[Federal Register Volume 73, Number 121 (Monday, June 23, 2008)]
[Rules and Regulations]
[Pages 35472-35507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-13587]



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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; Final 
Rule

  Federal Register / Vol. 73, No. 121 / Monday, June 23, 2008 / Rules 
and Regulations  

[[Page 35472]]


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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: Final regulations.

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SUMMARY: The Secretary amends 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 amends the 
regulations related to the Student Assistance General Provisions; the 
General Provisions for the Federal Perkins Loan Program, Federal Work-
Study Program, and Federal Supplemental Educational Opportunity Grant 
Program; the Federal Perkins Loan Program; the Federal Work-Study 
Program; 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 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: Effective Date: These regulations are effective July 1, 2008.

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 (TDD), 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 in this section.

SUPPLEMENTARY INFORMATION: On March 21, 2008, the Secretary published a 
notice of proposed rulemaking (NPRM) for the Teacher Education 
Assistance for College and Higher Education (TEACH) Grant Program and 
Other Federal Student Aid Programs in the Federal Register (73 FR 
15336).
    In the preamble to the NPRM, the Secretary discussed on pages 15337 
through 15352 the major regulations proposed in that document to 
implement the TEACH Grant program authorized under Title IV of the HEA, 
including the following:
     Amending Sec.  668.164(g) to add the TEACH Grant program 
to the list of programs for which a student becomes ineligible when the 
student is no longer enrolled at the institution for the award year and 
to describe how TEACH Grant recipients may qualify for a late 
disbursement.
     Amending Sec.  668.183 to specify that a TEACH Grant that 
has been converted to a Federal Direct Unsubsidized Loan would not be 
included in calculating an institution's cohort default rate.
     Amending Sec.  673.5 to include the amount of any TEACH 
Grant in the types of funds that may be used to replace a student's 
expected family contribution (EFC).
     Adding new Sec.  686.2 to define the terms ``Academic year 
or its equivalent for elementary and secondary schools (Elementary or 
secondary academic year),'' ``Annual award,'' ``Scheduled award,'' 
``Elementary school,'' ``High-need field,'' ``Highly-qualified,'' 
``Numeric equivalent,'' ``Post-baccalaureate program,'' ``Retiree,'' 
``School serving low-income students (low-income school),'' ``Secondary 
school,'' ``Service Agreement,'' ``TEACH Grant-eligible institution,'' 
``TEACH Grant-eligible program,'' ``Teacher,'' and ``Teacher 
preparation program.''
     Adding new Sec.  686.3 to establish the duration of 
student eligibility for a TEACH Grant based on the maximum amount of 
grant funds available to students under section 420M(d)(1) and (2) of 
the HEA.
     Adding new Sec.  686.4 to give institutions the option to 
participate in the TEACH Grant program, to clarify that participation 
in the program is voluntary, and to describe the obligations of 
institutions if they cease to participate in the program.
     Adding new Sec.  686.5 to specify how an institution would 
treat correspondence courses for purposes of the TEACH Grant program.
     Adding new Sec.  686.6 to prohibit students from receiving 
TEACH Grant payments concurrently from more than one institution.
     Adding new Sec.  686.10 to describe the procedures that a 
student must follow when applying for a TEACH Grant, and, in 
particular, to require that a student 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.
     Adding new Sec.  686.11 to establish student eligibility 
requirements for the TEACH Grant program.
     Adding new Sec.  686.12 to describe the agreement students 
must sign prior to receiving each TEACH Grant award, and to explain the 
service obligation that students must carry out for the TEACH Grant 
award not to convert to a Federal Direct Unsubsidized Loan.
     Adding new Sec.  686.20 to require a student to submit a 
valid Student Aid Report (SAR) or for the student's institution to 
receive an Institutional Student Information Record (ISIR) with an 
official EFC so that the institution can determine the appropriate 
amount of a student's TEACH Grant.
     Adding new Sec.  686.21 to provide that while a Scheduled 
Award for the TEACH Grant program is $4,000, students may receive 
lesser annual award amounts depending on their enrollment status and to 
clarify that a student's TEACH Grant award, combined with other 
estimated financial assistance, cannot exceed the cost of the student's 
attendance as determined by the institution.
     Adding new Sec. Sec.  686.22 and 685.25 to: (1) Describe 
how an institution calculates 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; (2) establish the minimum payment for a 
payment period; (3) require institutions to define the term ``academic 
year'' for purposes of calculating payments for payment periods; and 
(4) allow institutions to use overlapping Scheduled Awards in a payment 
period.
     Adding new Sec.  686.23 to 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.
     Adding new Sec.  686.24 to establish how an institution 
calculates a payment for an eligible student who transfers

[[Page 35473]]

from another postsecondary institution within the same award year.
     Adding new Sec.  686.31 to delineate what an institution 
must do to determine whether a student is eligible to receive a TEACH 
Grant.
     Adding new Sec.  686.32 to describe the initial, 
subsequent, and exit counseling that institutions must provide to each 
TEACH Grant recipient.
     Adding new Sec.  686.33 to allow institutions to pay a 
student a TEACH Grant at such times and in such installments that best 
meet the student's needs.
     Adding new Sec.  686.37 to describe the information 
pertaining to a student's TEACH Grant eligibility that an institution 
must submit to the Department and to establish submission deadlines for 
this information.
     Adding new Sec.  686.40 to define how and when a TEACH 
Grant recipient must contact the Department to document fulfillment of 
his or her service obligation or, if the service obligation has not 
been met, the intent to fulfill the service obligation.
     Adding new Sec.  686.41 to define the conditions under 
which a TEACH Grant recipient will be able to request a suspension of 
his or her service obligation for a specified amount of time.
     Adding new Sec.  686.42 to require the discharge of a 
grant recipient's service obligation if the recipient dies or becomes 
totally and permanently disabled, and to clarify that the four-year 
service obligation still would apply to a recipient who is in a 
conditional discharge period.
     Adding new Sec.  686.43 to describe the various conditions 
under which a TEACH Grant would be converted into a Federal Direct 
Unsubsidized Loan, with interest accruing from the date of each grant 
disbursement and which a TEACH Grant recipient would be required to 
pay.

Technical Corrections

    We are making minor technical changes, including the following, to 
correct errors that we identified during our review of the proposed 
regulations.

Program Participation Agreement (Sec.  668.14(f))

    We have revised Sec.  668.14(f) to correct inaccurate cross-
references. Specifically, Sec.  668.14(f) has been amended to cross-
reference paragraphs (g) and (h) of the section, rather than (h) and 
(i) of the section. We also have revised Sec.  668.14(f)(3) to cross-
reference paragraph (f), rather than paragraph (g), of the section.

Teacher Loan Forgiveness Program (Sec. Sec.  682.215 and 685.217)

    We have revised Sec. Sec.  682.215(c)(7)(ii) and 685.217(c)(7)(ii) 
to correct inaccurate citations for the Family and Medical Leave Act of 
1993 (FMLA). The correct citation for the FMLA is 29 U.S.C. 2601, et 
seq., not 19 U.S.C. 2654.

Analysis of Comments and Changes

    The regulations in this document were developed through negotiated 
rulemaking. Section 492 of the HEA requires that, before publishing any 
proposed regulations to implement programs under Title IV of the HEA, 
the Secretary must obtain public involvement in the development of the 
proposed regulations. After obtaining advice and recommendations, the 
Secretary must conduct a negotiated rulemaking process to develop the 
proposed regulations. All proposed regulations must conform to 
agreements resulting from the negotiated rulemaking process unless the 
Secretary reopens that process or explains any departure from the 
agreements to the negotiated rulemaking participants.
    These regulations were published in proposed form on March 21, 
2008, in conformance with the consensus of the negotiated rulemaking 
committee. Under the committee's protocols, consensus meant that no 
member of the committee dissented from the agreed-upon language. The 
Secretary invited comments on the proposed regulations by April 21, and 
in response to the Secretary's invitation, 132 parties submitted 
comments on the proposed regulations. An analysis of the comments and 
the changes in the regulations since publication of the NPRM follows.
    We group major issues according to subject, with appropriate 
sections of the regulations referenced in parentheses. We discuss other 
substantive issues under the sections of the regulations to which they 
pertain. Generally, we do not address minor, non-substantive changes.

General

    Comment: The Department received several general comments about the 
TEACH Grant program. Four commenters suggested that the program is 
inappropriately named and argued that the Department should change the 
name of the program to reflect the fact that it is, in their opinion, a 
loan forgiveness program rather than a grant program. Two commenters 
argued that the funds dedicated for the TEACH Grant program would 
better serve students if they were reallocated to the current Teacher 
Loan Forgiveness Program or to the Perkins Loan Program.
    The Department also received comments in support of the TEACH Grant 
program that did not address specific sections of the proposed 
regulations.
    Discussion: The name, purpose, and structure of the program are 
established by the HEA and cannot be changed by the Department. The 
Department is not authorized to reallocate funds Congress designates 
for the TEACH Grant program to another program.
    The Department is working to disseminate detailed information about 
the unique nature of the TEACH Grant program, including how TEACH 
Grants may, under certain circumstances, convert into Federal 
Unsubsidized Direct Loans, to institutions as well as to parents and 
students.
    Changes: None.

Eligible Programs (Sec.  668.8)

    Comment: One commenter requested clarification about the 
relationship between the definition of eligible program in Sec.  668.8 
and the definition of TEACH Grant-eligible program in 34 CFR 686.2(d). 
The commenter questioned whether it is appropriate to add, in Sec.  
668.8(h)(3), a cross-reference to the definition of TEACH Grant-
eligible program in 34 CFR 686.2(d). In addition, the commenter asked 
if programs that contribute to a student's ability to teach in a high-
need field should be included in the definition of eligible program 
under Sec.  668.8(h)(3)(i).
    Discussion: We agree that the connection between the definition of 
eligible program in Sec.  668.8 and the definition of TEACH Grant-
eligible program found in 34 CFR 686.2(d) needs clarification. For 
purposes of the TEACH Grant program, an educational program is an 
eligible program under Sec.  668.8 only if it qualifies as a TEACH 
Grant-eligible program in accordance with 34 CFR 686.2(d). Rather than 
amend Sec.  668.8 to restate the definitional requirements of a TEACH 
Grant-eligible program, we amended Sec.  668.8 simply to cross-
reference the definition in 34 CFR 686.2(d).
    A program that contributes to a student's ability to teach in a 
high-need field would be a TEACH Grant-eligible program if it is 
designed to prepare an individual to teach as a highly qualified 
teacher in a high-need field and leads to a baccalaureate or master's 
degree, or is a post-baccalaureate program of study.
    Changes: We amended Sec.  668.8(h) to clarify that an educational 
program qualifies as an eligible program for purposes of the TEACH 
Grant program only if it is a TEACH Grant-eligible

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program in accordance with 34 CFR 686.2(d).

Treatment of Title IV grant and loan funds when a student withdraws 
(Sec.  668.22)

    Comment: One commenter questioned the placement of TEACH Grants in 
the listing of unearned grant funds returned in the event a student 
withdraws from an institution during a payment period. The commenter 
believed that TEACH Grants should be placed at the beginning of the 
order for returning grant funds and asked that that placement be 
reconsidered.
    Discussion: As reflected in the NPRM, the Department believes that 
TEACH Grants should not be at the beginning of the order for returning 
grant funds. Under the regulations, TEACH Grants will be returned after 
Federal Pell Grants, Academic Competitiveness Grants, National SMART 
Grants, and FSEOG program assistance. This return order is prescribed 
by section 484B(b)(3)(B)(iii) of the HEA.
    Changes: None.

Calculating and Applying Cohort Default Rates (Sec.  668.183)

    Comment: Several commenters supported Sec.  668.183, which provides 
that a TEACH Grant that has been converted to a Federal Direct 
Unsubsidized Loan is not included in the calculation of an 
institution's cohort default rate.
    Discussion: We appreciate the commenters' support.
    Changes: None.

Overaward (Sec.  673.5)

    Comment: One commenter supported the proposal that TEACH Grants be 
allowed to replace the EFC, believing that this approach fulfills the 
spirit of the legislation and will be helpful in making awards to 
students.
    Discussion: We appreciate the commenter's support.
    Changes: None.

Maximum Loan Amounts (Sec. Sec.  682.204 and 685.203)

    Comment: One commenter wrote to support the proposal to exclude a 
TEACH Grant that has been converted to a Federal Direct Unsubsidized 
Loan from a borrower's aggregate or annual loan limits in the Federal 
Family Education Loan (FFEL) and Federal Direct Loan Programs.
    Discussion: We appreciate the commenter's support.
    Changes: None.

Definitions (Sec.  686.2(d))

Agreement To Serve

    Comment: None.
    Discussion: The Department is changing the name of the agreement 
described in section 420N(b) of the HEA from ``service agreement'' to 
``agreement to serve'' to be more consistent with the statute.
    Change: We have amended Sec.  686.2(d) to change the name of the 
agreement under which a TEACH Grant recipient commits to meet the 
service obligation described in Sec.  686.12 from ``service agreement'' 
to ``agreement to serve.''

High-Need Field

    Comment: A large number of commenters suggested that library media 
specialist should be included in the list of high-need fields. They 
argued that all 50 States require that a school library media 
specialist have a State teaching certificate, that library media 
specialists are considered teachers and are responsible for developing 
curriculum and instructing students, and that there are significant 
shortages of library media specialists across the country. Several 
commenters contended that early childhood education should be 
considered a high-need field because of the shortage of baccalaureate-
degree-holding early childhood education teachers and the requirement 
that Head Start teachers have a bachelor's degree in early childhood 
education by 2013.
    Discussion: Under certain circumstances, library media specialist 
and early childhood education qualify as high-need fields and a grant 
recipient could fulfill the service obligation associated with receipt 
of a TEACH Grant by teaching in these fields. As specified in Sec.  
686.12(b), for each TEACH Grant-eligible program for which the student 
received TEACH Grant funds, the grant recipient must fulfill a service 
obligation by 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 in a 
low-income school, as a highly qualified teacher, and in a high-need 
field in the majority of classes taught during each elementary and 
secondary academic year.
    The definition of high-need field in Sec.  686.2(d) reflects 
section 420N(b) of the HEA which specifically designates several fields 
as high-need and provides for the inclusion of other fields that are 
documented as high-need by the Federal Government, a State government 
or a local educational agency (LEA), and approved by the Secretary. The 
regulations explain that the additional high-need fields are those 
listed in the Department's annual Teacher Shortage Area Nationwide 
Listing (Nationwide List), which is available on the Department of 
Education's Web site at http://www.ed.gov/about/offices/list/ope/pol/tsa.pdf. The Nationwide List is based on information submitted to the 
Department by the States, and inclusion of a field on the Nationwide 
List indicates approval by the Department of Education. Some States 
have identified early childhood education and library media specialist 
as shortage areas in the Nationwide List.
    For purposes of the TEACH Grant program, a teacher is someone who 
provides direct classroom teaching or classroom-type teaching in a non-
classroom setting in an elementary or secondary school. An elementary 
or secondary school is a nonprofit institutional day or residential 
school, including a public elementary or secondary charter school, that 
provides elementary or secondary education, as determined under State 
law. The individual must be teaching the majority of classes in the 
high-need field. In the case of service in early childhood education, 
to meet the criterion of being a highly qualified teacher the 
individual would need to be certified by the State in early childhood 
education. To meet the criterion of teaching in an elementary school, 
the service would need to take place in an elementary school and the 
State would need to consider early childhood education a component of 
the State's elementary school education system and have designated 
early childhood education as a high-need field.
    To meet the criterion of ``highly qualified,'' a library media 
specialist would need to be certified by the State as a library media 
specialist. To meet the criterion of ``teacher,'' the library media 
specialist would need to be performing direct classroom teaching or 
classroom-type teaching in a non-classroom setting for a majority of 
time in an elementary or secondary school. In addition, the State would 
have to designate library media specialist as a high-need field. In all 
cases, the service would need to be performed in a low-income school.
    Changes: None.
    Comment: A couple of commenters inquired whether elementary 
education could be included as a high-need field. One commenter 
requested that we provide specific information about how elementary 
school teachers could demonstrate that they are teaching in a high-need 
field.

[[Page 35475]]

    Discussion: As described in the discussion of library media 
specialist and early childhood education, elementary education could be 
a high-need field if it is designated as a high-need field by the State 
in which the recipient teaches.
    There are other limited circumstances under which a grant recipient 
can satisfy the service obligation by serving as an elementary school 
teacher including: (1) Teaching the majority of his or her courses in a 
high-need field, such as math, science, or a foreign language; (2) 
teaching in a foreign language immersion program; (3) serving as a 
reading specialist, a special education teacher, or a bilingual 
education teacher, or teaching English language acquisition; or (4) 
teaching in a low-income school in a State that has designated 
elementary education as a high-need field.
    Changes: None.
    Comment: A couple of commenters asked for clarification of the 
terms ``bilingual education'' and ``English language acquisition.'' One 
commenter questioned whether bilingual education includes immersion 
classrooms.
    Discussion: The National Clearinghouse for English Language 
Acquisition (NCELA) (http://www.ncela.gwu.edu), an online resource 
supported by the Department of Education's Office of English Language 
Acquisition, provides general definitions of these terms. Language 
acquisition is the process of acquiring a first or second language. 
Bilingual education is an educational program in which two languages 
are used to provide content matter instruction. In foreign language 
immersion programs the foreign language is the vehicle for content 
instruction and is not the subject of instruction. Therefore, bilingual 
education does not include foreign language immersion programs.
    Changes: We have added definitions of the terms ``bilingual 
education'' and ``English language acquisition'' to Sec.  686.2(d). 
These definitions are taken from the NCELA.
    Comment: One commenter asked the Department to specify what major 
would lead to teaching English acquisition and English as a Second 
Language and who would make this determination.
    Discussion: The Department does not have the authority or expertise 
to specify which academic degrees would prepare an individual to teach 
in these, or any other, fields since that is an academic decision that 
rests with the institution.
    Changes: None.

    Comment: One commenter sought clarification of whether a foreign 
language is a high-need field and suggested that a K-12 foreign 
language immersion program should be considered part of the high-need 
foreign language field listed in the statute and regulations.
    Discussion: All foreign languages are high-need fields for purposes 
of the TEACH Grant program. We agree with the commenter that teaching 
in a foreign language immersion program would meet the requirement for 
teaching in a high-need field.
    Changes: None.

Highly-Qualified

    Comment: A couple of commenters requested that the Department 
provide the specific requirements that must be met to satisfy the 
criterion for being a highly-qualified teacher rather than merely 
referencing the relevant statutes.
    Discussion: The requirements for being designated ``highly 
qualified'' are very complex and differ for the various states. The 
requirement that teachers be highly-qualified applies to all public 
elementary or secondary school teachers employed by a LEA who teach a 
core academic subject. Special education teachers who teach core 
academic subjects are included in this requirement. In general, 
``highly qualified'' means that the teacher--
    (1) Has obtained full State certification as a teacher or passed 
the State teacher licensing examination, holds a license to teach in 
the State, and has not had certification or licensure requirements 
waived on an emergency, temporary, or provisional basis (special 
education teachers must be certified in special education);
    (2) Holds a minimum of a bachelor's degree; and
    (3) Has demonstrated subject-matter competency in each of the 
academic subjects in which the teacher teaches, in a manner determined 
by the State and in compliance with section 9101(23) of the Elementary 
and Secondary Education Act of 1965, as amended (ESEA).
    The statutory definition of ``highly qualified'' includes 
additional elements that apply differently to veteran teachers and new 
teachers, and to elementary, middle, and secondary school teachers. The 
complete statutory definition of a ``highly qualified'' teacher is in 
section 9101(23) of the ESEA and in section 602(10) of the Individuals 
With Disabilities Education Act. The Department's regulations at 34 CFR 
200.56 further define ``highly qualified teacher.'' Among other things, 
34 CFR 200.56 clarifies when teachers who pursue State certification 
through an alternative-route program may be considered fully certified 
while they participate in that program. More guidance on the criterion 
for being a highly qualified teacher is available at http://www.ed.gov/teachers/nclbguide/improve-quality.html.
    Changes: None.

Post-Baccalaureate Program

    Comment: A few commenters raised concerns about the phrase at the 
end of paragraph (2) of the definition of post-baccalaureate program 
that they believe makes a post-baccalaureate program offered by an 
institution that also has an undergraduate teacher preparation program 
ineligible for the TEACH Grant program. They suggested that the post-
baccalaureate program and an undergraduate teacher education program 
offered by the same institution should both be eligible programs for 
TEACH Grant purposes. One of these commenters noted that some 
institutions require their undergraduate education majors to complete a 
fifth year during which they take coursework necessary to earn a 
teaching credential.
    Discussion: The definition of post-baccalaureate program in Sec.  
686.2(d) is from section 420L(2) of the HEA. That definition limits the 
TEACH Grant eligibility of post-baccalaureate programs to those offered 
by institutions that do not have an undergraduate teacher preparation 
program. In the case of an institution that offers both an 
undergraduate teacher preparation program and a post-baccalaureate 
program, the institution would be eligible, and it could designate its 
teacher preparation program as a TEACH Grant-eligible program. We 
understand that some institutions' teacher preparation programs require 
students to complete a post-baccalaureate program after earning a 
baccalaureate degree in teacher education. However, the statute does 
not permit these post-baccalaureate programs to be eligible for the 
TEACH Grant program.
    Changes: None.

TEACH Grant-Eligible Institution

    Comment: One commenter questioned the exclusion of institutions 
that fail to meet financial responsibility standards but that qualify 
to participate in all of the other Title IV, HEA programs under 
alternate standards from participation in the TEACH Grant program.
    Discussion: We agree with the commenter that the same standards 
should apply for an institution to qualify to participate in the TEACH 
Grant program as for all the other Title

[[Page 35476]]

IV programs. Using the same standards will result in consistent 
treatment across all programs and reduce the administrative burden on 
both institutions and the Department.
    Changes: We have amended the definition of TEACH Grant-eligible 
institution to allow institutions that do not meet financial 
responsibility standards established in 34 CFR part 668, subpart L to 
participate in the TEACH Grant program by qualifying under an 
alternative standard in 34 CFR 668.175.
    Comment: One commenter thanked us for including in the definition 
of TEACH Grant-eligible institution institutions whose teacher 
preparation programs are approved by a State, include extensive pre-
service clinical experience, and provide pedagogical coursework or the 
assistance in the provision of such coursework.
    Discussion: We appreciate the commenter's support.
    Changes: None.
    Comment: One commenter asked that we clarify what constitutes 
``high-quality'' teacher preparation programs and what ``extensive pre-
service clinical experience'' entails.
    Discussion: The definition of TEACH Grant-eligible institution in 
Sec.  686.2(d) contains four components that constitute a ``high-
quality'' teacher preparation program. The components are: (1) Approval 
by a cognizant authority (either accreditation by a specialized 
accrediting agency or State approval); (2) extensive pre-service 
clinical experience; (3) direct provision of pedagogical coursework or 
assistance in providing such coursework; and (4) provision of 
supervision and support services to teachers, or assistance in such 
provision. Institutions whose programs are accredited by one of the 
specialized accrediting agencies recognized by the Secretary for the 
accreditation of professional teacher education programs, which are 
listed on the Department's Web site at http://www.ed.gov/admins/finaid/accred/accreditation_pg8.html#ed, are considered to meet the 
requirements related to pre-service clinical experience and pedagogical 
coursework. While we did not specifically discuss a minimum length of 
time for pre-service clinical experience during negotiated rulemaking, 
a standard will be necessary from an operational standpoint so that we 
can determine whether or not an institution whose teacher preparation 
program is not accredited by a specialized accrediting agency meets 
this requirement. Accordingly, we reviewed the requirements of all the 
States and determined that a majority of States require at least 10 
weeks of full-time pre-service clinical experience, while some require 
significantly less and a few require more. In addition, in testimony 
during a public hearing on the TEACH Grant program, the American 
Association of Colleges for Teacher Education recommended 10 weeks of 
full-time pre-service clinical experience as a minimum. Therefore, we 
have adopted 10 weeks of full-time pre-service clinical experience, or 
its equivalent, as the regulatory standard. We considered that a 
program might be designed so that students would complete their 
clinical experience on a part-time basis and will allow for the 
completion of the 10 weeks of full-time pre-service clinical experience 
on a part-time basis.
    Changes: We have revised paragraph (1)(i)(B) of the definition of 
TEACH Grant-eligible program in Sec.  686.2(d) to specify that a 
teacher preparation program that is approved by a State must provide a 
minimum of 10 weeks of full-time pre-service clinical experience, or 
its equivalent.
    Comment: One commenter asked whether the reference to ``teachers'' 
in paragraph (1)(ii) of the definition of TEACH Grant-eligible 
institution refers to an employed teacher or a student teacher.
    Discussion: The phrase ``provides supervision and support services 
to teachers, or assists in the provision of services to teachers'' 
refers to employed teachers, not to student teachers. Faculty and other 
professional personnel at institutions with teacher preparation 
programs are expected to share their knowledge with working teachers as 
part of their education role.
    Changes: None.
    Comment: One commenter wondered what is meant in paragraph 
(1)(ii)(B) by the term ``novice'' in the description of the types of 
supervision and support services an institution might provide to 
teachers. The same commenter asked for further explanation and examples 
of ways an institution might meet the supervision and support services 
requirement.
    Discussion: In general, a novice is an individual who is new to a 
field or activity. In the case of teachers, a novice is normally 
considered to be one who is involved in the first, second, or third 
year of teaching.
    The regulations include a few illustrative examples of the types of 
supervision and support services an institution might provide to 
teachers. We believe that an exclusive list would be too restrictive on 
institutions. We expect that institutions with teacher preparation 
programs will be able to identify other types of services they provide 
that satisfy the requirement based on the illustrative examples.
    Changes: None.
    Comment: One commenter asked for more discussion and examples of 
how a community college can become a TEACH Grant-eligible institution. 
In particular, the individual wondered whether the community college 
must have an articulation agreement with each four-year institution to 
which a student would transfer.
    Discussion: In order to be a TEACH Grant-eligible institution, a 
community college must have an agreement with at least one four-year 
institution. The agreement need not be a formal articulation agreement. 
However, the agreement must demonstrate (1) that the two-year program 
offered by the community college is acceptable for full credit in that 
institution's baccalaureate teacher education program, or (2) that the 
two-year program is acceptable for full credit in a baccalaureate 
degree program in a high-need field at a TEACH Grant-eligible 
institution. An agreement that would demonstrate that the two-year 
program is acceptable for full credit into a baccalaureate degree in 
the high-need field of math, for example, would likely list several 
courses that would meet the four-year institution's general education 
requirements, some courses that could be electives, and a few lower-
level math courses required for the major. Our expectation is that a 
student who follows a pathway established through an agreement would 
not have to take additional credits beyond the minimum required for 
graduation from the four-year institution.
    The agreement is used to establish institutional eligibility. It is 
not a requirement that each student enrolled in the two-year program 
attend the four-year institution with which the community college has 
the agreement. A community college does not have to have more than one 
agreement to establish its eligibility.
    Changes: None.

TEACH Grant-Eligible Program

    Comment: A couple of commenters expressed their appreciation that 
the regulations permit institutions to define which programs will be 
eligible for the TEACH Grant.
    Discussion: We appreciate the support.
    Changes: None.
    Comment: One commenter asked that we explain the criterion of 
``fully-qualified'' teacher in the context of preparation in an 
eligible program.

[[Page 35477]]

    Discussion: We agree with the commenter that the definition of 
TEACH Grant-eligible program should make it clear that the program 
should be designed to prepare an individual to teach as a highly-
qualified teacher. Preparation of highly-qualified teachers is a key 
component of an eligible program, but we also recognize that, given the 
various pathways a student might follow to gain the knowledge needed to 
become a highly-qualified teacher, the student may need to complete 
more than one program. For example, a student may earn a baccalaureate 
degree in a high-need field, such as mathematics, and then enroll in a 
post-baccalaureate program for the courses needed to receive a 
professional certification or licensing credential. Subject area 
content knowledge and certification are both components of the 
definition of ``highly-qualified'' teacher and, in the situation just 
described, a single program would not provide both. With this 
clarification, we agree that the definition of TEACH Grant-eligible 
program should include a reference to the preparation of a highly-
qualified teacher.
    Changes: We have amended the definition of a TEACH Grant-eligible 
program in Sec.  686.2(d) to clarify that a TEACH Grant-eligible 
program must be designed to prepare an individual to teach as a highly-
qualified teacher.
    Comment: Several commenters sought guidance on the amount of 
latitude institutions have in designating eligible programs. Some 
wondered if an institution could designate only its master's degree 
programs, and not its undergraduate programs, or only its teacher 
preparation programs or post-baccalaureate programs as TEACH Grant-
eligible.
    Discussion: In making a determination of which programs to 
designate as TEACH Grant-eligible, an institution may differentiate 
between its master's degree programs and its undergraduate programs, 
making only its master's degree programs TEACH Grant-eligible. An 
institution may also choose to make only its teacher preparation 
programs TEACH Grant-eligible, and not include any programs in high-
need fields.
    Changes: None.
    Comment: Several commenters asked whether institutions could limit 
participation in the TEACH Grant program to upper level undergraduate 
students. One commenter suggested that institutions should have the 
option to determine whether the first two years of a four-year program 
are part of an eligible program.
    Discussion: An institution may limit participation in the TEACH 
Grant program to students who have formally declared a major or who 
have been formally admitted to the teacher preparation program. In such 
cases, the TEACH Grant-eligible program could effectively involve only 
upper-level undergraduate students and the eligible program would not 
include the first two years of a four-year program. An institution 
could also determine that the first two years are not part of the TEACH 
Grant-eligible program. However, if the institution designates a 
program as TEACH Grant-eligible it cannot further discriminate among 
eligible students in that program. If, for example, an institution 
designates a program as TEACH Grant-eligible and that program begins in 
the freshman year, the institution may not limit TEACH Grant 
participation to upper-level undergraduates in the program.
    Changes: None.
    Comment: One commenter asked whether a two-year institution could 
restrict TEACH Grant-eligibility to programs with some relationship to 
teacher preparation and not include programs that transfer into four-
year baccalaureate programs that include high-need majors.
    Discussion: An institution may designate only certain programs as 
TEACH Grant-eligible and not designate others, even though they may 
prepare a student to teach in a high-need field.
    Changes: None.
    Comment: In questioning whether an institution could require that a 
student must have declared an appropriate major, or have been accepted 
into a teacher preparation program, one commenter asked whether the 
practice would cross the line between program eligibility and student 
eligibility.
    Discussion: Program eligibility--where the institution may 
identify, within the parameters of the regulations, the scope of 
institutional programs that are TEACH Grant-eligible--and student 
eligibility--where the institution must adhere to the eligibility 
criteria identified in the regulations--are closely intertwined in the 
TEACH Grant program and there are instances, such as the situation the 
commenter describes, where the line between them is crossed. It is 
important to note that a program might be defined differently for 
general Title IV purposes and for TEACH Grant purposes with the 
consequence that, for some period of time, a student could receive 
financial assistance from other Title IV programs, but would not 
qualify for a TEACH Grant. Ultimately, it is up to the institution to 
decide, based on regulatory requirements, what programs are TEACH 
Grant-eligible and when a student is considered to be accepted into a 
TEACH Grant-eligible program.
    Changes: None.
    Comment: One commenter asked whether an institution can determine 
that only some of the programs for which it currently awards other 
Title IV aid are also eligible for TEACH Grant purposes, even if some 
programs it does not wish to make TEACH Grant-eligible meet the 
regulatory definition.
    Discussion: The institution has that discretion.
    Changes: None.
    Comment: Based on a concern that students will apply for and accept 
the TEACH Grant as a way of obtaining more loan funds with no intention 
of fulfilling the Agreement to Serve (ATS), one commenter asked the 
Secretary to provide more guidance, similar to the list of acceptable 
Classification of Instructional Programs (CIP) codes in the National 
SMART Grant program, for students to determine which programs are TEACH 
Grant-eligible.
    Discussion: We recognize that institutions may not be able to 
control the type of behavior the commenter describes in all instances. 
Although an institution may limit the programs it designates as TEACH 
Grant-eligible, an institution can never know with certainty whether a 
student truly intends to fulfill his or her service obligation. Since 
designation of TEACH Grant-eligible programs is an institutional 
decision, we do not plan to provide more specific guidance or a list of 
CIP codes.
    Changes: None.
    Comment: One commenter asked if, prior to awarding a TEACH Grant, 
an institution could require that a student submit a plan to the 
institution describing the student's career goal and intended academic 
plan to that goal.
    Discussion: An institution may require a student to submit a plan 
such as the commenter describes. This may be particularly helpful in 
situations where the student is enrolled in a program that will not, by 
itself, enable the student to begin teaching as a highly-qualified 
teacher in a high-need field. However, the plan by itself would not 
establish a student's eligibility for a TEACH Grant. A student must be 
enrolled in a TEACH Grant-eligible program to receive a TEACH Grant.
    Changes: None.
    Comment: A few commenters wondered whether a program that prepares 
a student to teach in a high-need field would have to be in the high-
need field in which an individual plans to teach in meeting the service 
obligation, or if it could contribute significantly to the TEACH Grant

[[Page 35478]]

recipient's knowledge and instructional capacity in a high-need field. 
One commenter asked whether a master's degree program that is not a 
teacher preparation program would need to result in a degree in a high-
need field to be considered eligible.
    Discussion: An institution has the authority to determine which of 
its programs meet the requirements to be TEACH Grant-eligible and may 
designate any program that contributes in any way to a student's 
preparation to teach in a high-need field as a TEACH Grant-eligible 
program. This approach would allow, for example, an institution to 
designate its Masters in Business Administration (MBA) Program as a 
TEACH Grant-eligible program that will prepare a student to teach in 
the high-need field of mathematics, if it determines that the content 
of its MBA program would be good preparation for teaching mathematics.
    Changes: None.
    Comment: One commenter asked whether an institution could consider 
as TEACH Grant-eligible a two-year program that appears unrelated to a 
high-need field but that will transfer fully into a four-year TEACH 
Grant-eligible program.
    Discussion: We believe that the institution would have a basis on 
which to define such a program as TEACH Grant-eligible.
    Changes: None.
    Comment: One commenter inquired whether a two-year school could 
offer a TEACH Grant-eligible post-baccalaureate program.
    Discussion: These regulations do not restrict the authority of an 
institution of higher education to offer a post-baccalaureate program. 
If a community college offers such a program, the community college may 
use this as the means of establishing its institutional eligibility for 
the TEACH Grant program and would not, therefore, need to enter into an 
agreement with a four-year institution to establish eligibility.
    Changes: None.
    Comment: One commenter asked whether a student who returns to the 
institution only for teacher certification courses would be eligible 
for a grant.
    Discussion: A student must be enrolled in a TEACH Grant-eligible 
program, which could be either a post-baccalaureate program of study or 
a master's degree program assuming the student already has a 
baccalaureate degree. If the student is merely taking courses he or she 
needs for certification, but is not enrolled in a TEACH Grant-eligible 
program, then the student would not be eligible for a TEACH Grant.
    Changes: None.
    Comment: One commenter asked whether a current teacher who decides 
to pursue a master's degree in a field that would not result in that 
teacher adding a certified area to his or her teaching credential would 
be considered to be enrolled in a TEACH Grant-eligible program and, if 
so, if the service performed on the basis of the individual's 
undergraduate degree could be used to fulfill the teaching obligation 
associated with the TEACH Grant for the master's degree.
    Discussion: An institution designates which of its programs are 
TEACH Grant-eligible. As long as the student is enrolled in a TEACH 
Grant-eligible program that student could receive a TEACH Grant. Prior 
experience in the field will not strip a student of his or her 
eligibility. However, the teaching service performed prior to 
enrollment in the master's degree program cannot be used to meet the 
service obligation associated with the TEACH Grant. Full-Time teaching 
service while attending school to obtain a master's degree would count 
toward the service obligation for any TEACH Grants that were received 
for an undergraduate or post-baccalaureate program. The teaching 
service performed while the student is enrolled may not be counted 
against the service obligation for the program in which the student is 
enrolled because the statute specifies that the student must teach 
``after completing the course of study for which the applicant received 
a TEACH Grant.''
    Changes: None.
    Comment: One commenter asked whether a four-year baccalaureate 
program that does not include an education component could be 
considered TEACH Grant-eligible if a student is able to transfer out of 
it after two years, prior to declaring a major, into a teacher 
preparation program at the same institution or at another institution 
with which the student's first institution has an agreement.
    Discussion: The comment addresses institutional eligibility and 
program eligibility. In regard to institutional eligibility, an 
institution that has a teacher preparation program would not need to 
enter into an agreement with another institution to be a TEACH Grant-
eligible institution. The institution could establish eligibility on 
the basis of its teacher preparation program, assuming that program 
meets the requirements contained in paragraph (1) of the definition of 
TEACH Grant-eligible institution in Sec.  686.2(d).
    In regard to program eligibility, it is not a requirement that a 
program include a teacher education component to be designated a TEACH 
Grant-eligible program. An institution may designate a program as TEACH 
Grant-eligible if it prepares an individual to teach as a highly-
qualified teacher in a high-need field.
    In this example, if the institution has designated both its program 
that does not include a teacher education component and its teacher 
preparation program as TEACH Grant-eligible, and the student is 
admitted to its teacher preparation program in the third year of 
undergraduate study, then the student would be eligible for a TEACH 
Grant for a total of four years. Since both of the programs in this 
example are TEACH Grant-eligible, the student could receive a TEACH 
Grant for each year of enrollment in the baccalaureate program without 
the education component and for each year of enrollment in the program 
with the teacher education component.
    Changes: None.

Teacher and Full-Time Teacher

    Comment: One commenter asked what a substitute teacher would need 
to do to meet the requirement of teaching full-time and other aspects 
of the service obligation.
    Discussion: A substitute teacher would need to satisfy the same 
requirements as a regular teacher as described in Sec.  686.12(b)(1), 
(2), and (3). The substitute teaching service must be in a low-income 
school and the substitute must teach a majority of courses in a high-
need field, as a highly-qualified teacher, for it to count toward 
meeting the service obligation. The substitute teacher must teach 
enough to meet the standard used by the State in defining full-time 
employment as a teacher. He or she could satisfy the requirement of 
teaching full-time by teaching in more than one low-income school and 
demonstrating that the combined teaching service was the equivalent of 
full-time. The substitute teacher would need to provide documentation 
as provided in Sec.  686.40.
    Changes: None.
    Comment: One commenter noted that special education teachers and 
reading specialists often serve other teachers as a resource or as a 
literacy coach and inquired whether such individuals would be 
considered teachers for purposes of fulfilling the service obligation.
    Discussion: The definition of ``teacher'' specifically includes 
special education teachers and reading specialists. Service performed 
by special education teachers and reading specialists, such as serving 
as a literacy

[[Page 35479]]

coach or resource to another teacher, either in the classroom or in a 
classroom-like setting, meets the definition of teacher. In order to 
meet the requirements of the service obligation, special education 
teachers and reading specialists must spend the majority of time 
teaching in a classroom or classroom-like setting, though they may also 
serve as a resource for other teachers.
    Changes: None.

Duration of Student Eligibility (Sec.  686.3)

    Comment: One commenter asked whether a student who already has 
earned a baccalaureate degree in a non-TEACH Grant-eligible program 
could be considered eligible for a TEACH Grant if the student enrolled 
in a TEACH Grant-eligible baccalaureate degree program, since this 
would be that student's first such baccalaureate degree. The commenter 
asked the same question about post-baccalaureate programs.
    Discussion: Section 420M(d)(1) of the HEA provides that a student 
may receive grants for the period required for the completion of the 
first undergraduate or post-baccalaureate course of study. In reviewing 
proposed Sec.  686.3, we have determined that Sec.  686.3 could suggest 
that a student who already has a baccalaureate degree in a non-TEACH 
Grant-eligible program would be eligible for a TEACH Grant if the 
student enrolled in a TEACH Grant-eligible baccalaureate degree 
program. However, that is not what we intended so we have clarified the 
regulations. An undergraduate student can get a TEACH Grant only for 
their first baccalaureate degree.
    Post-baccalaureate programs are by definition TEACH Grant-eligible. 
A student can get a TEACH Grant for completion of only one post-
baccalaureate program.
    Changes: We amended Sec.  686.3(a) to clarify that a student who 
already has completed a baccalaureate or post-baccalaureate program of 
study and has enrolled in a TEACH Grant-eligible baccalaureate or post-
baccalaureate program of study will not be able to receive a TEACH 
Grant.
    Comment: A commenter asked whether a student who has completed the 
requirements for teacher certification but elects to remain enrolled in 
the institution would continue to be eligible to receive TEACH Grants.
    Discussion: If a student has completed the requirements for teacher 
certification but remains enrolled in the institution, the student's 
eligibility for further TEACH Grants would depend on whether the 
student is still considered enrolled in his or her TEACH Grant-eligible 
program. If the student completed the requirements for the TEACH Grant-
eligible program's degree or certificate, the student would no longer 
be eligible.
    Changes: None.

Institutional Participation (Sec.  686.4)

    Comment: One commenter expressed appreciation that participation in 
the TEACH Grant program is optional for institutions.
    Discussion: We appreciate the support.
    Changes: None.
    Comment: One commenter suggested that the regulations should 
provide that if an institution ceases to participate in the TEACH Grant 
program, the TEACH Grant recipients at that institution would not be 
required to repay any TEACH Grant funds they received because it is the 
institution, not the student, that has withdrawn from the program.
    Discussion: Whether or not the institution continues to participate 
in the TEACH Grant program, a grant recipient is responsible for 
fulfilling the terms of the ATS that he or she signed. The student 
would still be able to continue a program of study to become a teacher, 
even if the institution no longer participated in the TEACH Grant 
Program, though the student would not receive additional TEACH Grants 
for that program. In addition, the student would also have the option 
to transfer to another institution to get a teaching credential. If the 
recipient fails to meet the requirements of the ATS, the TEACH Grants 
will convert to a Federal Direct Unsubsidized Loan.
    Changes: None.

Application (Sec.  686.10)

    Comment: One commenter supported the Department's use of the FAFSA 
as the application for a TEACH Grant.
    Discussion: We appreciate the commenter's support.
    Changes: None.

Eligibility To Receive a Grant (Sec.  686.11)

    Comment: Several comments were received on how admissions tests are 
treated as part of student eligibility for a TEACH Grant. One commenter 
asked whether an institution must first determine whether a student 
achieved a score above the 75th percentile on at least one of the 
batteries of a standardized admission test before determining TEACH 
Grant eligibility based on the student's grade point average (GPA). One 
commenter requested restricting admission test scores by educational 
level, while another commenter supported the approach in the proposed 
regulations regarding how admission test scores are considered as part 
of student eligibility. Another commenter wanted to know how to 
determine a home-schooled student's eligibility if the institution does 
not require an admissions test. Another commenter asked whether a test 
used for admission is acceptable for the 75th percentile determination 
even if it is also used as a placement test. Clarification on which 
nationally-normed tests qualify a student for a TEACH Grant and how a 
test is determined to be nationally-normed was also requested by a 
commenter. Finally, one commenter asked whether, in lieu of test score 
submissions by the testing entity, a student may submit documentation 
of test scores directly to the financial aid office.
    Discussion: Section 420N(a)(2)(A)(ii)(II) of the HEA requires an 
institution to determine whether the student displayed high academic 
aptitude by scoring above the 75th percentile of scores on at least one 
of the batteries from a nationally-normed standardized admissions test 
and does not restrict the use of admission test scores by undergraduate 
or graduate educational level. Because the test scores are intended to 
be a measure of high academic aptitude without being associated with a 
particular educational level, the Department does not believe that 
restricting qualification for a TEACH Grant by test score by 
educational level is appropriate. If the student did not achieve a 
qualifying test score, an otherwise eligible student may qualify based 
on the applicable GPA requirements.
    The student's qualifying test score does not need to be used by the 
institution as an admissions test at that school. In addition, a 
student may qualify based on a score on an admissions test that doubles 
as a placement test at the institution. While a home-schooled student 
may qualify by scoring above the 75th percentile on a standardized 
admissions test, he or she may also qualify based on his or her high 
school GPA as documented by the student's parent or other cognizant 
authority. Any student who does not qualify by test score or GPA is not 
eligible for a TEACH Grant.
    All nationally-normed tests are not eligible to qualify a student--
only nationally-normed admission tests qualify. An admissions test is 
considered to be nationally-normed if the norming sample is nationally-
representative, that is, individual student test performance can be

[[Page 35480]]

compared to a nationally-drawn peer sample. For documentation purposes, 
a student may submit qualifying test scores directly to the financial 
aid office in lieu of having the testing entity send the test scores to 
the institution. However, if the institution has reason to believe that 
the test scores submitted directly by the student are incomplete or 
inaccurate, the institution must request test scores from the testing 
entity.
    Changes: None.
    Comment: Three commenters expressed concern about the GPA 
requirement to receive a TEACH Grant. One believed that the required 
3.25 GPA is too high. Another commenter suggested that students who 
qualified for a TEACH Grant by meeting the admission test option should 
still have to meet the 3.25 cumulative GPA, or numeric equivalent, 
through the most recently completed payment period that is required of 
students who did not qualify under the admission test option. Another 
commenter recommended that GPA be checked once per year, not once each 
term.
    Discussion: Under section 420N(a)(2)(A)(ii)(I) of the HEA, 
achieving a 3.25 GPA on a 4.0 scale allows an otherwise eligible 
student who did not qualify via an undergraduate, postbaccalaureate, or 
graduate school admissions test score to qualify for a TEACH Grant. The 
statute does not require students who qualified using the admission 
test score option to maintain a 3.25 GPA in the eligible program, but 
does require that a student who qualified using the 3.25 cumulative GPA 
option to continue to maintain a GPA of at least 3.25 on a 4.0 scale. 
To document that such a student continues to meet the 3.25 GPA 
eligibility requirement, Sec.  686.11(a)(1)(v) stipulates that the 
institution must check the student's GPA for the most recently 
completed payment period by the institution prior to disbursement.
    Changes: None.
    Comment: One commenter was concerned that the academic requirements 
to receive a TEACH Grant--qualifying test scores or GPA--would impose 
an additional burden on financial aid officers.
    Discussion: Section 420N(a)(2)(A)(ii)(I) and (II) of the HEA 
established the qualifying admission test scores and GPA requirements 
for receiving a TEACH Grant that were reflected in the proposed 
regulations. Institutions are required to implement these requirements. 
The regulations do not specifically stipulate, however, that financial 
aid officers make the academic determinations. Rather, institutions 
should follow their own institutional policies and procedures to ensure 
that these student eligibility requirements are properly administered.
    Changes: None.
    Comment: One commenter requested clarification on the methods by 
which a former teacher may qualify for a TEACH Grant.
    Discussion: Under Sec.  686.11(b), a former teacher is eligible for 
a TEACH Grant for a master's degree program or an alternative 
certification program as part of a master's degree program. In 
addition, a former teacher can qualify under Sec.  686.11(a) for an 
eligible undergraduate, post-baccalaureate, or graduate degree program 
if he or she meets the academic requirements.
    Changes: None.

Agreement To Serve (Sec.  686.12)

    Comment: Many commenters were concerned that the basic elements of 
the ATS would be difficult for most TEACH Grant recipients to satisfy, 
thereby increasing the probability that the majority of TEACH Grants 
would convert to Federal Direct Unsubsidized Loans. The commenters 
stated that it was not appropriate to expect students, especially lower 
classmen who either have not or cannot declare a major, to make a four-
year commitment to serve in a low-income school as a highly-qualified 
full-time teacher in a high-need field at such a young age. The 
commenters cited the frequency with which students change majors or 
career goals upon exposure to coursework or, even later, after exposure 
to teaching experience. One commenter suggested that the Department 
include, in the ATS, the fact that the Congressional Budget Office has 
projected that 80 percent of TEACH Grants will convert to Federal 
Direct Unsubsidized Loans.
    Discussion: The teaching service requirements contained in the ATS 
and described in Sec.  686.12(b) are mandated by section 420N(b) and 
(c) of the HEA. In order to receive a TEACH Grant, the HEA requires 
that each TEACH Grant recipient agree to 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 a TEACH Grant was received in 
a low-income school as a highly-qualified teacher in a high-need field. 
The HEA further requires that a grant recipient document each year of 
his or her teaching service in the form of a certification by the chief 
administrative officer of the school in which the recipient is 
teaching. Lastly, the HEA provides that if the recipient fails or 
refuses to carry out the service obligation, any TEACH Grants received 
are treated as a Federal Direct Unsubsidized Loan with interest 
accruing from the date that each TEACH Grant was disbursed. While we 
understand the commenters' concerns, the Secretary does not have the 
authority to change statutory requirements. We note, however, that the 
ATS that a TEACH Grant recipient must sign each year before receiving a 
TEACH Grant contains all of the terms and conditions a recipient must 
meet in order to prevent the grant from converting to a Federal Direct 
Unsubsidized Loan. Finally, the Secretary does not see the merit of 
including Congressional Budget Office projections in the ATS.
    Changes: None.
    Comment: Many commenters expressed concern that the regulations in 
Sec.  686.12(b)(1) do not provide for partial fulfillment of a TEACH 
Grant recipient's ATS based on completion of less than four years of 
creditable teaching service. The commenters believed that requiring a 
teacher who fails to meet any part of the teaching service obligation 
to repay the entire amount of the grant award as a Federal Direct 
Unsubsidized Loan was unfair and punitive. The commenters strongly 
recommended that we allow TEACH Grant recipients to partially fulfill 
their ATS based on the number of years taught. For example, if a grant 
recipient received $16,000 in TEACH Grants and completed two years of 
creditable teaching service in accordance with his or her ATS, the 
grant recipient would owe $8,000 in TEACH Grants that would convert to 
Federal Direct Unsubsidized Loans.
    Other commenters did not believe that a student who receives TEACH 
Grants for only one award year while completing coursework necessary to 
begin a career in teaching should be required to perform four years of 
creditable teaching service in order to keep the TEACH Grants from 
converting to Federal Direct Unsubsidized Loans. The commenters 
believed that the teaching service obligation should be directly 
proportional to the number of years of TEACH Grant support received by 
a student. For example, if a student receives TEACH Grants for two 
award years, the teaching service obligation associated with the 
receipt of grant funds would also be two years.
    Discussion: Section 420N(b)(1) of the HEA states 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 the applicant received a TEACH Grant. The Secretary 
does not have the

[[Page 35481]]

authority to change statutory requirements to allow for partial 
fulfillment of an ATS based on a teaching service obligation that is 
directly proportional to the number of years of TEACH Grant support 
received by a student.
    Changes: None.
    Comment: One commenter stated that requiring a TEACH Grant 
recipient to perform creditable teaching service in a low-income 
elementary or secondary school is a disservice to such schools because 
inexperienced teachers trying to satisfy their ATS would be teaching in 
an environment where more experienced teachers are needed.
    One commenter recommended that the final regulations provide relief 
to a TEACH Grant recipient who is unable to fulfill his or her ATS 
because there are no low-income elementary or secondary schools within 
a reasonable distance of the grant recipient's residence or because the 
grant recipient has not been hired by a low-income school.
    Finally, one commenter asked whether all of the elementary or 
secondary schools at which a grant recipient teaches must be considered 
low-income to satisfy the ATS if the grant recipient's full-time status 
as a teacher is achieved by employment at more than one school.
    Discussion: There is a shortage of teachers in elementary and 
secondary low-income schools that experienced teachers have not filled. 
The TEACH Grant program was established to address this need, among 
others, by providing incentives in the form of grants of up to $4,000 
per year to students who make a commitment to teach in a public or 
private non-profit elementary or secondary low-income school.
    We believe that providing relief to a TEACH Grant recipient who 
does not live within a reasonable distance of a low-income school or 
who is not hired by a low-income school would be contrary to the intent 
of the TEACH Grant program. We believe that under the regulations, 
TEACH Grant recipients will receive enough information to make an 
informed choice regarding their ability to meet the requirements of the 
ATS, including the requirement to teach in a low-income school. Section 
686.32 requires that a TEACH Grant recipient receive extensive 
counseling before grant funds are disbursed each year that emphasizes 
that by receiving TEACH Grant funds, a student is committing to a 
teaching service obligation. Both initial and exit counseling 
requirements in Sec.  686.32(a)(3)(ii) and (c)(4)(iii), respectively, 
require a school to provide grant recipients with information on how to 
access the Directory of Low-Income Schools so that TEACH Grant 
recipients can familiarize themselves with the name and location of 
every designated low-income school in the United States. Moreover, 
section 420N(b)(1)(A) of the HEA allows a TEACH Grant recipient eight 
years to satisfy his or her teaching service obligation of four years. 
This eight-year timeframe builds in four years for TEACH Grant 
recipients who do not begin their teaching service immediately and 
provides them with ample time to locate and apply to teach in a low-
income elementary or secondary school.
    Finally, all of the elementary or secondary schools at which a 
grant recipient teaches must be designated as low-income to satisfy the 
ATS if the grant recipient's full-time status as a teacher is achieved 
by employment at more than one school. This policy is consistent with 
the policy applied to borrowers in the Title IV, HEA loan programs with 
regard to teacher loan forgiveness.

    Changes: None.
    Comment: One commenter suggested that the Secretary include the 
definition of ``highly-qualified teacher,'' or a link to a Web site 
that contains the definition, in the ATS developed by the Department in 
accordance with Sec.  686.12 so that TEACH Grant recipients know what 
requirements they must meet to be considered a highly-qualified teacher 
and to satisfy their teaching service obligation.
    Discussion: The Secretary agrees with the commenter that it is 
important for TEACH Grant recipients to have access to the definition 
of ``highly-qualified teacher.'' We will ensure that the initial 
version of the ATS includes the appropriate statutory cites so that a 
TEACH Grant recipient can research the definition of highly-qualified 
teacher. We will consider other options for providing this information 
when the Agreement is revised in the future.

    Changes: None.
    Comment: One commenter supported the provisions of Sec.  
686.12(c)(1) that allow creditable teaching service to apply to more 
than one ATS.
    One commenter believed that Sec.  686.12(c)(1) should allow a 
student to incur only one ATS, instead of one ATS for each program of 
study for which a student received TEACH Grants, if a student must 
complete both a baccalaureate and a post-baccalaureate degree in order 
to begin a career in teaching.
    Another commenter requested that we clarify whether a teacher who 
received Stafford Loans as an undergraduate and who successfully 
completed five years of teaching service to obtain loan forgiveness on 
those loans could use the same teaching service to immediately satisfy 
an ATS associated with the receipt of TEACH Grants for a subsequent 
master's degree.
    Discussion: The Secretary agrees that, under certain circumstances, 
it is appropriate to apply creditable teaching service to more than one 
ATS and appreciates the commenter's support for this provision. 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 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 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.
    The requirement in Sec.  686.12(c)(1) that a TEACH Grant recipient 
must complete an ATS for each program of study for which the recipient 
received a TEACH Grant is based on section 420N(b)(1)(A) of the HEA. 
The Secretary does not have the authority to change a statutory 
requirement.
    Lastly, a TEACH Grant recipient can use only prospective, 
creditable teaching service performed after the student completed or 
ceased to be enrolled in the program for which the TEACH Grant was 
received to satisfy the requirements of the ATS, not teaching service 
performed before or during the time the student received a TEACH Grant.
    Changes: None.
    Comment: One commenter believed that Sec.  686.12(b)(2), which 
requires a TEACH Grant recipient to annually

[[Page 35482]]

submit documentation of creditable teaching service in the form of a 
certification by a chief administrative officer of the school, should 
provide protection to TEACH Grant recipients who fail to provide such 
documentation in a timely manner.
    Discussion: A TEACH Grant recipient must annually submit 
documentation of his or her teaching service or intent to teach within 
a timeframe necessary to keep the TEACH Grants from converting to 
Federal Direct Unsubsidized Loans in accordance with the provisions of 
Sec. Sec.  686.40 and 686.43. The Secretary believes that these 
timeframes are reasonable for grant recipients to meet and protect the 
Federal fiscal interest by allowing for the conversion of TEACH Grants 
to loans when the Secretary cannot verify or document a grant 
recipient's intent to satisfy the ATS.
    Changes: None.
    Comment: Several commenters recommended that the Secretary amend 
Sec.  686.12(d) to allow a TEACH Grant recipient who completes a TEACH 
Grant-eligible program in a field that is listed in the Nationwide List 
to satisfy the requirement to teach in a high-need field if the high-
need field in which he or she prepared to teach is no longer listed in 
the Nationwide List for the State in which the grant recipient begins 
teaching. The commenters believed that a TEACH Grant recipient, who in 
good faith undertakes the coursework necessary to teach in a designated 
high-need field, should not be punished for circumstances that are 
beyond his or her control.
    Discussion: The HEA specifically states in section 420N(b)(1)(C) 
that a TEACH Grant recipient must ``teach'' in a high-need field in 
accordance with their ATS. We do not have the authority to allow a 
TEACH Grant recipient who completes a TEACH Grant-eligible program in a 
field that is listed in the Nationwide List to satisfy the requirement 
to teach in a high-need field if the high-need field in which he or she 
prepared to teach is no longer considered a high-need field in the 
recipient's state and is no longer included in the Nationwide List for 
the State in which the grant recipient begins teaching. If the high-
need field in which a TEACH Grant recipient prepared to teach is 
included in the Nationwide List for a State other than the State in 
which the grant recipient planned to teach, the grant recipient may 
apply to teach in that State in order to fulfill his or her ATS.
    Changes: None.
    Comment: Several commenters were concerned that TEACH Grant 
recipients who intend to become elementary school teachers may not be 
able to meet their teaching service obligation because, as elementary 
school teachers, they may not be able to teach the majority of their 
classes in high-need fields as required by Sec.  686.40(c)(1). The 
commenters suggested that Sec.  686.12 specifically state how 
elementary school teachers can demonstrate that they are teaching in 
high-need fields.
    Another commenter suggested that, because the purpose of the TEACH 
Grant program is to provide an incentive to get highly-qualified 
teachers into low-income schools, it would be consistent with this 
purpose for the Secretary to define all classroom teaching in 
elementary schools that includes math, science, and other defined high-
need fields as qualifying teaching service in a high-need field.
    One commenter suggested that the ATS include information alerting 
TEACH Grant recipients who intend to become elementary school teachers 
that they may not be able to meet their teaching service obligation to 
teach the majority of their classes in high-need fields so that 
students in a TEACH Grant eligible program can make a more informed 
decision regarding receipt of a grant.
    Discussion: Section 420N(b)(1)(C) of the HEA requires that a TEACH 
Grant recipient enter into an agreement in which he or she commits to 
teach in mathematics, science, a foreign language, bilingual education, 
special education, as a reading specialist, or in any other high-need 
field documented by the Federal government or a State or local 
government and approved by the Secretary in exchange for the grant. In 
recognition of the fact that TEACH Grant recipients who intend to 
become elementary school teachers may not be able to meet the 
requirement to teach in a high-need field because of the nature of 
elementary school curriculum, Sec. Sec.  686.12(b)(1)(iii) and 
686.40(c)(1)(i) and (ii) permit a teacher to fulfill the requirement to 
teach in a high-need field if the majority of classes taught are in a 
high-need field. We believe that these provisions sufficiently address 
how an elementary school teacher can meet the requirements of his or 
her ATS.
    Because the statute requires a TEACH Grant recipient to teach in a 
high-need field, we do not believe that we have the authority to 
interpret this provision to consider all classroom teaching in 
elementary schools that includes math, science, and other defined high-
need fields as qualifying teaching service in a high-need field.
    We also do not believe that it is appropriate to include a warning 
in the ATS that TEACH Grant recipients who intend to become elementary 
school teachers may not be able to meet their teaching service 
obligation unless they teach the majority of their classes in high-need 
fields. Instead, we will make it clear in the ATS that a teacher may 
fulfill the requirement to teach in a high-need field if the majority 
of classes taught are in a high-need field.
    It is important to note in this discussion that an elementary 
school teacher can also satisfy the requirement to teach in a high-need 
field if the State in which he or she teaches designates ``elementary 
school teachers'' as a high-need field. In this case, the designation 
alone satisfies the requirement to teach in a high-need field, 
regardless of whether the majority of the classes taught by the grant 
recipient were taught in a high-need field. An elementary school 
teacher can also satisfy the requirement to teach in a high-need field 
if he or she is a full-time teacher in mathematics, science, a foreign 
language, bilingual education, or special education or is a reading 
specialist.
    Changes: None.

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

    Comment: One commenter asked how an institution would have an 
official EFC computed by the Central Processing System (CPS) and an 
accurate EFC without having a valid SAR or valid ISIR. The commenter 
also questioned whether the intent of the proposed regulations was to 
provide for an institutional or third-party need analysis.
    Discussion: As with the other Title IV, HEA programs, the EFC must 
be calculated using the Federal methodology need analysis provided in 
Title IV, Part F of the HEA (Federal Methodology). An institution may 
receive an official EFC computed by CPS that is not based on accurate 
information. 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 if the EFC is not computed by CPS. In 
lieu of a CPS-calculated EFC based on information from a valid SAR or 
valid ISIR, an institution may hand-calculate a Federal Methodology EFC 
based on accurate information, or the institution may use a vendor's 
product to calculate a Federal EFC. An institution may not use the EFC 
of a need analysis methodology other than the Federal Methodology.
    Changes: None.

[[Page 35483]]

Calculation of a Grant and Calculation of a Grant for a Payment Period 
(Sec. Sec.  686.21 and 686.22)

    Comment: One commenter was concerned with the relationship between 
payments for payment periods and a student's TEACH Grant Scheduled 
Awards. The commenter cited the example of a program that operates on a 
quarter schedule with three quarters in the fall through spring and a 
summer quarter, each with 11 weeks of instructional time, and the 
summer quarter is treated as part of the prior award year. In this 
example, the institution has defined its academic year as being 44 
weeks of instructional time and 48 quarter hours and uses the payment 
methodology described in Sec.  686.22(b), commonly referred to as 
Formula 1. A student attends three quarters starting in the fall 
quarter, full-time for the first quarter and half-time for the winter 
and spring quarters, and receives TEACH Grant disbursements of $1,000, 
$500, and $500 for each of the respective terms from an initial 
Scheduled Award. The commenter questioned whether the payment for full-
time attendance in the following summer term would be $1,000 or the 
$2,000 balance of the Scheduled Award and, if the amount was $1,000, 
what would be the disposition of the remaining $1,000 of the student's 
Scheduled Award and future Scheduled Awards.
    Discussion: In a manner similar to the Academic Competitiveness 
Grant (ACG) and National SMART Grant programs, and unlike the Federal 
Pell Grant program, a TEACH Grant Scheduled Award is not limited to an 
award year and remains available to a student until that Scheduled 
Award is completely disbursed. Payments of a Scheduled Award are 
calculated by payment period as provided in Sec. Sec.  686.22 and 
686.25.
    In the commenter's example, the student would receive a $1,000 
disbursement in the summer term, the payment for the payment period as 
calculated under Sec.  686.22(b). The remaining balance of $1,000 from 
the Scheduled Award remains available for the next payment period in 
which the student enrolls. As an example, assume a student is otherwise 
TEACH Grant-eligible and enrolls in the subsequent fall and winter 
quarters as a half-time student and then in the spring quarter as a 
full-time student. The student would receive $500 payments for the fall 
and winter quarters from the initial Scheduled Award partially 
disbursed in the prior award year and would complete the use of that 
Scheduled Award. In the subsequent spring quarter, the student would 
receive an initial $1,000 disbursement from the student's next 
Scheduled Award.
    Changes: None.
    Comment: One commenter asked for clarification of the relationship 
between the payment methodologies to calculate a grant under Sec. Sec.  
686.22 and 686.25 and the requirement that the grant, in combination 
with Federal and other student financial assistance that a student may 
receive, may not exceed the Title IV, HEA program cost of attendance 
(COA). The commenter also questioned the relationship between annual 
awards that take into account part-time attendance and full-time COA 
and part-time COA in determining the amount of a student's TEACH Grant. 
The commenter suggested that it would be simpler to follow the model of 
determining payments under the campus-based programs (i.e. , Federal 
Perkins Loan Program and Federal Supplemental Educational Opportunity 
Grant Program).
    Discussion: An institution is required to calculate a TEACH Grant 
payment for each payment period. However, if the student's TEACH Grant 
in combination with other aid for the enrollment period covered by the 
aid, e.g. , a one-term period of enrollment, exceeds the student's COA 
for the enrollment period, the payment of the TEACH Grant must be 
reduced. This same principle would hold true in the treatment of a 
part-time COA in combination with a part-time TEACH Grant payment for a 
period of enrollment covered by the aid and COA.
    Section 401M(c)(1) of the HEA requires that a student's TEACH Grant 
payments must be reduced if the student is not attending full-time. The 
amount of the grant is reduced in proportion to the degree to which the 
student is not attending on a full-time basis. Similar adjustments must 
be made in the Federal Pell Grant, ACG, and National SMART Grant 
programs. There is no comparable adjustment required under the HEA for 
the campus-based programs. These regulations, therefore, use the same 
methodologies for calculating a payment for a payment period as do the 
Federal Pell Grant, ACG, and National SMART Grant programs.
    Changes: None.
    Comment: One commenter sought confirmation that it is the 
institution's option to use the grant as a replacement for EFC.
    Discussion: Under Sec.  686.21(d), an institution is not required 
to replace a student's EFC with a TEACH Grant. If an institution does 
replace a student's EFC with a TEACH Grant, the amount of the grant 
that exceeds the student's EFC is considered estimated financial 
assistance under 34 CFR 673.5(c).
    Changes: None.

Determination of Eligibility for Payment (Sec.  686.31)

    Comment: Several commenters expressed concern about the requirement 
in Sec.  686.31(a)(2) that for each payment period, an institution may 
pay a TEACH Grant to an eligible student only after determining that 
the student has completed the relevant counseling. The commenters 
interpreted this provision to require recipients to receive counseling 
prior to each grant disbursement, which they believe to be excessive.
    Discussion: We intended Sec.  686.31(a)(2) to require institutions 
to ensure that initial counseling is conducted prior to making the 
first disbursement of the student's first TEACH Grant and subsequent 
counseling is conducted prior to making the first disbursement of any 
subsequent TEACH Grant. Because these counseling requirements are 
triggered only by the first disbursement of a TEACH Grant, they are 
only required annually. For clarity, we have amended Sec.  686.31(a)(2) 
to reflect the annual nature of the counseling.
    Changes: Section 686.31(a)(2) is amended by adding the words 
``initial or subsequent'' before ``counseling''.

Counseling Requirements (Sec.  686.32)

    Comment: We received several comments suggesting that the TEACH 
Grant counseling requirements reflected in Sec.  686.32 will place an 
additional burden on financial aid offices. Some commenters requested 
that the Department develop counseling materials for institutions to 
use or develop and make available to students applying for a TEACH 
Grant an online, interactive counseling program. One commenter 
requested that the Department make an online counseling program a 
priority so that it could be available for the 2008-2009 award year. A 
few commenters suggested that required counseling could be 
electronically connected to the ATS, which the student will complete 
online. Another commenter noted that many students already resist 
current financial aid counseling that is offered and, for that reason, 
they do not believe that students will embrace the additional TEACH 
Grant counseling requirements. One commenter supported comprehensive 
counseling while another commenter asked the Department to eliminate 
the subsequent

[[Page 35484]]

counseling requirements in Sec.  686.32(b) altogether.
    One commenter asked the Department to add a requirement that 
students have documentation, either from the Department or from a 
college financial aid office, showing that they completed the required 
counseling before an institution can disburse the TEACH Grant. Another 
commenter asked the Department to clarify what the timeframe is in 
which counseling must be provided to students. Finally, one commenter 
noted that there are slight differences between the TEACH Grant 
counseling requirements and the Stafford Loan counseling requirements 
and asked the Department to clarify whether or not these differences 
are intentional.
    Discussion: We appreciate the administrative burden associated with 
the counseling requirements, but we strongly believe that extensive 
counseling is necessary given the complex nature of the TEACH Grant 
program and, in particular, the potential for a grant under this 
program to convert to a Federal Direct Unsubsidized Loan. As mentioned 
in the preamble to the NPRM, the Department and the non-Federal 
negotiators who participated in the negotiated rulemaking sessions for 
the TEACH Grant program agreed that students should be given as much 
information as possible about the TEACH Grant program and its 
requirements. The Department believes that providing initial counseling 
for students is necessary so that each TEACH Grant recipient 
understands the rights and responsibilities that are attached to a 
grant award. Subsequent counseling sessions remind students of those 
rights and responsibilities. Exit counseling reminds students about 
their service obligation and gives them information similar to that 
given to loan recipients when they leave school. Students who do not 
complete the initial or subsequent counseling requirements, whichever 
is appropriate, will not be eligible to receive a TEACH Grant. Thus, 
students who are interested in receiving a TEACH Grant will have to 
complete the annual counseling requirement regardless of whether or not 
they agree with the requirement.
    The Department intends to provide online, interactive counseling 
that will be connected to the ATS. Once this online counseling is in 
place, students will be required to complete it before they can access 
and sign the ATS. Because students who do not complete an ATS are not 
eligible to receive a TEACH Grant, this ensures that all recipients 
will have completed the counseling. Unfortunately, the Department will 
not be able to provide online counseling during the 2008-2009 award 
year, but we are hopeful that on-line counseling will be available 
beginning with the 2009-2010 award year.
    Under Sec.  686.32, an institution is required to ensure that 
initial, subsequent, and exit counseling is provided, as appropriate, 
to each TEACH Grant recipient. Institutions, therefore, will be 
required to provide counseling until the Department makes an online 
TEACH Grant counseling program available. At that time, to fulfill the 
requirements of Sec.  686.32, institutions will be responsible not for 
providing the counseling, but instead for ensuring that the necessary 
counseling has been provided (i.e., obtaining documentation evidencing 
that the student received appropriate counseling).
    To provide institutions as much flexibility as possible, the 
Department has decided not to require institutions to collect a 
specific form from students to show that they have completed the 
required counseling. However, institutions can require their students 
to submit a specific form, if they choose. Once the Department begins 
to offer online counseling with the ATS, students will be able to print 
off a copy of the ATS, which could serve as proof that they have 
completed the online counseling (they will be unable to access and sign 
the ATS without first completing the online counseling session). If it 
chooses, an institution can request that each student provide a copy of 
his or her completed ATS for that student's file. Also, nothing in the 
regulations prohibits institutions from requiring students to receive 
additional in-person counseling, prior to receiving a TEACH Grant.
    The regulations indicate that an institution must ensure that a 
student receives either initial or subsequent counseling, whichever is 
appropriate, prior to the first disbursement of the grant award. While 
the Department would prefer that institutions provide initial and 
subsequent counseling to students before the students sign an ATS, we 
realize that this could be difficult and so the Department did not 
specify in the regulations the specific timeframe in which counseling 
must take place. We believe that this gives institutions flexibility 
and will allow them to provide counseling at a time that best suits 
their needs and the needs of their students so long as students receive 
counseling before the first disbursement of the TEACH Grant.
    The Department used the current counseling requirements for the 
William D. Ford Federal Direct Loan Program as an example when 
formulating the TEACH Grant counseling requirements. However, the 
requirements for the Direct Loan Program and the TEACH Grant program do 
differ slightly. These differences are intentional. For example, the 
initial counseling requirements for the Direct Loan Program state that 
the initial counseling must explain the use of a Master Promissory Note 
(MPN) whereas, because the TEACH Grant program does not use a MPN, this 
requirement is not included in the TEACH Grant counseling requirements. 
Also, the exit counseling section of the Direct Loan regulations states 
that the exit counseling must inform the student borrower of the 
average anticipated monthly payment amount based on the student's 
overall indebtedness or on the average indebtedness of Direct 
Subsidized Loan and Federal Direct Unsubsidized Loan borrowers at the 
same school or in the same program of study. In the TEACH Grant 
regulations the Department requires that exit counseling inform the 
student of the average anticipated monthly amount based only on the 
student's TEACH Grant indebtedness, which could be in addition to any 
other loan indebtedness that the student may incur. This is due to the 
fact that institutions will not have an average indebtedness of TEACH 
Grant recipients. Most TEACH Grants that convert to a loan will not do 
so until several years after a TEACH Grant recipient has left the 
institution.
    Changes: None.

Recalculation of TEACH Grant Award Amounts (Sec.  686.35)

    Comment: One commenter suggested that we change the title of this 
section to ``Recalculation of eligibility for TEACH Grant award'' to be 
consistent with a similar section of the Pell Grant Program 
regulations.
    Discussion: The Secretary agrees that the heading for this section 
should reflect better the substance of the section. Under this section, 
an institution can recalculate the amount of a TEACH Grant award in 
response to changes in the student's enrollment status and changes in 
the student's cost of attendance.
    Changes: The section heading of Sec.  686.35 is changed to 
``Recalculation of TEACH Grant award amounts.''

Documenting the Service Obligation (Sec.  686.40) and Periods of 
Suspension (Sec.  686.41)

    Comment: None.
    Discussion: After negotiated rulemaking was completed, the 
Department learned that two new

[[Page 35485]]

military family leave provisions were added to the Family and Medical 
Leave Act (FMLA) by the National Defense Authorization Act Fiscal Year 
2008 (Pub. L. 110-181) and that the Department of Labor was in the 
process of receiving public comment on an NPRM for the FMLA 
implementing regulations, which included a description of the new 
military family leave provisions, a discussion of the issues, and a 
series of questions seeking public comment on subjects and issues to be 
addressed in final regulations. The Secretary committed in the TEACH 
Grant NPRM to consult with the Department of Labor when developing 
TEACH Grant final regulations so that the provisions in Sec. Sec.  
686.40(e)(1) and 686.41(a)(1) would accurately reflect qualifying 
reasons for leave under the FMLA, including qualifying leave reasons 
under the new military family leave provisions. At the time of 
publication of the final TEACH Grant program regulations, the 
Department of Labor was still reviewing the comments received on the 
FMLA NPRM and had not published revised final regulations.
    Additionally, it was brought to our attention that references to 
``conditions covered under the FMLA'' could imply that the coverage, 
eligibility, notification, certification and other provisions of the 
FMLA might need to be met in order for the condition to be one which 
merited extension of the pay back time. It is not our intention that 
other qualifying criteria for employees to take leave under the FMLA 
apply, or even that leave be taken as a result of such condition. The 
criteria will be met if a TEACH Grant recipient is unable to meet 
obligations of the grant due to a condition that would be a qualifying 
reason for leave under the FMLA. Moreover, because the FMLA may change, 
as it did in 2008, by Congressional action in the future, we believe 
that it is appropriate for the TEACH Grant regulations to reference the 
applicable provisions of the FMLA, rather than to repeat those 
provisions in the text of the TEACH Grant program regulations. We 
believe that these references will be a more accurate source of 
information for TEACH Grant recipients who are seeking a suspension 
from the Secretary of the eight-year period for completion of the 
service obligation when complying with Sec. Sec.  686.40 and 686.41 of 
the TEACH Grant regulations based on a condition that would be 
considered a qualifying reason for leave under the FMLA.
    Changes: We have amended Sec. Sec.  686.40 and 686.41 by removing 
the ``list of conditions covered'' by the FMLA and adding, in its 
place, a reference to qualifying reasons for leave under the FMLA (29 
U.S.C. 2612(a)(1) and (3)).

Periods of Suspension (Sec.  686.41)

    Comment: Several commenters supported the addition of suspension 
periods to the TEACH Grant program as a measure of protection for grant 
recipients who, for reasons beyond their control, need an extension of 
the eight-year period for completion of the teaching service 
obligation.
    Discussion: The Secretary appreciates the commenters' support.
    Changes: None.
    Comment: Several commenters suggested that Sec.  686.41(b) be 
amended to allow TEACH Grant recipients to request a suspension within 
a 12-month period--rather than a 6-month period--after the date that 
they either stop teaching or complete or otherwise cease enrollment in 
a TEACH Grant-eligible program.
    Another commenter noted that under current Sec.  686.41(b), a TEACH 
Grant recipient must request a suspension within six months of ceasing 
enrollment in a TEACH Grant-eligible program and that this period of 
time conflicts with the trigger for conversion of a TEACH Grant to a 
Federal Direct Unsubsidized Loan in Sec.  686.43(a)(2) because, under 
that provision, conversion occurs within 120 days of ceasing enrollment 
in the TEACH Grant-eligible program if the grant recipient fails to 
notify the Secretary that he or she is teaching or still intends to 
teach full-time in accordance with the ATS. The commenters suggested 
that the Secretary synchronize the timeframes for requesting a 
suspension and the timeframes under which a TEACH Grant could convert 
to a Federal Direct Unsubsidized Loan so that a grant is not converted 
to a loan before the TEACH Grant recipient has an opportunity to 
request a suspension.
    Discussion: We agree that the deadline by which a TEACH Grant 
recipient must request a suspension and the time that a TEACH Grant may 
convert to a Federal Direct Unsubsidized Loan should not conflict. 
However, we do not believe that amending the regulations to require 
TEACH Grant recipients to request a suspension within 12 months of 
completing or ceasing enrollment in a TEACH Grant-eligible program or 
stopping teaching service is appropriate because such a change would 
not resolve the conflicts between Sec.  686.41(b), which gives a 
student 12 months to request a suspension, and Sec.  686.43(a)(2), 
under which a TEACH Grant could convert to a Federal Direct 
Unsubsidized Loan 120 days after the recipient completes a TEACH Grant-
eligible program if the student does not notify the Secretary.
    To address the potential conflict, we amended Sec.  686.41(b) in 
two ways: (1) By removing the requirement that a TEACH Grant recipient 
make a request for a suspension within six months of completing or 
otherwise ceasing enrollment or after he or she stops teaching; and (2) 
by adding, in its place, a requirement that a TEACH Grant recipient 
request a suspension prior to being subject to any of the conditions 
under Sec.  686.43(a)(1) through (a)(5) that would cause the TEACH 
Grant to convert to a Federal Direct Unsubsidized Loan. With these 
changes, a suspension request would have to be made by the TEACH Grant 
recipient within 120 days of ceasing enrollment in a TEACH Grant-
eligible program if the grant recipient has failed to confirm with the 
Secretary, within the 120-day period, that he or she is or intends to 
be employed full-time in accordance with the terms and conditions of 
the student's ATS. If the recipient notifies the Secretary in 
accordance with Sec.  686.40(a), he or she still may request a 
suspension, but must do so before any of the conditions identified in 
Sec.  686.43(a)(1), (a)(3), (a)(4), and (a)(5) occur.
    Changes: We amended Sec.  686.41(b) to require that a grant 
recipient must apply for a suspension prior to being subject to any 
conditions in Sec.  686.43(a)(1) through (a)(5) that would convert the 
TEACH Grant to a Federal Direct Unsubsidized Loan.
    Comment: One commenter asked if it would be appropriate to add the 
phrase ``as a highly-qualified teacher'' to the end of Sec.  
686.41(a)(1)(i). The commenter believed this additional language would 
assist a TEACH Grant recipient by broadening the circumstances under 
which a suspension can be requested to include enrollment in programs 
that confer the status of ``highly qualified.''
    Discussion: We do not believe it is necessary to add the phrase 
``as a highly-qualified teacher'' to the end of Sec.  686.41(a)(1)(i). 
If a student is seeking a suspension to enroll 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, the program's course work must address the State-
determined standards for highly-qualified teachers by definition.
    Changes: None.

Obligation To Repay the Grant (Sec.  686.43)

    Comment: One commenter asked if the counseling requirements in 
Sec.  686.32

[[Page 35486]]

require an institution to determine when a TEACH Grant converts to a 
Federal Direct Unsubsidized Loan and, if so, whether an institution 
would be required to participate in the Federal Direct Loan Program in 
order to participate in the TEACH Grant program.
    Discussion: The Secretary will determine when a TEACH Grant 
converts to a Federal Direct Unsubsidized Loan in accordance with Sec.  
686.43(a). The counseling requirements in Sec.  686.32 in no way 
require an institution that participates in the TEACH Grant program to 
convert a TEACH Grant to a loan. Moreover, nothing in the TEACH Grant 
program regulations requires institutions that participate in the TEACH 
Grant program to participate in the Direct Loan Program. Under Sec.  
686.40(a), it is the responsibility of the TEACH Grant recipient to 
notify the Secretary within 120 days of completing or ceasing 
enrollment in a TEACH Grant-eligible program and annually thereafter 
about his or her plans to satisfy the ATS, to request a suspension, and 
to document creditable teaching service. The Secretary will track a 
TEACH Grant recipient's enrollment status and progress in meeting the 
terms and conditions of the recipient's ATS and will determine if and 
when a TEACH Grant converts to a Federal Direct Unsubsidized Loan based 
on this information.
    Changes: None.
    Comment: Several commenters were concerned that no appeal process 
is available to a TEACH Grant recipient whose TEACH Grant converts to a 
Federal Direct Unsubsidized Loan. The commenters believed that the 
regulations should provide for an appeal process so that a TEACH Grant 
recipient's individual circumstances that caused the recipient to fail 
to satisfy the terms and conditions of his or her ATS could be 
evaluated or so that a conversion of a TEACH Grant to a loan that was 
done in error could be corrected.
    Discussion: We do not believe that an appeals process is necessary 
because a number of protections are already built into the TEACH Grant 
program. First, under the HEA, recipients have eight years to complete 
a four-year service obligation--this builds in four extra years for 
recipients with ``mitigating circumstances'' to satisfy their service 
obligation. Moreover, suspensions of the service obligation 
requirements are available under a number of defined situations a 
recipient could face. For example, Sec.  686.41(a) provides up to three 
years of eligibility for a suspension of the eight-year period in which 
a TEACH Grant recipient has to satisfy the conditions of his or her ATS 
based on enrollment in a TEACH Grant-eligible program or a program of 
study to obtain a State license to teach, or a condition that is a 
qualifying reason for leave under the FMLA. TEACH Grant recipients also 
may request a suspension for an unlimited period of time to meet 
certain military obligations. Finally, if a TEACH Grant is converted to 
a Federal Direct Unsubsidized Loan in error, the grant recipient may 
contact the Department of Education's Student Loan Ombudsman or other 
Department staff to resolve the matter.
    Changes: None.
    Comment: Several commenters recommended that the regulations permit 
a TEACH Grant recipient to cancel the TEACH Grant within a reasonable 
timeframe. The commenters noted that otherwise, a TEACH Grant recipient 
would be required to request conversion of the TEACH Grant to a Federal 
Direct Unsubsidized Loan under Sec.  686.43(a)(1) if the recipient 
decided that he or she does not want the TEACH Grant.
    Discussion: We agree that a TEACH Grant recipient should be able to 
cancel all or part of a TEACH Grant within a reasonable time without 
having to request that the TEACH Grant be converted to a Federal Direct 
Unsubsidized Loan. We have added a new paragraph (e) to Sec.  686.31 
and amended 34 CFR 668.165 to require that an institution provide the 
same notices and cancellation opportunities to TEACH Grant recipients 
that it provides to borrowers in the Title IV, HEA loan programs.
    Changes: We have added a new paragraph (e) to Sec.  686.31 of the 
TEACH Grant program regulations and amended 34 CFR 668.165(a)(2) to 
provide that, before disbursing a TEACH Grant for any award year, an 
institution must notify the student of the amount of TEACH Grant funds 
that the student is eligible to receive, how and when those funds will 
be disbursed, and the student's right to cancel all or a portion of the 
TEACH Grant. Under Sec.  686.31(e)(1)(ii) and 34 CFR 668.165(a)(4), an 
institution must also return the TEACH Grant proceeds, cancel the TEACH 
Grant, or do both, if the institution receives a TEACH Grant 
cancellation request from the student no later than the first day of a 
payment period or 14 days after the date it notifies the student of his 
or her right to cancel all or a portion of a TEACH Grant. Under Sec.  
686.31(e)(2)(i) and 34 CFR 668.165(a)(4)(iii), if a student requests 
cancellation of a TEACH Grant after the first day of a payment period 
or 14 days after the date the institution notifies the student of his 
or her right to cancel, but within 120 days of the TEACH Grant 
disbursement date, the institution may return the TEACH Grant proceeds 
or cancel the TEACH Grant, or both. Finally, under Sec.  
686.31(e)(2)(ii), if the institution does not return the TEACH Grant 
proceeds, or cancel the TEACH Grant, the institution must notify the 
student that he or she may contact the Secretary to request that the 
TEACH Grant be converted to a Federal Direct Unsubsidized Loan.
    Comment: One commenter stated that interest should begin accruing 
on the date that a TEACH Grant is converted to a Federal Direct 
Unsubsidized Loan, not on the date that the TEACH Grant was disbursed.
    Discussion: Section 420N(c) of the HEA provides that interest 
accrues from the date that a TEACH Grant was disbursed. The Secretary 
does not have the authority to change this statutory requirement.
    Changes: None.
    Comment: One commenter asked whether the Department would assess 
origination or insurance fees on a Federal Direct Unsubsidized Loan 
that was originally a TEACH Grant.
    Discussion: The Secretary has no plans to assess origination or 
insurance fees on a Federal Direct Unsubsidized Loan that was 
originally a TEACH Grant.
    Changes: None.
    Comment: One commenter supported Sec.  686.43(b), which exempts 
TEACH Grants that convert to Federal Direct Unsubsidized Loans from 
annual and aggregate loan limits, as an appropriate protection for 
TEACH Grant recipients who, for reasons beyond their control, may be 
unable to satisfy their ATS but still may need Federal student aid. 
Another commenter stated that the regulations exempting TEACH Grants 
that convert to Federal Direct Unsubsidized Loans from annual loan 
limits is unwise because students who have no plans to teach may accept 
TEACH Grants as a means of borrowing more than current annual loan 
limits allow.
    Discussion: There are many reasons why a TEACH Grant recipient may 
be unable to fulfill his or her ATS, thereby triggering conversion of 
TEACH Grants to Federal Direct Unsubsidized Loans. In some cases, TEACH 
Grant recipients whose grants convert to Federal Direct Unsubsidized 
Loans might immediately exceed aggregate loan limits and be declared 
ineligible for further Title IV, HEA aid until the loans are paid down.

[[Page 35487]]

The Secretary believes this approach is overly punitive.
    As discussed earlier in this preamble, although an institution may 
limit the programs it designates as TEACH Grant-eligible, an 
institution can never know with certainty whether a student truly 
intends to fulfill his or her service obligation or whether the student 
applies for and receives a TEACH Grant only to circumvent loan limits 
in the Direct Loan Program. We also believe that the extensive 
counseling and materials provided to TEACH Grant recipients will ensure 
that only those students who intend to teach receive TEACH Grants.
    Changes: None.
    Comment: One commenter recommended that we amend the regulations in 
Sec.  686.43(c) to provide a grace period for a grant recipient whose 
TEACH Grant has been converted to a Federal Direct Unsubsidized Loan. 
The commenter stated that the purpose of a grace period is to allow 
adequate time for a graduate to find employment before beginning 
repayment. The commenter believed that it was unfair to expect a TEACH 
Grant recipient to begin repayment immediately.
    Discussion: The Secretary agrees with the commenter. We have 
reviewed our initial budget assumptions and have determined that there 
is no cost associated with making a change to the final regulations and 
providing a grace period in Sec.  686.43(c) to a grant recipient whose 
TEACH Grant has been converted to a Federal Direct Unsubsidized Loan. 
The provision of a grace period to a TEACH Grant recipient whose grant 
has converted to a loan also mirrors the terms of the Direct Loan 
Program with regard to entering repayment.
    Changes: We have amended Sec.  686.43(c) to provide a grace period 
for a grant recipient whose TEACH Grant has been converted to a Federal 
Direct Unsubsidized Loan.
    Comment: One commenter recommended that Sec.  686.43(c) specify 
that a grant recipient who is in school when his or her TEACH Grant 
converts to a Federal Direct Unsubsidized Loan is eligible for an in-
school deferment so that such students do not have to begin making 
payments immediately upon conversion of the TEACH Grant.
    Discussion: A grant recipient whose TEACH Grant has been converted 
to a Federal Direct Unsubsidized Loan is eligible for most of the 
benefits of the Direct Loan Program. These benefits include an in-
school deferment as long as the borrower is eligible under 34 CFR 
685.204(b)(1). We agree that the regulations should highlight this 
benefit so that TEACH Grant recipients who are in school at the time of 
conversion are aware of it.
    Changes: We have amended Sec.  686.43(c)(2) by adding the words ``, 
including an in-school deferment'' at the end of the paragraph.

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 Office 
of Management and Budget (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

    As discussed in the NPRM, these regulations are needed to implement 
provisions of the HEA, as amended by the CCRAA, that established the 
TEACH Grant program. 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.

Regulatory Alternatives Considered

    A broad range of alternatives to the regulations was considered as 
part of the negotiated rulemaking process. These alternatives were 
reviewed in detail in the preamble to the NPRM under both the 
Regulatory Impact Analysis and the Reasons sections accompanying the 
discussion of each proposed regulatory provision. To the extent they 
were addressed in response to comments received on the NPRM, 
alternatives are also considered elsewhere in the preamble to these 
final regulations under the Discussion sections related to each 
provision. No comments were received related to the Regulatory Impact 
Analysis discussion of these alternatives.

Net Budget Impacts

    As noted in the NPRM, 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

[[Page 35488]]

100 percent forgiveness of outstanding principal and interest upon 
completion of a student's service obligation. 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. Details on how these estimates were developed are provided 
in the Regulatory Impact Analysis section of the NPRM.
    The administrative burden associated with Sec. Sec.  686.4, 686.11, 
686.32, and 686.34 of the TEACH Grant final regulation package has been 
estimated in accordance with the Paperwork Reduction Act of 1995 and 
Bureau of Labor Statistics wage information. The total increase in PRA 
burden associated with the regulations is estimated to be $2.6 million. 
This amount is comprised of $1.6 million in determining eligibility to 
receive a grant, $997,245 in complying with counseling requirements, 
$1,589 in determining institutional eligibility, and $16,775 in 
covering liability for and recovery of overpayments.

Assumptions, Limitations, and Data Sources

    Because these regulations 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 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. No comments or 
additional data were received related to the estimates or discussions 
included in the NPRM.
    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 regulations. This 
table provides our best estimate of the changes in Federal student aid 
payments as a result of these 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.
------------------------------------------------------------------------

Waiver of Delayed Effective Date and Congressional Review Act

    The Administrative Procedure Act requires that a substantive rule 
be published at least 30 days before its effective date, except as 
otherwise provided for good cause (5 U.S.C. 553(d)(3)). The Secretary 
has determined that a delayed effective date for these final 
regulations is unnecessary and contrary to the public interest, and 
that good cause exists to waive the requirement for a delayed effective 
date. Pursuant to section 420O of the HEA, Congress directed the 
Secretary to make TEACH Grants available as of July 1, 2008. To fulfill 
the intent of Congress that TEACH Grants be available to eligible 
students beginning on July 1, 2008, the Secretary makes these 
regulations effective as of the date of publication to enable TEACH 
Grant-eligible institutions to prepare and forward student financial 
aid packages as early as possible following the availability of funds 
for this program. We note that delaying the effective date of the 
regulations also would prevent a significant number of otherwise 
eligible students enrolled during the 2008 summer term from being able 
to receive a TEACH Grant.
    These regulations have been determined to be major for purposes of 
the Congressional Review Act (CRA) (5 U.S.C. 801, et seq.). However, 
for the reasons outlined in the preceding paragraph, the Department has 
determined that, pursuant to section 808(2) of the CRA, the delay in 
the effective date generally required for congressional review is 
contrary to the public interest and waived for good cause.

Regulatory Flexibility Act Certification

    The Secretary certifies that these final regulations will not have 
a significant economic impact on a substantial number of small 
entities. These final regulations will affect institutions of higher 
education and individual students and loan borrowers. The U.S. Small 
Business Administration Size Standards define 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.
    As noted in the NPRM, a significant percentage of the schools 
participating in the Federal student loan programs meet the definition 
of ``small entities.'' In general, the Department believes benefits 
under these final regulations outweigh the relatively small additional 
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.
    In the NPRM, the Secretary invited comments from small institutions 
as to whether they believe the proposed regulations would have a 
significant economic impact on them and, if so, requested evidence to 
support that belief. No comments or data were received.

Paperwork Reduction Act of 1995

    Sections 668.165, 686.4, 686.10, 686.11, 686.12, 686.20, 686.31, 
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 OMB for its review.

Section 668.165--Notices and Authorizations

    The final regulations modify the Student Assistance General 
Provisions by including the Teacher Education Assistance for College 
and Higher Education (TEACH) Grant program in subpart K of the Student 
Assistance General Provisions regulations in 34 CFR part 668 (Cash 
management). Before an institution disburses Title IV, HEA program 
funds for any award year, the institution must notify a student of the 
amounts of funds that the student can expect to receive and how and

[[Page 35489]]

when those funds will be disbursed. The institution is required to 
notify, in writing, the recipient of a TEACH Grant of the student's 
right to cancel or reduce the amount of the TEACH Grant disbursement, 
as well as the procedures by which the student must notify the 
institution. We estimate that the requirements in Sec.  668.165 will 
increase burden for institutions and individuals by 14,090 hours 
annually in OMB Control Number 1845-0038.

Section 686.4--Institutional Participation

    The final regulations 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 within 45 
days after the effective date of the loss of eligibility. The contents 
of the report must 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 
must provide an accounting of all TEACH Grant expenditures for that 
award year to the date of termination. We estimate that the 
requirements in Sec.  686.4 will increase burden for institutions by 81 
hours in OMB Control Number 1845-XXXX.

Section 686.10--Application

    Under the final regulations, a potential TEACH grant recipient must 
complete and submit an approved and signed application form, as 
designated by the Secretary prior to the published deadline. Currently, 
the FAFSA is the designated application form. All undergraduate and 
most graduate student applicants for Title IV, HEA program assistance 
must complete and submit the FAFSA. Because the TEACH Grant Program is 
not a need-based program, some applicants will be required to complete 
a FAFSA that otherwise may not have been required to complete a FAFSA, 
thereby generating additional burden. The estimated burden associated 
with these application requirements is contained in OMB Control Number 
1845-0001. We estimate that the burden will increase for individuals by 
1,000 hours.

Section 686.11--Eligibility To Receive a Grant

    The final regulations establish that in addition to meeting the 
student eligibility requirements, in order to receive a TEACH Grant the 
applicant must submit the designated application, sign a TEACH Grant 
ATS, and enroll in a TEACH Grant-eligible institution. Grant recipients 
must maintain a GPA 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 are several categories of grant recipients who must 
maintain the cumulative GPA of 3.25 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 must 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 must document the student's 
undergraduate school cumulative GPA.
    The transfer student cumulative GPA as determined by the current 
TEACH Grant-eligible institution--
    The TEACH Grant-eligible institution must 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. Subsequent payment periods:
    The cumulative GPA 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 TEACH 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 paperwork burden 
associated with Sec.  686.11 will increase for individuals and 
institutions by 82,675 hours in OMB Control Number 1845-XXXX.

Section 686.12--Agreement To Serve

    Under the final regulations, a student must sign an ATS before 
receiving a TEACH Grant. The ATS provides that a student must fulfill a 
service obligation for each program for which the student received a 
TEACH Grant. The ATS explains the terms of the service obligation and 
provides 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 convert to a Federal 
Direct Unsubsidized Loan that the student must repay in full to the 
Secretary, with interest.
    The burden associated with the ATS will be reported under OMB 
Control Number 1845-0083. OMB granted emergency approval of the ATS on 
May 15, 2008. The ATS will be submitted for public comment under the 
regular clearance process.

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

    The final regulations require that participating institutions who 
disburse TEACH Grant funds to students must electronically transmit 
data as required by the Secretary. The burden associated with the 
collection and transmission of the required data is assessed and 
attributed in 34 CFR 686.37. Therefore, there is no burden associated 
with this section of the final regulations.

Section 686.31--Determination of Eligibility for Payment and 
Cancellation of a TEACH Grant

    Section 686.31 of the final regulations added notification 
requirements for an institution awarding TEACH Grants that are 
consistent with the changes made in 34 CFR 668.165--(Notices and 
authorizations). The estimated burden associated with these 
notification requirements is contained in OMB Control Number 1845-0038, 
as reported under the Section 668.165--Notices and authorizations 
heading. As a result, there is no additional burden associated with 
Sec.  686.31.

Section 686.32--Counseling requirements

    The final regulations require an institution to ensure that 
initial, subsequent, and exit counseling are provided to each TEACH 
Grant recipient. The initial counseling is required prior to making the 
first disbursement of the grant. Initial counseling must include, but 
is not limited to, explaining the terms and conditions of the TEACH 
Grant ATS; 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 obligation; and the conditions under which a suspension may 
be granted. Subsequent counseling, which must occur prior to the first 
disbursement of a TEACH Grant in a subsequent award year, must

[[Page 35490]]

include, but is not limited to reviewing the terms and conditions of 
the ATS; and emphasizing that if the student fails or refuses to 
complete the service obligation, the TEACH Grant will convert into a 
Federal Direct Unsubsidized Loan. Under the final regulations, 
institutions must ensure that exit counseling is provided to each TEACH 
Grant recipient before the recipient ceases to attend the institution. 
Written exit counseling materials may be provided within 30 days after 
completing a study abroad program or after a student withdraws without 
notifying the institution. We estimate that the paperwork burden 
associated with Sec.  686.32 will increase for individuals and 
institutions by 50,828 hours in OMB Control Number 1845-XXXX.

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

    The final regulations 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 final regulations also 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 Sec.  
686.34 will increase burden for individuals and institutions by 855 
hours in OMB Control Number 1845-XXXX.

Section 686.36--Fiscal Control and Accounting Procedures

    The final regulations 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 must disburse TEACH Grant funds consistent 
with the cash management regulations in 34 CFR 668.164. Participating 
institutions must comply with these requirements for the other Title 
IV, HEA programs and, therefore, there is no additional burden placed 
upon institutions participating in the TEACH Grant program.

Section 686.37--Institutional Reporting Requirements

    Under the final regulations, a participating institution must 
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 must be submitted 
to the Department no later than 30 days following the initial 
disbursement of TEACH Grant funds. Subsequent disbursements, 
cancellations, and adjustments must be submitted to the Department 
within 30 days of the transaction. Participating institutions must 
comply with these requirements for other Title IV, HEA programs and, 
therefore, there is no additional burden placed upon institutions 
participating in the TEACH Grant program.

Section 686.38--Maintenance and Retention of Records

    The final regulations 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 must comply with these requirements for the 
other Title IV, HEA programs and, therefore, there is no additional 
burden placed upon institutions participating in the TEACH Grant 
program.

Section 686.40--Documenting the Service Obligation

    Except as provided in Sec. Sec.  686.40 and 686.42, the final 
regulations require 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 ATS, 
or is not yet employed, but intends to meet the terms and conditions of 
the ATS.
    The burden associated with this notification requirement will be 
covered under a new collection. A separate 60-day information 
collection notice will be published in the Federal Register to solicit 
comment on a notification form once it is developed.

Section 686.41--Periods of Suspension

    The final regulations provide that a TEACH Grant recipient may 
request a suspension of the 8-year period for completion of the TEACH 
Grant service obligation based on one of the conditions described in 
Sec.  686.41. The grant recipient must apply for a suspension on a form 
approved by the Secretary.
    The burden associated with this notification requirement will be 
covered under a new collection. A separate 60-day information 
collection notice will be published in the Federal Register to solicit 
comment on a suspension request form once it is developed.

Section 686.42--Discharge of Agreement To Serve

    Under the final regulations, a TEACH Grant recipient's service 
obligation will 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 is covered under OMB 
Control Number 1845-0021 as the TEACH Grant will be recognized as an 
Federal Direct Unsubsidized Loan for the purposes of the loan discharge 
for death, consistent with Sec.  685.212. We estimate that the burden 
will increase for individuals and loan holders by 23 hours in OMB 
Control Number 1845-0021.
    The burden associated with the discharge of a TEACH Grant service 
obligation based on the grant recipient's total and permanent 
disability is covered under OMB Control Number 1845-0065.

Section 686.43--Obligation To Repay the Grant

    The final regulations specify the conditions under which a TEACH 
Grant will 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 obligation.
    The burden associated with this notification requirement will be 
covered under the same new collection associated with the notification 
requirement in Sec.  686.40.
    Consistent with the discussion in this Paperwork Reduction Act of 
1995 section, the following chart describes the sections of the final 
regulations involving information collections, the information being 
collected, and the collections the Department will submit to OMB for 
approval and public comment under the Paperwork Reduction Act of 1995.

[[Page 35491]]



------------------------------------------------------------------------
   Regulatory section     Information collection        Collection
------------------------------------------------------------------------
668.165................  Before an institution    OMB 1845-0038. This
                          disburses Title IV,      will be a revision of
                          HEA program funds for    an existing
                          any award year, the      collection which was
                          institution must         submitted to OMB with
                          notify a student of      these final
                          the amounts of funds     regulations.
                          that the student can
                          expect to receive and
                          how and when those
                          funds will be
                          disbursed. The
                          institution is
                          required to notify in
                          writing, the recipient
                          of a TEACH Grant of
                          the student's right to
                          cancel or reduce the
                          amount of the TEACH
                          Grant disbursement, as
                          well as the procedures
                          by which the student
                          must notify the
                          institution.
686.4..................  Institutions that cease  OMB 1845-XXXX. This
                          participation in the     will be a new
                          TEACH Grant program or   collection.
                          otherwise lose
                          eligibility are
                          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
                          must (a) score above     will be a new
                          the 75th percentile on   collection.
                          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 an eligible
                          TEACH Grant program.
686.12.................  Before receiving a       OMB 1845-0083. OMB
                          TEACH Grant, a student   granted emergency
                          must sign an ATS. The    approval of the ATS
                          ATS provides that        on May 15, 2008. The
                          student must fulfill a   ATS will be submitted
                          service obligation for   for public comment
                          each program for which   under the regular
                          the student received a   clearance process in
                          TEACH Grant. The ATS     the near future.
                          explains the terms of
                          the service obligation
                          and provides 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.
686.31.................  An institution           The estimated burden
                          participating in the     associated with this
                          TEACH Grant program      section of the final
                          must, before             regulations is
                          disbursing Title IV,     recognized in OMB
                          HEA program funds,       1845-0038 Cash
                          notify the recipient     Management.
                          in accordance with 34
                          CFR 668.165.
686.32.................  A participating          OMB 1845-XXXX. This
                          institution must         will be a new
                          ensure that initial,     collection.
                          subsequent, and exit
                          counseling are
                          provided for all TEACH
                          Grant recipients.
686.34.................  A participating          OMB 1845-XXXX. This
                          institution must         will be a new
                          provide written notice   collection.
                          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 must
                          report the overpayment
                          to the Department.
686.40.................  Except as provided in    OMB 1845-XXXX. This
                          Sec.  Sec.   686.40      will be a new
                          and 686.42, within 120-  collection. A
                          days of completing or    separate 60-day
                          otherwise ceasing        information
                          enrollment in a          collection notice
                          program for which the    will be published in
                          student received a       the Federal Register
                          TEACH Grant, the         to solicit comment on
                          student must confirm     this form. The form
                          to the Secretary in      will be put into the
                          writing that he or she   paperwork clearance
                          is employed as a full-   process by October
                          time teacher in          2008.
                          accordance with the
                          TEACH Grant ATS, or is
                          not yet employed, but
                          intends to meet the
                          terms and conditions
                          of the ATS.
686.41.................  A TEACH Grant recipient  OMB 1845-XXXX. This
                          may request a            will be a new
                          suspension of the 8-     collection. A
                          year period for          separate 60-day
                          completion of the        information
                          TEACH Grant service      collection notice
                          obligation based on      will be published in
                          one of the conditions    the Federal Register
                          described in Sec.        to solicit comment on
                          686.41. The grant        this form. The form
                          recipient must apply     will be put into the
                          for a suspension on a    paperwork clearance
                          form approved by the     process by October
                          Secretary.               2008.
686.42.................  A TEACH Grant            Discharge of a TEACH
                          recipient's service      Grant service
                          obligation will be       obligation based on
                          discharged if the        the grant recipient's
                          recipient dies, or if    death is covered
                          the recipient becomes    under OMB 1845-0021.
                          totally and              Discharge of a TEACH
                          permanently disabled     Grant service
                          and meets the            obligation based on
                          eligibility              the grant recipient's
                          requirements for a       total and permanent
                          total and permanent      disability is covered
                          disability discharge     under OMB 1845-0065.
                          in 34 CFR 685.213.
686.43.................  One of the conditions    This will be covered
                          under which a TEACH      by the same new
                          Grant will be            collection as
                          converted to a Federal   described for Sec.
                          Direct Unsubsidized      686.40.
                          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
                          obligation.
------------------------------------------------------------------------

Assessment of Educational Impact

    In the NPRM, and in accordance with section 411 of the General 
Education Provisions Act, 20 U.S.C. 1221e-4, we requested comments on 
whether the proposed regulations would require transmission of 
information that any other agency or authority of the United States 
gathers or makes available.
    Based on the responses to the NPRM and on our review, we have 
determined that these final regulations do not require transmission of 
information that any other agency or authority of the United States 
gathers or makes available.

[[Page 35492]]

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 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.gopaccess.gov/nara/index.html.

(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal 
Supplemental Educational Opportunity Grant Program; 84.032 Federal 
Family Education Loan Program; 84.033 Federal Work Study; 84.038 
Federal Perkins Loan Program; 84.063 Federal Pell Grant Program; 
84.069 Leveraging Education 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: June 11, 2008.
Margaret Spellings,
Secretary of Education.

0
For the reasons discussed in the preamble, the Secretary amends 34 CFR 
chapter VI as follows:

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

0
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.


0
2. Section 668.1 is amended by:
0
A. In paragraph (c)(10), removing the word ``and'' that appears after 
the punctuation ``;''.
0
B. In paragraph (c)(11), removing the punctuation ``.'' at the end of 
the paragraph and adding, in its place, the words ``; and''.
0
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.
* * * * *

0
3. Section 668.2 is amended by:
0
A. In paragraph (b), adding, in alphabetical order, the definitions of 
``Teacher Education Assistance for College and Higher Education (TEACH) 
Grant program'' and ``TEACH Grant''.
0
B. In paragraph (b), amending paragraph (2) of the definition of 
``Undergraduate student'' by:
0
i. Removing the word ``and'' following ``(ACG) Program''.
0
ii. Adding ``, and TEACH Grant program'' after ``(SMART) Grant 
Program''.
0
iii. Adding ``and 686.3(a)'' after ``690.6(c)(5)''.
0
C. In paragraph (b), 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 teacher in a high-need field 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]

0
4. Section 668.4(b)(1) is amended by removing the word ``and'' that 
appears after ``FSEOG,'' and adding ``, and TEACH Grant'' after 
``Perkins Loan''.

0
5. Section 668.8 is amended by:
0
A. In the heading of paragraph (h), adding ``TEACH Grant,'' after 
``National SMART Grant,''.
0
B. In paragraph (h)(1), removing the word ``and'' that appears after 
the punctuation ``;''.
0
C. In paragraph (h)(2), removing the punctuation ``.'' at the end of 
the paragraph and adding, in its place, the words ``; and''.
0
D. Adding a new paragraph (h)(3).
0
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 if it satisfies the requirements of 
the definition of TEACH Grant-eligible program 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)

Sec.  668.14  [Amended]

0
6. Section 668.14(f) is amended by:
0
A. In paragraph (f)(1), removing the words ``paragraphs (h) and (i)'' 
and

[[Page 35493]]

adding, in their place, the words ``paragraphs (g) and (h)''.
0
B. In paragraph (f)(3), removing the words ``paragraph (g)'' and 
adding, in their place, the words ``paragraph (f)''.

0
7. Section 668.19 is amended by:
0
A. In paragraph (a)(3), 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''.
0
B. In paragraph (a)(3), removing the word ``or'' the third time this 
word appears after the acronym ``ACG,'' and adding the words ``, or 
TEACH Grant'' after the third appearance of ``National SMART Grant''.
0
C. Revising the authority citation to read as follows:


Sec.  668.19  Financial aid history.

* * * * *

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



0
8. Section 668.21 is amended by:
0
A. In paragraph (a)(1), adding the words ``TEACH Grant,'' immediately 
after the word ``FSEOG,''.
0
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)



0
9. Section 668.22 is amended by:
0
A. In paragraph (a)(2), adding the words ``TEACH Grant,'' immediately 
after the words ``National SMART Grant,''.
0
B. In paragraph (i)(2), adding a new paragraph (i)(2)(v).
0
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)



0
10. Section 668.24 is amended by:
0
A. In the introductory text of paragraph (e)(1), removing the word 
``or'' which appears after ``ACG''.
0
B. In the introductory text of paragraph (e)(1), adding the words ``, 
or TEACH Grant'' immediately in front of the word ``Program''.
0
C. 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)



0
11. Section 668.26 is amended by:
0
A. In paragraph (d)(1), removing the word ``or'' the first time it 
appears and adding the words ``, or TEACH Grant'' immediately after the 
words ``National SMART Grant''.
0
B. In paragraph (e)(1), removing the word ``and'' the first time it 
appears and adding the words ``, and TEACH Grant'' immediately after 
the words ``National SMART Grant''.
0
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)



0
12. Section 668.32 is amended by:
0
A. In paragraph (c)(2)(ii), removing the word ``and''.
0
B. In paragraph (c)(3), adding the word ``and'' after the punctuation 
``;''.
0
C. Adding a new paragraph (c)(4).
0
D. Adding a new paragraph (k)(9).
0
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))



0
13. Section 668.35 is amended by:
0
A. Redesignating paragraph (g)(4) as paragraph (g)(5).
0
B. Adding a new paragraph (g)(4).
0
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)



0
14. Section 668.138 is amended by:
0
A. In paragraph (a), removing the word ``or'' the first time it 
appears.
0
B. In paragraph (a), adding the words ``, or TEACH Grant'' immediately 
after the words ``National SMART Grant''.
0
C. Revising the authority citation to read as follows:


Sec.  668.138  Liability.

* * * * *

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



0
15. Section 668.139 is amended by:
0
A. In paragraph (c), adding the words ``TEACH Grant,'' immediately 
after the words ``National SMART Grant,''.
0
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)



0
16. Section 668.161 is amended by:
0
A. In paragraph (a)(3)(i), adding the words ``TEACH Grant,'' 
immediately after the words ``National SMART Grant,''.
0
B. Revising the authority citation to read as follows:


Sec.  668.161  Scope and purpose.

* * * * *

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



0
17. Section 668.162 is amended by:
0
A. In paragraph (d)(1), adding the words ``TEACH Grant,'' immediately 
after the words ``National SMART Grant,''.
0
B. Revising the authority citation to read as follows:


Sec.  668.162  Requesting funds.

* * * * *

[[Page 35494]]


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



0
18. Section 668.163 is amended by:
0
A. In paragraph (c)(2), adding the words ``TEACH Grant,'' immediately 
after the words ``National SMART Grant,''.
0
B. In the introductory text of paragraph (c)(3), adding the words 
``TEACH Grant,'' immediately after the words ``National SMART Grant,''.
0
C. In paragraph (c)(4), adding the words ``TEACH Grant,'' immediately 
after the words ``National SMART Grant,''.
0
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)



0
19. Section 668.164 is amended by:
0
A. In paragraph (g)(1)(ii), by removing the word ``and'' after 
``FSEOG,'' and adding the words ``, and TEACH Grant,'' immediately 
after the words ``Federal Perkins Loan,''.
0
B. In paragraph (g)(2)(ii)(A), removing the word ``or'' that appears 
after the punctuation ``;''.
0
C. In paragraph (g)(2)(ii)(B), removing the ``.'' after the words ``to 
the student'' and adding in its place ``; or''.
0
D. Adding a new paragraph (g)(2)(ii)(C).
0
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)

Sec.  668.165  [Amended]


0
20. Section 668.165 is amended by:
0
A. In the introductory text of paragraph (a)(2), removing the word 
``or'' the first time it appears and adding the words ``, or TEACH 
Grant'' after ``Federal Perkins Loan''.
0
B. In paragraph (a)(2)(ii), removing the word ``or'' the third time it 
appears and adding the punctuation ``,'' in its place, adding the words 
``, TEACH Grant, or TEACH Grant disbursement'' immediately after the 
words ``loan disbursement'', and adding the words ``, or the TEACH 
Grant proceeds returned to the Secretary'' after the words ``and have 
the loan proceeds returned to the holder of that loan''.
0
C. In paragraph (a)(2)(iii), removing the word ``or'' before the words 
``loan disbursement'' and adding, in its place the punctuation ``,'' 
and by adding the words ``, TEACH Grant, or TEACH Grant disbursement'' 
immediately after the words ``loan disbursement''.
0
D. In paragraph (a)(4)(i) removing the word ``or'' before the words 
``loan disbursement'' and adding, in its place the punctuation ``,'' 
and adding the words ``, TEACH Grant, or TEACH Grant disbursement'' 
after the words ``loan disbursement''.
0
E. In the introductory text of paragraph (a)(4)(ii), adding the words 
``or TEACH Grant'' before the word ``proceeds'', after the words 
``cancel the loan'', and before the words ``cancellation request''.
0
F. In paragraph (a)(4)(ii)(A), adding the words ``or TEACH Grant'' 
after the words ``or a portion of a loan''.
0
G. In paragraph (a)(4)(iii), adding the words ``or TEACH Grant'' before 
the word ``proceeds'' and after the words ``cancel the loan''.
0
H. In paragraph (a)(6)(i), adding the words ``. The process under which 
the TEACH Grant program is administered is considered to be an 
affirmative confirmation process'' after the words ``loan funds''.
0
I. In paragraph (a)(6)(ii), adding the words ``or TEACH Grant'' before 
the word ``proceeds''.


0
21. Section 668.183 is amended by:
0
A. In paragraph (b)(1), 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'' at the beginning of the first 
sentence.
0
B. Adding a new paragraph (b)(3).
0
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 Federal 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

0
22. 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.


0
23. Section 673.5 is amended by:
0
A. In paragraph (c)(2)(iii), 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''.
0
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

0
24. 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.


0
25. Section 674.2 is amended by:
0
A. In paragraph (a), adding, in alphabetical order, the terms ``Teacher 
Education Assistance for College and Higher Education (TEACH) Grant 
Program'' and ``TEACH Grant''.
0
B. Revising the authority citation to read as follows:


Sec.  674.2  Definitions.

* * * * *

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



0
26. Section 674.61 is amended by:
0
A. In paragraph (b)(2)(ii), adding the words ``a new TEACH Grant or'' 
immediately after the words ``does not receive''.
0
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

0
27. 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.


[[Page 35495]]



0
28. Section 675.2 is amended by:
0
A. In paragraph (a), adding, in alphabetical order, the terms ``Teacher 
Education Assistance for College and Higher Education (TEACH) Grant 
Program'' and ``TEACH Grant''.
0
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

0
29. The authority citation for part 676 continues to read as follows:

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


0
30. Section 676.2 is amended by:
0
A. In paragraph (a), adding, in alphabetical order, the terms ``Teacher 
Education Assistance for College and Higher Education (TEACH) Grant 
Program'' and ``TEACH Grant''.
0
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

0
31. 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.


0
32. Section 682.200 is amended by:
0
A. In paragraph (a)(1), adding, in alphabetical order, the terms 
``Teacher Education Assistance for College and Higher Education (TEACH) 
Grant Program'' and ``TEACH Grant''.
0
B. In paragraph (b), in paragraph (2) of the definition of ``Estimated 
financial assistance,'' 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''.


0
33. Section 682.204 is amended by:
0
A. In paragraph (c), adding before the ``.'' the following words ``, 
except that any TEACH Grants that have been converted to Federal Direct 
Unsubsidized Loans are not counted against annual or any aggregate loan 
limits under this section.''
0
B. Adding an authority citation to read as follows:


Sec.  682.204  Maximum loan amounts.

* * * * *

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

Sec.  682.215  [Amended]

0
34. Section 682.215(c)(7)(ii) is amended by removing the citation ``(19 
U.S.C. 2654)'' and adding in its place, the citation ``(29 U.S.C. 2601, 
et seq. )''.


0
35. Section 682.402 is amended by:
0
A. In paragraph (c)(1)(ii)(B), adding the words ``a new TEACH Grant 
or'' immediately after the words ``does not receive''.
0
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

0
36. The authority citation for part 685 is revised to read as follows:

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


0
37. Section 685.102 is amended by:
0
A. In paragraph (a)(1), adding, in alphabetical order, the terms 
``Teacher Education Assistance for College and Higher Education (TEACH) 
Grant Program'' and ``TEACH Grant''.
0
B. In paragraph (b), in paragraph (2)(i) of the definition of 
``Estimated financial assistance,'' 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''.
0
C. Revising the authority citation to read as follows:


Sec.  685.102  Definitions.

* * * * *

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



0
38. Section 685.203 is amended by:

0
A. In paragraph (b), adding before the ``.'' the words ``, except that 
any TEACH Grants that have been converted to Federal Direct 
Unsubsidized Loans are not counted against annual or any aggregate loan 
limits under this section''.
0
B. Revising the authority citation to read as follows:


Sec.  685.203  Loan limits.

* * * * *

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



0
39. Section 685.213 is amended by:
0
A. In paragraph (c)(2), adding the words ``a new TEACH Grant or'' 
immediately after the words ``does not receive''.
0
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. )

Sec.  685.217  [Amended]

0
40. Section 685.217(c)(7)(ii) is amended by removing the citation ``(19 
U.S.C. 2654)'' and adding, in its place, the citation ``(29 U.S.C. 
2601, et seq. )''.


0
41. 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 Agreement to serve.
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 and cancellation of 
a TEACH Grant.
686.32 Counseling requirements.
686.33 Frequency of payment.
686.34 Liability for and recovery of TEACH Grant overpayments.
686.35 Recalculation of TEACH Grant award amounts.
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 agreement to serve.
686.43 Obligation to repay the grant.

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

[[Page 35496]]

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.
    Agreement to serve (ATS): 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.
    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.
    Bilingual education: An educational program in which two languages 
are used to provide content matter instruction.
    Elementary school: A nonprofit institutional day or residential 
school, including a public elementary charter school, that provides 
elementary education, as determined under State law.
    English language acquisition: The process of acquiring English as a 
second language.
    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).
    Highly-qualified: Has the meaning set forth in section 9101(23) of 
the Elementary and Secondary Education Act of 1965, as amended (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. The 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.

[[Page 35497]]

    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.
    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 meets financial responsibility 
standards established in 34 CFR part 668, subpart L, or that qualifies 
under an alternative standard in 34 CFR 668.175 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 a minimum of 10 weeks of 
full-time pre-service clinical experience, or its equivalent, 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, is a program of study that is designed to prepare an 
individual to teach as a highly-qualified teacher in a high-need field 
and 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 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 enrolled in a 
TEACH Grant-eligible program may receive the equivalent of up to four 
Scheduled Awards during the period required for the completion of the 
first undergraduate 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

[[Page 35498]]

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
                                     No. of                      load in
                                     credit     No. of credit     credit
       Under Sec.   686.5            hours          hours        hours to             Enrollment status
                                    regular    correspondence   determine
                                      work                      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.


(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 an agreement to serve 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 an agreement to serve 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--
    (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

[[Page 35499]]

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 an agreement to serve 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   Agreement to serve.

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

[[Page 35500]]

    (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 the 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 paragraph (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--
    (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 (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)

[[Page 35501]]

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--
    The number of weeks of instructional time offered in the program in 
the fall and spring semesters or trimesters
    The number of weeks in the program's academic year
    (ii) In a program using quarters--
    [GRAPHIC] [TIFF OMITTED] TR23JN08.023
    

; 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--
    (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 paragraph 
(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] TR23JN08.024

    (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] TR23JN08.025
    

; or
    (2)
    [GRAPHIC] [TIFF OMITTED] TR23JN08.026
    
    (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 paragraph 
(d) or (e) of

[[Page 35502]]

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 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 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.  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] TR23JN08.027
    

; or

    (ii)
    [GRAPHIC] [TIFF OMITTED] TR23JN08.028
    
    (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

[[Page 35503]]

academic year, as calculated under paragraph (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 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 and cancellation 
of a TEACH Grant.

    (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 initial or subsequent counseling as 
required in Sec.  686.32;
    (3) Has signed an agreement to serve 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.
    (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.
    (e)(1) In accordance with 34 CFR 668.165, before disbursing a TEACH 
Grant for any award year, an institution must--
    (i) Notify the student of the amount of TEACH Grant funds that the 
student is eligible to receive, how and when those funds will be 
disbursed, and the student's right to cancel all or a portion of the 
TEACH Grant; and
    (ii) Return the TEACH Grant proceeds, cancel the TEACH Grant, or 
both, if the institution receives a TEACH Grant cancellation request 
from the student by the later of the first day of a payment period or 
14 days after the date it notifies the student of his or her right to 
cancel all or a portion of a TEACH Grant.
    (2)(i) If a student requests cancellation of a TEACH Grant after 
the period of time in paragraph (e)(1)(ii) of this section, but within 
120 days of the TEACH Grant disbursement date, the institution may 
return the TEACH Grant proceeds, cancel the TEACH Grant, or do both.
    (ii) If the institution does not return the TEACH Grant proceeds, 
or cancel the TEACH Grant, the institution must notify the student that 
he or she may contact the Secretary to request that the TEACH Grant be 
converted to a Federal Direct Unsubsidized Loan.

(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 agreement 
to serve 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 recipient's 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 agreement to 
serve 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

[[Page 35504]]

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 agreement to serve 
or any other condition of the agreement to serve--
    (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 agreement to 
serve 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 agreement to serve 
or any other condition of the agreement to serve--
    (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 TEACH 
Grant-eligible 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 
obligation and the conditions under which a suspension may be granted 
in accordance with Sec.  686.41;
    (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 recipient's 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 obligation until 
the date that the service obligation has been met or the date that the 
grant becomes a Federal Direct Unsubsidized 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).

[[Page 35505]]

    (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 agreement 
to serve 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 the requested 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  Recalculation of TEACH Grant award amounts.

    (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 34 CFR 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 same, the institution may, but is not 
required to, establish a policy under which the student's TEACH Grant 
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 TEACH Grant, as determined in 
accordance with Sec. Sec.  686.11 and 686.31;
    (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 part 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--

[[Page 35506]]

    (1) He or she is employed as a full-time teacher in accordance with 
the terms and conditions of the agreement to serve 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 agreement to serve 
described in Sec.  686.12.
    (b) If a grant recipient is performing full-time teaching service 
in accordance with the agreement to serve, or agreements to serve 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 agreement to serve 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 obligation, 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 a qualifying reason for leave under the 
Family and Medical Leave Act of 1993 (FMLA) (29 U.S.C. 2612(a)(1) and 
(3)); 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. )

Sec.  686.41  Periods of suspension.

    (a)(1) A 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 a qualifying reason for leave under the 
FMLA; 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 
paragraphs (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) A grant recipient must apply for a suspension in writing on a 
form approved by the Secretary prior to being subject to any of the 
conditions under Sec.  686.43(a)(1) through (a)(5) that would cause the 
TEACH Grant to convert to a Federal Direct Unsubsidized Loan.
    (c) A 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 agreement to serve.

    (a) Death. If a grant recipient dies, the Secretary discharges the 
obligation to complete the agreement to serve 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 
agreement to serve 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 a condition 
that is a qualifying reason for leave under the FMLA in accordance with 
Sec.  686.41(a)(1)(ii)(D).
    (3) Interest continues to accrue on each TEACH Grant disbursement 
unless

[[Page 35507]]

and until the TEACH Grant recipient's agreement to serve 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 agreement to serve.

(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 
agreement to serve; 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 a six-month grace period prior to entering repayment, 
and
    (2) Is eligible for all of the benefits of the Direct Loan Program, 
including an in-school deferment.
    (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

0
42. The authority citation for part 690 is revised to read as follows:

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


0
43. Section 690.2 is amended by:
0
A. In paragraph (b), adding, in alphabetical order, the terms ``Teacher 
Education Assistance for College and Higher Education (TEACH) Grant 
Program'' and ``TEACH Grant''.
0
B. Revising the authority citation to read as follows:


Sec.  690.2  Definitions.

* * * * *

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


[FR Doc. E8-13587 Filed 6-20-08; 8:45 am]
BILLING CODE 4000-01-P