of instructional time in the payment period; and
    (2) Is the remaining amount of the Scheduled Award being completed 
plus an amount from the next Scheduled Award, if available, up to the 
payment for the payment period.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.23  Calculation of a grant for a payment period that occurs 
in two award years.

    If a student enrolls in a payment period that is scheduled to occur 
in two award years--
    (a) The entire payment period must be considered to occur within 
one award year;
    (b) The institution must determine for each TEACH Grant recipient 
the award year in which the payment period will be placed subject to 
the restriction set forth in paragraph (c) of this section;
    (c) The institution must place a payment period with more than six 
months scheduled to occur within one award year in that award year;
    (d) If the institution places the payment period in the first award 
year, it must pay a student with funds from the first award year; and
    (e) If the institution places the payment period in the second 
award year, it must pay a student with funds from the second award 
year.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.24  Transfer student: attendance at more than one institution 
during an award year.

    (a) If a student who receives a TEACH Grant at one institution 
subsequently enrolls at a second institution, the

[[Page 15369]]

student may receive a grant at the second institution only if--
    (1) The student submits a SAR with an official EFC to the second 
institution; or
    (2) The second institution obtains an ISIR with an official EFC.
    (b) The second institution must calculate the student's award in 
accordance with Sec.  686.22 or Sec.  686.25.
    (c) The second institution may pay a TEACH Grant only for that 
period in which a student is enrolled in a TEACH Grant-eligible program 
at that institution.
    (d) The student's TEACH Grant for each payment period is calculated 
according to the procedures in Sec. Sec.  686.22 or 686.25 unless the 
remaining balance of the Scheduled Award at the second institution is 
the balance of the student's last Scheduled Award and is less than the 
amount the student would normally receive for that payment period.
    (e) A transfer student must repay any amount received in an award 
year that exceeds the amount which he or she was eligible to receive.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.25  Correspondence study.

    (a) An institution calculates a TEACH Grant for a payment period 
for a student in a program of study offered by correspondence courses 
without terms, but not including any residential component, by--
    (1) Using the half-time annual award; and
    (2) Multiplying the half-time annual award by the lesser of--
    (i)
    [GRAPHIC] [TIFF OMITTED] TP21MR08.005
    

; or

    (ii)
    [GRAPHIC] [TIFF OMITTED] TP21MR08.006
    
    (b) For purposes of paragraph (a) of this section--
    (1) An academic year as measured in credit or clock hours must 
consist of two payment periods--
    (i) The first payment period must be the period of time in which 
the student completes the lesser of the first half of his or her 
academic year or program; and
    (ii) The second payment period must be the period of time in which 
the student completes the lesser of the second half of the academic 
year or program; and
    (2)(i) The institution must make the first payment to a student for 
an academic year, as calculated under paragraph (a) of this section, 
after the student submits 25 percent of the lessons or otherwise 
completes 25 percent of the work scheduled for the program or the 
academic year, whichever occurs last; and
    (ii) The institution must make the second payment to a student for 
an academic year, as calculated under (a) of this section, after the 
student submits 75 percent of the lessons or otherwise completes 75 
percent of the work scheduled for the program or the academic year, 
whichever occurs last.
    (c) In a program of correspondence study offered by correspondence 
courses using terms but not including any residential component--
    (1) The institution must prepare a written schedule for submission 
of lessons that reflects a workload of at least 30 hours of preparation 
per semester hour or 20 hours of preparation per quarter hour during 
the term;
    (2)(i) If the student is enrolled in at least six credit hours that 
commence and are completed in that term, the half-time annual award is 
used; or
    (ii) If the student is enrolled in less than six credit hours that 
commence and are completed in that term the less-than-half-time annual 
award is used;
    (3) A payment for a payment period is calculated using the formula 
in Sec.  686.22(d) except that paragraphs (c)(1) and (2) of this 
section are used in lieu of paragraphs Sec.  686.22(d)(1) and (2), 
respectively; and
    (4) The institution must make the payment to a student for a 
payment period after that student completes 50 percent of the lessons 
or otherwise completes 50 percent of the work scheduled for the term, 
whichever occurs last.
    (d) Payments for periods of residential training must be calculated 
under Sec.  686.22(d) if the residential training is offered using 
terms and credit hours or under Sec.  686.22(e) if the residential 
training is offered using credit hours without terms or clock hours.

(Authority: 20 U.S.C. 1070g et seq.)

Subpart D--Administration of Grant Payments


Sec.  686.30  Scope.

    This subpart deals with TEACH Grant Program administration by a 
TEACH Grant-eligible institution.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.31  Determination of eligibility for payment.

    (a) For each payment period, an institution may pay a grant under 
this part to an eligible student only after it determines that the 
student--
    (1) Is eligible under Sec.  686.11;
    (2) Has completed the relevant counseling required in Sec.  686.32;
    (3) Has signed a service agreement as described in Sec.  686.12;
    (4) Is enrolled in a TEACH Grant-eligible program; and
    (5) If enrolled in a credit-hour program without terms or a clock-
hour program, has completed the payment period as defined in 34 CFR 
668.4 for which he or she has been paid a grant.
    (b)(1) If an institution determines at the beginning of a payment 
period that a student is not maintaining satisfactory progress, but 
changes that determination before the end of the payment period, the 
institution may pay a TEACH Grant to the student for the entire payment 
period.
    (2) If an institution determines at the beginning of a payment 
period that a student enrolled in a TEACH Grant-eligible program is not 
maintaining the required GPA for a TEACH Grant under Sec.  686.11 or is 
not pursuing a career in teaching, but changes that determination 
before the end of the payment period, the institution may pay a TEACH 
Grant to the student for the entire payment period.

[[Page 15370]]

    (c) If an institution determines at the beginning of a payment 
period that a student is not maintaining satisfactory progress or the 
necessary GPA for a TEACH Grant under Sec.  686.11 or is not pursuing a 
career in teaching, but changes that determination after the end of the 
payment period, the institution may not pay the student a TEACH Grant 
for that payment period or make adjustments in subsequent payments to 
compensate for the loss of aid for that period.
    (d) An institution may make one disbursement for a payment period 
to an otherwise eligible student if--
    (1)(i) The student's final high school GPA is not yet available; or
    (ii) The student's cumulative GPA through the prior payment period 
under Sec.  686.11 is not yet available; and
    (2) The institution assumes liability for any overpayment if the 
student fails to meet the required GPA to qualify for the disbursement.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.32  Counseling requirements.

    (a) Initial counseling. (1) An institution must ensure that initial 
counseling is conducted with each TEACH Grant recipient prior to making 
the first disbursement of the grant.
    (2) The initial counseling must be in person, by audiovisual 
presentation, or by interactive electronic means. In each case, the 
institution must ensure that an individual with expertise in title IV, 
HEA programs is reasonably available shortly after the counseling to 
answer the student's questions. As an alternative, in the case of a 
student enrolled in a correspondence program of study or a study-abroad 
program of study approved for credit at the home institution, the 
student may be provided with written counseling materials before the 
grant is disbursed.
    (3) The initial counseling must--
    (i) Explain the terms and conditions of the TEACH Grant service 
agreement as described in Sec.  686.12;
    (ii) Provide the student with information about how to identify 
low-income schools and documented high-need fields;
    (iii) Inform the grant recipient that, in order for the teaching to 
count towards the service obligation, the high-need field in which he 
or she has prepared to teach must be--
    (A) One of the six high-need fields listed in Sec.  686.2; or
    (B) A high-need field listed in the Nationwide List at the time and 
for the State in which the grant recipient begins teaching in that 
field.
    (iv) Inform the grant recipient of the opportunity to request a 
suspension of the eight-year period for completion of the service 
agreement and the conditions under which a suspension may be granted in 
accordance with Sec.  686.41;
    (v) Explain to the student that conditions, such as conviction of a 
felony, could preclude the student from completing the service 
obligation;
    (vi) Emphasize to the student that if the student fails or refuses 
to complete the service obligation contained in the service agreement 
or any other condition of the service agreement--
    (A) The TEACH Grant must be repaid as a Federal Direct Unsubsidized 
Loan; and
    (B) The TEACH Grant recipient will be obligated to repay the full 
amount of each grant and the accrued interest from each disbursement 
date;
    (vii) Explain the circumstances, as described in Sec.  686.43, 
under which a TEACH Grant will be converted to a Federal Direct 
Unsubsidized Loan;
    (viii) Emphasize that, once a TEACH Grant is converted to a Federal 
Direct Unsubsidized Loan, it cannot be reconverted to a grant;
    (ix) Review for the grant recipient information on the availability 
of the Department's Student Loan Ombudsman's office;
    (x) Describe the likely consequences of loan default, including 
adverse credit reports, garnishment of wages, Federal offset, and 
litigation; and
    (xi) Inform the student of sample monthly repayment amounts based 
on a range of student loan indebtedness.
    (b) Subsequent counseling. (1) If a student receives more than one 
TEACH Grant, the institution must ensure that the student receives 
additional counseling prior to the first disbursement of each 
subsequent TEACH Grant award.
    (2) Subsequent counseling may be in person, by audiovisual 
presentation, or by interactive electronic means. In each case, the 
institution must ensure that an individual with expertise in title IV, 
HEA programs is reasonably available shortly after the counseling to 
answer the student's questions. As an alternative, in the case of a 
student enrolled in a correspondence program of study or a study-abroad 
program of study approved for credit at the home institution, the 
student may be provided with written counseling materials before the 
grant is disbursed.
    (3) Subsequent counseling must--
    (i) Review the terms and conditions of the TEACH Grant service 
agreement as described in Sec.  686.12;
    (ii) Emphasize to the student that if the student fails or refuses 
to complete the service obligation contained in the service agreement 
or any other condition of the service agreement--
    (A) The TEACH Grant must be repaid as a Federal Direct Unsubsidized 
Loan; and
    (B) The TEACH Grant recipient will be obligated to repay the full 
amount of the grant and the accrued interest from the disbursement 
date;
    (iii) Explain the circumstances, as described in Sec.  686.34, 
under which a TEACH Grant will be converted to a Federal Direct 
Unsubsidized Loan;
    (iv) Emphasize that, once a TEACH Grant is converted to a Federal 
Direct Unsubsidized Loan, it cannot be reconverted to a grant; and
    (v) Review for the grant recipient information on the availability 
of the Department's Student Loan Ombudsman's office.
    (c) Exit counseling. (1) An institution must ensure that exit 
counseling is conducted with each grant recipient before he or she 
ceases to attend the institution at a time determined by the 
institution.
    (2) The exit counseling must be in person, by audiovisual 
presentation, or by interactive electronic means. In each case, the 
institution must ensure that an individual with expertise in title IV, 
HEA programs is reasonably available shortly after the counseling to 
answer the grant recipient's questions. As an alternative, in the case 
of a grant recipient enrolled in a correspondence program of study or a 
study-abroad program of study approved for credit at the home 
institution, the grant recipient may be provided with written 
counseling materials within 30 days after he or she completes the 
program.
    (3) Within 30 days of learning that a grant recipient has withdrawn 
from the institution without the institution's knowledge, or from a 
TEACH Grant-eligible program, or failed to complete exit counseling as 
required, exit counseling must be provided either in-person, through 
interactive electronic means, or by mailing written counseling 
materials to the grant recipient's last known address.
    (4) The exit counseling must--
    (i) Inform the grant recipient of the four-year service obligation 
that must be completed within the first eight calendar years after 
completing a TEACH Grant-eligible program in accordance with Sec.  
686.12;
    (ii) Inform the grant recipient of the opportunity to request a 
suspension of the eight-year period for completion of the service 
agreement and the conditions under which a suspension may be granted in 
accordance with Sec.  686.41;

[[Page 15371]]

    (iii) Provide the grant recipient with information about how to 
identify low-income schools and documented high-need fields;
    (iv) Inform the grant recipient that, in order for the teaching to 
count towards the service obligation, the high-need field in which he 
or she has prepared to teach must be--
    (A) One of the six high-need fields listed in Sec.  686.2; or
    (B) A high-need field listed in the Nationwide List at the time and 
for the State in which the grant recipient begins teaching in that 
field.
    (v) Explain that the grant recipient will be required to submit to 
the Secretary each year written documentation of his or her status as a 
highly-qualified teacher in a high-need field at a low-income school or 
of his or her intent to complete the four-year service requirement 
until the date that the service requirement has been met or the date 
that the grant becomes a loan, whichever occurs first;
    (vi) Explain the circumstances, as described in Sec.  686.43, under 
which a TEACH Grant will be converted to a Federal Direct Unsubsidized 
Loan;
    (vii) Emphasize that once a TEACH Grant is converted to a Federal 
Direct Unsubsidized Loan it cannot be reconverted to a grant;
    (viii) Inform the grant recipient of the average anticipated 
monthly repayment amount based on a range of student loan indebtedness 
if the TEACH grants convert to a Federal Direct Unsubsidized Loan;
    (ix) Review for the grant recipient available repayment options if 
the TEACH Grant converts to a Federal Direct Unsubsidized Loan 
including the standard repayment, extended repayment, graduated 
repayment, income-contingent and income-based repayment plans, and loan 
consolidation;
    (x) Suggest debt-management strategies to the grant recipient that 
would facilitate repayment if the TEACH Grant converts to a Federal 
Direct Unsubsidized Loan;
    (xi) Explain to the grant recipient how to contact the Secretary;
    (xii) Describe the likely consequences of loan default, including 
adverse credit reports, garnishment of wages, Federal offset, and 
litigation;
    (xiii) Review for the grant recipient the conditions under which he 
or she may defer or forbear repayment, obtain a full or partial 
discharge, or receive teacher loan forgiveness if the TEACH Grant 
converts to a Federal Direct Unsubsidized Loan;
    (xiv) Review for the grant recipient information on the 
availability of the Department's Student Loan Ombudsman's office; and
    (xv) Inform the grant recipient of the availability of title IV 
loan information in the National Student Loan Data System (NSLDS).
    (5) If exit counseling is conducted through interactive electronic 
means, an institution must take reasonable steps to ensure that each 
grant recipient receives the counseling materials and participates in 
and completes the exit counseling.
    (d) Compliance. The institution must maintain documentation 
substantiating the institution's compliance with this section for each 
TEACH Grant recipient.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.33  Frequency of payment.

    (a) In each payment period, an institution may pay a student at 
such times and in such installments as it determines will best meet the 
student's needs.
    (b) The institution may pay funds in one lump sum for all the prior 
payment periods for which the student was eligible under Sec.  686.11 
within the award year as long as the student has signed the service 
agreement prior to disbursement of the TEACH Grant. The student's 
enrollment status must be determined according to work already 
completed.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.34  Liability for and recovery of TEACH Grant overpayments.

    (a)(1) Except as provided in paragraphs (a)(2) and (3) of this 
section, a student is liable for any TEACH Grant overpayment made to 
him or her.
    (2) The institution is liable for a TEACH Grant overpayment if the 
overpayment occurred because the institution failed to follow the 
procedures set forth in this part or in 34 CFR part 668. The 
institution must restore an amount equal to the overpayment to its 
TEACH Grant account.
    (3) A student is not liable for, and the institution is not 
required to attempt recovery of or refer to the Secretary, a TEACH 
Grant overpayment if the amount of the overpayment is less than $25 and 
is not a remaining balance.
    (b)(1) Except as provided in paragraph (a)(3) of this section, if 
an institution makes a TEACH Grant overpayment for which it is not 
liable, it must promptly send a written notice to the student 
requesting repayment of the overpayment amount. The notice must state 
that failure to make that repayment, or to make arrangements 
satisfactory to the holder of the overpayment debt to repay the 
overpayment, makes the student ineligible for further title IV, HEA 
program funds until final resolution of the TEACH Grant overpayment.
    (2) If a student objects to the institution's TEACH Grant 
overpayment determination, the institution must consider any 
information provided by the student and determine whether the objection 
is warranted.
    (c) Except as provided in paragraph (a)(3) of this section, if the 
student fails to repay a TEACH Grant overpayment or make arrangements 
satisfactory to the holder of the overpayment debt to repay the TEACH 
Grant overpayment, after the institution has taken the action required 
by paragraph (b) of this section, the institution must refer the 
overpayment to the Secretary for collection in accordance with 
procedures required by the Secretary. After referring the TEACH Grant 
overpayment to the Secretary under this section, the institution need 
make no further efforts to recover the overpayment.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.35  Re-determination of eligibility for TEACH Grant award.

    (a) Change in enrollment status. (1) If the student's enrollment 
status changes from one academic term to another academic term within 
the same award year, the institution must recalculate the TEACH Grant 
award for the new payment period taking into account any changes in the 
cost of attendance.
    (2)(i) If the student's projected enrollment status changes during 
a payment period after the student has begun attendance in all of his 
or her classes for that payment period, the institution may (but is not 
required to) establish a policy under which the student's award for the 
payment period is recalculated. Any such recalculations must take into 
account any changes in the cost of attendance. In the case of an 
undergraduate or post-baccalaureate program of study, if such a policy 
is established, it must be the same policy that the institution 
established under Sec.  690.80(b) for the Federal Pell Grant Program 
and it must apply to all students in the TEACH Grant-eligible program.
    (ii) If a student's projected enrollment status changes during a 
payment period before the student begins attendance in all of his or 
her classes for that payment period, the institution must recalculate 
the student's enrollment status to reflect only those classes for which 
he or she actually began attendance.
    (b) Change in cost of attendance. If the student's cost of 
attendance changes at any time during the award year and his or her 
enrollment status remains the

[[Page 15372]]

same, the institution may, but is not required to, establish a policy 
under which the student's award for the payment period is recalculated. 
If such a policy is established, it must apply to all students in the 
TEACH Grant-eligible program.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.36  Fiscal control and fund accounting procedures.

    (a) An institution must follow the provisions for maintaining 
general fiscal records in this section and in 34 CFR 668.24(b).
    (b) An institution must maintain funds received under this section 
in accordance with the requirements in 34 CFR 668.164.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.37  Institutional reporting requirements.

    (a) An institution must provide to the Secretary information about 
each TEACH Grant recipient that includes but is not limited to--
    (1) The student's eligibility for a grant, as determined in 
accordance with Sec. Sec.  686.11 and 686.19;
    (2) The student's TEACH Grant amounts; and
    (3) The anticipated and actual disbursement date or dates and 
disbursement amounts of the TEACH Grant funds.
    (b) An institution must submit the initial disbursement record for 
a TEACH Grant to the Secretary no later than 30 days following the date 
of the initial disbursement. The institution must submit subsequent 
disbursement records, including adjustment and cancellation records, to 
the Secretary no later than 30 days following the date the 
disbursement, adjustment, or cancellation is made.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.38  Maintenance and retention of records.

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

(Authority: 20 U.S.C. 1070g et seq.)

Subpart E--Service and Repayment Obligations


Sec.  686.40  Documenting the service obligation.

    (a) Except as provided in Sec. Sec.  686.41 and 686.42, within 120 
days of completing or otherwise ceasing enrollment in a program of 
study for which a TEACH Grant was received, the grant recipient must 
confirm to the Secretary in writing that--
    (1) He or she is employed as a full-time teacher in accordance with 
the terms and conditions of the service agreement described in Sec.  
686.12; or
    (2) He or she is not yet employed as a full-time teacher but 
intends to meet the terms and conditions of the service agreement 
described in Sec.  686.12.
    (b) If a grant recipient is performing full-time teaching service 
in accordance with the service agreement, or service agreements if more 
than one agreement exists, the grant recipient must, upon completion of 
each of the four required elementary or secondary academic years of 
teaching service, provide to the Secretary documentation of that 
teaching service on a form approved by the Secretary and certified by 
the chief administrative officer of the school in which the grant 
recipient is teaching. The documentation must show that the grant 
recipient is teaching in a low-income school. If the school at which 
the grant recipient is employed meets the requirements of a low-income 
school in the first year of the grant recipient's four elementary or 
secondary academic years of teaching and the school fails to meet those 
requirements in subsequent years, those subsequent years of teaching 
qualify for purposes of this section for that recipient.
    (c)(1) In addition to the documentation requirements in paragraph 
(b) of this section, the documentation must show that the grant 
recipient--
    (i) Taught a majority of classes during the period being certified 
in any of the high-need fields of mathematics, science, a foreign 
language, bilingual education, English language acquisition, special 
education, or as a reading specialist; or
    (ii) Taught a majority of classes during the period being certified 
in a State in another high-need field designated by that State and 
listed in the Nationwide List, except that teaching service does not 
satisfy the requirements of the service agreement if that teaching 
service is in a geographic region of a State or in a specific grade 
level not associated with a high-need field of a State designated in 
the Nationwide List as having a shortage of elementary or secondary 
school teachers.
    (2) If a grant recipient begins qualified full-time teaching 
service in a State in a high-need field designated by that State and 
listed in the Nationwide List and in subsequent years that high-need 
field is no longer designated by the State in the Nationwide List, the 
grant recipient will be considered to continue to perform qualified 
full-time teaching service in a high-need field of that State and to 
continue to fulfill the service obligation.
    (d) Documentation must also provide evidence that the grant 
recipient is a highly-qualified teacher.
    (e) For purposes of completing the service requirement, the 
elementary or secondary academic year may be counted as one of the 
grant recipient's four complete elementary or secondary academic years 
if the grant recipient completes at least one-half of the elementary or 
secondary academic year and the grant recipient's school employer 
considers the grant recipient to have fulfilled his or her contract 
requirements for the elementary or secondary academic year for the 
purposes of salary increases, tenure, and retirement if the grant 
recipient is unable to complete an elementary or secondary academic 
year due to--
    (1) A condition that is covered under the Family and Medical Leave 
Act of 1993 (FMLA) (29 U.S.C. 2601 et seq.) that is limited to--
    (i) The birth of a son or daughter of the grant recipient and in 
order to care for the son or daughter;
    (ii) The placement of a son or daughter with the grant recipient 
for adoption or foster care;
    (iii) Caring for the spouse, or a son, daughter, or parent, of the 
grant recipient, if the spouse, son, daughter, or parent has a serious 
health condition; or
    (iv) A serious health condition that makes the grant recipient 
unable to perform the functions of the position as a teacher; or
    (2) A call or order to active duty status for more than 30 days as 
a member of a reserve component of the Armed Forces named in 10 U.S.C. 
10101, or service as a member of the National Guard on full-time 
National Guard duty, as defined in 10 U.S.C. 101(d)(5), under a call to 
active service in connection with a war, military operation, or a 
national emergency.
    (f) A grant recipient who taught in more than one qualifying school 
during an elementary or secondary academic year and demonstrates that 
the combined teaching service was the equivalent of full-time, as 
supported by the certification of one or more of the chief 
administrative officers of the schools involved, is considered to have 
completed one elementary or secondary academic year of qualifying 
teaching.

(Authority: 20 U.S.C. 1070g et seq.)

[[Page 15373]]

Sec.  686.41  Periods of suspension.

    (a)(1) The grant recipient who has completed or who has otherwise 
ceased enrollment in a TEACH Grant-eligible program for which he or she 
received TEACH grant funds may request a suspension from the Secretary 
of the eight-year period for completion of the service obligation based 
on--
    (i) Enrollment in a program of study for which the recipient would 
be eligible for a TEACH Grant or in a program of study that has been 
determined by a State to satisfy the requirements for certification or 
licensure to teach in the State's elementary or secondary schools;
    (ii) A condition that is covered under FMLA which is limited to--
    (A) The birth of a son or daughter of the grant recipient and in 
order to care for the son or daughter;
    (B) The placement of a son or daughter with the grant recipient for 
adoption or foster care;
    (C) Caring for the spouse, or a son, daughter, or parent, of the 
grant recipient, if the spouse, son, daughter, or parent has a serious 
health condition; or
    (D) A serious health condition that makes the grant recipient 
unable to perform the functions of the position as a teacher; or
    (iii) A call or order to active duty status for more than 30 days 
as a member of a reserve component of the Armed Forces named in 10 
U.S.C. 10101 or service as a member of the National Guard on full-time 
National Guard duty, as defined in 10 U.S.C. 101(d)(5) under a call to 
active service in connection with a war, military operation, or a 
national emergency.
    (2) A grant recipient may receive a suspension described in 
paragraph (a)(1)(i) and (ii) of this section in one-year increments 
that--
    (i) Does not exceed a combined total of three years under both 
paragraphs (a)(1)(i) and (ii) of this section; or
    (ii) Ends upon the completion of the military service in paragraph 
(a)(1)(iii) of this section.
    (b) The grant recipient must apply for a suspension in writing on a 
form approved by the Secretary within six months of completing or 
otherwise ceasing enrollment in a TEACH Grant-eligible program, or if 
the grant recipient has already begun teaching service in fulfillment 
of the service obligation, within six months of the date he or she 
stops teaching.
    (c) The grant recipient must provide the Secretary with 
documentation supporting the suspension request as well as current 
contact information including home address and telephone number.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.42  Discharge of service agreement.

    (a) Death. If a grant recipient dies, the Secretary discharges the 
obligation to complete the service agreement based on an original or 
certified copy of the grant recipient's death certificate, an accurate 
and complete photocopy of the original or certified copy of the grant 
recipient's death certificate, or, on a case-by-case basis, reliable 
documentation acceptable to the Secretary.
    (b) Total and permanent disability. (1) A grant recipient's service 
agreement is discharged if the recipient becomes totally and 
permanently disabled, as defined in 34 CFR 682.200(b), and the grant 
recipient applies for and satisfies the eligibility requirements for a 
total and permanent disability discharge in accordance with 34 CFR 
685.213.
    (2) The eight-year time period in which the grant recipient must 
complete the service obligation remains in effect during the 
conditional discharge period described in 34 CFR 685.213(c)(2) unless 
the grant recipient is eligible for a suspension based on the FMLA in 
accordance with Sec.  686.41(a)(1)(ii)(D).
    (3) Interest continues to accrue on each TEACH Grant disbursement 
unless and until the TEACH Grant recipient's service agreement is 
discharged.
    (4) If the grant recipient satisfies the criteria for a total and 
permanent disability discharge during and at the end of the three-year 
conditional discharge period, the Secretary discharges the grant 
recipient's service obligation.
    (5) If, at any time during or at the end of the three-year 
conditional discharge period, the Secretary determines that the grant 
recipient does not meet the eligibility criteria for a total and 
permanent disability discharge, the Secretary ends the conditional 
discharge period and the grant recipient is once again subject to the 
terms of the service agreement.

(Authority: 20 U.S.C. 1070g et seq.)


Sec.  686.43  Obligation to repay the grant.

    (a) The TEACH Grant amounts disbursed to the recipient will be 
converted into a Federal Direct Unsubsidized Loan, with interest 
accruing from the date that each grant disbursement was made and be 
collected by the Secretary in accordance with the relevant provisions 
of subpart A of 34 CFR part 685 if--
    (1) The grant recipient, regardless of enrollment status, requests 
that the TEACH Grant be converted into a Federal Direct Unsubsidized 
Loan because he or she has decided not to teach in a qualified school 
or field or for any other reason;
    (2) Within 120 days of ceasing enrollment in the institution prior 
to completing the TEACH Grant-eligible program, the grant recipient has 
failed to notify the Secretary in accordance with Sec.  686.40(a);
    (3) Within one year of ceasing enrollment in the institution prior 
to completing the TEACH Grant-eligible program, the grant recipient has 
not--
    (i) Been determined eligible for a suspension of the eight-year 
period for completion of the service obligation as provided in Sec.  
686.41;
    (ii) Re-enrolled in a TEACH Grant-eligible program; or
    (iii) Begun creditable teaching service as described in Sec.  
686.12(b);
    (4) The grant recipient completes the course of study for which a 
TEACH Grant was received and does not actively confirm to the 
Secretary, at least annually, his or her intention to satisfy the 
service agreement; or
    (5) The grant recipient has completed the TEACH Grant-eligible 
program but has failed to begin or maintain qualified employment within 
the timeframe that would allow that individual to complete the service 
obligation within the number of years required under Sec.  686.12.
    (b) A TEACH Grant that converts to a loan, and is treated as a 
Federal Direct Unsubsidized Loan, is not counted against the grant 
recipient's annual or any aggregate Stafford Loan limits.
    (c) A grant recipient whose TEACH Grant has been converted to a 
Federal Direct Unsubsidized Loan--
    (1) Enters repayment immediately;
    (2) Is eligible for all of the benefits of the Direct Loan Program; 
and
    (3) Is not eligible for any grace period.
    (d) A TEACH Grant that is converted to a Federal Direct 
Unsubsidized Loan cannot be reconverted to a grant.

(Authority: 20 U.S.C. 1070g et seq.)

PART 690--FEDERAL PELL GRANT PROGRAM

    38. The authority citation for part 690 is revised to read as 
follows:

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

    39. Section 690.2 is amended by:
    A. Adding, in alphabetical order, the terms ``Teacher Education 
Assistance for College and Higher Education (TEACH) Grant Program'' and 
``TEACH Grant'' in paragraph (b).
    B. Revising the authority citation to read as follows:

[[Page 15374]]

Sec.  690.2  Definitions.

* * * * *
(Authority: 20 U.S.C. 1070a, 1070g)

[FR Doc. E8-5196 Filed 3-20-08; 8:45 am]
BILLING CODE 4000-01-P