[Federal Register Volume 74, Number 161 (Friday, August 21, 2009)]
[Proposed Rules]
[Pages 42380-42463]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-18550]



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Part II





Department of Education





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34 CFR Parts 600, 668, 675, et al.



General and Non-Loan Programmatic Issues; Proposed Rule

  Federal Register / Vol. 74, No. 161 / Friday, August 21, 2009 / 
Proposed Rules  

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DEPARTMENT OF EDUCATION

[Docket ID ED-2009-OPE-0005]

34 CFR Parts 600, 668, 675, 686, 690, and 692

RIN 1840-AC99


General and Non-Loan Programmatic Issues

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to implement various general and non-
loan provisions that were added to the Higher Education Act of 1965, as 
amended (HEA), by the Higher Education Opportunity Act of 2008 (HEOA) 
by amending the regulations for Institutional Eligibility Under the 
Higher Education Act of 1965, the Student Assistance General 
Provisions, the Federal Work-Study (FWS) Programs, the Teacher 
Education Assistance for College and Higher Education (TEACH) Grant 
Program, the Federal Pell Grant Program, and the Leveraging Educational 
Assistance Partnership Program (LEAP).

DATES: We must receive your comments on or before September 21, 2009.

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

    Privacy Note: The Department's policy for comments received from 
members of the public (including those comments submitted by mail, 
commercial delivery, or hand delivery) is to make these submissions 
available for public viewing in their entirety on the Federal 
eRulemaking Portal at http://www.regulations.gov. Therefore, 
commenters should be careful to include in their comments only 
information that they wish to make publicly available on the 
Internet.


FOR FURTHER INFORMATION CONTACT: For general information or information 
related to the non-Title IV revenue requirement (90/10), John Kolotos. 
Telephone: (202) 502-7762 or via the Internet at: [email protected].
    For information related to all Federal Pell Grant Program issues 
and the LEAP/GAP Program, Fred Sellers and Jacquelyn Butler. Telephone: 
(202) 502-7502 and (202) 502-7890, respectively, or via the Internet 
at: [email protected] or [email protected].
    For information related to the provisions for readmission for 
servicemembers, teach-outs, peer-to-peer file sharing, baccalaureate in 
liberal arts, and institutional plans for improving the academic 
program, Wendy Macias. Telephone: (202) 502-7526 or via the Internet 
at: [email protected].
    For information related to all Federal Work-Study Program issues, 
Nikki Harris and Harold McCullough. Telephone: (202) 219-7050 and (202) 
377-4030, respectively, or via the Internet at [email protected] or 
[email protected].
    For information related to the provisions for fire safety 
standards, missing students procedures, hate crime reporting, emergency 
response and evacuation, and students with intellectual disabilities, 
Jessica Finkel. Telephone: (202) 502-7647 or via the Internet at: 
[email protected].
    For information related to the provisions for extenuating 
circumstances under the TEACH Grant Program, Jacquelyn Butler. 
Telephone: (202) 502-7890, or via the Internet at: 
[email protected].
    For information related to the consumer information requirements, 
Brian Kerrigan. Telephone: (202) 219-7058, or via the Internet at: 
[email protected].
    If you use a telecommunications device for the deaf, call the 
Federal Relay Service (FRS), toll free, at 1-800-877-8339.
    Individuals with disabilities can obtain this document in an 
accessible format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to one of the contact persons listed under FOR 
FURTHER INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION:

Invitation to Comment

    As outlined in the section of this notice entitled Negotiated 
Rulemaking, significant public participation, through six public 
hearings and three negotiated rulemaking sessions, has occurred in 
developing this notice of proposed rulemaking (NPRM). In accordance 
with the requirements of the Administrative Procedure Act, the 
Department invites you to submit comments regarding these proposed 
regulations on or before September 21, 2009. To ensure that your 
comments have maximum effect in developing the final regulations, we 
urge you to identify clearly the specific section or sections of the 
proposed regulations that each of your comments addresses and to 
arrange your comments in the same order as the proposed regulations. 
Note that enactment as final regulations of any and all provisions of 
these proposed regulations is subject to the availability of sufficient 
administrative savings and any provision may be removed from the final 
rules if sufficient savings do not materialize.
    We invite you to assist us in complying with the specific 
requirements of Executive Order 12866, including its overall 
requirements to assess both the costs and the benefits of the proposed 
regulations and feasible alternatives, and to make a reasoned 
determination that the benefits of these proposed regulations justify 
their costs. Please let us know of any further opportunities we should 
take to reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of the programs.
    As noted elsewhere in the NPRM, two of the Department's negotiated 
rulemaking committees were to a minor extent involved in the proposed 
revisions to 34 CFR 668.184(a)(1) (Determining cohort default rates for 
institutions that have undergone a change in status) in part 668, 
subpart M of the Student Assistance General Provisions. Team V-General 
and Non-Loan Programmatic Issues (Team V), was the negotiating 
committee responsible for the regulations regarding the treatment of 
cohort default rates for institutions that conduct teach-outs of closed 
institutions. Team II-Loans-School-based Issues (Team II), negotiated 
all other changes to cohort default rates.
    We have included the proposed change to 34 CFR 668.184(a)(1) in 
this NPRM as well as in the notice of proposed rulemaking that we are 
publishing as a result of the negotiations of Team II. The proposed 
change is simply a cross-reference in 34 CFR 668.184(a)(1) to 34 CFR 
600.32(d) which provides that under certain circumstances the cohort 
default rate of a closed institution does not transfer in any way to 
the institution that conducts

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a teach-out at the site of the closed institution. We ask that when 
submitting any comments on the proposed changes to Sec. Sec.  600.32(d) 
or 668.184(a)(1), you submit the comments in the docket for this NPRM 
(Docket ID ED-2009-OPE-0005).
    During and after the comment period, you may inspect all public 
comments about these proposed regulations by accessing Regulations.gov. 
You may also inspect the comments, in person, in room 8031, 1990 K 
Street, NW., Washington, DC, between the hours of 8:30 a.m. and 4 p.m., 
Eastern time, Monday through Friday of each week except Federal 
holidays.

Assistance to Individuals With Disabilities in Reviewing the Rulemaking 
Record

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments or other documents in the public 
rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of aid, please contact one of the 
persons listed under FOR FURTHER INFORMATION CONTACT.

Negotiated Rulemaking

    Section 492 of the HEA requires the Secretary, before publishing 
any proposed regulations for programs authorized by Title IV of the 
HEA, to obtain public involvement in the development of the proposed 
regulations. After obtaining advice and recommendations from the 
public, including individuals and representatives of groups involved in 
the Federal student financial assistance programs, the Secretary must 
subject the proposed regulations to a negotiated rulemaking process. 
All proposed regulations that the Department publishes on which the 
negotiators reached consensus must conform to final agreements 
resulting from that process unless the Secretary reopens the process or 
provides a written explanation to the participants stating why the 
Secretary has decided to depart from the agreements. Further 
information on the negotiated rulemaking process can be found at: 
http://www.ed.gov/policy/highered/leg/hea08/index.html.
    On December 31, 2009, the Department published a notice in the 
Federal Register (73 FR 80314) announcing our intent to establish five 
negotiated rulemaking committees to prepare proposed regulations. One 
committee would focus on issues related to lender and general loan 
issues (Team I--Loans--Lender General Loan Issues). A second committee 
would focus on school-based loan issues (Team II--Loans--School-based 
Loan Issues). A third committee would focus on accreditation (Team 
III--Accreditation). A fourth committee would focus on discretionary 
grants (Team IV--Discretionary Grants). A fifth committee would focus 
on general and non-loan programmatic issues (Team V--General and Non-
Loan Programmatic Issues). The notice requested nominations of 
individuals for membership on the committees who could represent the 
interests of key stakeholder constituencies on each committee.
    Team V--General and Non-Loan Programmatic Issues (Team V) met to 
develop proposed regulations during the months of March 2009, April 
2009, and May 2009. Team V agreed to establish five subcommittees to 
facilitate the discussion of the issues and expedite the development of 
the proposed regulations. The subcommittees included some of non-
Federal negotiators and their alternates, outside experts regarding the 
particular issues addressed by a subcommittee, ED staff, and other 
interested parties. The subcommittees were:
    (1) Campus Safety, responsible for issues relating to Fire Safety 
Standards, Missing Student Procedures, Hate Crime Reporting, and 
Emergency Response and Evacuation Procedures.
    (2) Peer-to-Peer File Sharing, responsible for issues relating to 
illegal downloading of copyrighted materials.
    (3) Intellectual Disabilities, responsible for issues relating to 
establishing title IV eligible educational programs for students with 
intellectual disabilities.
    (4) LEAP/GAP, responsible for issues relating to LEAP and GAP 
programs.
    (5) 90/10, responsible for issues relating to the requirement that 
a proprietary institution must derive at least 10 percent of its 
revenue from sources other than funds from the title IV, HEA programs.
    In this NPRM we propose regulations for a variety of provisions, 
stemming from the work of the subcommittees and main committee, 
relating to the Federal grant and work-study programs, campus safety, 
educational programs for students with intellectual disabilities, 
copyright infringement, teach-outs, readmission of servicemembers, and 
non-Title IV revenue.
    The Department developed a list of proposed regulatory provisions 
based on the provisions contained in the HEOA and from advice and 
recommendations submitted by individuals and organizations as testimony 
to the Department in a series of six public hearings held on:
     September 19, 2008, at Texas Christian University in Fort 
Worth, Texas;
     September 29, 2008, at the University of Rhode Island, in 
Providence, Rhode Island;
     October 2, 2008, at Pepperdine University, in Malibu, 
California;
     October 6, 2008, at Johnson C. Smith University, in 
Charlotte, North Carolina;
     October 8, 2008, at the U.S. Department of Education in 
Washington, DC; and
     October 15, 2008, at Cuyahoga Community College, in 
Cleveland, Ohio.
    In addition, the Department accepted written comments on possible 
regulatory provisions submitted directly to the Department by 
interested parties and organizations. A summary of all comments 
received orally and in writing is posted as background material in the 
docket for this NPRM. Transcripts of the regional meetings can be 
accessed at http://www.ed.gov/policy/highered/leg/hea08/index.html.
    Staff within the Department also identified issues for discussion 
and negotiation.
    At its first meeting, Team V reached agreement on its protocols. 
These protocols provided that for each community of interest identified 
as having interests that were significantly affected by the subject 
matter of the negotiations, the non-Federal negotiators would represent 
the organizations listed after their names in the protocols in the 
negotiated rulemaking process.
    Team V included the following members:
     Clais Daniels-Edwards, University of California Student 
Association, and Serena Unrein (alternate), Arizona Students 
Association, representing students.
     David Baime, American Association of Community Colleges, 
and Dr. Karla Leach (alternate), Western Wyoming Community College, 
representing two-year public institutions.
     John Curtice, State University of New York, and Karen 
Fooks (alternate), University of Florida, representing four-year public 
institutions.
     Scott Fleming, Georgetown University, and Suzanne Day 
(alternate), Harvard University, representing private, non-profit 
institutions.
     Elaine Neely, Kaplan Higher Education Corp., and Mark 
Pelesh (alternate), Corinthian Colleges, Inc., representing private, 
for-profit institutions.
     Ray Testa, Empire Education Group, and Dr. Richard 
Dumaresq

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(alternate), Pennsylvania Association of Private School Administrators, 
representing cosmetology schools.
     David Tipton, Berea College, and Ian Robertson 
(alternate), Warren Wilson College, representing work colleges.
     Dr. Ray Keck, Texas A&M International University, and Karl 
Brockenbrough (alternate), Bowie State University, representing 
minority-serving institutions.
     David Gelinas, Davidson College, and David Smedley 
(alternate), George Washington University, representing financial aid 
administrators.
     Sandy Tallman, Ross Education LLC, and Diane Fleming 
(alternate), Central Michigan University, representing financial aid 
administrators.
     Karen McCarthy, NASFAA, and Joan Berkes (alternate), 
NASFAA, representing financial aid administrators.
     Maureen Laffey, Delaware Higher Education Commission, and 
Dr. Alan Edwards (alternate), State Council of Higher Education for 
Virginia, representing State student grant agencies.
     Dr. Nick Bruno, University of Louisiana System, and John 
Higgins (alternate), Purdue University, representing business officers 
and bursars.
     Dr. John Cavanaugh, Pennsylvania State Systems of Higher 
Education, representing State higher education executive officers.
     S. Daniel Carter, Security on Campus, Inc., and Jonathan 
Kassa (alternate), Security on Campus, Inc., representing campus safety 
advocates.
     Brendan McCluskey, UMDJ Office of Emergency Management, 
and Dr. John Petrie (alternate), George Washington University, 
representing campus safety administrators.
     Ed Comeau, Campus Firewatch, and Phil Hagen (alternate) 
Georgetown University, representing fire safety advocates and 
administrators.
     Paul D. Martin, Center for Campus Fire Safety, 
representing fire safety advocates.
     Michael Lieberman, Anti-Defamation League, and Cristina 
Finch (alternate), Human Rights Campaign, representing human rights 
advocates.
     Delores Stafford, George Washington University, and Lisa 
Phillips (alternate), IACLEA, representing law enforcement.
     Stephanie Smith Lee, NDSS, and Madeleine C. Will 
(alternate), representing individuals with intellectual disabilities.
     Gregory Jackson, The University of Chicago, and Matthew 
Arthur (alternate), representing institutions on peer-to-peer file 
sharing.
     David Green, NBC Universal, and Jennifer Jacobsen 
(alternate), Sony Music Entertainment, representing digital content 
owners on peer-to-peer file sharing.
     Brian Kerrigan, U.S. Department of Education, representing 
the Federal Government.
    These protocols also provided that, unless agreed to otherwise, 
consensus on all of the amendments in the proposed regulations had to 
be achieved for consensus to be reached on the entire NPRM. Consensus 
means that there must be no dissent by any member.
    During the meetings, Team V reviewed and discussed drafts of 
proposed regulations. At the final meeting in May 2009, Team V did not 
reach consensus on the proposed regulations in this document.

Summary of Proposed Changes

    These proposed regulations would implement general and non-Loan 
provisions of the HEA, as amended by the HEOA, including:
     Establishing requirements under which students may receive 
up to two Federal Pell Grant Scheduled Awards during a single award 
year (see section 401(b)(5)(A) of the HEA);
     Providing the maximum Federal Pell Grant eligibility to a 
student whose parent was in the armed forces and died in Iraq or 
Afghanistan if the student was under 24 years old or enrolled in an 
institution of higher education at the time the parent died (see 
section 401(F)(4) of the HEA);
     Establishing extenuating circumstances under which a TEACH 
Grant recipient may be excused from fulfilling all or part of his or 
her service obligation (see section 420N(d)(2) of the HEA);
     Expanding the use of FWS funds to permit institutions to 
compensate students employed in projects that teach civics in school, 
raise awareness of government functions or resources, or increase civic 
participation (see section 443 of the HEA);
     Allowing institutions located in major disaster areas to 
make FWS payments to disaster-affected students (see section 445(d) of 
the HEA).
     Revising definitions and terms relating to work colleges 
(see section 448 of the HEA).
     Establishing new requirements for determining how 
proprietary institutions calculate the amount and percent of revenue 
derived from sources other than title IV, HEA program funds (see 
section 487(d) of the HEA).
     Expanding the information that institutions must make 
available to prospective and enrolled students to include information 
on: The employment and placement of students, the retention rates of 
first-time, full-time undergraduate students, and completion and 
graduation rate data that is disaggregated by gender, race, and grant 
or loan assistance (see section 485(a) of the HEA).
     Establishing requirements for institutions that maintain 
on-campus housing facilities to publish annually a fire safety report, 
maintain a fire log, and report fire statistics to the Department (see 
section 485(i) of the HEA).
     Requiring institutions that provide on-campus housing 
facilities to develop and make available a missing student notification 
policy and allow students who reside on campus to confidentially 
register contact information (see section 485(j) of the HEA).
     Expanding the list of crimes that institutions must 
include in the hate crimes statistics reported to the Department (see 
section 485(f) of the HEA).
     Requiring institutions to include in the annual security 
report a statement of emergency response and evacuation procedures (see 
section 485(f) of the HEA).
     Expanding the eligibility for Federal Pell Grant, FWS, and 
FSEOG Program funds to students with intellectual disabilities (see 
sections 484(s) and 760 of the HEA).
     Establishing requirements under which an institution must 
readmit servicemembers to the same academic status they had when they 
last attended the institution (see section 484C of the HEA).
     Providing that an institution that conducts a teach-out at 
a site of a closed institution may, under certain conditions, establish 
that site as an additional location (see sections 487(f) and 498 of the 
HEA).
     Amending the definition of ``proprietary institution of 
higher education'' to include institutions that provide a program 
leading to a baccalaureate degree in liberal arts, if the institution 
provided that program since January 1, 2009, and has been accredited by 
a regional accrediting agency since October 1, 2007, or earlier (see 
section 102(b)(1)(A) of the HEA).
     Providing that an institution must certify that it has 
plans to effectively combat unauthorized distribution of copyrighted 
material and will offer alternatives to illegal downloading or peer-to-
peer distribution of intellectual

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property (see sections 485(a)(1) and 487(a) of the HEA).
     Expanding the information that an institution must make 
available to prospective and enrolled students to include a description 
of any plans the institution has to improve its academic program (see 
section 485(a) of the HEA).
     Providing that the non-Federal share of student grants or 
work-study jobs under the LEAP Program must be State funds and that the 
non-Federal share no longer has to come from a direct appropriation of 
State funds (see section 415C(b)(10) of the HEA).
     Requiring the State program to notify students that grants 
are LEAP Grants that are funded by the Federal Government, the State, 
and for LEAP Grants to students under the new Grants for Access and 
Persistence (GAP) Program, other contributing partners (see section 
415C(b) of the HEA).
     Establishing the activities, awards, allotments to States, 
matching funds requirements, consumer information requirements, 
application requirements, and other requirements needed to begin and 
continue participating in the GAP Program (see sections 415B and 415E 
of the HEA).

Significant Proposed Regulations

    We group major issues according to subject, with appropriate 
sections of the proposed regulations referenced in parentheses. We 
discuss other substantive issues under the sections of the proposed 
regulations to which they pertain. Generally, we do not address 
proposed regulatory provisions that are technical or otherwise minor in 
effect.

Part 600 Institutional Eligibility Under the Higher Education Act of 
1965, as Amended

Definition of Baccalaureate Liberal Arts Programs Offered by 
Proprietary Institutions (Sec.  600.5)

    Statute: Effective July 1, 2010, the HEOA amends the definition of 
proprietary institution of higher education in section 102(b)(1)(A) of 
the HEA to include an institution that provides a program leading to a 
baccalaureate degree in liberal arts that the institution has provided 
since January 1, 2009, so long as the institution has been accredited 
by a recognized regional accreditation agency or organization since 
October 1, 2007, or earlier. As the language in section 102(b)(1)(A)(i) 
of the HEA is not new, this change does not affect the eligibility of 
current programs or alter the method used by the Department in 
determining that a program of training prepares students for gainful 
employment in a recognized occupation.
    Current Regulations: Section 600.5(a)(5) defines a proprietary 
institution of higher education as one that provides an eligible 
program of training, defined in Sec.  668.8, to prepare students for 
gainful employment in a recognized occupation.
    Proposed Regulations: The proposed change to Sec.  600.5(a)(5) 
would add to the definition of proprietary institution of higher 
education, an institution that provides a program leading to a 
baccalaureate degree in liberal arts that the institution has provided 
since January 1, 2009, so long as the institution has been accredited 
by a recognized regional accreditation agency or organization since 
October 1, 2007, or earlier. In addition, a new paragraph (e) would be 
added to Sec.  600.5 to include a definition of a program leading to a 
baccalaureate degree in liberal arts. The definition would require that 
the institution's recognized regional accreditation agency or 
organization determine that the program is a general instructional 
program in the liberal arts subjects, the humanities disciplines, or 
the general curriculum, falling within one or more generally accepted 
instructional categories comprising such programs, but including only 
instruction in regular programs, and excluding independently designed 
programs, individualized programs, and unstructured studies. The 
generally accepted instructional categories would be:
     A program that is a structured combination of the arts, 
biological and physical sciences, social sciences, and humanities, 
emphasizing breadth of study;
     An undifferentiated program that includes instruction in 
the general arts or general science;
     A program that focuses on combined studies and research in 
the humanities subjects as distinguished from the social and physical 
sciences, emphasizing languages, literatures, art, music, philosophy 
and religion; and
     Any single instructional program in liberal arts and 
sciences, general studies and humanities not listed above.
    Reasons: The regulations are amended to reflect the changes made by 
the HEOA. The regulations would require that an institution's 
accrediting agency determine that a program is a liberal arts program 
as defined in this section in order to ensure that a program meets a 
generally accepted standard for liberal arts programs. The proposed 
definition of a program leading to a baccalaureate degree in liberal 
arts is from the U.S. Department of Education's National Center for 
Education Statistics' (NCES) Classification of Instructional Programs 
(CIP), the Federal government statistical standard on instructional 
program classifications. Specifically, the instructional categories are 
from the description of CIP 24, Liberal Arts and Sciences, General 
Studies, and Humanities, which would ensure that a program meets a 
generally accepted standard for liberal arts programs. The definition 
excludes independently-designed programs, individualized programs, and 
unstructured studies as the Department believes that, to meet the 
statutory requirement that an institution offer a program, it must be 
an organized program of study that is essentially the same for all 
students, except that it could include some elective courses.

Institutional Requirements for Teach-Outs and Eligibility and 
Certification Procedures (Sec. Sec.  600.2, 600.32, 668.14)

    Statute: The HEOA added paragraph (f) to section 487 of the HEA to 
provide that, whenever the Department initiates an action to limit, 
suspend, or terminate (LS&T) an institution's participation in any 
Title IV program or initiates an emergency action against an 
institution, the institution must prepare a teach-out plan for 
submission to its accrediting agency. The teach-out plan must be 
prepared in accordance with section 496(c)(6) of the HEA (mistakenly 
cited as section 496(c)(4) in the HEA) and any applicable title IV, HEA 
program regulations or accrediting agency standards. A teach-out plan 
is defined as a written plan that provides for equitable treatment of 
students if an institution ceases to operate before all students have 
completed their program of study, and may include, if required by the 
institution's accrediting agency, a teach-out agreement.
    The HEOA also added section 498(k) of the HEA to provide that a 
location of a closed institution is eligible as an additional location 
of another institution for the purpose of conducting a teach-out if the 
teach-out is approved by the institution's accrediting agency. The 
institution that conducts the teach-out under this provision is 
permitted to establish a permanent additional location at the closed 
institution without having to satisfy the requirements for additional 
locations in sections 102(b)(1)(E) and 102(c)(1))(C) of the HEA--i.e., 
that a proprietary institution or a postsecondary vocational 
institution must have been in existence for two years to be eligible--
and without assuming the liabilities of the closed institution.

[[Page 42384]]

    One of the four new accrediting agency operating procedures added 
by the HEOA as section 496(c)(3) of the HEA requires accrediting 
agencies to approve teach-out plans submitted by institutions they 
accredit if the Department notifies the agency of an action against an 
institution in accordance with section 487(f) of the HEA, if the 
institution's accreditation is withdrawn, terminated or suspended, or 
if the institution intends to cease operations. This provision was 
negotiated by Team III--Accreditation and will be reflected in the NPRM 
developed to implement accreditation issues (Docket ID ED-2009-OPE-). 
Because of the overlap in these three provisions, the development of 
proposed regulatory language was coordinated between the two 
negotiating committees.
    Current Regulations: Section 600.32 provides that an additional 
location is eligible to participate in the title IV, HEA programs if it 
meets the requirements for institutional eligibility in (1) Sec.  600.4 
(eligibility requirements for an institution of higher education), 
Sec.  600.5 (eligibility requirements for a proprietary institution), 
or Sec.  600.6 (eligibility requirements for a postsecondary vocational 
institution); (2) Sec.  600.8 (treatment of a branch campus), and (3) 
Sec.  600.10 (date, extent, duration, and consequences of eligibility). 
However, to qualify as an eligible additional location, a location is 
not required to have been in existence for two years unless (1) the 
location was a facility of another institution that has closed or 
ceased to provide educational programs for a reason other than a normal 
vacation period or a natural disaster that directly affects the 
institution or the institution's students; (2) the applicant 
institution acquired, either directly from the institution that closed 
or ceased to provide educational programs, or through an intermediary, 
the assets at the location; and (3) the institution from which the 
applicant institution acquired the assets of the location owes a 
liability for a violation of an HEA program requirement and is not 
making payments in accordance with an agreement to repay that 
liability. An additional location that must meet the two-year rule for 
these reasons, nevertheless, is exempt from the two-year rule if it 
agrees (1) to be liable for all improperly expended or unspent title IV 
program funds received by the institution that has closed or ceased to 
provide educational programs; (2) to be liable for all unpaid refunds 
owed to students who received title IV program funds; and (3) to abide 
by the policy of the institution that has closed or ceased to provide 
educational programs regarding refunds of institutional charges to 
students in effect before the date of the acquisition of the assets of 
the additional location for the students who were enrolled before that 
date.
    Proposed Regulations: Section 600.2 would define a teach-out plan 
as a written plan developed by an institution that provides for the 
equitable treatment of students if an institution, or an institutional 
location that provides 100 percent of at least one program, ceases to 
operate before all students have completed their program of study, and 
may include, if required by the institution's accrediting agency, a 
teach-out agreement between institutions.
    Section 668.14 would be amended to include in the program 
participation agreement the requirement in section 487(f) of the HEA. 
In addition to requiring an institution to submit a teach-out plan to 
its accrediting agency whenever the Department initiates an LS&T, or an 
emergency action against the institution, as required by statute, 
proposed Sec.  668.14(b)(31) would require an institution to submit a 
teach-out plan when (1) the institution's accrediting agency acts to 
withdraw, terminate, or suspend the accreditation or preaccreditation 
of the institution; (2) the institution's State licensing or 
authorizing agency revokes the institution's license or legal 
authorization to provide an educational program; (3) the institution 
intends to close a location that provides 100 percent of at least one 
program; or (4) the institution otherwise intends to cease operations.
    Proposed Sec.  600.32(d) would implement section 498(k) of the HEA 
to provide that an institution that conducts a teach-out for a closed 
institution whenever the Department initiates an LS&T, or an emergency 
action against the institution, may apply to have that site approved as 
an additional location, if the teach-out plan was approved by the 
closed institution's accrediting agency. If the Department approves the 
institution to add the additional location, the ``two-year rule'' would 
not apply to the additional location. In addition, the institution 
would not assume the liabilities of the closed institution, and the 
institution would not assume the cohort default rate of the closed 
institution, provided the institutions are not related parties and 
there is no commonality of ownership or management between the 
institutions, as described in proposed 34 CFR 668.188(b) and 34 CFR 
668.207(b) (these sections address the determination of cohort default 
rates for institutions that have undergone a change in status). An 
institution that accepts responsibility for conducting a teach-out of 
students under such an arrangement would still have to comply with 
Sec.  600.32(c)(3), which requires the additional location to abide by 
the policy of the institution that has closed or ceased to provide 
educational programs regarding refunds of institutional charges to 
students in effect before the date of the acquisition of the assets of 
the additional location for the students who were enrolled before that 
date. As a condition for approval of the additional location, the 
Department may require that payments from the institution conducting 
the teach-out to the owners of the closed institution, or related 
parties, be used to pay any liabilities owed by the closed institution.
    Reasons: The regulations are amended to reflect the changes made by 
the HEOA.
    In proposed Sec.  668.14(b)(31), the circumstances under which an 
institution would be required to submit a teach-out plan to its 
accrediting agency would be expanded beyond the circumstances listed in 
the statute to specifically address other situations where the 
Department believes the potential closure will put significant numbers 
of students at risk of being unable to complete their program, 
including the closure of a location that provides 100 percent of at 
least one program. This list of circumstances would conform with 
proposed changes in Sec. Sec.  602.3 and 602.24 of the Team III--
Accreditation NPRM (Docket ID ED-2009-OPE-) for implementing section 
496(c)(3) of the HEA, which directs accrediting agencies to require 
institutions to submit a teach-out plan for approval upon the 
occurrence of certain events. As a result, the definition of a teach-
out plan would apply to an institutional location that provides 100 
percent of at least one program, and would be the same definition used 
in 34 CFR part 602 for the Secretary's Recognition of Accrediting 
Agencies.
    Proposed Sec.  600.32(d) would be consistent with statutory intent 
to encourage an institution to conduct a teach-out of a closed 
institution and our view that the cohort default rate of a closed 
institution could be a potential impediment that could dissuade another 
institution from conducting the teach-out if its default rate would be 
adversely affected by the closed institution's default rate. However, 
the proposed regulations would ensure that this provision is not used 
by an owner to circumvent an undesirable cohort

[[Page 42385]]

default rate or liabilities for one institution by having it become an 
additional location of another institution under the same, or related, 
ownership. Preserving the Department's right to require that payments 
from the institution conducting the teach-out to the owners of the 
closed institution, or related parties, be used to pay any liabilities 
owed by the closed institution, provides the benefit to the institution 
that conducts the teach-out of not assuming any liabilities owed by the 
closed school, while ensuring that any funds paid to the owners of the 
closed school are applied against any title IV program liabilities owed 
by that institution.
    No changes are proposed to the applicability of Sec.  600.32(c)--
that the institution opening the additional location must continue to 
apply the refund policy for the students from the institution that has 
closed or ceased to provide educational programs. This obligation to 
protect the students by keeping the same refund policy in place 
continues because it is different from the pre-existing liabilities 
that the institution is not required to assume under this provision.
    Some non-Federal negotiators felt that, in keeping with proposed 34 
CFR 668.14(b)(31), proposed Sec.  600.32(d) should be expanded to allow 
the exemptions from the two-year rule, the assumption of liabilities, 
and the assumption of the cohort default rate, to apply when an 
institution conducts a teach-out at an institution that closes for 
reasons other than those listed in section 498(k) of the HEA--i.e., the 
initiation of a limitation, suspension, or termination of the 
institution, or an emergency action against the institution by the 
Department. The Department would limit the availability of this 
procedure (allowing an institution to conduct a teach-out of a closed 
institution without the imposition of customary restrictions to 
discourage institutions not subject to an LS&T, or emergency action 
from arranging a closure and sale of the institution) without 
liabilities in situations where a buyer would otherwise purchase the 
institution and assume the institution's liabilities under existing 
change of ownership rules.

Part 668 Student Assistance General Provisions

Readmission Requirements for Servicemembers (Sec.  668.18)

    Statute: The HEOA added new section 484C to the HEA to address 
institutional readmission requirements for servicemembers. Section 484C 
of the HEA provides that an institution of higher education may not 
deny readmission to a servicemember of the uniformed services for 
reasons relating to that service. In addition, a student who is 
readmitted to an institution under this section must be readmitted with 
the same academic status as the student had when he or she last 
attended the institution. An affected servicemember is any individual 
who is a member of, applies to be a member of, or performs, has 
performed, applies to perform, or has the obligation to perform, 
service in the uniformed services. This requirement applies to service 
in the uniformed services, whether voluntary or involuntary, on active 
duty in the Armed Forces, including service as a member of the National 
Guard or Reserve, for a period of more than 30 days under a call or 
order to active duty of more than 30 days.
    Any student whose absence from an institution of higher education 
is necessitated by reason of service in the uniformed services is 
entitled to readmission if:
     The student (or an appropriate officer of the Armed Forces 
or official of the Department of Defense) gives advance written or 
verbal notice of such service to the appropriate official at the 
institution;
     The cumulative length of the absence and of all previous 
absences from that institution of higher education by reason of service 
in the uniformed services does not exceed five years; and
     Except as otherwise provided in this section, the student 
submits a notification of intent to reenroll in the institution.
    However, no advance notice by the student is required if the giving 
of such notice is precluded by military necessity, such as a mission, 
operation, exercise, or requirement that is classified; or a pending or 
ongoing mission, operation, exercise, or requirement that may be 
compromised or otherwise adversely affected by public knowledge. In 
addition, any student (or an appropriate officer of the Armed Forces or 
official of the Department of Defense) who did not give advance notice 
of service to the appropriate official at the institution may meet the 
notice requirement by submitting, at the time the student seeks 
readmission, an attestation to the student's institution that the 
student performed service in the uniformed services that necessitated 
the student's absence from the institution.
    When determining the cumulative length of the student's absence for 
service, the period of service does not include any service:
     That is required, beyond five years, to complete an 
initial period of obligated service;
     During which the student was unable to obtain orders 
releasing the student from a period of service in the uniformed 
services before the expiration of the five-year period and the 
inability to obtain those orders was through no fault of the student; 
or
     That is performed by a member of the Armed Forces 
(including the National Guard and Reserves) who is--
    [ctrcir] Ordered to or retained on active duty under section 688, 
12301(a), 12301(g), 12302, 12304, or 12305 of Title 10, U.S.C., or 
under section 331, 332, 359, 360, 367, or 712 of Title 14, U.S.C.;
    [ctrcir] Ordered to or retained on active duty (other than for 
training) under any provision of law because of a war or national 
emergency declared by the President or the Congress;
    [ctrcir] Ordered to active duty (other than for training) in 
support of an operational mission for which personnel have been ordered 
to active duty under section 12304 of Title 10, U.S.C.;
    [ctrcir] Odered to active duty in support of a critical mission or 
requirement of the Armed Forces (including the National Guard or 
Reserve); or
    [ctrcir] Called into Federal service as a member of the National 
Guard under chapter 15 of Title 10, U.S.C., or section 12406 of Title 
10, U.S.C.
    An affected servicemember must, upon the completion of a period of 
service in the uniformed services, notify the institution of his or her 
intent to return to the institution not later than three years after 
the completion of the period of service. However, a student who is 
hospitalized for or convalescing from an illness or injury incurred in 
or aggravated during the performance of service in the uniformed 
services must notify the institution of his or her intent to return to 
the institution not later than two years after the end of the period 
that is necessary for recovery from such illness or injury. A student 
who fails to apply for readmission within the required period does not 
automatically forfeit eligibility for readmission to the institution, 
but is subject to the institution's established leave of absence policy 
and general practices.
    A student who submits an application for readmission to an 
institution must provide to the institution documentation to establish 
that:
     The student has not exceeded the specified service 
limitations; and
     The student's eligibility for readmission has not been 
terminated.

[[Page 42386]]

    An institution may not delay or attempt to avoid a readmission of a 
student under this section by demanding documentation that does not 
exist, or is not readily available, at the time of readmission.
    A student's eligibility for readmission to an institution under 
this section by reason of such student's service in the uniformed 
services terminates upon the occurrence of any of the following events:
     A separation of such person from the Armed Forces 
(including the National Guard and reserves) with a dishonorable or bad 
conduct discharge;
     A dismissal of such person permitted under section 1161(a) 
of Title 10, U.S.C.; or
     A dropping of such person from the rolls pursuant to 
section 1161(b) of Title 10, U.S.C.
    Current Regulations: None.
    Proposed Regulations:

General

    Section 668.18(a) would include the general requirements of the 
statute that an institution may not deny readmission to a 
servicemember, but must readmit the servicemember with the same 
academic status as the student had when the student was last admitted 
to the institution. The proposed regulations would clarify that the 
requirements of this section also apply to a student who was admitted 
to an institution, but did not begin attendance because of service in 
the uniformed services. The proposed regulations would specify that the 
institution must promptly readmit a student, and would define 
``promptly readmit'' as readmitting a student into the next class or 
classes in the student's program unless the student requests a later 
date of admission, or unusual circumstances require the institution to 
admit the student at a later date.
    Section 668.18(a)(2)(iii) would specify that to readmit a person 
with the ``same academic status'' means that the institution admits the 
student:
     To the same program to which he or she was last admitted 
by the institution or, if that program is no longer offered, the 
program that is most similar, unless the student requests or agrees to 
admission to a different program;
     At the same enrollment status that the student last held 
at the institution, unless the student requests or agrees to admission 
at a different enrollment status;
     With the same number of credit hours or clock hours 
completed previously by the student, unless the student is readmitted 
to a different program to which the completed credit hours or clock 
hours are not transferable;
     With the same academic standing (e.g., with the same 
satisfactory academic progress status) the student previously had;
     If the student is readmitted to the same program, for the 
first academic year in which the student returns, by assessing the same 
institutional charges that the student was or would have been assessed 
for the academic year during which the student left the institution;
     If the student is admitted to a different program, and for 
subsequent academic years for a student admitted to the same program, 
by assessing no more than the institutional charges that other students 
in the program are assessed for that academic year; and
     Waiving charges for equipment required in lieu of 
equipment the student paid for when the student was previously 
enrolled.
    In the case of a student who is not prepared to resume the program 
at the point where he or she left off or will not be able to complete 
the program, Sec.  668.18(a)(2)(iv) would require the institution to 
make reasonable efforts to help the student become prepared or to 
enable the student to complete the program including, but not limited 
to, providing refresher courses at no extra cost and allowing the 
student to retake a pretest at no extra cost. The institution would not 
be required to readmit the student if, after reasonable efforts by the 
institution, the student is still not prepared to resume the program at 
the point where he or she left off, or is still unable to complete the 
program. In addition, an institution would not be required to readmit a 
student if there are no reasonable efforts the institution can take to 
prepare the student to resume the program, or to enable the student to 
complete the program.
    The proposed regulations would define ``reasonable efforts'' as 
actions that do not place an undue hardship on the institution. An 
``undue hardship'' would be defined as requiring significant difficulty 
or expense to the institution. An institution would carry the burden to 
prove by a preponderance of the evidence that the student is not 
prepared to resume the program with the same academic status at the 
point where the student left off, or that the student will not be able 
to complete the program.
    Section 668.18(a)(3) would make clear that the requirements of this 
section apply to an institution even if that institution has undergone 
a change of ownership since the student ceased attendance.
    Finally, Sec.  668.18(a)(4) would make clear that the provisions of 
this section supersede any State law or other requirement that reduce, 
limit, or eliminate any right or benefit provided by this section.

Service in the Uniformed Services

    Section 668.18(b) would delineate what service in the uniformed 
services means for purposes of this section. This section would expand 
upon the statutory language to clarify that service in the uniformed 
services includes active duty for training and full-time National Guard 
duty under Federal authority (i.e., not National Guard service under 
authority of State law). In addition, the regulations would specify 
that qualifying service must be for more than 30 consecutive days under 
a call or order to active duty of more than 30 consecutive days.

Readmission Procedures

    Section 668.18(c) would list the statutory conditions under which 
an institution must readmit a servicemember. In addition, Sec.  
668.18(c)(2)(i) would require an institution to designate one or more 
offices for the purpose of receiving advance notice from students of 
their absence from the institution necessitated by service in the 
uniformed services, and notice from students of an intent to return to 
the institution. Section 668.18(c)(1)(i) would make clear that advance 
notice must be provided by the student as far in advance as is 
reasonable under the circumstances. However under Sec.  
668.18(c)(2)(ii) and (iii), such notice would not need to follow any 
particular format, nor would a student have to indicate as part of the 
notice whether the student intends to return to the institution. Also, 
the regulations would make clear that an institution may not set a 
brightline deadline for submission of any such notice, but must judge 
the timeliness of submission by the facts of a particular case. As such 
notice may be provided by an appropriate officer of the Armed Forces, 
Sec.  668.18(c)(2)(iv) would clarify who an ``appropriate officer'' is. 
The regulations would also provide that a student's notice of intent to 
return may be provided orally or in writing and would not need to 
follow any particular format. Section 668.18(c)(1)(ii) would make clear 
that the cumulative length of all previous absences by an affected 
student from the institution would include only the time the student 
spends actually performing service in the uniformed services. A period 
of absence from the institution before or after performing service in 
the

[[Page 42387]]

uniformed services would not count against the five year limit. For 
example, after the individual completes a period of service in the 
uniformed services, he or she is provided a certain amount of time to 
return to the institution. The period between completing the uniformed 
service and returning to the institution would not count against the 
five-year limit.

Exceptions to Advance Notice

    Section 668.18(d) would restate the statutory language for 
exceptions to advance notice.

Cumulative Length of Absence

    Section 668.18(e) would restate the statutory types of service that 
are not included in the cumulative length of the student's absence, 
including a brief description of the types of services referenced in 
titles 10 and 14 of the United States Code.

Notification of Intent to Reenroll

    Section 668.18(f) would restate the statutory provision providing 
that a student who fails to apply for readmission within the required 
periods does not automatically forfeit eligibility for readmission to 
the institution, but is subject to the institution's established leave 
of absence policy and general practices.

Documentation

    Section 668.18(g) would list the documentation required by the 
statute that a student must submit with an application for readmission. 
The regulations would list several specific types of documentation that 
satisfy the statutory documentation requirements, making clear that the 
types of documentation available or necessary will vary from case to 
case.

Termination of Readmission Eligibility

    Section 668.18(h) would list the circumstances listed in the 
statute under which a student's eligibility for readmission to an 
institution would be terminated, including a brief description of the 
types of circumstances referenced in title 10 of the United States 
Code.
    Reasons: The regulations are amended to reflect the changes made by 
the HEOA. The statutory provisions for readmission of servicemembers to 
institutions of higher education were based on the provisions of the 
Uniformed Services Employment and Reemployment Rights Act (USERRA) (38 
U.S.C. 4301-4334), which established the process for servicemembers to 
return to employment after serving on active duty. Therefore, in 
developing these proposed regulations, the Department sought to be as 
consistent as possible with the regulations implementing the USERRA. 
The Department believes that the purpose of these provisions, as with 
the USERRA, is to minimize the disruption to the lives of persons 
performing service in the uniformed services, allowing a student to 
return to an institution without penalty for having left because of 
service in the uniformed services.

General

    Because the statute refers to ``readmission'' of servicemembers, 
the Department believes that the statute was intended to apply not just 
to a student who began attendance at an institution and left because of 
service in the uniformed services, but also to a student who was 
admitted to an institution, but did not begin attendance because of 
service in the uniformed services.
    In line with the goal of minimizing the disruption to the lives of 
persons performing service in the uniformed services and to prevent an 
institution from unduly delaying an individual's readmission, the 
proposed regulations would require an institution to promptly readmit a 
student, and would define ``promptly readmit'' as readmitting a student 
into the next class or classes in the student's program unless the 
student requests a later date of admission, or unusual circumstances 
require the institution to admit the student at a later date. If, for 
example, an institution must make efforts to help the student become 
prepared to resume the program, and such efforts would not be completed 
in time for the student to begin the next class, a later date of 
admission would be justified.
    The proposed requirements in Sec.  668.18(a)(2)(iii) for 
readmitting a person with the ``same academic status'' are consistent 
with USERRA regulations (20 CFR 1002.191 and 1002.192), which require 
an employer to employ a returning servicemember in the same position he 
or she left, so as to not penalize the individual for having left to 
serve in the uniformed services. The Department has chosen to focus 
only on the readmission of a servicemember by requiring that, if the 
student is readmitted to the same program, for the first academic year 
in which the student returns, the institution would have to assess the 
same institutional charges that the student had or would have been 
assessed for the academic year during which the student left the 
institution. However, this protection would not apply to subsequent 
years, when the institution could assess the institutional charges that 
other students in the program are assessed for that academic year.
    To address concerns voiced by non-Federal negotiators that the 
regulations would not allow an institution to readmit a student with a 
different academic status, even if the student wanted the change, the 
regulations would make clear that the institution may admit the student 
with a different academic status if the student requests or agrees to 
the change.
    Consistent with USERRA regulations (20 CFR 1002.198) which require 
an employer to make reasonable efforts, if necessary, to help an 
employee become qualified for the reemployment position, Sec.  
668.18(a)(2)(iv) would require the institution to make reasonable 
efforts, if necessary, to help a returning student become prepared or 
to enable the student to complete the program including, but not 
limited to, providing refresher courses at no extra cost and allowing 
the student to retake a pretest at no extra cost. The Department 
believes requiring an institution to make such an effort is in line 
with the goal of allowing a student to return to an institution without 
penalty for having left because of service in the uniformed services. 
To ensure that such an effort does not unduly burden the institution 
financially or administratively, the proposed regulations would use the 
USERRA regulations definitions of ``reasonable efforts''--actions that 
do not place an undue hardship on the institution and ``undue 
hardship''--requiring significant difficulty or expense to the 
institution.
    In addition, as USERRA regulations (20 CFR 1002.139) provide an 
employer with a degree of flexibility in meeting its reemployment 
obligations by not requiring an employer to reemploy an individual 
under very limited circumstances, so would Sec.  668.18(a)(2)(iv)(B) 
provide institutions with some flexibility to not readmit a student if, 
(1) after reasonable efforts by the institution, the student is still 
not prepared to resume the program at the point where he or she left 
off, or is still unable to complete the program; or (2) if there are no 
reasonable efforts the institution can take to prepare the student to 
resume the program, or to enable the student to complete the program. 
Consistent with USERRA regulations (20 CFR 1002.139), an institution 
would carry the burden to prove by a preponderance of the evidence that 
the student is not prepared to resume the program with the same 
academic status at the point where the student left off, or that the 
student will not be able to complete the program.

[[Page 42388]]

    Consistent with the Department's practice of treating an 
institution that has undergone a change of ownership as the same 
institution, Sec.  668.18(a)(3) provides that the requirements of this 
section would apply to an institution even if that institution has 
undergone a change of ownership since the student ceased attendance.
    As with USERRA regulations (20 CFR 1002.7(b)), Sec.  668.18(a)(4) 
would make clear that the provisions of this section supersede any 
State law or other requirement that reduces, limits, or eliminates any 
right or benefit provided by this section. This provision would make it 
possible, for example, to readmit a servicemember into a class for a 
semester even if that class was at the maximum enrollment level set by 
the institution's State. The preemption only applies when it is the 
admission of the returning servicemember that would be prevented by the 
State law or other requirement. The institution is expected to take 
other steps to come into compliance with the State law or other 
requirements for future periods of enrollment. As with USERRA 
regulations, these regulations would not supersede, nullify or diminish 
any Federal or State law (including any local law or ordinance), 
contract, agreement, policy, plan, practice, or other matter that 
establishes an individual's right or benefit that is more beneficial 
than, or is in addition to, a right or benefit provided under the HEA.

Service in the Uniformed Services

    Section 668.18(b) clarifies that service in the uniformed services 
includes active duty for training, because it is a form of active duty 
in the Armed Forces. Consistent with USERRA regulations (20 CFR 
1002.57), service in the uniformed services would include full-time 
National Guard duty under Federal authority, but not National Guard 
service under authority of State law, which is not considered to be 
service in the uniformed services for purposes of these provisions. As 
explained in 20 CFR 1002.57 of the USERRA regulations:

    The National Guard has a dual status. It is a Reserve component 
of the Army, or, in the case of the Air National Guard, of the Air 
Force. Simultaneously, it is a State military force subject to call-
up by the State Governor for duty not subject to Federal control, 
such as emergency duty in cases of floods or riots. National Guard 
members may perform service under either Federal or State authority, 
but only Federal National Guard service is covered by USERRA.

    In addition, the regulations would specify that qualifying service 
must be for more than 30 consecutive days under a call or order to 
active duty of more than 30 consecutive days. This would exclude 
shorter periods of Reserve and National Guard service from being added 
together to trigger this provision.

Readmission Procedures

    Section 668.18(c) would list the statutory conditions under which 
an institution must readmit a servicemember. An institution would be 
required to designate one or more offices for the purpose of receiving 
advance notice from students of their absence from the institution 
necessitated by service in the uniformed services, and notice from 
students of an intent to return to the institution to ease 
administrative burden for institutions and to assist students in 
directing their notice to the appropriate individuals.
    Also, consistent with USERRA regulations (20 CFR 1002.85), to ease 
administrative burden for institutions, a student would have to provide 
notice that he or she is leaving as far in advance as is reasonable 
under the circumstances. However, also consistent with USERRA 
regulations (20 CFR 1002.85 and 1002.88), to ensure that a student's 
advance notice is not subject to unreasonable requirements by an 
institution: (1) Such notice would not need to follow any particular 
format; (2) an institution would have to judge the timeliness of 
submission by the facts of a particular case; and (3) a student would 
not have to indicate as part of the notice whether the student intends 
to return to the institution. For the same reason, the regulations 
would also provide that a student's notice of intent to return may be 
provided orally or in writing and would not need to follow any 
particular format (consistent with USERRA regulations section 
1002.118).
    Consistent with USERRA regulations (20 CFR 1002.100), Sec.  
668.18(c)(1)(ii) would make clear that the cumulative length of all 
previous absences by an affected student from the institution would 
include only the time the student spends actually performing service in 
the uniformed services. This means that the time a servicemember spent 
away from the institution either before, after, or in-between periods 
of service in the uniformed services does not count toward the maximum 
amount of time the servicemember may spend in active service before 
losing the protections in this provision.

Documentation

    The list of specific types of documentation was included to assist 
students and institutions in identifying documents that satisfy the 
statutory documentation requirements.

Non-Title IV Revenue Requirement (90/10)

Institutional Eligibility and Sanctions (Sec. Sec.  668.14(b)(16), 
668.28(c), and 668.13(c))

    Statute: The HEOA moved the requirement that a proprietary 
institution derive at least 10 percent of its revenue from sources 
other than title IV, HEA program funds from the institutional 
eligibility provisions in section 102(b) of the HEA to the general 
provisions in section 487(d) of the HEA. As a result, a proprietary 
institution that does not satisfy the 90/10 revenue requirement for a 
fiscal year, no longer loses its eligibility to participate in the 
title IV, HEA programs. Instead, as provided in section 487(d)(2) of 
the HEA, the institution's participation becomes provisional for two 
fiscal years. If the institution does not satisfy the 90/10 revenue 
requirement for two consecutive fiscal years, it loses its eligibility 
to participate in the title IV, HEA programs for at least two fiscal 
years.
    During the two fiscal years the institution is provisionally 
certified because it failed to satisfy the 90/10 revenue requirement 
for a fiscal year, the institution's provisional certification 
terminates on the expiration date of its program participation 
agreement or the date it loses its eligibility to participate because 
it failed to satisfy the requirement for two consecutive fiscal years. 
To regain eligibility, the institution must demonstrate that it 
complied with all eligibility and certification requirements under 
section 498 of the HEA for a minimum of two fiscal years after the 
fiscal year it became ineligible.
    Current Regulations: The regulations in 34 CFR 600.5(a)(8), (e), 
(f), and (g), identify the requirements for, and consequences of 
failing, the 90/10 revenue provision.
    Proposed Regulations: In general, the proposed regulations would 
remove all of the 90/10 revenue provisions from 34 CFR 600.5 and 
relocate those provisions, as amended by the HEOA, to subpart B of part 
668. Accordingly, proposed Sec.  668.14(b)(16) would amend the program 
participation agreement to specify that a proprietary institution must 
derive at least 10 percent of its revenue for each fiscal year from 
sources other than title IV, HEA program funds. If an institution does 
not satisfy the 90/10 requirement, the proposed regulations in Sec.  
668.28(c) would incorporate the statutory consequences and require the 
institution to notify the Secretary no later than 45 days after the end 
of its

[[Page 42389]]

fiscal year that it failed the 90/10 requirement. Also, and in keeping 
with the provisional certification requirement in the statute, Sec.  
668.13(c) would be amended by adding proposed paragraph (1)(ii) to 
provide that a proprietary institution's certification automatically 
becomes provisional if it fails the 90/10 requirement for any fiscal 
year.
    Reasons: The proposed regulations reflect the statutory 
requirements. The provision under which an institution would notify the 
Department that it failed the 90/10 requirement no later than 45 after 
its fiscal year, parallels, but would shorten, the current 90-day 
timeframe in 34 CFR 600.5(f). An institution at risk of failing the 90/
10 requirement is expected to monitor its revenue sources and amounts 
carefully throughout the year, and is expected to know if it failed 
shortly after the end of its fiscal year. Consequently, we believe that 
45 days provides ample time for the institution to confirm on-going 
assessments of its compliance with this requirement.

Calculating the Revenue Percentage (Sec.  668.28(a))

    Statute: Section 487(d) of the HEA prescribes the requirements that 
proprietary institutions must follow in calculating their 90/10 revenue 
percentage. Under these requirements, an institution must--
    (1) Use the cash basis of accounting, except for certain loans made 
by the institution;
    (2) Consider as revenue only those funds generated by the 
institution from:
     Tuition, fees, and other institutional charges for 
students enrolled in eligible programs.
     Activities conducted by the institution that are necessary 
for the education and training of the institution's students, if those 
activities are conducted on campus or at a facility under the control 
of the institution, are performed under the supervision of a member of 
the institution's faculty, and are required to be performed by all 
students in a specific educational program at the institution.
     Funds paid by a student, or on behalf of a student by a 
party other than the institution, for an education or training program 
that is not eligible for title IV, HEA program funds, if the program is 
approved or licensed by the appropriate State agency, is accredited by 
an accrediting agency recognized by the Department, or provides an 
industry-recognized credential or certification;
    (3) Presume that any title IV, HEA program funds are disbursed or 
delivered to or on behalf of a student will be used to pay the 
student's tuition, fees, or other institutional charges, regardless of 
whether the institution credits those funds to the student's account or 
pays those funds directly to the student, except to the extent that the 
student's tuition, fees, or other institutional charges are satisfied 
by:
     Grant funds provided by non-Federal public agencies or 
private sources independent of the institution;
     Funds provided under a contractual arrangement with a 
Federal, State, or local government agency for the purpose of providing 
job training to low-income individuals who are in need of that 
training;
     Funds used by a student from savings plans for educational 
expenses established by or on behalf of the student and which qualify 
for special tax treatment under the Internal Revenue Code of 1986; or
     Institutional scholarships.
    (4) Include institutional aid as revenue to the school only as 
follows:
     For loans made by the institution on or after July 1, 2008 
and prior to July 1, 2012, the net present value (NPV) of those loans 
made by the institution during the applicable institutional fiscal year 
accounted for on an accrual basis and estimated in accordance with 
generally accepted accounting principles and related standards and 
guidance, if the loans are bona fide as evidenced by enforceable 
promissory notes; are issued at intervals related to the institution's 
enrollment periods; and are subject to regular loan repayments and 
collections.
     For loans made by the institution on or after July 1, 
2012, only the amount of loan repayments received during the applicable 
institutional fiscal year, excluding repayments on loans made and 
accounted for which the NPV was used.
     For scholarships provided by the institution, only those 
scholarships provided by the institution in the form of monetary aid or 
tuition discounts based upon the academic achievements or financial 
need of students, disbursed during each fiscal year from an established 
restricted account, and only to the extent that funds in that account 
represent designated funds from an outside source or from income earned 
on those funds.
    (5) For each student who receives a loan on or after July 1, 2008, 
and prior to July 1, 2011, that is authorized under section 428H of the 
HEA or that is a Federal Direct Unsubsidized Stafford Loan, treat as 
revenue received by the institution from sources other than funds 
received under this title, the amount by which the disbursement of the 
loan received by the institution exceeds the limit on such loan in 
effect on the day before the date of enactment of the Ensuring 
Continued Access to Student Loans Act (ECASLA) of 2008; and
    (6) Exclude from revenues--
     The amount of funds the institution received under part C 
(Federal Work Study), unless the institution used those funds to pay a 
student's institutional charges.
     The amount of funds the institution received under subpart 
4 of part A (LEAP, SLEAP, or GAP).
     The amount of funds provided by the institution as 
matching funds for a title IV, HEA program.
     The amount of title IV, HEA program funds provided by the 
institution that are required to be refunded or returned.
     The amount charged for books, supplies, and equipment, 
unless the institution includes that amount as tuition, fees, or other 
institutional charges.
    Current regulations: The regulations in 34 CFR 600.5 address many, 
but not all, of the statutory requirements for calculating the 90/10 
revenue percentage. However, as discussed previously, the regulations 
in this section would be removed.
    Section 668.23(d)(4) requires a proprietary institution to report 
its 90/10 ratio in a footnote to its audited financial statements.
    Proposed regulations: Proposed Sec.  668.28(a) incorporates the 
statutory requirements.
    We propose to implement the statutory provision relating to 
counting revenue from non-title IV eligible programs by providing that 
these programs may prepare students to take an examination for an 
industry-recognized credential or certificate issued by an independent 
third-party, provide training needed for students to maintain State 
licensing requirements, or provide additional training for 
practitioners.
    An institution would continue to report the revenue percentages in 
a footnote to its audited financial statements, but the revisions in 
proposed Sec.  668.23(d)(4) would require the institution to identify 
in that footnote the non-Federal and Federal revenues by category.
    With regard to institutional loans for which an NPV would be 
calculated, the proposed regulations establish that institutional loans 
would have to be credited in-full to the student's account, be 
evidenced by standalone repayment agreements between students and the 
institution, and be separate from

[[Page 42390]]

enrollment contracts signed by students. Loans made to students by 
third parties but subsequently acquired by the institution would not 
meet this definition of institutional loans, and could not be included 
in either of the NPV calculations. Moreover, all payments from the 
institution to acquire the loans would be counted against any non-
Federal revenues from the loan proceeds the institution received.
    For the purpose of counting revenue from loan funds in excess of 
the loan limits in effect prior to ECASLA, we propose that institutions 
count the excess amount on a payment-period basis.
    Finally, in proposed appendix C to subpart B of part 668 we 
illustrate how an institution calculates its 90/10 revenue percentage.
    Reasons: To a large extent, the proposed regulations adopt the 
statutory provisions which, also to a large extent, reflect current 
regulations and practice. However, we are incorporating suggestions 
from some of the non-Federal negotiators in implementing three of the 
new provisions for non-Federal sources of revenue that may be included 
in the 90/10 calculation. First, we would identify the types of non-
title IV eligible programs from which an institution could count, as 
revenue, the funds paid for students taking those programs. We believe 
this eliminates much of the ambiguity regarding whether the revenue 
from a non-title IV eligible program offered by an institution could be 
counted for 90/10 purposes. Second, for purposes of the 90/10 
calculation, we are identifying the elements that will distinguish an 
institutional loan from other types of student account receivables. 
Third, the regulations would allocate the excess loan funds that are 
treated as non-Federal revenue to each payment period to simplify the 
90/10 calculation. This will minimize some complexities that may result 
if the excess funds were only counted after all of the pre-ECASLA loan 
funds were provided to a student, particularly if the disbursements for 
a loan are received by an institution in two different fiscal years.
    An institution would continue to report its 90/10 ratio in a 
footnote included with the institution's annual audited financial 
statements. Given the additional revenues that may be counted as non-
Federal funds in this calculation, and that Federal funds may be 
treated as non-Federal funds (i.e., loan amounts in excess of the pre- 
ECASLA limits), we believe it is necessary for the institution to 
report in that footnote the amounts of the revenues, by category, 
derived from Federal and non-Federal funds that are included in its 90/
10 calculation. The certified public accountant that prepares the 
institution's audited financial statements will be required to review 
that information and test the institution's calculation. On a case by 
case basis, Department staff will continue to review the accountant's 
work papers when more information is needed to determine if the 
calculation is correct.
    Some of the non-Federal negotiators suggested that the regulations 
permit tuition discounts given to students be counted for 90/10 
purposes, since tuition discounts are mentioned in the HEA, along with 
monetary aid provided to students, as types of scholarships provided by 
a proprietary institution. The HEA also requires that these 
scholarships be disbursed to a student's account from an established 
restricted account at the institution holding funds from an outside 
source, or income earned on those funds. The proposed regulations 
implement the statutory provision that institutions may pay 
scholarships with tuition discounts that are credited from such 
restricted accounts.
Net Present Value (NPV) (Sec.  668.28(c))
    Statute: For loans an institution makes to students on or after 
July 1, 2008 and prior to July 1, 2012, section 497(d)(1)(D)(i) of the 
HEA requires an institution to count as revenue the NPV of the loans it 
makes during a fiscal year.
    Current regulations: There are no current regulations regarding 
NPV, however 34 CFR 600.5(d)(3)(i) allows an institution to count as 
revenue the amount of loan repayments it receives on institutional 
loans during its fiscal year.
    Proposed regulations: In proposed Sec.  668.28(b), the Department 
defines the NPV as the sum of the discounted cash flows R\t\/(1+i)\t\. 
The variable ``i'' is the discount rate, which would, for 90/10 
purposes, be the most recent annual inflation rate. The variable ``t'' 
is the time or period of the cash flow, in years, starting from the 
time the loan entered repayment. The variable ``R\t\'' is the net cash 
flow at time or period t.
    If the institution's loans made during the fiscal year have 
substantially the same repayment period, the proposed regulations 
provide that an institution may use that repayment period for those 
loans to set the range of values of variable ``t'' in the NPV formula. 
However, if an institution's loans have different repayment periods, 
the institution would group the loans by repayment period and use the 
repayment period for each group to set the range of values for variable 
``t''. For each group of loans, as applicable, the institution would 
multiply the total annual payments due on the loans by the 
institution's collection rate (the total amount of payments collected 
divided by the total amount of payments due). The resulting amount is 
the cash flow used for variable ``R'' in each period ``t'' for each 
group of loans for which an NPV is calculated. Proposed appendix C to 
subpart B of part 668 illustrates this NPV calculation.
    As a simpler alternative to performing the NPV calculation, the 
proposed regulations allow an institution the option to use 50 percent 
of the total amount of loans it made during the fiscal year as the NPV. 
However, if the institution chooses to use this alternative, it may not 
sell any of the associated loans until they have been in repayment for 
at least two years.
    Reasons: The Department would implement the statutory requirement 
to establish the net present value of an institution's loans by 
adopting the formula--NPV = sum of the discounted cash flows R\t\/
(1+i)\t\. However, this formula is generally intended for, and used 
primarily, in making investment decisions. Nevertheless, the discount 
rate ``i'' is the rate of return that could be earned on an investment 
in the financial markets with similar risk, or more generally, the rate 
of return sought or expected by the investor. Translating this for 90/
10 purposes, the formula determines the NPV of institutional loans by 
taking into consideration the discounted value caused by inflation.
    The proposed regulations define the expected cash flows represented 
by variable ``R'' to be the annual payments due on the loans (i.e., the 
scheduled payments) multiplied by the institution's loan collection 
rate (the total amount of payments collected on loans for a fiscal year 
divided by the total amount of payments due on those loans for that 
year). In this way, the expected cash flows are adjusted to take into 
account loans that are not collected or loan payments that are not 
collected timely. The institution's loan collection rate should be 
based on the institution's own loan collection history, and may be a 
prior annual rate or historical rate covering several years. We seek 
public comment on other ways that an institution may establish a loan 
collections rate. In any case, the institution would need to document 
that rate and the institution's auditor would examine that information 
as a part of the institution's annual financial statement audit.

[[Page 42391]]

    With regard to the alternative provision that allows an institution 
to use 50 percent of the total amount of loans it made during the 
fiscal year as the NPV, we propose this option as an administrative 
convenience for institutions that either prefer a simpler method to 
establish the NPV or who do not need the additional non-Federal 
revenues that might be counted if the formula were used. This option 
provides a conservative, simple calculation for the NPV that is 
intended to be a fair compromise in exchange for choosing not to 
perform the NPV calculations. However, if the institution chooses this 
option, it may not sell the loans associated with the 50 percent 
calculation until those loans have been in repayment for two years. As 
provided in section 487(d)(1)(D)(i)(III) of the HEA, institutional 
loans are subject to regular loan repayment and collections. The 
regular NPV formula would use the institution's own collection rate, 
but the alternative formula would not. To make sure that alternative 
formula institutional loans are legitimate, the institution may not 
sell them until they have been in repayment for two years. This will 
permit the Department, or another oversight entity, to determine 
whether these loans were subject to regular loan repayment and 
collection as required by the statute. Moreover, we wish to avoid an 
outcome where an institution would sell the loans in the short term for 
less than the 50 percent amount it claimed for 90/10 purposes.

Institutional Plans for Improving the Academic Program (Sec.  
668.43(a))

    Statute: As part of the required information on its academic 
program that an institution must make available to prospective and 
enrolled students under section 485(a) of the HEA, the HEOA adds the 
requirement that an institution make available any plans the 
institution has for improving that academic program.
    Current Regulations: Section 668.43(a)(5) requires an institution 
to make readily available to enrolled and prospective students 
information on the academic program of the institution, including (1) 
the current degree programs and other educational and training 
programs; (2) the instructional, laboratory, and other physical 
facilities that relate to the academic program; and (3) the 
institution's faculty and other instructional personnel.
    Proposed Regulations: Section 668.43(a)(5) would be amended to add 
to the information on the academic program of the institution that an 
institution must make readily available to enrolled and prospective 
students any plans by the institution for improving the academic 
program of the institution. An institution would be allowed to 
determine what a ``plan'' is, including when a plan becomes a plan.
    Reasons: The regulations are amended to reflect the changes made by 
the HEOA.

Peer-to-Peer File Sharing and Copyrighted Material (Sec. Sec.  
668.14(b) and 668.43(a))

    Statute: The HEOA added a new requirement to section 487 of the HEA 
(Program Participation Agreement) under which an institution must 
certify that it has developed plans to effectively combat the 
unauthorized distribution of copyrighted material (including through 
the use of a variety of technology-based deterrents) and will, to the 
extent practicable, offer alternatives to illegal downloading or peer-
to-peer distribution of intellectual property, as determined by the 
institution in consultation with the chief technology officer or other 
designated officer of the institution.
    In addition, as part of the required information an institution 
must make available to prospective and enrolled students, the HEOA 
added new subparagraph (P) to section 485(a)(1) of the HEA to require a 
description of institutional policies and sanctions related to the 
unauthorized distribution of copyrighted material. This description 
includes (1) an annual disclosure that explicitly informs students that 
unauthorized distribution of copyrighted material, including peer-to-
peer file sharing, may subject the students to civil and criminal 
liabilities; (2) a summary of the penalties for violation of Federal 
copyright laws; and (3) the institution's policies with respect to 
unauthorized peer-to-peer file sharing, including disciplinary actions 
that are taken against students who engage in unauthorized distribution 
of copyrighted materials using the institution's information technology 
system.
    Current Regulations: Section 668.41(c) requires an institution to 
provide to enrolled students an annual notice containing a list and 
brief description of the consumer information it must disclose and the 
procedures for obtaining this consumer information. The term notice is 
defined in Sec.  668.41(a) as a means of notification of the 
availability of information an institution is required to disclose on a 
one-to-one basis through a direct individual notice to each enrolled 
student. This notice must be made through an appropriate mailing or 
publication, including direct mailing through the U.S. Postal Service, 
campus mail or electronic mail. Posting on Internet or Intranet Web 
sites does not constitute notice. If the institution discloses the 
consumer information listed in Sec.  668.41(c) by posting the 
information on a Web site, it must include in the notice the exact 
electronic address at which the information is posted, and a statement 
that the institution will provide a paper copy of the information on 
request.
    Section 668.41(a) defines a prospective student as an individual 
who has contacted an eligible institution requesting information 
concerning admission to that institution.
    Proposed Regulations:
Program Participation Agreement (PPA)
    Section 668.14(b)(30)(i) would implement section 487(a)(29)(A) of 
the HEA to require an institution, as a condition of participation in a 
title IV, HEA program, to agree that it has developed and implemented 
written plans to effectively combat the unauthorized distribution of 
copyrighted material by users of the institution's network without 
unduly interfering with the educational and research use of the 
network.
    An institution would have to include in its plan:
     The use of one or more technology-based deterrents;
     Mechanisms for educating and informing its community about 
appropriate versus inappropriate use of copyrighted material. The 
written plan would include the information contained in proposed Sec.  
668.43(a)(10). These mechanisms could include any additional 
information and approaches determined by the institution to contribute 
to the effectiveness of the plan, such as including pertinent 
information in student handbooks, honor codes, and codes of conduct in 
addition to e-mail and/or paper disclosures.
     Procedures for handling unauthorized distribution of 
copyrighted material, including disciplinary procedures; and
     Procedures for periodically reviewing the effectiveness of 
the plans to combat the unauthorized distribution of copyrighted 
materials by users of the institution's network using relevant 
assessment criteria. It would be left to each institution to determine 
what relevant assessment criteria are.
    The regulations would make clear that no particular technology 
measures are favored or required for inclusion in an institution's 
plans, and each institution retains the authority to determine what its 
particular plans for compliance will

[[Page 42392]]

be, including those that prohibit content monitoring.
    Proposed Sec.  668.14(b)(30)(ii) would implement section 
487(a)(29)(B) of the HEA by requiring that an institution, in 
consultation with the chief technology officer or other designated 
officer of the institution, to the extent practicable, offer legal 
alternatives to illegal downloading or otherwise acquiring copyrighted 
material, as determined by the institution. The proposed regulations 
would also require that institutions (1) be required to periodically 
review the legal alternatives for downloading or otherwise acquiring 
copyrighted material and (2) make the results of the review available 
to their students through a Web site or other means.
Consumer Information
    Proposed Sec.  668.43(a)(10) would implement section 485(a)(1)(P) 
of the HEA. Information regarding institutional policies and sanctions 
related to the unauthorized distribution of copyrighted material would 
be included in the list of institutional information provided upon 
request to prospective and enrolled students. This information would be 
required to (1) explicitly inform its students that unauthorized 
distribution of copyrighted material, including peer-to-peer file 
sharing, may subject a student to civil and criminal liabilities; (2) 
include a summary of the penalties for violation of Federal copyright 
laws; and (3) describe the institution's policies with respect to 
unauthorized peer-to-peer file sharing, including disciplinary actions 
that are taken against students who engage in illegal downloading or 
unauthorized distribution of copyrighted materials using the 
institution's information technology system. The Department will work 
with representatives of copyright holders and institutions to develop a 
summary of the civil and criminal penalties for violation of Federal 
copyright laws to include as part of the Federal Student Aid Handbook 
that an institution may use to meet this requirement.
    As current Sec.  668.41(c) requires an institution to provide to 
enrolled students an annual notice containing a list and brief 
description of the consumer information it must disclose and the 
procedures for obtaining this consumer information, an institution 
would be required to add to this list the fact that it must make 
readily available information regarding institutional policies and 
sanctions related to the unauthorized distribution of copyrighted 
material. Consistent with the current definition of notice in Sec.  
668.41(a), an institution would be required to provide this annual 
notice on a one-to-one basis through a direct individual notice to each 
enrolled student. This notice must be made through an appropriate 
mailing or publication, including direct mailing through the U.S. 
Postal Service, campus mail or electronic mail. Posting on Internet or 
Intranet Web sites does not constitute notice. If the institution 
discloses the consumer information by posting the information on a Web 
site, it must include in the notice the exact electronic address at 
which the information is posted, and a statement that the institution 
will provide a paper copy of the information on request.
    The current definition of prospective student in Sec.  668.41(a) 
would be used--i.e., an individual who has contacted an eligible 
institution requesting information concerning admission to that 
institution.
    Reasons: The regulations are amended to reflect the changes made by 
the HEOA.
    These proposed regulations reflect the work of a subcommittee of 
representatives of institutions, digital content owners, and Department 
staff that was formed by the larger committee to address copyright 
issues. The members of the subcommittee were able to successfully 
reconcile vastly disparate viewpoints on several contentious parts of 
the statute to develop proposed regulatory language that was then 
presented to, and tentatively agreed upon by, the full committee. The 
Department has chosen to preserve the compromises made by all sides on 
this issue by including the proposed regulatory language on which 
tentative agreement was reached. The Department believes that the 
proposed regulations provide enough specificity to emphasize that 
institutions must take seriously their role in combating unauthorized 
distribution of copyrighted materials by users of their network, while 
providing enough flexibility to institutions in how they combat any 
unauthorized distribution to acknowledge the differences among 
institutions and their networks, as well as variances in the scope of 
the problem of unauthorized distribution of copyrighted material.
Program Participation Agreement
    The Department believes the intent of the statute was to require 
institutions to actively combat the unauthorized distribution of 
copyrighted material. Accordingly, Sec.  668.14(b)(30)(i) would require 
an institution to agree as part of its program participation agreement 
that it not only has developed a plan to do so, but has also 
implemented that plan. In recognition that there must be a balance 
between network security and the functioning of a network for its 
intended use, Sec.  668.14(b)(30)(i) would also make clear that an 
institution is not required to take measures to effectively combat the 
unauthorized distribution of copyrighted material that would unduly 
interfere with the educational and research use of the network. The 
Department believes that all institutions can achieve this balance, 
given the flexibility provided by the proposed regulations allowing 
individual institutions to determine how to best effectively combat 
such unauthorized distribution. Institutions should not view this 
provision as a justification for not effectively combating the 
unauthorized distribution of copyrighted material. Although there was 
some discussion of requiring an institution to effectively combat the 
unauthorized distribution of copyrighted material by only student users 
of the institution's network, the regulatory language on which 
tentative agreement was reached would apply the requirement more 
broadly to ``users.'' This approach ensures that institutions will be 
more likely to deter and prevent downloads of copyrighted material by 
employees and members of the public that may use computers at a school 
library, for example, and also allow them to identify illegal downloads 
being made by students who are not accessing the computer systems using 
their student accounts. The Department believes that this approach 
meets the intent of the statute that institutions secure their networks 
from misuse by individuals who are given access to the networks.
    In recognition of the diversity among institutions and how 
technology is continuously evolving, Sec.  668.14(b)(30)(i)(A) would 
leave it up to an institution's discretion to determine how many and 
what type of technology-based deterrents it uses as a part of its 
plan--although every institution must employ at least one. The 
Statement of Managers in the Conference Report for the HEOA discusses 
this issue on pages 547-549 (H. R. Conf. Rep. No. 110-803, at 547-549 
(2008)), and provides context and clarification to this requirement as 
follows:

    Experience shows that a technology-based deterrent can be an 
effective element of an overall solution to combat copyright 
infringement, when used in combination with other internal and 
external solutions to educate users and enforce institutional 
policies.

[[Page 42393]]

    Effective technology-based deterrents are currently available to 
institutions of higher education through a number of vendors. These 
approaches may provide an institution with the ability to choose 
which one best meets its needs, depending on that institution's own 
unique characteristics, such as cost and scale. These include 
bandwidth shaping, traffic monitoring to identify the largest 
bandwidth users, a vigorous program of accepting and responding to 
Digital Millennium Copyright Act (DMCA) notices, and a variety of 
commercial products designed to reduce or block illegal file 
sharing.
    Rapid advances in information technology mean that new products 
and techniques are continually emerging. Technologies that are 
promising today may be obsolete a year from now and new products 
that are not even on the drawing board may, at some point in the not 
too distant future, prove highly effective. The Conferees intend 
that this Section be interpreted to be technology neutral and not 
imply that any particular technology measures are favored or 
required for inclusion in an institution's plans. The Conferees 
intend for each institution to retain the authority to determine 
what its particular plans for compliance with this Section will be, 
including those that prohibit content monitoring. The Conferees 
recognize that there is a broad range of possibilities that exist 
for institutions to consider in developing plans for purposes of 
complying with this Section.

    The Department believes that some institutions may be able to 
effectively combat the unauthorized distribution of copyrighted 
material using only one of the four types of technology-based 
deterrents (bandwidth shaping, traffic monitoring, accepting and 
responding to DMCA notices, or a commercial product designed to reduce 
or block illegal file sharing) while others may need to employ a 
combination of such deterrents.
    The additional proposed components of an effective plan in Sec.  
668.14(b)(30)(i)(B) and (C) reflect general agreement by the committee 
that a plan to effectively combat the unauthorized distribution of 
copyrighted material by users of the institution's network should 
include an educational component and a description of the institution's 
procedures for handling the unauthorized distribution of copyrighted 
material to provide a deterrent by ensuring that users are made aware 
that the unauthorized distribution of copyrighted material is illegal, 
what actions constitute illegal distribution of copyrighted material, 
and the potential penalties for the unauthorized distribution of 
copyrighted materials.
    The final component of the plan, in proposed Sec.  
668.14(b)(30)(i)(D), would require an institution to periodically 
review its plan to evaluate whether it is working. One of the most 
controversial aspects of the proposed regulations was the evaluation of 
whether a plan was effectively combating the unauthorized distribution 
of copyrighted material. There was extensive discussion over how a plan 
should be reviewed to determine its effectiveness, and how much 
discretion institutions should be given in this area. Ultimately, 
tentative agreement was reached on a provision requiring an institution 
to periodically review its plan using relevant assessment criteria, 
permitting an institution discretion to determine the most appropriate 
criteria. As the specifics of a plan will be determined by an 
institution, the Department believes that the institution is in the 
best position to determine the appropriate criteria to assess its plan. 
In some cases, appropriate assessment criteria might be process-based, 
so long as the institution's information system information does not 
contradict such a determination. Such process-based criteria might look 
at whether the institution is following best practices, as laid out in 
guidance worked out between copyright owners and institutions or as 
developed by similarly situated institutions that have devised 
effective methods to combat the unauthorized distribution of 
copyrighted material. In other cases, assessment criteria might be 
outcome-based. The criteria might look at whether there are reliable 
indications that a particular institution's plans are effective in 
combating the unauthorized distribution of copyrighted material. Among 
such indications may be ``before and after'' comparisons of bandwidth 
used for peer-to-peer applications, low recidivism rates, and 
reductions (either in absolute or in relative numbers) in the number of 
legitimate electronic infringement notices received from rights 
holders. The institution is expected to use the assessment criteria it 
determines are relevant to evaluate how effective its plans are in 
combating the unauthorized distribution of copyrighted materials by 
users of the institution's networks.
    In addition to reflecting the statute requiring that institutions, 
to the extent practicable, offer legal alternatives to illegal 
downloading or otherwise acquiring copyrighted material, proposed Sec.  
668.14(b)(30)(ii) reflects general agreement that institutions should 
periodically review the legal alternatives, and make available the 
results of the review to its students through a Web site or other 
means, as such legal alternatives are likely to change over time. Based 
on the discussions of the subcommittee, the Department anticipates that 
individual institutions, national associations, and commercial entities 
will develop and maintain up-to-date lists that may be referenced for 
compliance with this provision.

Consumer Information

    For consistency, Sec.  668.43(a)(10) would implement the consumer 
information portion of the statute within the existing framework and 
using the definitions found in current regulations. The committee 
discussed whether the statutorily required annual disclosure should be 
a one-to-one notice provided directly to each student by the 
institution. However, as the statute requires that most institutional 
information in this section of the HEA instead be made readily 
available to prospective and enrolled students, the information 
regarding institutional policies and sanctions related to the 
unauthorized distribution of copyrighted material would be handled in 
the same manner (i.e., included in the list of institutional 
information that an institution must make available pursuant to Sec.  
668.43). The Department believes that the required disclosure of 
institutional policies and sanctions related to the unauthorized 
distribution of copyrighted materials can be met without imposing the 
burden of a one-to-one notification on institutions.
    There was some discussion by the committee of extending the 
statutory provision to require an institution to disclose the required 
information to employees of the institution in addition to students. As 
the statute does not require disclosure of this information to 
employees, this would not be mandated in the regulations. The 
Department believes that employees of an institution are more likely to 
be aware that unauthorized distribution of copyrighted material is 
illegal and does not believe that the benefit of such disclosure would 
justify the potential added burden to the institution. However, we 
encourage institutions to make such information available to employees 
and the general public if they believe it will be beneficial.

Consumer Information (Sec. Sec.  668.41 and 668.45)

    Statute: Section 485(a) of the HEA lists the types of information 
that institutions are required to make available to prospective and 
enrolled students. Section 488 of the HEOA expands the list of consumer 
information requirements in section 485(a)(1) of the HEA, and from that

[[Page 42394]]

expanded list, Team V discussed a number of the requirements, including 
the following:
     The placement and types of employment obtained by 
graduates of the institution's degree or certificate programs;
     The types of graduate and professional education in which 
graduates of the institution's four-year degree programs enrolled; and
     The retention rates of the certificate or degree seeking, 
first-time, full-time, undergraduate students entering the institution.
    Note that the information required by section 485(a)(1) of the HEA 
addressing ``institutional policies and sanctions that relate to 
copyright infringements'' and ``the fire safety report'' (that is 
prepared by the institution pursuant to section 485(i) of the HEA) is 
discussed elsewhere in this preamble.
    Section 488 of the HEOA also amends the calculation procedures for 
completion and graduation rates in section 485(a)(4) of the HEA that 
address situations in which students leave school to serve in the Armed 
Forces, on official church missions, or with a recognized foreign aid 
service of the Federal Government. Section 488 of the HEOA also adds 
section 485(a)(7) to the HEA, which directs an institution to 
disaggregate its completion and graduation rate information by gender, 
by each major racial and ethnic subgroup, and by recipients of several 
types of Federal title IV aid--if the number of students in each such 
subgroup or with each such status is sufficient to yield statistically 
reliable information and reporting this information will not reveal 
personally identifiable information about an individual student.
    Current Regulations: Section 668.41 lists the types of information 
that an institution must make available to enrolled and prospective 
students (and in some cases, employees, prospective employees, 
prospective student-athletes, the public, and others). This information 
includes:
     Financial assistance available to students;
     The institution's completion and graduation rate;
     An annual security report (including institutional 
security policies and crime statistics that are described in Sec.  
668.46);
     The completion and graduation rates for student-athletes;
     Athletic program participation rates and financial support 
data; and
     Institutional information (including the cost to attend 
the institution, its academic programs and faculty, etc.).
    Section 668.45 specifies how an institution must prepare the annual 
completion or graduation rate for its certificate- or degree-seeking, 
full-time, undergraduate students. It also addresses how an institution 
must prepare a transfer-out rate if the institution's mission includes 
providing substantial preparation for students to enroll in another 
institution. An institution must make its completion or graduation 
rate, and if applicable, its transfer-out rate available by July 1 
following the 12-month period ending August 31 during which 150 percent 
of the normal time for completion or graduation has elapsed for the 
students on which the institution bases its calculations.
    Proposed Regulations: In proposed Sec.  668.41(d), we would add 
retention rate information, placement rate information, and information 
on the types of graduate and professional education in which graduates 
of the institution's four-year degree programs enroll, to the types of 
information that an institution must provide to its enrolled and 
prospective students. When reporting its retention rate, proposed Sec.  
668.41(d) would require an institution to disclose the institution's 
retention rate as reported to the Integrated Postsecondary Education 
Data System (IPEDS). We have adopted IPEDS' definition of ``retention 
rate'' in proposed Sec.  668.41(a) for this purpose. For its placement 
information, the institution may use various sources of information 
(such as State data systems, surveys, or other relevant sources). 
However, if it calculates an actual placement rate, it must disclose 
that rate. For the types of graduate and professional education in 
which graduates of the institution's four-year degree programs enroll, 
the institution also may use various sources of information (such as 
State data systems, surveys, or other relevant sources). For both 
placement information and the types of graduate and professional 
education in which graduates of the institution's four-year degree 
programs enroll, the institution would have to identify the source of 
the information it discloses, as well as the time frames and 
methodology associated with that information.
    In addressing the requirement for an institution to make certain 
information available to students or prospective students (and 
sometimes the public), we have removed the words ``on request'' in 
proposed Sec.  668.41(d) and (g)(1)(i). Similar words have been deleted 
from proposed Sec.  668.43(a) and (b).
    Under proposed Sec.  668.45, an institution's completion and 
graduation rate information must be disaggregated by gender, by each 
major racial and ethnic subgroup, and by whether or not the 
institution's students received certain types of Federal student aid. 
The disaggregation by receipt of aid is categorized by whether students 
were--
     Recipients of a Federal Pell Grant;
     Recipients of a Federal Family Education Loan or a Federal 
Direct Loan (other than an Unsubsidized Stafford Loan); and
     Recipients of neither a Federal Pell Grant nor a Federal 
Family Education Loan or a Federal Direct Loan (other than an 
Unsubsidized Stafford loan).
    The institution would report its completion and graduation rate 
information in a disaggregated manner only if the number of students in 
each category is sufficient to yield statistically reliable 
information, and doing so would not reveal personally identifiable 
information about an individual student. Otherwise, the institution 
would note that it enrolled too few students in the affected category 
to disclose the information with confidence and confidentiality.
    In calculating its completion and graduation rate, an institution 
normally counts students as completing or graduating if they have 
completed or graduated by the end of the 12-month period ending August 
31 during which 150 percent of the normal time for completion or 
graduation from the program has elapsed. However, as proposed, if 20 
percent or more of the certificate- or degree-seeking, full-time, 
undergraduate students at the institution left school to serve in the 
Armed Forces, to serve on official church missions, or to serve with a 
foreign aid service of the Federal Government (such as the Peace 
Corps), then the institution may recalculate the completion or 
graduation rate of those students by adding to the 150 percent time 
frame they normally have to complete or graduate, the time period the 
students were not enrolled due to their service in one of these 
specified categories.
    Reasons: The proposed changes in Sec. Sec.  668.41 and 668.45 would 
implement statutory changes to section 485 of the HEA made by section 
488 of the HEOA. As specified in Sec.  668.41(d), institutions are 
allowed to use various sources to compile information on placements and 
on the types of graduate and professional education in which graduates 
of the institution's four-year degree programs enroll. A number of the 
non-Federal negotiators noted that this latitude to compile information 
from various sources should not be compromised or otherwise qualified 
by

[[Page 42395]]

requiring institutions to disclose methodologies used in compiling the 
data. However, because the information can come from any number of 
sources and may not be comparable to similar-looking information at 
another institution, the Department believes it is important that the 
institution disclose the source of the information, as well as the time 
frames and methodology associated with it, when the institution 
discloses that information to its enrolled and prospective students. 
This will allow the student and prospective student recipients of the 
information to make more informed decisions regarding their educational 
choices.
    Since the statute is silent about requiring an institution to 
calculate an actual placement rate, or to disseminate that rate if it 
calculates one, a number of non-Federal negotiators argued that the 
regulations should remain silent in that regard. However, the 
Department believes that disclosing placement rate information would be 
beneficial to students and prospective students. If the institution 
makes available placement rates that it has, students and especially 
prospective students will be able to make more informed decisions about 
enrollment in various programs at the institution. Therefore, when a 
placement rate is voluntarily calculated by the institution, proposed 
Sec.  668.41(d) would require the institution to disclose that rate 
along with other placement information.
    The words ``on request'' (or ``upon request'') were removed from 
Sec. Sec.  668.41(d), 668.41(g)(1)(i), and 668.43(a) and (b) because 
the Department believes that they do not reflect how institutions 
currently operate in terms of making various types of information 
available to their students, prospective students, and sometimes the 
public. While it is true that an individual may not receive information 
unless he or she asks about it, institutions, in essence, are 
considered to ``make their information available'' by having it on a 
Web site or in printed material without regard to whether any one 
individual requests it or not. When an individual inquires about the 
information in question, the institution would direct him or her to the 
appropriate source.
    The requirement in proposed Sec.  668.45 for an institution to 
disaggregate its completion and graduation rate information by gender, 
by each major racial and ethnic subgroup, and by receipt or nonreceipt 
of certain types of Federal student aid is from section 485 of the HEA. 
All of the negotiators agreed that the Department should use the IPEDS 
racial and ethnic categories for this purpose, but several of them 
raised the issue of how institutions should disaggregate the 
information by receipt or nonreceipt of student aid. For example, 
should a student be considered to have received aid if the student 
received it at any time during his enrollment, or only during the 
student's first year, or for some other period of time? The Department 
and the non-Federal negotiators ultimately agreed that the question of 
receipt of aid for this determination should be based on whether the 
student received the aid during the time period when the student 
entered the institution that is associated with the cohort of students 
the student is a part of for purposes of the institution's calculation 
of completion or graduation, retention, and transfer out rates. For 
institutions with a predominate number of programs based on semesters, 
trimesters, or quarters, this would be the fall term of the year the 
student's cohort of certificate- or degree-seeking, first-time, full-
time undergraduate students first entered the institution. For other 
institutions, this would be the period between September 1 of one year 
and August 31 of the following year when the student's cohort of 
certificate- or degree-seeking, first-time, full-time undergraduate 
students first entered the institution.
    It is possible that an institution could have a significant number 
of its students interrupt their education to serve in the Armed Forces, 
on church missions, or with a foreign aid service of the Federal 
Government (e.g., the Peace Corps). Were that to occur, the normal 
calculation of the institution's completion or graduation rate would 
result in a misleadingly smaller rate. Thus, consistent with section 
485 of the HEA, when 20 percent or more of the certificate- or degree-
seeking, full-time, undergraduate students at the institution leave 
school to serve in one of the ways listed in Sec.  668.45(d)(1)(i) 
through (iii), the institution may recalculate its completion or 
graduation rate to take that fact into consideration. That is, when the 
institution calculates its completion or graduation rate, it may add 
the time period the students were not enrolled due to their service 
time to the 150 percent time frame that students normally have to 
complete or graduate.

Campus Safety Provisions

Hate Crime Reporting (Sec.  668.46(c)(3))

    Statute: Section 488(e)(1)(c) of the HEOA amended section 485(f) of 
the HEA to expand the list of hate crimes that institutions must report 
to the Department to include larceny-theft, simple assault, 
intimidation, and destruction, damage, or vandalism of property.
    Current Regulations: Section 668.46(c)(3) of the Department's 
regulations currently requires institutions to report as hate crimes 
the occurrence of criminal homicide, sex offenses, robbery, aggravated 
assault, burglary, motor vehicle theft, arson, and any other crime 
involving bodily injury reported to local police agencies or a campus 
security authority if there is manifest evidence that the victim was 
intentionally selected on the basis of certain characteristics.
    Proposed Regulations: We propose to revise Sec.  668.46(c)(3) to 
add the crimes of ``larceny-theft,'' ``simple assault,'' 
``intimidation,'' and ``destruction/damage/vandalism of property'' to 
the crimes that must be reported in hate crime statistics. 
Additionally, we would update the definitions of the terms ``Weapons: 
carrying, possessing, etc.,'' ``Drug abuse violations,'' and ``Liquor 
law violations'' in appendix A to subpart D of 34 CFR part 668, which 
are excerpted from the Federal Bureau of Investigation's Uniform Crime 
Reporting Program, to reflect changes made by the FBI.
    Reasons: The proposed regulations would implement the statutory 
changes made by the HEOA by using the FBI's Hate Crime Data Collection 
Guidelines in the Uniform Crime Reporting Handbook (available at http://www.fbi.gov/ucr/hatecrime.pdf) to define the hate crimes to be 
reported.

Definition of Test (Sec.  668.46(a))

    Statute: Section 488(e)(1)(D) of the HEOA amended section 485(f) of 
the HEA to require institutions to include a statement of policy 
regarding their emergency response and evacuation procedures in the 
annual security report. As part of this policy statement an institution 
must describe how it will test its emergency response and evacuation 
procedures on an annual basis. Current Regulations: Section 668.46(a) 
contains definitions that apply to the requirements for institutional 
security policies and the reporting of crime statistics.
    Proposed Regulation: Under proposed Sec.  668.46(a), we would 
define test for purposes of the emergency response and evacuation 
procedures as ``regularly scheduled drills, exercises, and appropriate 
follow-through activities, designed for assessment and evaluation of 
emergency plans and capabilities.''
    Reasons: This definition would clarify the meaning of test for the 
purposes of complying with the statutory requirement that an 
institution test its emergency response and evacuation

[[Page 42396]]

procedures. Following a recommendation from some of the non-Federal 
negotiators, the definition of the term was drawn from the Emergency 
Management Accreditation Program (EMAP) Standard, which was designed to 
serve as a set of standards defining a quality emergency management 
program and was collaboratively developed by numerous organizations 
involved in emergency management and response.

Annual Security Report--Emergency Response and Evacuation Procedures 
(Sec.  668.46(b))

    Statute: Section 485(f) of the HEA outlines the elements that must 
be included in an institution's annual security report. Section 
488(e)(1)(D) of the HEOA added to section 485(f) of the HEA a 
requirement that an institution must include a statement of policy 
regarding emergency response and evacuation procedures in its annual 
security report. This statement must describe how the institution will 
immediately notify the campus community upon the confirmation of a 
significant emergency or dangerous situation involving an immediate 
threat to the health or safety of students or staff occurring on the 
campus, unless the notification will compromise efforts to contain the 
emergency.
    Current Regulations: Section 668.46(b) delineates the elements that 
must be included in an institution's annual security report.
    Proposed Regulations: Proposed Sec.  668.46(b)(13) would require 
institutions to include a statement of policy regarding their emergency 
response and evacuation procedures in the annual security report. 
Institutions must satisfy this requirement beginning with the annual 
security report distributed by October 1, 2010.
    Reasons: These new provisions implement the new statutory 
requirement. We would require this statement of policy for the October 
1, 2010 report because it is the first report due after these 
regulations would go into effect. As institutions are expected to make 
a good faith effort to comply with the statute in the absence of 
regulations, institutions should be gathering this information in 
preparation for the 2010 report.

Timely Warning and Emergency Notification (Sec.  668.46(e))

    Statute: Section 485(f)(3) of the HEA requires institutions to make 
timely warnings to the campus community on crimes considered to be a 
threat to students and employees that are reported to campus security 
or local police agencies. Section 488(e)(1)(D) of the HEOA added 
section 485(f)(1)(J) to the HEA to require institutions to have a 
policy for emergency notification of the campus community upon the 
confirmation of a significant emergency or dangerous situation 
involving an immediate threat to the health or safety of students or 
staff occurring on the campus, unless the notification will compromise 
efforts to contain the emergency.
    Current Regulations: Section 668.46(e) describes the situations in 
which an institution must send a timely warning to the campus community 
to report on crimes that are considered by the institution to represent 
a threat to students and employees.
    Proposed Regulations: Proposed Sec.  668.46(e)(3) would clarify the 
difference between the existing timely warning requirement and the new 
requirement for an emergency notification policy. While a timely 
warning must be issued in response to crimes specified in Sec.  
668.46(c)(1) and (3), an emergency notification is required in the case 
of an immediate threat to the health or safety of students or employees 
occurring on campus, as described in proposed Sec.  668.46(g). The 
proposed language would clarify that an institution that follows its 
emergency notification procedures is not required to issue a timely 
warning based on the same circumstances; however, the institution must 
provide adequate follow-up information to the community as needed.
    Reasons: Many of the non-Federal negotiators requested that the 
regulations clearly explain the difference between a timely warning 
circumstance and an emergency notification circumstance. The emergency 
notification requirement applies to a wider range of threats, such as 
crimes, gas leaks, highly contagious viruses, or hurricanes. Many non-
Federal negotiators also asked that the Department make it clear that 
institutions may satisfy a timely warning requirement with an emergency 
notification in appropriate circumstances to avoid inundating students 
and employees with messages that may become ineffective. On the other 
hand, some non-Federal negotiators also expressed concern that 
providing insufficient information could jeopardize the safety of the 
campus community, for instance, in a situation in which the emergency 
or investigation is still developing.
    To address these concerns, we are proposing to require an 
institution that uses its emergency notification system to provide 
follow-up information to the community as needed. The phrase ``as 
needed'' was used to address the wide variety of threats that might 
occur.

Annual Security Report--Emergency Response and Evacuation Procedures 
(Sec.  668.46(g))

    Statute: Section 485(f)(1)(J) of the HEA, added by the HEOA, 
requires institutions to include a statement of policy regarding 
emergency response and evacuation procedures in the annual security 
report. This policy statement must describe how the institution will 
immediately notify the campus community upon the confirmation of a 
significant emergency or dangerous situation involving an immediate 
threat to the health or safety of students or staff occurring on the 
campus, unless the notification will compromise efforts to contain the 
emergency.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  668.46(g) would set out the 
following elements that an institution must include in its statement of 
policy describing its emergency response and evacuation procedures in 
its annual security report:
     Procedures to immediately notify the campus community upon 
the confirmation of a significant emergency or dangerous situation 
involving an immediate threat to the health or safety of students or 
employees occurring on the campus.
     A description of the process that the institution will use 
to (1) confirm that there is a significant emergency or dangerous 
situation, (2) determine the appropriate segment or segments of the 
campus community to receive a notification, (3) determine the content 
of the notification, and (4) initiate the notification system.
     A statement that the institution will, without delay, and 
taking into account the safety of the community, determine the content 
of the notification and initiate the notification system, unless 
issuing the notification will, in the professional judgment of 
responsible authorities, compromise efforts to assist a victim or to 
contain, respond to, or otherwise mitigate the emergency.
     A list of the titles of the persons or organizations 
responsible for carrying out the actions in proposed Sec.  
668.46(g)(2).
     Procedures for disseminating emergency information to the 
larger community.
     Procedures for testing its emergency response and 
evacuation procedures on at least an annual basis. Such tests could be 
announced or unannounced, would be publicized in conjunction with at 
least one test per calendar year,

[[Page 42397]]

and would be documented, including a description of the exercise, the 
date, time, and whether it was announced or announced.
    Reasons: The proposed regulations are intended to ensure that 
institutions have sufficiently prepared for an emergency situation on 
campus, that they are testing these procedures to identify and improve 
weaknesses, and that they have considered how they will inform the 
campus community and other individuals, such as parents. While the non-
Federal negotiators generally agreed with these goals, some of them 
expressed concern that institutions need to have flexibility to 
appropriately respond to situations while maintaining a level of 
accountability in the system.
    To allow appropriate flexibility in the system, the Department has 
not specified that institutions use a particular mode of communication, 
but notes that institutions may and should have multiple methods of 
communication with the campus community. For example, in the case of a 
gas leak, an institution may determine that the most effective mode of 
communication is a fire alarm, whereas in other situations it might be 
best to use a text message system. The Department encourages 
institutions to consider overlapping means of communication in case one 
method fails or malfunctions. Additionally, institutions have the 
flexibility to alert only the appropriate segment or segments of the 
population that they determine to be at risk; for instance, only 
notifying individuals in the building where there is a gas leak. This 
provision is intended to guard against the possibility that too many 
emergency notifications would lead some members of the campus community 
to begin to ignore the notices, thus dampening its response to a 
potentially dangerous situation. Institutions also have the flexibility 
to list the organizations that may be best equipped to respond to 
different situations, for instance, the health department may best 
respond to an outbreak of a virus. Further, institutions would have a 
great deal of flexibility in designing tests of the emergency 
notification system, as a test, as defined in the proposed changes to 
Sec.  668.46(a), could be done in many ways, such as by a tabletop 
exercise or a test conducted on a campus-wide scale.
    Parents and students affected by the shootings at the Virginia 
Polytechnic Institute and State University in 2007 attended part of the 
negotiations and discussed their experiences and opinions regarding how 
the Department should regulate in this area. They emphasized the need 
for institutions to keep parents and families informed in the case of 
an emergency. Some non-Federal negotiators suggested that institutions 
be encouraged to use Web sites, radio, and television stations to keep 
the larger community apprised of emergency situations. Additionally, in 
the case of an institution that uses a texting system to relay 
emergency notification information, several non-Federal negotiators 
suggested allowing parents to sign up to receive texts along with 
students and employees.
    Some non-Federal negotiators were concerned that an institution 
could misinterpret these proposed regulations to mean that, as part of 
its procedures, it should disclose all of the details of how it would 
respond to any of a variety of situations. The negotiators noted that 
this approach could potentially hamper law enforcement efforts to 
address or investigate an emergency. In response, we note that the 
proposed regulations would not require institutions to publish in great 
detail how they would respond to specific emergencies. Finally, many 
non-Federal negotiators raised concerns that institutions consider the 
needs of students with disabilities in developing emergency response 
and evacuation policies and procedures. The Department expects an 
institution to consider the diverse needs of all members of the campus 
community in developing or revising an emergency plan.

Definition of On-Campus Student Housing Facility (Sec.  668.41(a))

    Statute: Section 488(g) of the HEOA added section 485(j) to the HEA 
to require an institution that maintains an on-campus student housing 
facility to establish, for students who reside in on-campus student 
housing, a missing student notification policy that allows students to 
confidentially register a contact person, and procedures to notify that 
contact person if the student is missing for more than 24 hours.
    Current Regulations: Section 668.41(a) contains definitions that 
apply to 34 CFR part 668, subpart D.
    Proposed Regulations: The proposed regulations would add a 
definition of the term on-campus student housing facility to Sec.  
668.41(a) to mean a dormitory or other residential facility for 
students that is located on an institution's campus, as defined in 
Sec.  668.46(a).
    Reasons: The proposed definition would be added to clarify what is 
meant by on-campus student housing facility and to link the meaning of 
``on-campus'' to the existing regulatory definition of campus in Sec.  
668.46(a), which is used for crime reporting under Sec.  668.46(c). For 
the purposes of the fire safety reporting requirements under proposed 
Sec.  668.49 and the missing student notification policies and 
procedures requirements under proposed Sec.  668.46, a student housing 
facility that is on property owned by an institution, even if the 
building is owned and maintained by a student organization or other 
party, would be considered an on-campus student housing facility. If 
neither the property nor the building is owned by the institution, then 
the student housing facility would not be covered by this definition. 
While on-campus student housing facility is used in the statute in 
reference to the new fire safety and missing student notification 
provisions, the definition of on-campus student housing facility would 
also apply to the existing crime reporting requirements in Sec.  
668.46. The Department believes this approach will minimize confusion 
and create less administrative burden for institutions.

Annual Security Report--Missing Student Notification Policy (Sec.  
668.46(b) and (h))

    Statute: Section 485(f) of the HEA, as amended by the section 
488(g) of the HEOA, requires institutions that maintain an on-campus 
student housing facility to establish, for students who reside in an 
on-campus student housing facility, both a missing student notification 
policy that allows students to confidentially register a contact 
person, and procedures for notifying a missing student's contact 
person.
    Current Regulations: Section 668.46(b) delineates the elements that 
must be included in an institution's annual security report.
    Proposed Regulations: The proposed changes in Sec.  668.46(b)(14) 
would require an institution to include its missing student 
notification policy and procedures in its annual security report. This 
would be required beginning with the annual security report distributed 
by October 1, 2010.
    Reasons: Some non-Federal negotiators felt that an institution 
should have the flexibility to decide how and when to distribute its 
missing student policies and procedures. The Department considered this 
suggestion but agrees with other negotiators who argued that having the 
information in the annual security report would enable students and 
parents to more easily compare policies across institutions. We propose 
to require that these policies and procedures be included in the 
institution's annual security report, but note that institutions may 
also distribute

[[Page 42398]]

these policies and procedures at other appropriate times, such as 
during a new student orientation. This policy statement must be 
included in the report that must be distributed by October 1, 2010 
because it is the first report due after these regulations go into 
effect. Institutions must make a good faith effort to comply with the 
statute in the absence of regulations; therefore, institutions should 
be gathering this information in preparation for the 2010 report.

Missing Student Notification Policy (Sec.  668.46(h))

    Statute: Section 485 of the HEA, as amended by section 488 of the 
HEOA, requires an institution that maintains an on-campus student 
housing facility to establish, for students who reside in on-campus 
student housing, a missing student notification policy that includes 
notifying students that they can confidentially register an individual 
to be contacted if the student is determined to be missing. The statute 
requires an institution to advise students who are under 18 years old 
and not emancipated that a custodial parent or guardian must be 
notified if the student is determined to be missing. Further, all 
students residing in an on-campus student housing facility must be 
advised that, regardless of whether they register a contact person, the 
local law enforcement agency will be notified in the event that the 
student is determined to be missing.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  668.46(h)(1) implements the 
new statutory requirements, specifying that an institution's statement 
of policy regarding missing student notification for students residing 
in on-campus student housing facilities must include:
     A list of the titles of the persons or organizations to 
which students, employees, or other individuals should report that a 
student has been missing for 24 hours;
     A requirement that any official missing student report be 
immediately referred to the institution's police or campus security 
department or to the local law enforcement agency with jurisdiction in 
the area;
     The option for each student to identify a contact person 
to be notified if the student is determined missing by the 
institutional police or campus security department, or the local law 
enforcement agency; and
     A disclosure that contact information will be registered 
and maintained confidentially.
    Proposed Sec.  668.46(h)(1) would further require an institution to 
advise students who are under 18 and not emancipated that if the 
student is missing it will notify a custodial parent or guardian in 
addition to any contact person designated by the student. All students 
must also be advised that, regardless of whether they name a contact 
person, the institution must notify the local law enforcement agency 
that the student is missing, unless the local law enforcement was the 
entity that determined that the student is missing.
    Reasons: These new provisions would implement the statutory 
requirements. Like the existing crime reporting regulations and the 
proposed fire reporting regulations, these proposed regulations require 
institutions to include a list of the titles of the persons or 
organizations to which a student should be reported missing.
    These regulations provide that only authorized campus officials, 
and law enforcement officers in furtherance of a missing person 
investigation, may have access to the confidential contact information 
and that it may not be disclosed to others. This limit was proposed in 
order to protect the privacy rights and safety of the student.

Missing Student Notification Procedures (Sec.  668.46(h))

    Statute: Section 485 of the HEA, as amended by section 488(g) of 
the HEOA, requires an institution that maintains an on-campus student 
housing facility to establish procedures that the institution will 
follow if a student who resides in on-campus student housing is 
determined to be missing. The statute specifies time frames during 
which certain actions must occur. When a student is reported missing, 
the institution has 24 hours to inform the local law enforcement agency 
with jurisdiction in the area where the student has been reported 
missing. After the law enforcement agency determines that the student 
is missing, the institution has 24 hours to notify the student's 
contact person, if applicable.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  668.46(h)(2) reflects the 
statutory requirements.
    Reasons: The proposed regulations reflect the new statutory 
requirements. These regulations do not preclude the institution from 
contacting the student's contact person or the parent immediately upon 
determination that the student has been missing for 24 hours.

Annual Fire Safety Report (Sec.  668.41(e))

    Statute: Section 488(g) of the HEOA amended section 485 of the HEA 
to require institutions that maintain on-campus student housing 
facilities to publish a fire safety report each year and provide a copy 
of the report to the Secretary.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  668.41(e) would provide that 
institutions that maintain an on-campus student housing facility must 
distribute an annual fire safety report, as described in proposed Sec.  
668.49(b). In addition, we propose to revise Sec.  668.41(e) to create 
publication requirements for the annual fire safety report that are 
similar to the long-standing regulations for the annual security 
report.
    The proposed regulations would allow an institution to publish the 
annual security report and the annual fire safety report together, as 
long as the title of the document clearly states that it contains both 
the annual security report and the annual fire safety report. If an 
institution chooses to publish the reports separately, it would have to 
include information in each of the two reports about how to directly 
access the other report.
    Reasons: We are proposing to require the same distribution method 
for both the annual fire safety report and the annual security report 
to reduce administrative burden and to make it easier for students and 
parents to access the information. The Department believes that 
providing one source for this information best ensures that students 
and parents will find and review the material. Under the proposed 
regulations, institutions would have the flexibility to choose whether 
to combine the two reports; however, if the reports are combined, the 
title of the combined document must make it clear that both the annual 
fire safety report and the annual security report are included to give 
both reports equal emphasis and to clarify that the fire safety 
provisions are separate from the crime provisions. An institution that 
chooses to publish the reports separately must provide information in 
each report about how to directly access the other report to aid 
students and parents in locating and comparing information across 
institutions.

Annual Fire Safety Report--Definitions of Terms (Sec.  668.49(a))

    Statute: Section 485(i)(1) of the HEA, as amended by section 488(g) 
of the HEOA, specifies that the annual fire safety report must contain 
statistics concerning the number of fires in the institution's on-
campus housing facilities; the cause of each fire; the number of 
injuries and deaths related to each fire; and the value of property 
damage caused by each fire.

[[Page 42399]]

Additionally, the annual fire safety report must include a description 
of each on-campus student housing facility fire safety system and the 
number of regular mandatory supervised fire drills.
    Current Regulations: None.
    Proposed Regulations: We are proposing to add new Sec.  668.49(a) 
to define the following terms relevant to the fire safety reporting 
requirements:
     Cause of fire: The factor or factors that give rise to a 
fire. The causal factor may be, but is not limited to, the result of an 
intentional or unintentional action, mechanical failure, or act of 
nature.
     Fire: Any instance of open flame or other burning in a 
place not intended to contain the burning or in an uncontrolled manner.
     Fire drill: A supervised practice of a mandatory 
evacuation of a building for a fire.
     Fire-related injury: Any instance in which a person is 
injured as a result of a fire, including an injury sustained from a 
natural or accidental cause, while involved in fire control, attempting 
rescue, or escaping from the dangers of a fire. The term ``person'' may 
include students, faculty, staff, visitors, firefighters, or any other 
individuals.
     Fire-related death: Any instance in which a person (1) is 
killed as a result of a fire, including death resulting from a natural 
or accidental cause while involved in fire control, attempting rescue, 
or escaping from the dangers of a fire; or (2) dies within one year of 
injuries sustained as a result of a fire.
     Fire-safety system: Any mechanism or system related to the 
detection of a fire, the warning resulting from a fire, or the control 
of a fire. This may include sprinkler systems or other fire 
extinguishing systems; fire detection devices; stand-alone smoke 
alarms; devices that alert one to the presence of a fire, such as 
horns, bells, or strobe lights; smoke-control and reduction mechanisms; 
and fire doors and walls that reduce the spread of a fire.
     Value of property damage: The estimated value of the loss 
of the structure and contents, in terms of the cost of replacement in 
like kind and quantity. This estimate should include contents damaged 
by fire, and related damages caused by smoke, water, and overhaul; 
however, it does not include indirect loss, such as business 
interruption.
    Reasons: We have added these definitions to enable comparability 
across institutions of the statistics that institutions are required to 
report under section 485(i)(1) of the HEA. The definitions for cause of 
fire, fire-related injury, fire-related death, and value of property 
damage were drawn largely from the National Fire Incident Reporting 
System (NFIRS), a standard national reporting system used by U.S. fire 
departments to report fires and other incidents. The non-Federal 
negotiators recommended, and we agreed, that we should use the NFIRS 
definitions to remain consistent with definitions already used in the 
field. The definition of fire drill was developed to capture the HEA 
requirement that institutions report regular, mandatory, supervised 
fire drills. Further, the definition of fire safety system was 
developed through collaboration with experts in the fire safety field, 
who advised that the definition should include the variety of systems 
and mechanisms used to detect and alert someone to the presence of a 
fire, reduce the spread of fire, and control and reduce the amount of 
smoke from a fire.
    The committee discussed the definition of fire at length. 
Generally, the negotiators agreed that the critical elements of a 
reportable fire are that it occurs in a place not intended to contain 
the fire or involves any burning that is not under control. For 
instance, under these proposed regulations, a fire in a trash can would 
count as a fire for reporting purposes, even if the fire was still 
under control, because a trash can is not intended to contain a fire. A 
lit candle, by contrast, while possibly against the institution's 
policies for candles in dorms, would not generally be considered a 
reportable fire, as it is in a place intended to contain the fire and 
is under control. However, if the flame from a lit candle were to 
spread and become uncontrolled, it would be considered a reportable 
fire. The definition of fire is also intended to capture situations in 
which there is burning (not necessarily an open flame) that might 
easily become a fire, such as a smoldering couch. Burning or other 
flames can easily become a fire, at great risk to students and other 
individuals.

Annual Fire Safety Report--Statistics (Sec.  668.49(b) and (c))

    Statute: Section 485(i)(1), as amended by section 488(g) of the 
HEOA, requires an institution to include in its annual fire safety 
report statistics on the number of fires and the cause of each fire; 
the number of injuries related to a fire that resulted in treatment at 
a medical facility; the number of deaths related to a fire; and the 
value of property damage caused by a fire. Section 485(i)(2) of the HEA 
requires that an institution report these statistics to the Secretary.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  668.49(b)(1) would require an 
institution to report the statistics that it submits to the Department 
in its annual fire safety report. The institution would have to provide 
data for the three most recent calendar years for which data are 
available. Proposed Sec.  668.49(c) would delineate the statutorily 
required statistics.
    Reasons: The proposed regulations would implement the statutory 
requirements. The majority of the committee supported the position that 
institutions should report statistics for the three most recent 
calendar years to remain consistent with current reporting requirements 
for crime statistics under Sec.  668.46(c). Moreover, the three year 
time frame will better enable consumers to compare statistics across 
institutions while helping to identify trends in the data. This 
reporting requirement would be phased in beginning with the collection 
of statistics for calendar year 2009 in the October 1, 2010 Annual Fire 
Safety Report. Data would be collected for three subsequent calendar 
years until three years are represented. The first report to contain 
the full three years of data would be the report due on October 1, 
2012.

Annual Fire Safety Report--Description of Policies (Sec.  668.49(b))

    Statute: Section Sec.  485(i)(1) of the HEA, as amended by section 
488(g) of the HEOA, requires that, in its annual fire safety report, an 
institution must include a description of each on-campus student 
housing facility fire safety system, including fire sprinkler systems; 
the number of regular mandatory supervised fire drills; the 
institution's policies on portable electrical appliances, smoking, and 
open flames; procedures for evacuation; fire safety education and 
training program policies; and plans for future improvements in fire 
safety, if applicable.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  668.49(b) would outline the 
elements that an institution must disclose in its annual fire safety 
report, including:
     The fire statistics required by paragraph 485(i)(1)(A) of 
the HEA;
     A description of each on-campus student housing facility 
fire safety system;
     The number of fire drills held during the previous 
calendar year;
     Policies or rules on portable electrical appliances, 
smoking, and open flames in student housing facilities;

[[Page 42400]]

     Procedures for evacuation of student housing facilities in 
the case of a fire;
     Policies on fire safety education and training programs 
provided to students, faculty, and staff, including a description of 
the procedures that students and employees should follow in the case of 
a fire;
     For purposes of including a fire in the statistics in the 
annual fire safety report, a list of the titles of each person or 
organization to which students and employees should report that a fire 
has occurred; and
     Plans for future improvements in fire safety, if 
determined necessary by the institution.
    Reasons: These proposed regulations would implement the statutory 
requirements for the annual fire safety report, and specify that an 
institution must include: (1) A description of the procedures that 
students and employees should follow in the case of a fire, and (2) 
procedures for reporting fires that do not require a call to the fire 
department, for instance, those that are discovered after the fact and 
are no longer a threat to safety. In response to concerns expressed by 
some negotiators that all fires, even those that have already been put 
out, should be included in reported statistics, the proposed 
regulations would require institutions to provide a list of the titles 
of each person or organization to which such fires should be reported.

Fire Log (Sec.  668.49(d))

    Statute: Section 485(i)(3) of the HEA, as amended by section 488(g) 
of the HEOA, requires an institution that maintains an on-campus 
student housing facility to maintain a log of all fires that occur in 
on-campus student housing facilities, including the nature, date, time, 
and general location of each fire. An institution must make annual 
reports to the campus community on such fires.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  668.49(d) would specify that 
an institution that maintains an on-campus student housing facility 
must maintain a written and easily understood fire log that records, by 
the date that the fire was reported, any fire that occurred in an on-
campus student housing facility. The log would have to include the 
nature, date, time, and general location of each fire. Further, the 
proposed regulations would specify that additions or changes to the log 
must be made within two business days of the receipt of the 
information, and require that the log be available for public 
inspection for the most recent 60-day period. Any portion of the log 
older than 60 days must be made available within two business days of a 
request for inspection. Finally, the proposed regulations would also 
implement the statutory requirement that an institution make an annual 
report to the campus community on the fires recorded in the fire log; 
however, the proposed regulations specify that this requirement may be 
satisfied by the annual fire safety report described in proposed Sec.  
668.49(b).
    Reasons: The proposed regulations would implement the statutory 
requirement that an institution record all reportable fires in a fire 
log. Many of the negotiators recommended that institutions have 
flexibility in maintaining this log. Therefore, we have not specified a 
format for the log, and we would allow institutions to determine 
whether to combine the annual report to the campus community on the 
fires in the fire log with the annual fire safety report. Many 
negotiators also recommended, and we agreed, that the fire log follow 
the requirements for the crime log. As a result, we have specified 
requirements for how information in the fire log should be updated, in 
accordance with the long-standing requirements for the crime log 
described in Sec.  668.46(f).

Financial Assistance for Students With Intellectual Disabilities

Intellectual Disabilities

Institutional Eligibility and Eligible Program (Sec. Sec.  600.2, 
600.4, 600.5, 600.6, and 668.8)

    Statute: Section 485(a)(8) of the HEOA added section 484(s) to the 
HEA to provide that a student with intellectual disabilities who 
enrolls in a comprehensive transition and postsecondary program is 
eligible to receive title IV, HEA program funds under the Federal Pell 
Grant, FSEOG, and FWS programs. Under the newly added provision, the 
student does not have to be a high school graduate (or have obtained a 
GED, or have passed an ability-to-benefit test) and does not have to be 
enrolled in a program that leads to a degree or certificate.
    Current Regulations: Section 600.2 defines an educational program 
as a legally authorized postsecondary program of organized instruction 
or study that, in part, leads to an academic, professional, or 
vocational degree, or certificate, or other recognized educational 
credential.
    Under the definitions of an institution of higher education (Sec.  
600.4(a)(2)), proprietary institution of higher education (Sec.  
600.5(a)(3)), and postsecondary vocational institution (Sec.  
600.6(a)(2)), the institution is required to admit as regular students, 
as defined in Sec.  600.2, only those persons who have a high school 
diploma or its equivalent. In addition, in Sec. Sec.  600.4(a)(4), 
600.5(a)(5), 600.6(a)(4), and the definition of an eligible program 
under Sec.  668.8(c)(1) and (d)(1)(iii), the institution must provide 
an educational program for which it awards a degree, certificate, or 
other recognized credential or that prepares students for gainful 
employment in a recognized occupation.
    Proposed Regulations: Proposed Sec. Sec.  600.2 (paragraph (1)(i) 
of the definition of educational program), 600.4(a)(4), 600.5(a)(5), 
and 600.6(a)(4) would provide that an institution may provide a 
comprehensive transition and postsecondary program for students with 
intellectual disabilities. In addition, proposed Sec.  668.8(n) would 
define a comprehensive transition and postsecondary program as an 
eligible program if it is approved by the Secretary.
    Reasons: The proposed regulations would implement the statutory 
requirements by making it clear that an institution does not jeopardize 
its participation in the title IV, HEA programs by admitting students 
with intellectual disabilities who do not have a high school diploma or 
its equivalent, or admitting students with intellectual disabilities 
into non-degree or non-certificate programs. In addition, the proposed 
regulations would specify that a comprehensive transition and 
postsecondary program approved by the Secretary qualifies as an 
eligible program.

Scope and Purpose (Sec.  668.230)

    Statute: Section 485(a) of the HEOA added section 484(s) to the HEA 
authorizing the Secretary to develop regulations allowing students with 
intellectual disabilities to be eligible for funds under the Federal 
Pell Grant, FSEOG, and FWS programs. New section 484(s)(3) of the HEA 
authorizes the Secretary to waive any statutory provision applicable to 
these programs, except needs analysis provisions, or waive any 
institutional eligibility provisions, to ensure that students with 
intellectual disabilities who enroll in comprehensive transition and 
postsecondary programs remain eligible for this assistance.
    Current Regulations: None.
    Proposed Regulations: The proposed regulations would specify that 
students with intellectual disabilities who enroll in comprehensive 
transition and postsecondary programs are eligible for

[[Page 42401]]

assistance under the Federal Pell Grant, FSEOG, and FWS programs, and 
would restate the Secretary's waiver authority by providing that, 
except for provisions related to needs analysis, the Secretary may 
waive any title IV, HEA program requirement related to these programs 
or institutional eligibility.
    Reasons: The proposed regulations would implement the statutory 
provisions, and clarify that the Secretary's waiver authority may be 
used to ensure that students with intellectual disabilities remain 
eligible for Federal Pell Grant, FSEOG, and FWS program funds.

Definition of a Comprehensive Transition and Postsecondary Program 
(Sec.  668.231)

    Statute: Section 709 of the HEOA added section 760 to the HEA to 
define a comprehensive transition and postsecondary program as a 
degree, certificate, or non-degree program that--
     Is offered by an institution of higher education;
     Is designed to support students with intellectual 
disabilities who are seeking to continue academic, career and 
technical, and independent living instruction at an institution to 
prepare for gainful employment;
     Includes an advising and curriculum structure; and
     Requires students with intellectual disabilities to 
participate on not less than a half-time basis, as determined by the 
institution, with that participation focusing on academic components 
and occurring through one or more of the following activities:
     Regular enrollment in credit-bearing courses with students 
without disabilities.
     Auditing or participating in courses with students without 
disabilities for which the student does not receive regular academic 
credit.
     Enrollment in non-credit-bearing, nondegree courses with 
students without disabilities.
     Participation in internships or work-based training in 
settings with students without disabilities.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  668.231 would define a 
comprehensive transition and postsecondary program by incorporating the 
statutory provisions, but would add a provision that the program would 
have to be delivered to students physically attending the institution. 
The proposed regulations would also clarify that the program must 
provide opportunities for students with intellectual disabilities to 
participate in coursework and other activities with students without 
disabilities.
    Reasons: Proposed Sec.  668.231 would incorporate the statutory 
requirements from section 760 of the HEA except for the proposed 
addition and clarification described in the preceding Proposed 
Regulations section. Some of the non-Federal negotiators initially 
opposed the proposed requirement that a comprehensive transition and 
postsecondary program must be delivered to students physically 
attending the institution. The negotiators argued that students should 
have the option of taking distance courses because they might be unable 
to commute to a campus or because some courses might only be offered 
online. Other negotiators and experts in the field argued that Congress 
intended for students with intellectual disabilities to be integrated 
into campus life as much as possible and did not want to allow distance 
education to be the sole or main delivery method. The Department does 
not wish to regulate to preclude all distance courses for students with 
intellectual disabilities and may permit a limited number of courses to 
be delivered via distance, as long as the institution explains why it 
believes the course is applicable to, and benefits, students with 
intellectual disabilities. Similarly, we wish to clarify that a 
comprehensive transition and postsecondary program may include an 
internship for students or other activities that are located off-
campus--the physically-attending requirement does not exclude these 
activities.
    With regard to students participating in one or more of the 
identified activities with students without disabilities, an 
institution has the flexibility to determine the activity or 
combination of activities that is best aligned with student needs and 
interests, as long as students with intellectual disabilities 
participate in these activities for at least half the time that they 
are enrolled in the program.
    Some non-Federal negotiators suggested that comprehensive 
transition and postsecondary programs might offer multiple ways for 
students with intellectual disabilities to participate in campus life 
beyond those that are delineated in the statute. In response, we 
propose that a program provide students with opportunities to 
participate in coursework and other activities with students without 
disabilities, such as student government, clubs, social events, and 
sports.

Definition of a Student With an Intellectual Disability (Sec.  668.231)

    Statute: Section 709 of the HEOA added section 760 of the HEA to 
define student with an intellectual disability as a student:
     With mental retardation or a cognitive impairment 
characterized by significant limitation in intellectual and cognitive 
functioning and adaptive behavior as expressed in conceptual, social, 
and practical adaptive skills; and
     Who is currently, or was formerly, eligible for a free 
appropriate public education (FAPE) (i.e., special education and 
related services) under the Individuals with Disabilities Education Act 
(IDEA).
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  668.231 would define student 
with an intellectual disability as set forth in the statute, but 
clarify that a student who was determined eligible for services under 
the IDEA but was home-schooled or attended private school would also 
meet this part of this definition.
    Reasons: Proposed Sec.  668.231 would incorporate the statutory 
requirements from section 760 of the HEA except for the proposed 
clarification regarding students who are home-schooled or attended 
private school.
    While some non-Federal negotiators felt that the statute could be 
read to include students with intellectual disabilities who are home-
schooled or attended a private school but were not determined eligible 
for special education and related services under the IDEA, the 
Department does not believe that the HEA provides this flexibility. 
Under Sec. Sec.  612(a)(3), 612(a)(10)(A)(ii)(I) and 613(a)(1) of the 
Individuals with Disabilities Education Act (IDEA) (20 U.S.C. 1221e-3, 
1406, 1411-1419; 23 CFR part 304), State educational agencies (SEAs) 
and local educational agencies (LEAs) are required to locate, identify 
and evaluate all students with disabilities within the jurisdiction of 
the State and LEA. In addition, under Sec.  614(a)(1)(B) of the IDEA, 
LEAs and SEAs must assess students for eligibility for special 
education and related services under the IDEA if requested by the 
parent. These are ongoing responsibilities that extend to all children 
residing in the State, or in the jurisdiction of the LEA, including 
children attending private schools. To qualify for title IV aid 
pursuant to Sec.  484(s) of the HEA, a student should obtain an IDEA 
eligibility determination while the student is still age-eligible for 
IDEA services from, (1) for students attending private elementary and 
secondary schools, including home

[[Page 42402]]

schools if home schools are considered private schools under State law, 
the LEA in which the private school is located, or (2) for students not 
attending private elementary and secondary schools, the LEA that is 
responsible for making available a FAPE to the student (generally, the 
LEA in which the student resides).

Program Eligibility (Sec.  668.232)

    Statute: Section 485(a)(8) of the HEOA adds section 484(s) to the 
HEA to establish the eligibility of students with intellectual 
disabilities who enroll in comprehensive transition and postsecondary 
programs to receive aid under the Federal Pell Grant, FSEOG, and FWS 
programs.
    Current Regulations: None.
    Proposed Regulations: Consistent with current procedures under 
which an institution adds an additional program, an institution that 
wishes to offer a comprehensive transition and postsecondary program 
would have to apply and receive approval from the Secretary under 
proposed Sec.  668.232. The proposed regulations outline the elements 
that an institution must include in its application, including:
     A detailed description of the comprehensive transition and 
postsecondary program, addressing all of the components of the program 
as defined in proposed Sec.  668.231;
     The policy for determining whether a student enrolled in 
the program is making satisfactory academic progress;
     A statement of the number of weeks of instructional time 
and the number of semester or quarter credit hours or clock hours in 
the program, including the equivalent credit or clock hours associated 
with noncredit or reduced credit courses or activities;
     A description of the educational credential offered or 
identified outcome or outcomes established by the institution for all 
students enrolled in the program;
     A copy of the letter or notice sent to the institution's 
accrediting agency informing the agency of its comprehensive transition 
and postsecondary program; and
     Any other information the Secretary may require.
    Reasons: Proposed Sec.  668.232 would incorporate the statutory 
provisions from section 484(s) of the HEA. The Department would use the 
requested information to determine whether to approve the institution's 
program for funding under the Federal Pell Grant, FSEOG, and FWS 
programs.
    The requirement that an institution provide a copy of the notice 
sent to its accrediting agency is intended only to ensure that the 
accrediting agency is informed that the institution offers or will 
offer a comprehensive transition and postsecondary program. The 
accrediting agency would then decide whether to take any actions.
    One of the non-Federal negotiators felt that an institution should 
not have to set up a separate advising and curriculum structure for 
students with intellectual disabilities. The Department will consider, 
on a case-by-case basis, allowing an institution to use an existing 
structure based on the institution's explanation of how that structure 
is applicable to, and benefits, students with intellectual 
disabilities.
    Other negotiators asked whether the Department would approve a 
comprehensive transition and postsecondary program developed to serve 
the needs of a single student, as this is already the practice in the 
field. The Department will consider, on a case-by-case basis, whether 
to approve a comprehensive transition and postsecondary program 
developed to serve the needs of a single student. However, an 
institution would have to submit a separate application for each 
comprehensive transition and postsecondary program for which it seeks 
approval, even if the program is developed for only one student, as 
each would be considered a separate program.

Student Eligibility (Sec. Sec.  668.32 and 668.233)

    Statute: Section 484(s) of the HEA specifies that a student with an 
intellectual disability must:
     Be enrolled or accepted for enrollment in a comprehensive 
transition and postsecondary program for students with intellectual 
disabilities at an institution of higher education;
     Be maintaining satisfactory progress in the program as 
determined by the institution, in accordance with standards established 
by the institution; and
     Meet the student eligibility requirements in sections 
484(a)(3), (4), (5), and (6) of the HEA, under which a student must not 
be in default on any Federal student loans, must have filed a FAFSA, 
must be a United States citizen or national, and, if the student was 
convicted of fraud in obtaining funds under this title, must have 
repaid those funds.
    Current Regulations: Section 668.32 describes the requirements for 
student eligibility for title IV, HEA program assistance. In part, 
under this section a student must:
     Be enrolled for the purpose of obtaining a degree or 
certificate;
     Have a high school diploma, a recognized equivalent of a 
high school diploma, or have passed an ability to benefit test; and
     Be making satisfactory progress according to the 
institution's published standards for satisfactory progress that 
satisfy the provisions of Sec.  668.16(e) and, if applicable, those 
under Sec.  668.34.
    Proposed Regulations: Proposed Sec. Sec.  668.32(n) and 668.233 
would provide that a student with intellectual disabilities enrolled in 
a comprehensive transition and postsecondary program may be eligible 
for title IV, HEA program assistance under the Federal Pell Grant, 
FSEOG, and FWS programs if--
     The student is making satisfactory academic progress in 
accordance with the institution's published standards for students 
enrolled in the comprehensive transition and postsecondary program; and
     The institution obtains a record from a local or State 
educational agency that the student is or was eligible for special 
education and related services under IDEA. If the student's record does 
not indicate that the student has an intellectual disability, as 
discussed in paragraph (1) of the definition of a student with an 
intellectual disability in proposed Sec.  668.231, the institution 
would have to also obtain documentation from another source that 
identifies the intellectual disability.
    Reasons: The proposed regulations would implement the statutory 
requirements by clarifying that a student with an intellectual 
disability is exempt from the requirements that he or she have a high 
school diploma or its equivalent, and is making satisfactory academic 
progress under Sec.  668.16(e) and Sec.  668.34, if applicable. Also, 
because a student with an intellectual disability does not have to be 
enrolled in a degree or certificate program, the student would be 
eligible for a second Pell Grant in the same award year if the student 
otherwise qualifies for that grant under proposed Sec.  690.67.
    With respect to documentation establishing an intellectual 
disability, there was some concern among the negotiators that 
institutions would require updated evaluations that could be costly or 
cost prohibitive. Proposed Sec.  668.233 would allow institutions to 
accept the most recent documentation, even if it is more than a few 
years old. Also, if available in the student's record and to better 
understand a student's abilities and limitations, we encourage 
institutions to consider using a student's summary of academic 
achievements and functional performance, as described in 34 CFR 
300.305(e)(3), which includes

[[Page 42403]]

recommendations on how to assist the student in meeting the student's 
postsecondary goals.

Institutional Information (Sec.  668.43)

    Statute: Section 485(a)(I) of the HEA specifies that institutions 
must disseminate information about special facilities and services 
available to students with disabilities.
    Current Regulations: Section 668.43 requires an institution to 
provide a description of any special facilities and services available 
to disabled students.
    Proposed Regulations: Proposed Sec.  668.43(a)(7) would change the 
phrase ``any special facilities and services'' to ``the services and 
facilities,'' and replace the phrase ``disabled students'' with 
``students with disabilities.'' The proposed changes would also clarify 
that a description of services and facilities for students with 
disabilities must also contain the services and facilities available 
for students with intellectual disabilities.
    Reasons: The proposed changes reflect changes in terminology in the 
special education and disability fields. Further, we wanted to clarify 
that a description of the services and facilities available to students 
with intellectual disabilities must be included in the description of 
the services and facilities available to all students with 
disabilities.

Part 675 Federal Work-Study Programs

Definition of Community Services (Sec.  675.2)

Adding the Field of Emergency Preparedness and Response

    Statute: Section 441 of the HEOA amended the definition of 
community services in section 441(c)(1) of the HEA to include the field 
of emergency preparedness and response.
    Current Regulations: Section 675.2(b) provides the definitions of 
terms for the FWS Program, including the term community services. The 
definition of community services includes a list of possible services 
in fields such as literacy training and education tutoring that may be 
considered community services under the FWS Program. The definition 
does not provide a complete list of acceptable services, but highlights 
certain services that may improve the quality of life for outside 
community residents, particularly low-income individuals, or solve 
particular problems related to their needs.
    Proposed Regulations: We propose to revise the definition of the 
term community services in Sec.  675.2(b) to include the field of 
emergency preparedness and response to reflect the statutory 
definition.
    Reasons: This proposed regulatory change is needed to conform the 
regulatory definition of community services with section 441(c)(1) of 
the HEA.

Conforming FWS Payment Requirements to the Cash Management Regulations 
(Sec.  675.16)

Handling Minor Prior-Year Charges
    Statute: Under Part E--Need Analysis of the HEA (particularly 
sections 471 through 473), a student's need for most Title IV, HEA 
program funds for a period of enrollment during an award year is 
determined by subtracting the expected family contribution (EFC) and 
other estimated financial assistance for that same enrollment period 
during the award year from the student's cost of attendance for the 
same period. The cost of attendance is based on current award year 
educational expenses. The EFC is the amount that can reasonably be 
contributed toward meeting the student's educational expenses for the 
period of enrollment during the award year for which a need 
determination is made. The Title IV, HEA funds are awarded to defray 
the educational costs for the award year.
    Current Regulations: Under Sec.  675.16(a)(3)(iv), an institution 
may use a student's current year FWS compensation to pay for minor 
prior-award year charges if the charges are less than $100, or the 
charges are $100 or more and the payment of those charges does not 
prevent the student from paying his or her current educational costs. 
In either case, the institution must first obtain the student's written 
authorization. The cash management requirements in Sec.  668.164(d) for 
the other title IV, HEA programs allow an institution to use a 
student's current year title IV, HEA program funds to pay for minor 
prior-year charges if the charges are not more than $200.
    Proposed Regulations: Under the provisions in proposed Sec.  
675.16(b)(1)(ii) and (b)(2), the FWS regulations are amended in three 
ways regarding the use of current award year FWS funds to pay prior 
award year charges. First, the amount of prior award year charges that 
could be paid with current award year FWS funds would increase to not 
more than $200. Second, the FWS provision that allows an institution to 
pay for prior award year charges of $100 or more would be removed. 
Finally, we clarify that the $200 limit applies to all title IV, HEA 
program funds that an institution uses to pay prior-year charges. For 
example, if an institution uses FWS funds in combination with other 
title IV, HEA program funds to credit a student's account to satisfy 
prior award year charges, the total amount of the funds used must be 
$200 or less. We note that an institution is still required to obtain 
the student's written authorization to credit FWS to the student's 
account.
    Reasons: The proposed changes are needed to conform the FWS payment 
regulations to the cash management requirements in Sec.  668.164(d) 
regarding the prior award year limit. When the Department amended the 
regulations for minor prior award year charges under Sec.  668.164(d) 
in November 1, 2007, for the other title IV, HEA programs, we failed to 
make the conforming change for the FWS Program in Sec.  675.16.

Electronic Disbursements

    Statute: The HEA does not address the issue of electronic 
disbursement of FWS or other Title IV, HEA program funds.
    Current Regulations: The current FWS regulations in Sec.  675.16(a) 
provide that an institution may pay a student by check or similar 
instrument that the student can cash on his or her own endorsement, by 
initiating an electronic funds transfer (EFT) to the student's bank 
account, or by crediting the student's account at the institution. If 
an institution wishes to make an EFT or credit the student's account at 
the institution, it must obtain the student's written authorization. 
The current FWS regulations do not allow an institution to require a 
student to have a bank account in order to be paid FWS compensation. 
Also, the current FWS regulations do not address payments made via a 
stored-value card.
    Proposed Regulations: The proposed FWS regulations in Sec.  
675.16(a)(1) would adopt the regulations in Sec.  668.164(c) for the 
direct payment of FWS compensation. The provisions for issuing a check 
and expanding the use of EFTs to bank accounts that underlie stored-
value cards and other transaction devices that already exist for the 
other title IV, HEA programs would also apply to the FWS Program. The 
proposed regulations would remove the FWS requirement that an 
institution obtain a student's written authorization to make an EFT 
payment and add a provision allowing an institution to issue a stored-
value card or similar device. The proposed regulations continue the 
current requirement that an institution must obtain a student's written 
authorization to credit FWS compensation to a student's account at the 
institution for any purpose because

[[Page 42404]]

the funds are earnings and holding those funds without the student's 
permission would be a garnishment of wages. Finally, the proposed FWS 
regulations would allow an institution to establish a policy requiring 
students to provide bank account information or open an account at a 
bank of the student's choosing, as long as this policy does not delay 
the disbursement of FWS earnings to the student. Thus, if the student 
does not comply with the policy, the institution must still disburse 
the funds to the student in a timely manner in another way. Further, an 
institution is not allowed to refuse to hire a student who does not 
comply with the policy to provide bank account information or open a 
bank account, nor to fire him or her for that same reason. This policy 
is based on section 445(c) of the HEA, which states that an institution 
may, upon the request of a student, make a direct deposit to the 
student's account.
    Reasons: The proposed regulations eliminate inconsistencies and 
otherwise harmonize the requirements in the FWS and cash management 
regulations. Providing consistency among the title IV, HEA programs for 
making direct payments to students would make the FWS Program easier 
for institutions to administer and make the process easier for students 
to understand.

Eliminating Separate Student Authorizations

    Statute: The HEA does not address the issue of student written 
authorizations for crediting FWS funds directly to the student's 
account at the institution or holding FWS credit balances on behalf of 
a student.
    Current Regulations: Under Sec.  675.16(a), an institution must 
obtain written authorization from the student to credit the student's 
account at the institution with FWS funds and to hold a title IV credit 
balance. The authorization to credit FWS funds to a student's account 
at the institution must be separate from any other authorization. The 
FWS written authorization may not be included as part of a list or in 
combination with other types of authorizations signed by the student, 
including authorizations for all the other title IV, HEA programs as 
provided in Sec.  668.165. This requirement for a separate student 
authorization to credit FWS funds to a student's account also applies 
to the written authorization required to hold an FWS credit balance for 
the student.
    Proposed Regulations: Under the provisions in proposed Sec.  
675.16(d), the FWS written authorization required to credit a student's 
account at the institution or the written authorization required to 
hold a credit balance for the student will no longer be required to be 
separated from other authorizations.
    Reasons: The proposed FWS change would allow the administrative 
collection of the student authorizations required under the FWS Program 
for crediting student accounts and holding credit balances at the 
institution to be combined with the student authorizations required in 
Sec.  668.165 for the other title IV, HEA programs. This combination of 
student authorizations will make the collection process easier for both 
the student and the institution.

Terms for the Work Colleges Program (Subpart C of Part 675)

    Statute: The amendments made by the HEOA to section 448 of the HEA 
replace the term work-learning each place it appears in the statute for 
the Work Colleges Program with the term work-learning-service. In 
addition, the name of the comprehensive student work-learning program 
that a work college must have, was changed to the comprehensive student 
work-learning-service program.
    Current Regulations: Throughout subpart C of part 674, the current 
Work Colleges Program regulations refer to the term work-learning or 
the term comprehensive work-learning programs and the term 
comprehensive student work-learning program is defined in Sec.  
675.41(b).
    Proposed Regulations: Under the proposed changes to the regulations 
in subpart C of part 674, the term work-learning is replaced with the 
term work-learning-service each place that it appears. Further, the 
name of the defined term comprehensive student work-learning program in 
Sec.  675.41(b) would be changed to comprehensive student work-
learning-service program.
    Reasons: This change is needed to conform the wording in the Work 
Colleges Program regulations to the wording used in the HEA. The 
addition of the word service is important because it recognizes the 
value of service as an intrinsic element and educational outcome of 
work that is provided as part of the overall education program at a 
Work College that benefits the college, the community, and the student. 
The word service that was added as part of the term work-learning-
service in the HEA and now in the proposed regulations, refers to 
uncompensated volunteer service or compensated service for work 
performed for the good of the college community or the external 
community beyond the campus. It includes work performed in the public 
interest at a Federal, State, or local public agency, or at a private 
nonprofit organization.

Additional Standards for the Definition of the Term Work College

    Statute: The amendments made by the HEOA to section 448 of the HEA 
amended the definition of work college. The term work college was 
amended by adding additional standards that a public or private 
nonprofit institution must meet to be eligible for this program. The 
institution must be a four-year, degree-granting institution and must 
require at least one-half of all of its full-time students to 
participate in a comprehensive student work-learning-service program. 
The institution must continue to have all of its resident students 
participate in a comprehensive student work-learning-service program. 
In addition, the institution must require the students to participate 
in a comprehensive student work-learning-service program for at least 
five hours each week or at least 80 hours during each period of 
enrollment, except for summer school, an approved study abroad program, 
or an externship program. A period of enrollment means a semester, 
quarter, trimester, or a similar period.
    Current Regulations: Section 675.41(a) defines the term work 
college.
    Proposed Regulations: Under proposed Sec.  675.41(a), the 
definition of work college would now include the requirement that an 
institution must be a four-year, degree-granting institution. The 
proposed definition would also provide that the institution must have 
at least one-half of all of its full-time students participate in the 
required comprehensive work-learning-service program. In addition, all 
of the students in that program must participate for a minimum of five 
hours each week or a minimum of 80 hours during each period of 
enrollment, except for summer school, an approved study abroad program, 
or an externship program.
    Reasons: The proposed additional requirements are needed to conform 
the definition of a work college to the statutory definition.

Expanding FWS Community Service Jobs (Sec. Sec.  675.18(g) and 
675.26(d)) Promoting Civic Education and Participation Activities

    Statute: The amendments made by the HEOA to section 443 of the HEA 
permit institutions to meet the FWS seven percent community service 
expenditure requirement by using FWS funds to pay students employed in 
projects that teach civics in schools, raise awareness of government 
functions or resources, or increase civic participation.

[[Page 42405]]

    If an institution decides to place FWS students in a community 
service project performing civic education and participation 
activities, it must to the extent practicable:
     Give priority to the employment of FWS students in 
projects that educate or train the public about evacuation, emergency 
response, and injury prevention strategies relating to natural 
disasters, acts of terrorism, and other emergency situations; and
     Ensure that the FWS students performing these projects 
receive the appropriate training to carry out the required educational 
services.
    The FWS students employed in community service projects performing 
these civic education and participation activities may be paid for the 
time spent in training and travel. Further, the FWS students employed 
in community service projects performing civic education and 
participation activities may be paid FWS compensation with a Federal 
share that exceeds the regular 75 percent limit.
    Current Regulations: The current FWS regulations do not address and 
promote civic education and participation activities as a community 
service project.
    Proposed Regulations: Section 675.18(g) would be amended to 
implement section 443 of the HEA that promotes the use of FWS funds to 
employ FWS students in community service projects performing civic 
education and participation activities. The proposed regulations would 
provide that when a school decides to have FWS students perform these 
activities, to the extent practicable, it must give priority to the 
employment of students participating in projects that educate or train 
the public about evacuation, emergency response, and injury prevention 
strategies relating to natural disasters, acts of terrorism, and other 
emergency situations. The institution, to the extent practicable, would 
also have to ensure that the students receive the appropriate training 
to carry out the educational services required.
    Section 675.26(d) would be amended to implement the requirement in 
section 443 of the HEA to allow the Federal share of the compensation 
paid to FWS students performing the civic education and participation 
activities in community service projects to exceed the regular 75 
percent limit. These FWS students may be paid with a Federal share of 
up to 100 percent.
    Reasons: The proposed changes to the FWS regulations are needed to 
add this new use of FWS funds and to promote the employment of FWS 
students in community service projects performing civic education and 
participation activities. Allowing institutions to pay FWS students 
with a Federal share of up to 100 percent encourages institutions to 
place students in community service projects performing civic education 
and participation activities.
    We note that the conference language in the HEOA urges FWS 
participating institutions to improve the availability and quality of 
community service job information to students and to improve their 
outreach to community service agencies. The addition of this new use of 
FWS funds to have students perform civic education and participation 
activities in community service projects provides an opportunity for an 
institution to make the above requested improvements and to meet the 
seven percent community service expenditure requirement.

Flexible Use of FWS Funds (Sec.  675.18(i))

Paying Students Under Certain Conditions in the Event of a Major 
Disaster

    Statute: The amendments made by the HEOA added a new subsection (d) 
to section 445 of the HEA. This new provision allows an eligible 
institution located in any area affected by a major disaster to make 
FWS payments to disaster-affected students under certain limited 
conditions. The FWS payments may only be made for the period of time, 
not to exceed one academic year, in which the disaster-affected 
students were prevented from fulfilling their FWS work obligations due 
to the major disaster.
    Payments may be made to the disaster-affected students in an amount 
equal to or less than the amount of FWS wages the students would have 
been paid had the students been able to complete the work obligation 
necessary to receive the FWS funds. Payments may not be made to any 
student who was not eligible for FWS or was not completing the work 
obligation necessary to receive the FWS funds prior to the occurrence 
of the major disaster. Any payments made to disaster-affected students 
must meet the applicable FWS matching requirements, unless the 
Secretary has waived the matching requirements.
    Section 445(d) of the HEA defines the term ``disaster-affected 
student'' as a student enrolled at the institution who has received the 
FWS award and earned FWS wages prior to the occurrence of the major 
disaster, was prevented from working for all or part of the academic 
year due to the major disaster, and was unable to be reassigned to 
another FWS job after the major disaster. The amended HEA also provides 
that the term ``major disaster'' has the meaning as defined in section 
102(2) of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5122(2)).
    Current Regulations: The current FWS regulations do not provide for 
the flexibility to pay FWS funds to disaster-affected students unable 
to work due to a major disaster. Under the current regulations, there 
is no exception to the FWS Program requirement that an FWS student may 
never be paid FWS funds until the student has performed the work and 
earned those funds.
    Proposed Regulations: Section 675.18 would be amended by adding a 
new paragraph (i) that allows an institution located in any area 
affected by a major disaster to make FWS payments to disaster-affected 
students. However, this one special exception to the basic requirement 
that an FWS student may not be paid FWS funds until the student has 
performed the FWS work has very specific conditions that must be met.
    To apply this limited flexible use of FWS funds to pay disaster-
affected students an institution must be located in an area affected by 
a major disaster. A major disaster must be declared by the President. 
The counties or parishes covered by the declaration are provided by the 
Federal Emergency Management Agency (FEMA).
    The FWS payments may only be made for the period of time in which 
the disaster-affected students were prevented from completing their FWS 
work obligations due to the major disaster. The period of time cannot 
exceed one academic year for this purpose. The FWS payments made to 
disaster-affected students cannot exceed the amount of FWS wages the 
students would have been paid had these students been able to complete 
the FWS work obligation necessary to receive the FWS funds. The 
institution in paying the FWS funds to the disaster-affected students 
must make the appropriate match for the FWS Federal funds, unless the 
Secretary has waived the matching requirements.
    The disaster-affected students must have been eligible for FWS and 
awarded FWS prior to the occurrence of the major disaster. The 
disaster-affected students must have earned FWS funds and be completing 
the FWS work obligation prior to the occurrence of the major disaster. 
The disaster-affected students could not have been separated from their 
FWS employment prior to the occurrence of the major disaster. The major 
disaster must prevent the FWS students from working for a portion or

[[Page 42406]]

all of the academic year. In addition, the disaster-affected students 
must be unable to be reassigned to other FWS jobs by the institution 
after the occurrence of the major disaster.
    Reasons: The proposed changes to the FWS regulations are needed to 
add this new flexibility to pay disaster-affected students who are 
unable to work because of a major disaster. The change would allow the 
eligible FWS students unable to work due to a major disaster to still 
receive the FWS funds that they need to help pay for educational costs.

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

TEACH Grant Program

Periods of Suspension (Sec.  686.41)

    Statute: None.
    Current Regulations: Section 686.41(a) provides that a TEACH Grant 
recipient may be granted a suspension of the eight-year period required 
for completing his or her teaching service obligation, in a low-income 
school as a highly-qualified teacher in a high-need field, based on a 
call or order to active military duty. The suspension ends upon the 
completion of that military service.
    Proposed Regulations: A TEACH Grant recipient who is called or 
ordered to active military duty (or his or her representative) may 
request a suspension of the eight-year period in increments not to 
exceed three years. Under proposed Sec.  686.41(a)(2), a request for a 
suspension of the eight-year period may be granted in one-year 
increments. Proposed Sec.  686.41(a)(2)(ii) would allow a suspension of 
the eight-year period for no more than three years. Once the recipient 
has exceeded the three-year suspension period, the recipient (or his or 
her representative) may request a discharge of all or a portion of his 
or her teaching service obligation.
    Reasons: The proposed regulations would no longer provide an 
indefinite delay of the eight-year, service obligation period to a 
TEACH Grant recipient who is called or ordered to active duty. Instead 
a TEACH Grant recipient that exceeds the three-year suspension period 
could qualify for a discharge of all or part of his or her teaching 
service obligation as provided in proposed Sec.  686.42. The proposed 
discharge provides a greater benefit than a suspension of the service 
obligation to a TEACH Grant recipient who is called or ordered to 
active military duty for extended periods.

Discharge of Agreement To Serve (Sec.  686.42)

    Statute: Section 420N(d)(2) of the HEA, as amended by the HEOA, 
requires the Secretary to establish categories of extenuating 
circumstances under which a TEACH Grant recipient who is unable to 
fulfill all or a portion of his or her teaching service obligation may 
be excused from fulfilling that portion of the teaching service 
obligation.
    Current Regulations: None.
    Proposed Regulations: As provided in proposed Sec.  686.42(c)(2), 
the recipient may qualify for a proportional discharge of his or her 
service obligation based on the number of years the recipient has been 
called or ordered to active military duty. The recipient would qualify 
for a one-year discharge if the call or order to active military duty 
is for more than three years. Similarly, the recipient would qualify 
for a two-year, three-year, or total discharge if the call or order to 
active military duty is for more than four, five, or six years, 
respectively.
    To obtain the discharge, the recipient (or his or her 
representative) would be required under Sec.  686.42(c)(3) to provide 
the Secretary:
     A written statement from his or her commanding or 
personnel officer certifying that the recipient is on active duty in 
the Armed Forces, the date on which that service began, and the date 
the service is expected to end; and
     A copy of his or her official military orders and military 
identification.
    The term Armed Forces would be defined in Sec.  686.42(c)(4) to 
mean the Army, Navy, Air Force, Marine Corps, and Coast Guard.
    Finally, under proposed Sec.  686.42(c)(5), the Department would 
notify a TEACH Grant recipient or his or her representative of the 
decision reached on his or her request for a partial or full discharge 
of the teaching service obligation. The grant recipient would be 
responsible for fulfilling any teaching service obligation that is not 
discharged.
    Reasons: The proposed regulations in Sec.  686.41 implement the 
statutory requirement in section 420N(d)(2)of the HEA by providing for 
a discharge of a teaching service obligation based on a call or order 
to active military duty.
    Under current Sec.  686.42(a) and (b), a TEACH Grant recipient may 
have his or her teaching service obligation discharged upon the 
recipient's death or if he or she becomes totally and permanently 
disabled. The Department believes it would be appropriate to also 
provide a discharge of a TEACH Grant recipient's teaching service 
obligation in cases when the grant recipient cannot comply with his or 
her agreement to teach because of a call or order to active military 
duty for an extended period of time. TEACH Grant recipients who are 
called to active military duty for an extended period of time may 
return from their military service with teaching credentials that are 
no longer valid, may require retraining to meet the standards 
established by the State before they can be placed in a teaching 
position, or may otherwise encounter difficulties in obtaining a 
teaching position that could be used to fulfill their teaching service 
obligation.
    Several non-Federal negotiators believed that additional 
extenuating circumstances should also be considered. Some of them 
suggested that we expand the categories of extenuating circumstances to 
include economic hardship. Noting that teachers were being laid off in 
a number of areas, they argued that TEACH Grant recipients might not be 
able to find full-time employment in their high-need fields due to the 
current economic conditions, which they felt might continue for some 
time. While we are sympathetic to these concerns, the Department 
believes that, because a TEACH Grant recipient has eight years to 
complete a four-year teaching service obligation, he or she should 
still be able to fulfill that obligation notwithstanding the fact that 
he or she may encounter a temporary hardship in locating a suitable 
position.

Part 690 Federal Pell Grant Program

Two Federal Pell Grants in an Award Year (Sec. Sec.  690.63(h), 690.64, 
and 690.67)

    Statute: Section 401(b)(5) of the HEA, as amended by the HEOA, 
provides that a student may receive up to two consecutive Federal Pell 
Grant Scheduled Awards during a single award year if the student is 
enrolled at least half-time for more than one academic year, more than 
two semesters, or the equivalent time during a single award year. The 
student must also be enrolled in a certificate, associate degree, or 
baccalaureate degree program. Section 484(s)(3) of the HEA provides the 
authority to waive this provision for students with intellectual 
disabilities who enroll in a comprehensive transition and postsecondary 
program.

Student Eligibility for a Second Scheduled Award (Sec.  690.67(a))

    Current Regulations: The current regulations provide that the 
Secretary announces in the Federal Register whether an institution may 
award up to

[[Page 42407]]

a second Federal Pell Grant Scheduled Award to a student in a 
particular award year. An institution may award up to a second 
Scheduled Award if a student is enrolled as a full-time student in an 
eligible program that leads to an associate or baccalaureate degree and 
the student has completed the credit hours and weeks of instructional 
time in an academic year leading to his or her associate or 
baccalaureate degree program. If an institution awards a student a 
second Scheduled Federal Pell Grant award, the institution must make 
that award to all students who qualify.
    Proposed Regulations: The proposed regulations would amend Sec.  
690.67 to provide that a student would be eligible for a second 
Scheduled Award if the student has earned in an award year at least the 
credit or clock hours of the first academic year of the student's 
eligible program, and is enrolled as at least a half-time student in a 
program leading to a bachelor's or associate degree or other recognized 
educational credential (such as a postsecondary certificate or 
diploma), except as provided in proposed 34 CFR part 668, subpart O for 
students with intellectual disabilities.
    Reasons: We are proposing these requirements to encourage a student 
to accelerate the completion of his or her program of study within a 
shorter time period than the regularly scheduled completion time, i.e., 
the published length of the program. Providing up to two Federal Pell 
Grants to students for attendance in all payment periods in an award 
year supports this acceleration. We believe that, by encouraging the 
student to complete the credit or clock hours in the academic year 
expeditiously, the benefit of most students' second Scheduled Awards 
would be maximized.
    We initially proposed that a student would be required to complete 
the credit or clock hours of the first academic year before receiving a 
second Scheduled Award or to complete the credit or clock hours of the 
first academic year in the payment period for which he or she is 
receiving a payment from the second Scheduled Award in the award year. 
We further proposed to amend Sec.  690.80 to provide that if the 
projected enrollment status of a student enrolled in a term-based 
program changed at any time during a payment period in which the 
student is receiving a payment from a second Scheduled Award in an 
award year, the institution would be required to recalculate the 
student's payment for the payment period. This recalculation 
requirement would ensure that a student who is not accelerating does 
not receive the benefit of a payment from a second Scheduled Award.
    We did not propose any similar recalculation requirement for clock-
hour and nonterm-credit-hour programs. A recalculation requirement 
would not be relevant to these programs. A student enrolled in one of 
these programs must successfully complete the credit or clock hours of 
a payment period to progress to the next payment period. Thus, a 
student is required to earn the credit or clock hours of the first 
academic year to advance to a payment from a second Scheduled Award.
    Some of the non-Federal negotiators objected to the recalculation 
requirements for term-based programs. These non-Federal negotiators 
were concerned that the requirements would be administratively 
burdensome. They also objected to the difference in treatment compared 
to the requirements for recalculations for payments from a student's 
first Scheduled Award in the award year. In addition, some of these 
non-Federal negotiators believed that the satisfactory academic 
progress standards in 34 CFR 668.16(e), as well as the new limitation 
under section 401(c)(5) of the amended HEA that a student's lifetime 
eligibility is limited to nine Scheduled Awards, provided sufficient 
minimum standards for ensuring a student's advancement in his or her 
eligible program. We are not convinced that the satisfactory progress 
standards at most institutions are robust enough for this purpose or 
that the lifetime limitation on eligibility is short enough to provide 
a sufficient basis for encouraging students to complete their eligible 
programs in less than the regularly scheduled completion time.
    As a result of the non-Federal negotiators objections to the 
requirements for recalculations for changes in enrollment status, we 
proposed an alternative approach. Instead of recalculation, we proposed 
that a student in a term-based program must earn the credit or clock 
hours in an academic year before the student would be eligible for any 
payment from a second Scheduled Award. This proposal would be similar 
to the current treatment of students in clock-hour and nonterm-credit-
hour programs.
    Some of the non-Federal negotiators objected to the proposed 
alternative approach. They did not believe it was appropriate to 
require a student in a term-based program to earn the credit or clock 
hours of the first academic year for the student to be eligible for a 
second Scheduled Award. In addition, the non-Federal negotiators 
disagreed with our understanding that acceleration means that a student 
would complete his or her eligible program in less than the regularly 
scheduled period for completion. The non-Federal negotiators believed 
that acceleration meant that a student was earning additional credit or 
clock hours beyond the first academic year in the award year without 
respect to whether the additional hours were sufficient for the student 
to advance significantly toward the completion of his or her eligible 
program. Some of these non-Federal negotiators believed that the 
statute intended acceleration to apply only on a student-by-student 
basis. For example, a student would be accelerating by completing his 
or her eligible program in a shorter period of time than the student 
would otherwise have completed the program without reference to any 
objective standard. We do not agree. We do not believe the statute 
limits the implementation of these requirements in this manner, nor do 
we believe that adopting the non-Federal negotiators' position would 
provide the necessary encouragement for a student to accelerate the 
completion of his or her educational program.
    As an alternative to our proposal, the non-Federal negotiators 
again advanced their belief that the satisfactory progress standards 
and the nine-Scheduled-Award limit were sufficient. However, they did 
not provide any further information on how these requirements would 
serve to advance a student's acceleration in his or her eligible 
program.
    Consensus was not reached and the Department decided to move 
forward with the proposal to require a student to earn the credit or 
clock hours in the (first) academic year before the student would be 
eligible for any payment from a second Scheduled Award in the award 
year.

Transfer Students (Sec.  690.67(b))

    Current Regulations: None.
    Proposed Regulations: The proposed regulations would provide that 
an institution must determine the credit or clock hours that a transfer 
student has earned at a prior institution during the award year based 
on the Federal Pell Grant disbursements that the student received at 
the prior institution during the award year in relation to the 
student's Scheduled Award at that prior institution. The credit or 
clock hours that the student would be considered to have earned would 
be in the same proportion to credit or clock hours in the current 
institution's academic year as the disbursements that the student has 
received at the prior institution in the award year are in proportion 
to the

[[Page 42408]]

student's Scheduled Award at the prior institution.
    If the student's first Scheduled Award has been disbursed at 
institutions previously attended, the student would be considered to 
have completed the credit or clock hours of the first academic year in 
the award year. If less than the first Scheduled Award has been 
disbursed at prior institutions, the student's credit or clock hours 
earned would be determined by multiplying the payments of the student's 
Scheduled Award disbursed at a prior institution during the award year 
by the number of credit or clock hours in the current institution's 
academic year and dividing the product of the multiplication by the 
amount of the Scheduled Award at the prior institution. If the student 
previously attended more than one institution in the award year, the 
institution would add the results of the calculation for each prior 
institution. For example, a transfer student received $2,000 of his or 
her first Scheduled Award of $4,000 while enrolled at a prior 
institution. The student's current institution defines its academic 
year, in part, as 24 semester hours. To determine the number of credit 
hours the student is considered to have earned in the award year at the 
prior institution, the current institution performs the following 
calculation:
[GRAPHIC] [TIFF OMITTED] TP21AU09.000

    In this case the student would be considered to have earned 12 
semester hours of the first academic year in the award year.
    Reasons: We are proposing these changes because we believe that 
they limit the administrative burden for institutions in implementing 
the requirements for determining the eligibility of transfer students.
    During negotiated rulemaking, the non-Federal negotiators noted 
that our initial proposal did not address the eligibility status of 
transfer students. As a result, we proposed that, unless the 
institution had information to the contrary such as a transcript from 
the other institution, an institution could determine the credit or 
clock hours that a transfer student earned at another institution 
during the award year based on the Federal Pell Grant disbursements 
that the student received at the other institution during the award 
year in relation to the student's Scheduled Award at that institution. 
Many of the non-Federal negotiators were concerned about the 
difficulties for institutions administering the Federal Pell Grant 
Program. Specifically, the non-Federal negotiators were concerned that 
transcripts that might be in the registrar's office might not always be 
readily available to the financial aid office in a form or process 
conducive to implementing these provisions.
    Based on the non-Federal negotiators' concerns, we have revised our 
proposal to provide that an institution would rely solely on assuming 
the credit or clock hours earned in an award year based on the Federal 
Pell Grant disbursements received from the student's Scheduled Award at 
another institution.

Special Circumstances (Sec.  690.67(c))

    Current Regulations: None.
    Proposed Regulations: The proposed regulations would provide that a 
financial aid administrator may waive the requirement that a student 
complete the credit or clock hours in the student's first academic year 
in the award year if the administrator determines that the student was 
unable to complete the clock or credit hours in the student's first 
academic year in the award year due to circumstances beyond the 
student's control. The financial aid administrator would be required to 
make and document the determination on an individual basis. The 
proposed regulations also provide examples of circumstances that may be 
considered beyond the student's control, such as withdrawing from 
classes due to illness, and those that would not be considered beyond 
the student's control, such as failing to register for a necessary 
class to avoid a particular instructor.
    Reasons: During negotiated rulemaking, the non-Federal negotiators 
noted that our initial proposal did not provide any authority for a 
financial aid administrator to consider whether there were special 
circumstances affecting a student's ability to complete the credits or 
clock hours to be eligible for a payment from a second Scheduled Award. 
We agree.

Nonapplicable Credit or Clock Hours (Sec.  690.67(d))

    Current Regulations: None.
    Proposed Regulations: We are proposing that, in determining a 
student's eligibility for a second Scheduled Award in an award year, an 
institution may not use credit or clock hours that the student received 
based on Advanced Placement (AP) programs, International Baccalaureate 
(IB) programs, testing out, life experience, or similar competency 
measures.
    Reasons: A student's eligibility for a second Scheduled Award is 
based, in part, on the student's progress in earning the credits or 
clock hours of the first academic year in the award year. This 
provision ensures that only those credits or clock hours earned in the 
award year are considered in determining the student's eligibility.

Payment Period in Two Award Years (Sec.  690.64)

    Current Regulations: Under current Sec.  690.64, if a payment 
period is scheduled to occur in two award years, an institution must 
consider this ``crossover'' payment period to occur entirely in one 
award year. In general, an institution may assign a crossover payment 
to either award year. The assignment, for example, may be on a student-
by-student basis, or the institution may establish a policy of 
assigning the crossover payment period of all students to the same 
award year. If more than six months of a crossover payment period are 
scheduled to occur within one award year, the institution must assign 
the payment period to that award year.
    Proposed Regulations: Under proposed Sec.  690.64, if a student is 
enrolled in a crossover payment period as a half-time or less-than-
half-time student, the current requirements generally would apply.
    If a student is enrolled as a three-quarter-time or full-time 
student, an institution must consider the payment period to be in the 
award year in which the student would receive the greater payment for 
the payment period based on the information available at the time that 
the student's Federal Pell Grant is initially calculated. If the 
institution subsequently receives information that the student would 
receive a greater payment for the payment period by reassigning the 
payment to the other award year, the institution would be required to 
reassign the payment to the award year providing the greater payment.
    A student may request that the institution place the payment period 
in the award year that can be expected to

[[Page 42409]]

result in the student receiving a greater amount of Federal Pell Grants 
over the two award years in which the payment period is scheduled to 
occur. If the student makes that request, the institution must assign 
the payment period to that award year.
    Reasons: To the extent practicable, we believe that a crossover 
payment period should be assigned in a way that maximizes a student's 
eligibility over the two award years in which the payment period is 
scheduled to occur.
    Initially, we proposed that a crossover payment period should be 
assigned to the award year in which the student receives the greater 
payment for the payment period based on the information available to 
the institution at the time of disbursement. If, subsequent to that 
date, the institution determines that the student would receive a 
greater payment for the payment period by reassigning the payment to 
the other award year, the institution may reassign the payment period 
to the other award year.
    The non-Federal negotiators objected to the mandatory assignment of 
a crossover payment period to the award year with the higher payment. 
They objected because, based on the student's enrollment status in a 
term-based program, there may be a decrease in the overall amount the 
student would receive for the two award years of the crossover payment 
period. For example, a student is enrolled in a traditional semester-
based program with an academic year that is defined, in part, as 24 
semester hours. The student attends half-time, 6 semester hours, for a 
summer term that must be assigned to the second award year due to the 
higher payment and enrolls for 12 semester hours in the fall semester. 
The student would not have earned the semester hours of the first 
academic year at the end of the fall semester. When the student enrolls 
full-time in the spring semester, the student is not yet eligible for a 
payment from the second Scheduled Award. Thus, the student would 
receive only the remaining one-fourth of his or her first Scheduled 
Award, instead of a full payment of one-half of a Scheduled Award. 
However, if the student's summer crossover payment period were assigned 
to the first award year of the crossover payment period, the student 
would be eligible for a full payment of one-half of a Scheduled Award 
for that following spring semester. The difference for the spring 
semester between a payment of one-fourth of a Scheduled Award under the 
first approach, and one-half of a Scheduled Award under the second 
approach, would usually more than make up for the generally smaller 
amount that the student would receive for the summer term if it were 
assigned to the first award year.
    In addition, the non-Federal negotiators believed that determining 
the higher payment for the crossover payment period at the time of 
disbursement created significant administrative difficulties, since the 
higher disbursement amount might be determined not only by a change in 
the Scheduled Award for the award year, but also by a change in a 
student's expected family contribution (EFC). As an alternative, they 
suggested that the determination of the higher amount be set based 
solely on the higher Payment or Disbursement Schedule. They believed 
that this approach would not require a financial aid administrator to 
track changes in a student's EFC.
    As a result of the non-Federal negotiators' concerns regarding the 
assignment of crossover payment periods for term-based programs, we 
provided an alternative proposal that is the basis for these proposed 
regulations. In the case of a half-time student or less-than-half-time 
student, we do not believe the difference in the payments from each 
award year for a crossover payment period will usually be a significant 
amount. In these situations, we do not believe it would be necessary to 
mandate assignment based on the higher payment. In addition, in those 
circumstances where the assignment by the institution may not be to the 
student's advantage, the student may request a determination by the 
institution of the assignment that would provide the student the 
greater amount of Federal Pell Grants over the two award years. The 
institution must comply with the student's request and must reassign 
the crossover payment period if the reassignment would be expected to 
provide the student the greater amount of Federal Pell Grants over the 
two award years.
    With regard to a student enrolled at least three-quarter-time, we 
believe that, generally, a student would significantly benefit from a 
crossover payment period being assigned to the award year in which the 
student would receive the greater payment for the payment period. If a 
student is enrolled at least three-quarter-time in a crossover payment 
period that is assigned to the second award year, the student would 
generally be able to complete the credit hours of an academic year in 
the next semester or next two quarters by taking slightly more than the 
minimum course load required for a full-time student and would be able 
to qualify for a full payment from the second Scheduled Award in the 
subsequent spring term. As in the case of a student enrolled half-time 
or less, the student may request that the institution assign the 
crossover payment period to the award year that would be expected to 
provide the student the greater amount of Federal Pell Grants over the 
two award years, and the institution must comply with the student's 
request.
    Some of the non-Federal negotiators were concerned that the time 
for a determination of the award year to which a crossover payment 
period must be assigned may prevent institutions from closing out the 
earlier of the two award years in which the crossover payment period is 
scheduled to occur. They suggested that the proposed regulations 
include a provision for a deadline for such determinations. We agree 
that an institution must be able to close out the earlier award year in 
a timely manner, but we do not believe a specific reference is 
necessary in these proposed regulations. Sections 690.12, 690.61(b), 
and 690.83 and 34 CFR part 668.60 already provide the necessary 
authorities to establish deadlines for closing out application 
processing and Federal Pell Grant financial reporting for an award 
year. If a student's higher payment for a crossover payment period is 
from the earlier award year, the application and financial reporting 
deadlines would still be applicable. If the determination occurred 
subsequent to those deadlines, no further action would be required of 
the institution. If a student's higher payment for a crossover payment 
period is from the later award year, the applicable deadlines would be 
those for the later award year.
    The Department specifically invites public comment on the proposal 
to require institutions to initially place the crossover payment period 
in the award year that results in the payment of the higher amount to a 
student enrolled at least three-quarter-time (and to allow the student 
to request that the payment period be placed in the other award year if 
that placement would be expected to result in the student receiving a 
greater amount of Federal Pell Grant aid over the two award years in 
which the payment period is scheduled to occur). Further, the 
Department is interested in data from past practices and experiences of 
institutions in the placement of crossover payment periods and in 
whether, and to what degree, this proposal will burden or otherwise 
adversely affect institutions' administration of the Federal Pell Grant 
Program.

[[Page 42410]]

Payment From Two Scheduled Awards (Sec.  690.63(h))

    Current Regulations: None.
    Proposed Regulations: Under Sec.  690.63(h) of the proposed 
regulations, if a student is eligible for the remaining portion of a 
first Scheduled Award in an award year and for a payment from the 
second Scheduled Award, the student's payment would be calculated using 
the annual award for his or her enrollment status for the payment 
period. The student's payment would be the remaining amount of the 
first Scheduled Award being completed plus an amount from the second 
Scheduled Award in the award year up to the total amount of the payment 
for the payment period.
    Reasons: In certain circumstances, a student may, within the same 
payment period, be completing his or her eligibility for the remaining 
balance of the first Scheduled Award in the award year while also 
having eligibility to receive a payment from the second Scheduled 
Award. We have identified two circumstances in which a student may be 
paid from two Scheduled Awards in a payment period. One circumstance 
would be if the institution determined, under proposed Sec.  690.67(c), 
that a student was unable to earn the credits in the first academic 
year due to special circumstances beyond the control of the student. 
The other circumstance would be that a student completed the hours of 
the first academic year but had not received all of his or her first 
Scheduled Award. This provision would provide guidance to institutions 
in calculating a student's payment for the payment period in these 
circumstances and would ensure that eligible students receive their 
awards.

Maximum Federal Pell Grant for Children of Soldiers (Sec.  690.75(e))

    Statute: Section 401(f)(4) of the HEA provides that a student whose 
parent or guardian died as a result of performing military service in 
Iraq or Afghanistan after September 11, 2001, is deemed to have a zero 
expected family contribution (EFC) for purposes of the Federal Pell 
Grant Program. The HEA further directs the Secretary of Veterans 
Affairs and the Secretary of Defense to provide necessary information 
to the Secretary of Education to carry out this provision.
    Current Regulations: None.
    Proposed Regulations: Under proposed Sec.  690.75(e), a student 
whose parent or guardian was a member of the Armed Forces of the United 
States and died as a result of performing military service in Iraq or 
Afghanistan after September 11, 2001, would automatically receive a 
zero EFC for purposes of the Federal Pell Grant Program if he or she 
was under 24 years old or enrolled in an institution of higher 
education at the time of the parent's or guardian's death.
    Reasons: These proposed regulations would implement the statutory 
provisions. Some of the negotiators objected to our initial proposal 
that a student must have an EFC in the numerical range that would make 
a student eligible for a Federal Pell Grant to qualify for a maximum 
Federal Pell Grant. The negotiators believed that the Secretary would 
be adding an additional student eligibility requirement that the 
statute did not provide. Based on the non-Federal negotiators 
objections and our belief that any student should receive a zero EFC if 
the student's parent or guardian died as a result of performing 
military service in Iraq or Afghanistan after September 11, 2001, we 
removed the proposal that a student must have an initial Federal Pell 
Grant EFC that makes him or her eligible in order to qualify for a zero 
EFC under this provision.
    The non-Federal negotiators also objected to the Secretary's 
position that an eligible student would be considered to have a zero 
EFC rather than the maximum Federal Pell Grant Scheduled Award. We do 
not agree. The statute explicitly states that an eligible student is 
deemed to have an EFC of zero.
    We are not proposing any regulations in relation to the Secretary 
of Veterans Affairs and the Secretary of Defense providing the 
necessary information to the Secretary of Education to carry out this 
provision, nor will this provision require any additional questions on 
the Free Application for Federal Student Aid (FAFSA). Once a student 
completes the FAFSA, the Secretary of Education will perform a data 
match with the Department of Defense and the Department of Veterans 
Affairs to confirm that the student had a parent or guardian who died 
as a result of performing military service in Iraq or Afghanistan after 
September 11, 2001.
    A tentative consensus was reached on these proposed regulations 
during the negotiations.

Part 692 Leveraging Educational Assistance Partnership Program

LEAP Program--Non-Federal Share (Sec.  692.10)

    Statute: Section 415C(b)(10) of the HEA, as amended by the HEOA, 
provides that the non-Federal share of the amount of student grants or 
work-study jobs under the LEAP Program must be from State funds for the 
program and no longer requires that the non-Federal share must be from 
a direct appropriation of State funds.
    Current Regulations: Section 692.10(b) references ``State-
appropriated funds'' in the provisions concerning how the Secretary 
determines the number of students deemed eligible for purposes of 
calculating State allotments under Sec.  692.10(a).
    Proposed Regulations: Proposed Sec.  692.10(b) would remove 
references to State funds being appropriated funds and would make 
technical corrections in Sec.  692.10(a) to reflect that multiple 
programs are funded under part 692.
    Reasons: This proposal is necessary to implement section 
415C(b)(10) of the HEA, as amended by the HEOA.
    Several members of the LEAP/GAP subcommittee raised concerns 
regarding whether we should define the term ``State funds'' to clarify 
this change to the nature of the program's matching funds. We did not 
agree that a definition was necessary. During the subcommittee 
discussions, we noted that the term ``State funds'' only refers to cash 
funds, and this cash may be from State-appropriated funds or may be 
from dedicated State revenues such as revenues from a State lottery or 
tuition revenues at a State's public institutions of higher education 
used to provide grant aid. The term ``State funds'' would not include 
in-kind support to a student such as a tuition waiver at a public 
institution of higher education. ``In-kind'' support is not cash. If a 
State were to choose to use tuition revenues at public institutions, or 
some other sources of State cash, to meet its non-Federal share, use of 
this cash may affect information that the State must provide in its 
application to participate in the LEAP and GAP programs in addition to 
being included in the amount of funds reported for the non-Federal 
share.
    In addition, discussions of the LEAP/GAP subcommittee noted that, 
in accordance with 34 CFR 80.24 of the Education Department General 
Administrative Regulations (EDGAR), other Federal funds generally may 
not be used to meet a State's non-Federal share nor may a State use the 
same non-Federal funds to meet the non-Federal share of more than one 
Federal program. For example, tuition revenues at a public institution 
used to meet the non-Federal share of the LEAP Program may not be used 
by the institution to meet the matching requirement of the FSEOG 
Program.

[[Page 42411]]

Notification to Students of LEAP Grant Funding Sources (Sec.  
692.21(k))

    Statute: Section 415C(b)(11) of the HEA requires that a State 
notify eligible students that grants under the LEAP Program are (1) 
LEAP Grants and (2) are funded by the Federal Government, the State, 
and, where applicable, other contributing partners.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  692.21(k) would require that 
the State program notify eligible students that grants under the LEAP 
Grant Program are (1) LEAP Grants and (2) are funded by the Federal 
Government, the State, and, where applicable, other contributing 
partners.
    Reasons: The proposed regulations generally reflect the statutory 
language. Some LEAP/GAP subcommittee members questioned whether the 
regulations should reflect the extent to which States had flexibility 
in implementing this provision. While we noted in the discussions with 
the subcommittee that our intent is to provide maximum flexibility to 
the States in implementing this provision, we believe the statutory 
language as used in the proposed regulations inherently sets certain 
minimum standards.
    As was discussed by the subcommittee members, the State would need 
to ensure that students who receive a LEAP Grant are aware of the 
source of those funds. A State would need to establish a policy that 
would define the term ``eligible student,'' the State would use the 
policy to identify the students that the State would notify in 
accordance with the proposed regulations. A State may consider an 
``eligible student'' to be all students submitting an application, thus 
including potentially eligible students; we believe that this approach 
would minimize the State's administrative burden. A State may consider 
an ``eligible student'' to be students awarded LEAP Grants, or, at a 
minimum, recipients of LEAP Grants. Also, under the proposed 
regulations, notifications must be to individual students rather than 
general notifications; a State may use electronic media; and a State 
may rely on institutions as the agent of the State to provide the 
notifications.
    Some subcommittee members were concerned with whether it would be 
appropriate to revise the notification to say that the LEAP Grant ``may 
be funded'' by Federal, State, or, for purposes of the GAP Program, 
other contributing partners. We do not believe such an alteration is 
appropriate or necessary. The language in the required notice would 
accurately describe, for example, a grant that consisted solely of 
State funds or solely of Federal funds. In some cases, a State may not 
determine actual LEAP recipients at the time State grants are made, for 
example, if a State selects students considered to have received a LEAP 
Grant after the award year has ended. In this circumstance, the State 
would be expected to provide notices at least to all State grant 
recipients.
    In general, these same considerations apply to notifications for 
LEAP Grants made under the GAP Program in accordance with proposed 
Sec.  692.100(a)(8).

Grants for Access and Persistence Program (Subpart C of Part 692 
Consisting of Sec. Sec.  692.90 Through 692.130)

    Statute: Section 415E of the HEA, as amended by the HEOA, 
authorizes the Grants for Access and Persistence (GAP) Program to 
assist States in establishing partnerships to provide eligible students 
with LEAP Grants under GAP to attend institutions of higher education. 
The GAP Program replaces the SLEAP Program previously authorized by 
section 415E of the HEA.
    Current Regulations: None.
    Proposed Regulations: Under proposed part 692, subpart C, 
Sec. Sec.  692.90 through 692.130, we are proposing the regulations 
necessary to implement the GAP Program. The proposed regulations 
would--
     Describe the definitions and other regulations that would 
apply to the GAP Program (See Sec.  692.92);
     Provide the requirements for participation in the GAP 
Program by students, States, degree-granting institutions of higher 
education, early information and intervention, mentoring, or outreach 
programs (early intervention programs), and philanthropic organizations 
or private corporations (See Sec.  692.93);
     Describe the requirements a State must satisfy, as the 
administrator of a partnership with institutions of higher education, 
early intervention programs, and philanthropic organizations or private 
corporations, to receive GAP Program funds (See Sec.  692.94);
     Describe the requirements that a State must meet to 
receive an allotment under this program, including submitting an 
application on behalf of a partnership and serving as the primary 
administrative unit of the partnership (See Sec.  692.100);
     Describe the responsibilities of the members of a State 
partnership in a State that receives a GAP allotment; (See Sec.  
692.101)
     Describe how the Secretary would allot funds to the States 
(See Sec.  692.110);
     Provide that the State must use at least 98 percent of the 
Federal funds received under the GAP Program to fund LEAP Grants under 
GAP and may use up to two percent of the Federal funds received for 
administrative expenses such as the establishment of a partnership, 
early notification to potentially eligible students and their families 
of their potential eligibility for student assistance including LEAP 
Grants under GAP, and issuing to students preliminary award 
notifications (See Sec.  692.112);
     Describe the requirements for funds matching the Federal 
allotment under the GAP Program (See Sec.  692.113);
     Describe the requirements for student eligibility under 
the GAP Program including that the student meets the relevant 
eligibility requirements in 34 CFR 668.32; has graduated from secondary 
school or, for a home-schooled student, has completed a secondary 
education; has financial need for a grant; and meets any additional 
requirements that the State may require for receipt of a LEAP Grant 
under GAP (See Sec.  692.120);
     Provide that a State may impose reasonable time limits for 
a student to complete his or her degree (See Sec.  692.120(c)(2)); and
     Describe how a participating institution may request a 
waiver of statutory or regulatory requirements that would inhibit the 
ability of the institution to successfully and efficiently participate 
in the activities of the partnership (See Sec.  692.130).
    Reasons: These proposed regulations are necessary to implement the 
provisions of section 415E of the HEA, as amended by the HEOA.

Early Intervention Programs (Sec. Sec.  692.94(a)(2)(ii), and 
692.101(c))

    Statute: Section 415E(c)(3) provides that a State agency apply for 
a GAP allotment with, among others, early intervention programs located 
in the State. Section 415E(c)(4)(C) requires that an early intervention 
program in a partnership must provide direct services, support, and 
information (direct services) to participating students.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  692.94(a)(2)(ii) provides that 
a State applying for a GAP allotment must establish a partnership that 
includes new or existing early intervention programs. Under proposed 
Sec.  692.101(c), an early intervention program

[[Page 42412]]

administered by a State or private organization is eligible to 
establish a partnership under the GAP Program, if the program provides 
direct services, support, and information to participating students.
    Reasons: These proposed regulations are necessary to implement 
section 415E(c)(3) of the HEA and to clarify what is considered an 
eligible early intervention program.
    Members of the LEAP/GAP subcommittee were concerned that the 
proposed regulations did not define the direct services that would be 
expected. We did not believe such an expansion of the regulations is 
necessary but agreed to provide further clarification. Under these 
proposed regulations, early intervention services would include, but 
would not be limited to, direct services such as after-school and 
summer-school tutoring, test preparation, assistance in obtaining 
summer jobs, career mentoring, a summer-bridge component, i.e., a 
precollege campus experience, and academic, personal and career 
counseling. These services may be provided through electronic media if 
the electronic media would be appropriate to the direct service 
provided and would interactively and directly engage individual 
students. Disseminating literature, or providing informational Web 
sites, would not qualify as direct services.
    Members of the LEAP/GAP subcommittee also questioned the minimum 
number of early intervention programs that must be in a State 
partnership. Under these proposed regulations, a State partnership 
would be required to have more than one program that offers an early 
intervention component. Section 415E(c)(3) of the HEA, which the 
regulations mirror, refers to early information and intervention, 
mentoring, or outreach programs, suggesting that more than one of these 
types of programs must be included in the GAP Partnership. We believe 
the proposed regulations are consistent with the statute. A State or 
private organization that has a single early intervention program that 
includes several components or programs within its structure would 
satisfy the requirement of having more than one early intervention 
program.

Persistence to Degree Completion (Sec.  692.100(a)(6))

    Statute: Section 415E(c)(1)(B)(vi) of the HEA provides that a 
State's application for a GAP allotment must include a description of 
the steps the State would take to ensure that students who receive LEAP 
Grants under GAP would persist to degree completion.
    Current Regulations: None.
    Proposed Regulations: Under proposed Sec.  692.100(a)(6), a State 
must include in its application the steps it plans to take to ensure, 
to the extent practicable, that students who receive a LEAP Grant under 
GAP would persist to degree completion.
    Reasons: Proposed Sec.  692.100(a)(6) is necessary to implement 
section 415E(c)(1)(B)(vi) of the HEA.
    Some members of the LEAP/GAP subcommittee believed that the 
proposed regulations should directly address eligible students 
attending nonparticipating institutions of higher education. We do not 
agree. For a State that provides a LEAP Grant under GAP to an eligible 
student attending a nonparticipating institution of higher education, 
we would expect the State to obtain a signed assurance from the 
nonparticipating institution. The nonparticipating institution would 
assure the State that it would follow the State's plan established in 
the State's GAP application.

Notification to Students of LEAP Grant Funding Sources (Sec.  
692.100(a)(8))

    Statute: Section 415E(c)(1)(B)(viii) of the HEA requires that a 
State notify eligible students that grants are (1) LEAP Grants and (2) 
are funded by the Federal Government; the State; and, where applicable, 
other contributing partners.
    Current Regulations: None.
    Proposed Regulations: Under proposed Sec.  692.100(a)(8) a State 
GAP Program is required to notify eligible students that the grants 
they receive under GAP are LEAP Grants and that the grants are funded 
by the Federal Government; the State; and where applicable, other 
contributing partners.
    Reasons: Section 415E(c)(1)(B)(viii) of the HEA for the GAP 
Program, which these proposed regulations implement, is basically the 
same as section 415C(b)(11) of the HEA for the LEAP Program. The 
reasons for these proposed regulations are the same as those reasons 
described for the LEAP Program proposed regulations as discussed under 
proposed Sec.  692.21(k).
    For a LEAP Grant under GAP, a State may include this notification 
in the award notification required under proposed Sec.  692.111(e). The 
notifications would apply to LEAP Grants under GAP that are funded by 
in-kind contributions as well as those funded by the Federal allotment 
or cash contributions to the non-Federal share.

Recruiting Eligible Students (Sec.  692.101(b)(2))

    Statute: Section 415E(c)(4)(B)(i)(I) of the HEA provides that an 
institution of higher education in a GAP partnership must recruit and 
admit participating qualified students and provide additional grant aid 
as agreed to with the State agency.
    Current Regulations: None.
    Proposed Regulations: Under proposed Sec.  692.101(b)(2), a degree-
granting institution of higher education that is in a partnership under 
the GAP Program must recruit, admit, and provide institutional grant 
aid to participating eligible students as agreed to with the State 
agency.
    Reasons: The proposed regulations generally reflect the language in 
section 415E(c)(4)(B)(i)(I) of the HEA. Some LEAP/GAP subcommittee 
members were concerned that the regulations may adversely affect the 
admissions standards of participating institutions. We believe that 
under these proposed regulations institutions and States would have 
broad discretion regarding what may be included in an agreement, e.g., 
there is no requirement that an institution must waive its admissions 
standards.

GAP and SLEAP Allotments (Sec. Sec.  692.70 and 692.110)

    Statute: Section 415E(b) of the HEA, as amended by the HEOA, 
provides that the Secretary makes an allotment under the GAP Program to 
each State that submits an application to meet the costs of the Federal 
share of the State's GAP Program. The statute requires that, in making 
a continuation award for a State, the Secretary would make an allotment 
to the State that is not less than the allotment made to the State in 
the previous fiscal year and further provides that the Secretary give 
priority to a State that applies for an allotment in partnerships with 
degree-granting institutions whose combined full-time enrollment 
represents a majority of all students attending institutions of higher 
education in the State.
    Section 415E(g) of the HEA, as amended by the HEOA, provides that 
the LEAP Program provisions that are not inconsistent with GAP 
requirements apply to GAP.
    For the programs authorized under part A, subpart 4 of title IV of 
the HEA, including the GAP Program, section 415B of the HEA provides 
that allotments are based on the ratio that the number of eligible 
students in a State bears to the number of eligible students in all the 
States except that no State may receive less than the State

[[Page 42413]]

received for fiscal year 1979 (1979-1980 award year). Section 415B of 
the HEA further provides that any allotted funds not required by a 
State may be realloted to other States in proportion to the original 
allotments to these other States.
    Section 415A(b) of the HEA, as amended by the HEOA, provides that 
the amount of the annual appropriation for the LEAP and GAP programs 
that is in excess of $30,000,000 must be made available to carry out 
the GAP Program.
    Section 415E(j) of the HEA, as amended by the HEOA, provides that 
for the two-year period that begins on August 14, 2008, the date of 
enactment of the HEOA, a State may continue to make grants under the 
SLEAP Program, i.e., through the 2010-2011 award year.
    Current Regulations: There are no current regulations for the GAP 
Program. Section 692.70 provides that funds are allotted to States 
applying under the SLEAP Program in accordance with Sec.  692.10.
    Proposed Regulations: Proposed Sec.  692.110(a)(1) would apply to 
the GAP Program the allotment formula authorized under section 415B of 
the HEA and used to allot a State's Federal LEAP funds under Sec.  
692.10(a) for a fiscal year.
    Proposed Sec.  692.110(a)(2) would provide priority to qualifying 
States by increasing the number of eligible students in a State to 125 
percent in determining the ratio for allotting funds for a fiscal year. 
This provision would apply to a State that meets the requirements under 
proposed Sec.  692.113(b) for reduced State matching because the State 
is applying for an allotment in partnership with degree-granting 
institutions whose combined full-time enrollment represents a majority 
of all students attending institutions of higher education in the 
State.
    In some years, sufficient funds may be available to allot to each 
State that participated in the prior fiscal year a continuation award 
that is the same amount of Federal GAP funds as were allotted in the 
prior fiscal year, but are not sufficient both to allot at least the 
same amount of Federal GAP funds allotted in the prior year to these 
States and also to allot funds to additional States in accordance with 
the ratio used to allot the States' Federal LEAP funds under Sec.  
692.10(a). For these circumstances we are proposing Sec.  
692.110(a)(3)(i) that would provide to each State that participated in 
the prior fiscal year a continuation award in the amount the State 
received in the prior fiscal year. From the remaining Federal GAP 
funds, new applicants would be allotted an amount based on the ratio 
used to allot the State's Federal LEAP funds under Sec.  692.10(a).
    Insufficient funds may be available to allot a continuation award 
that is at least the amount of Federal GAP funds that were allotted to 
each State in the prior fiscal year. In this circumstance, proposed 
Sec.  692.110(a)(3)(ii) would provide that each State would receive an 
allotment that bears the same ratio to the amount of Federal GAP funds 
available as the amount of Federal GAP funds allotted to each State in 
the prior fiscal year bears to the amount of Federal GAP funds allotted 
to all States in the prior fiscal year.
    Proposed Sec.  692.110(b) provides that we would reallot funds 
available for reallotment in a fiscal year in accordance with the 
provisions of proposed Sec.  692.110(a) that were used to calculate 
initial allotments for the fiscal year.
    Proposed Sec.  692.110(c) provides that any funds made available 
for GAP but not expended in a fiscal year may be allotted or reallotted 
under the LEAP Program.
    Proposed Sec.  692.70 would clarify that, for fiscal year 2010 
(2010-2011 award year), we would allot funds to States applying under 
the SLEAP Program in accordance with Sec.  692.10 prior to calculating 
allotments to States applying for GAP funds under proposed subpart C of 
part 692.
    Reasons: Except to carry out provisions specific to GAP, we are 
proposing to apply the allotment formulas applicable to the LEAP 
Program. This proposal is in accordance with section 415E(g) of the 
HEA, as amended by the HEOA, that provides that the LEAP Program 
provisions that are not inconsistent with GAP requirements apply to 
GAP.
    Two specific provisions of GAP would modify the allotment formulas 
used for the LEAP Program. One provision gives priority to States that 
apply for an allotment in partnerships with degree-granting 
institutions whose combined full-time enrollment represents a majority 
of all students attending institutions of higher education in the 
State. The other provision provides that a State's GAP allotment may 
not be less than the allotment made to the State in the previous year.
    We propose to implement the funding priority in proposed Sec.  
692.110(a)(2) by providing that the State's enrollment of eligible 
students would be 125 percent of its eligible students in applying the 
allotment formula to all States. We believe that the proposed 125 
percent fulfills the statutory provision while providing that all 
eligible States have an opportunity to qualify for funding under the 
allotment formula.
    For continuing awards, there may be a year in which there are 
sufficient funds available to allot to each State that participated in 
the prior fiscal year the same amount of Federal GAP funds that were 
allotted in the prior fiscal year, but insufficient funds are available 
both to allot the same amount of Federal GAP funds to these continuing 
States as in the prior year and to allot additional funds to additional 
States in accordance with the ratio used to allot the States' Federal 
LEAP funds. For these circumstances, we believe it is in accordance 
with the statute to provide continuing States with the same allotment 
as received in the prior fiscal year as proposed in Sec.  
692.110(a)(3)(i). Additional applicants would receive an allotment 
based on applying to the remaining available funds the allotment 
formula used to allot the States' Federal LEAP funds.
    Another circumstance affecting continuing awards would be a year 
for which there are insufficient funds available to allot a 
continuation award that is at least the amount of Federal GAP funds 
allotted to each State in the prior year. Proposed Sec.  
692.110(a)(3)(ii) would provide that we ratably reduce the allotment of 
each State in proportion to its prior year funding. Under this proposal 
we would allot to each State an amount that would bear the same ratio 
to the amount of Federal GAP funds available as the amount of Federal 
GAP funds allotted to each State in the prior fiscal year bears to the 
amount of Federal GAP funds allotted to all States in the prior fiscal 
year. This proposal would ensure that, to the extent practicable, a 
State with an allotment in the prior fiscal year would receive, at 
least proportionately, the same allotment as in the prior year.
    Proposed Sec.  692.110(b) provides that we would reallot available 
funds in a fiscal year in accordance with the provisions of proposed 
Sec.  692.110(a) that were used to calculate initial allotments for the 
fiscal year, and under proposed Sec.  692.110(c) any funds made 
available to GAP but not expended would be allotted or reallotted under 
the LEAP Program. We believe that applying the provisions for 
realloting funds as authorized under section 415B of the HEA is not 
inconsistent with the provisions of GAP and, therefore, must be applied 
to GAP allotments in accordance with section 415E(g) of the HEA. In 
addition we believe that it would be consistent with the provisions of 
section 415A(b) of the HEA to allot or reallot funds under the LEAP

[[Page 42414]]

Program that were previously made available to GAP but not expended.
    We are proposing to amend Sec.  692.70 of the SLEAP Program to 
implement the provisions of section 415E(j) of the HEA for fiscal year 
2010 (2010-2011 award year). As a practical matter, no State was able 
to participate in the GAP Program in fiscal year 2009 (2009-2010 award 
year), and these procedures are necessary only for fiscal year 2010.
    In proposed appendix A to subpart C of part 692, we are providing a 
case study that would illustrate the proposed requirements for 
allotting funds under the GAP Program, including the provisions 
implementing the funding priority, continuation awards, and SLEAP 
Program funding during the transition period of fiscal year 2010 (the 
2010-2011 award year) when a State may continue to participate in the 
SLEAP Program in lieu of GAP Program participation. Apart from State 
enrollments for fiscal year 1979 used in the allotment formula, nothing 
in the case study should be considered to reflect any State's actual 
circumstances or the expected results for any State.

Non-Federal Matching Funds (Sec.  692.113(a)(2))

    Statute: Section 415E(b)(2) of the HEA provides that the non-
Federal matching funds for a State's GAP Program may be cash or a 
noncash, in-kind contribution that has monetary value and helps a 
student meet the cost of attendance at an institution of higher 
education.
    Current Regulations: None.
    Proposed Regulations: Under proposed Sec.  692.113(a)(2), a State 
may include cash or in-kind contributions as non-Federal matching funds 
of a State partnership under the GAP Program. An in-kind contribution 
must be fairly evaluated; have monetary value, such as a tuition 
waiver; and be considered estimated financial assistance under 34 CFR 
673.5(c).
    Reasons: These proposed regulations would implement the provisions 
of section 415E(b)(2) of the HEA.
    Members of the LEAP/GAP subcommittee noted the need to clarify the 
qualifying matching funds, including the in-kind contributions that may 
qualify as matching funds to make LEAP Grants under GAP to eligible 
students.
    Cash that qualifies as matching funds may include, but is not 
limited to, State-appropriated funds or other State funds such as funds 
from a State lottery or tuition revenue at public institutions of 
higher education. Matching cash may also be grants to students provided 
by private institutions or philanthropic organizations or private 
corporations.
    An in-kind contribution is a noncash contribution that has monetary 
value, such as a tuition waiver, the provision of room and board, 
transportation passes, or other provisions that help a student meet the 
cost of attending an institution of higher education. The proposed 
regulations would further clarify that an in-kind contribution must be 
considered to be estimated financial assistance under 34 CFR 673.5(c). 
As in the case of matching cash, matching in-kind contributions may be 
provided by the State, institutions of higher education, or 
philanthropic organizations or private corporations.
    Regardless of whether the funds are cash or are an in-kind 
contribution, funds would qualify as matching funds only if awarded in 
accordance with the GAP Program requirements, and the matching funds 
would be considered title IV, HEA program assistance. For example, if a 
student receiving a tuition waiver did not graduate from secondary 
school, as required under Sec.  692.120(a)(2) to qualify as an eligible 
student for a LEAP Grant under GAP, the amount of the tuition waiver 
could not qualify as matching funds for the non-Federal share of a 
State's GAP Program nor would it qualify as title IV, HEA program 
assistance. If another student receiving a tuition waiver graduated 
from secondary school and was otherwise eligible for a LEAP Grant under 
GAP, the amount of this other student's tuition waiver would qualify as 
matching funds for the non-Federal share of a State's GAP Program and 
as title IV, HEA program assistance.
    Nothing in these proposed regulations would require a State to 
provide LEAP Grants under GAP to meet all costs of attendance. As with 
LEAP Grants under subpart A of this part, a State may, for example, 
restrict a LEAP Grant under GAP to meeting a student's tuition and 
fees. The restriction could apply to funds from both the Federal 
allotment and both cash and in-kind contributions toward the non-
Federal share.
    In accordance with 34 CFR 80.24 of EDGAR, generally other Federal 
funds may not be used to meet a State's non-Federal share nor may a 
State use the same non-Federal funds to meet the non-Federal share of 
more than one Federal program. For instance, non-Federal funds used to 
match the Gaining Early Awareness and Readiness for Undergraduate (GEAR 
UP) Program may not be used as matching funds for the GAP Program 
because those non-Federal funds were already used to match another 
Federal program. However, those non-Federal funds would be included in 
the State's base-year and maintenance of effort requirements under 
proposed Sec.  692.100(f) and (g).

Enrollment and the Amount of State Match (Sec.  692.113(b))

    Statute: Section 415E(b)(2) of the HEA provides that the amount of 
the non-Federal matching funds for a State's GAP Program is based on 
the full-time equivalent enrollment of the institutions of higher 
education participating in the State's partnership.
    Current Regulations: None.
    Proposed Regulations: Under proposed Sec.  692.113(b), the non-
Federal match of the Federal allotment must be forty-three percent of 
the expenditures under this subpart if a State applies for a GAP 
allotment in partnership with degree-granting institutions of higher 
education in the State whose combined full-time enrollment represents 
less than a majority of all students attending institutions of higher 
education in the State, or thirty-three and thirty-four one-hundredths 
percent of the expenditures under this subpart if a State applies for a 
GAP allotment in partnership with degree-granting institutions of 
higher education in the State whose combined full-time enrollment 
represents a majority of all students attending institutions of higher 
education in the State.
    Reasons: These proposed regulations would implement the provisions 
of section 415E(b)(2) of the HEA. Members of the LEAP/GAP subcommittee 
believed that the number of students used in determining these 
percentages should include both in-State and out-of-State students. We 
agree.

Base-year Requirement (Sec.  692.100(f))

    Statute: Section 415E(i) of the HEA provides that in determining a 
State's share of the costs of the State's GAP Program, the State may 
consider only those expenditures from non-Federal sources that exceed 
the State's total expenditures for need-based grants, scholarships, and 
work-study assistance for fiscal year 1999.
    Current Regulations: None.
    Proposed Regulations: Under proposed Sec.  692.100(f), the State 
must provide an assurance that the non-Federal funds used as matching 
dollars under the State's GAP Program is in excess of what the State 
spent in fiscal year 1999 on need-based grants, scholarships, and work-
study assistance.
    Reasons: Section 415E(i) of the HEA and proposed Sec.  692.100(f) 
are identical to the base-year provisions for the previously authorized 
SLEAP Program. Proposed Sec.  692.100(f) would consider the same fiscal 
year 1999 expenditures

[[Page 42415]]

from the same need-based grant, scholarship, and work-study programs a 
State operated in fiscal year 1999. Thus, the amount of a State's 
expenditures in fiscal year 1999 as determined for the SLEAP Program 
would be the same amount applicable for the State under these proposed 
regulations for the GAP Program.

Maintenance-of-Effort Requirement (Sec.  692.100(g))

    Statute: Section 415E(h) of the HEA provides that the aggregate 
amount expended by a State per student, or the aggregate expenditures 
by the State, for funds derived from non-Federal sources, for the 
authorized activities under section 415E(d) of the HEA for the 
preceding fiscal year were not less than the amount expended per 
student or the aggregate expenditure by the State for these authorized 
activities for the second preceding fiscal year. The authorized 
activities under section 415E(d) of the HEA include making LEAP Grants 
under GAP and certain administrative expenses.
    Current Regulations: None.
    Proposed Regulations: Under proposed Sec.  692.100(g), the State 
must provide an assurance that it meets the GAP maintenance-of-effort 
(MOE) requirement. Under the GAP MOE requirement, for the fiscal year 
prior to the fiscal year for which the State is requesting Federal 
funds, the amount the State expended from non-Federal sources per 
student, or the aggregate amount the State expended, for all the 
authorized activities in Sec.  692.111, i.e., making LEAP Grants under 
GAP and certain administrative expenses for the GAP Program, will be no 
less than the amount the State expended from non-Federal sources per 
student, or in the aggregate, for those activities for the second 
fiscal year prior to the fiscal year for which the State is requesting 
Federal funds.
    Reasons: Section 415E(h) of the HEA and proposed Sec.  692.100(g) 
are essentially the same as the MOE provisions for the previously 
authorized SLEAP Program except that the GAP MOE provision is concerned 
only with expenditures for GAP program activities. Because States can 
only participate in the GAP Program starting in the 2010-2011 award 
year, the total State expenditures for authorized GAP activities for 
the 2008-2009 and 2009-2010 award years would be zero. A State's MOE 
would not be relevant to qualifying for a GAP allotment until fiscal 
year 2012 (the 2012-2013 award year).
    Note that although the statute and regulations refer to funding in 
terms of a fiscal year, States receive LEAP, SLEAP, and GAP funds 
operationally on an award year (July 1 through June 30) basis. 
Therefore, a State's MOE and matching requirements are also measured on 
an award year basis.

Student Eligibility--Secondary School Graduate (Sec.  692.120(a)(2))

    Statute: Section 415E(d)(2)(B)(i)(V)(bb) of the HEA provides that a 
student must graduate from secondary school to be eligible for a LEAP 
Grant under GAP.
    Current Regulations: None.
    Proposed Regulations: Under proposed Sec.  692.120(a)(2), to be 
eligible for a LEAP Grant under GAP, a student must graduate from 
secondary school or, for a home-schooled student, must complete a 
secondary education.
    Reasons: Proposed Sec.  692.120(a)(2) is necessary to implement 
section 415E(d)(2)(B)(i)(V)(bb) of the HEA. We believe that a home-
schooled student who completes a secondary education would satisfy the 
statutory requirement that a student graduate from secondary school. 
However, a student who passed an approved ability-to-benefit test or 
obtained a General Educational Development (GED) certificate would not 
satisfy the statutory provision and would not qualify as an eligible 
student for a LEAP Grant under GAP.

Student Eligibility--State's Maximum LEAP Program Award (Sec.  
692.120(a)(3)(ii)(B))

    Statute: Section 415E(d)(3)(A)(ii) of the HEA provides that a 
student is eligible for a LEAP Grant under GAP if the student qualifies 
for the State's maximum undergraduate LEAP Grant under the LEAP Program 
as authorized under section 415(C)(b) of the HEA.
    Current Regulations: None.
    Proposed Regulations: Proposed Sec.  692.120(a)(3)(ii)(B) would 
provide that, in an award year in which a student is receiving an 
additional LEAP Grant under GAP, a student's eligibility may be based, 
in part, on qualifying for a State's maximum undergraduate award for 
LEAP Grants under the LEAP Program in accordance with subpart A of part 
692.
    Reasons: Proposed Sec.  692.120(a)(3)(ii)(B) is necessary to 
implement section 415E(d)(3)(A)(ii) of the HEA. Members of the LEAP/GAP 
subcommittee were concerned that a State's LEAP Program may not have a 
single maximum award amount. They were also concerned that a student 
may qualify for a maximum award but not receive the maximum amount. We 
agree that a student may qualify for the State's maximum LEAP Grant 
under the LEAP Program in a State that may have more than one maximum 
award amount without qualifying for the highest of the maximum awards, 
e.g., a State may have different maximum awards for attendance at 
public and private institutions. In these cases, a student's maximum 
award is based on the maximum award amount established for the 
applicable category or program under which the student qualifies. We 
agree that a student would meet this requirement if the student 
qualifies for the State's maximum undergraduate award but does not 
actually receive the full amount of the maximum award.

Executive Order 12866

Regulatory Impact Analysis

    Under Executive Order 12866, the Secretary must determine whether 
the regulatory action is ``significant'' and therefore subject to the 
requirements of the Executive Order and subject to review by the OMB. 
Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action likely to result in a rule that may 
(1) have an annual effect on the economy of $100 million or more, or 
adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local or 
tribal governments or communities in a material way (also referred to 
as an ``economically significant'' rule); (2) create serious 
inconsistency or otherwise interfere with an action taken or planned by 
another agency; (3) materially alter the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raise novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive order.
    Pursuant to the terms of the Executive order, it has been 
determined this proposed 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. Virtually all of the economic impact 
associated with these proposed regulations flows from proposed Sec.  
690.67 (implementing the statutory provision in section 401(a)of the 
HEOA) allowing the award of two Pell Grants in one year for students 
who wish to accelerate their program of study. Outside of this 
provision, the cost of which is driven almost entirely by explicit 
statutory requirements, these proposed regulations would not be 
considered ``economically significant.''

[[Page 42416]]

The Secretary has assessed the potential costs and benefits of this 
regulatory action and has determined that the benefits justify the 
costs.

Need for Federal Regulatory Action

    These proposed regulations are needed to implement provisions of 
the HEA, as amended by the HEOA, related to changes to the Federal 
grant and work-study programs, campus safety, educational programs for 
students with intellectual disabilities, copyright infringement, teach-
outs, readmission of servicemembers, and non-Title IV revenue.
    In general, these regulations simply restate specific HEOA 
requirements, in many cases using language drawn directly from the 
statute, or make technical changes to conform with statutory 
requirements or other regulations. In the following areas, the 
Secretary has exercised limited discretion in implementing the HEOA 
provisions in these proposed regulations:
    Definition of baccalaureate liberal arts programs offered by 
proprietary institutions: The Secretary determined that, to meet the 
statutory requirement that an institution offer a program, a liberal 
arts program must be an organized program of study that is essentially 
the same for all students, except that it could include some elective 
courses.
    Readmission requirements for servicemembers: The Secretary 
determined that the statute applies both to a student who began 
attendance at an institution and left because of service in the 
uniformed services and to a student admitted to an institution who did 
not begin attendance because of service in the uniformed services. The 
Secretary defined ``promptly readmit'' as readmitting a student into 
the next class or classes in the student's program unless the student 
requests a later date of admission, or unusual circumstances require 
the institution to admit the student at a later date.
    Non-title IV revenue requirement (90/10)--institutional eligibility 
and sanctions: The Secretary determined that an institution has 45 days 
after the end of its fiscal year to notify the Department if it failed 
the 90/10 requirement.
    Non-title IV revenue requirement (90/10)--calculating revenue 
percentage: The Secretary identified types of non-title IV eligible 
programs from which an institution could count, as revenue, funds paid 
for students taking those programs; identified elements to distinguish 
an institutional loan from other student account receivables; and set 
criteria to allocate excess loan funds treated as non-Federal revenue 
to each payment period.
    Net present value: As discussed more fully in the net present value 
discussion in this preamble, the Secretary established a formula for 
institutions to use in calculating the net present value of 
institutional loans made during a fiscal year for the purpose of 
counting those loans as non-Federal revenue. As an alternative, the 
proposed regulations would also allow an institution to use 50 percent 
of the total amount of loans it made during the fiscal year as the NPV, 
provided that none of these loans are sold until they have been in 
repayment for at least two years.
    Institutional plans for improving the academic program: While 
requiring institutions to provide prospective and enrolled students 
information about plans for improving the institution's academic 
program, the Secretary determined that institutions themselves are in 
the best position to determine what defines a plan, including when a 
plan becomes a plan subject to dissemination under this provision.
    Peer-to-peer file sharing/copyrighted material: The Secretary 
determined that in implementing statutory requirements intended to 
reduce the unauthorized distribution of copyrighted material, 
institutions must incorporate at least one technological deterrent; 
must inform users that the unauthorized distribution of copyrighted 
material is illegal, what actions constitute illegal distribution of 
copyrighted material, and the potential penalties for doing so; and 
must use relevant assessment criteria to evaluate how effective its 
plans are in combating the unauthorized distribution of copyrighted 
materials by users of the institution's networks.
    Consumer Information: The Secretary determined that institutions 
must identify the source of the information disclosed, as well as the 
time frames and methodology associated with that information; that 
institutions must disclose the retention rate as reported to the 
Integrated Postsecondary Education Data System (IPEDS); that, with 
limited exceptions, institutions must disaggregate completion and 
graduation rate data by gender, by major racial and ethnic subgroup, 
and by whether or not the institution's students received certain types 
of Federal student aid; and that, in cases where 20 percent or more of 
the certificate- or degree-seeking, full-time, undergraduate students 
at an institution left school to serve in the Armed Forces, to serve on 
official church missions, or to serve with a foreign aid service of the 
Federal Government (such as the Peace Corps), the institution may 
recalculate the completion or graduation rate of those students by 
adding the time period of service to the 150 percent time frame they 
normally have to complete or graduate.
    Campus Safety Provisions--Hate Crime Reporting: The Secretary 
determined that the current FBI's Hate Crime Data Collection Guidelines 
in the Uniform Crime Reporting Handbook should be used to define the 
hate crimes to be reported.
    Campus Safety Provisions--Definition of Test: The Secretary defines 
test for purposes of emergency response and evacuation procedures as 
regularly scheduled drills, exercises, and appropriate follow-through 
activities, designed for assessment and evaluation of emergency plans 
and capabilities.
    Campus Safety Provisions--Annual Security Report/Emergency Response 
and Evacuation Procedures: The Secretary determined that institutions 
must include a statement of policy regarding their emergency response 
and evacuation procedures in the annual security report beginning with 
the annual security report distributed by October 1, 2010. The 
Secretary established these emergency response procedures to ensure 
institutions are prepared for an emergency situation on campus. These 
procedures include testing procedures to identify and improve 
weaknesses and procedures to providing emergency information to the 
campus and larger community, such as parents.
    Campus Safety Provisions--Timely Warning and Emergency 
Notification: The Secretary determined that a timely warning must be 
issued in response to crimes specified in the regulations and that an 
emergency notification is required in the case of an immediate threat 
to the health or safety of students or employees occurring on campus, 
covering a broader scope of situations than those covered by the timely 
warning requirement.
    Campus Safety Provisions--Annual Security Report/Emergency Response 
and Evacuation Procedures/Definition of On-Campus Student Housing 
Facility: The Secretary defines the term on-campus student housing 
facility to mean a dormitory or other residential facility for students 
that is located on an institution's campus, as defined in Sec.  
668.46(a).
    Campus Safety Provisions--Annual Security Report/Missing Student 
Notification Policy: The Secretary determined that the annual security 
report must include information about missing student policies and 
procedures.

[[Page 42417]]

    Campus Safety Provisions--Missing Student Notification Policy: The 
Secretary determined that institutional missing student notification 
policies must include a list of the titles of the persons or 
organizations to which a student should be reported missing, must allow 
students to register in a confidential manner a contact person to be 
notified within 24 hours if they are reported missing, must inform 
students that their parent or guardian will be notified if they are 
under eighteen and not an emancipated minor, and must inform students 
that law enforcement will be notified within 24 hours if the student 
has been determined to be missing for 24 hours.
    Campus Safety Provisions--Annual Fire Safety Report: The Secretary 
included definitions for cause of fire, fire, fire drill, fire-related 
injury, fire-related death, fire-safety system, and value of property 
damage to enable comparability across institutions of the statistics 
that institutions are required to report. Additionally, institutions 
must submit statistics to the Department in their annual fire safety 
report and must provide data for the three most recent calendar years 
for which data are available, with reporting requirements phased in 
beginning with the collection of calendar year 2009 statistics for 
inclusion in the October 1, 2010 Annual Fire Safety Report.
    Financial Assistance for Students with Intellectual Disabilities: 
The Secretary determined that a comprehensive transition and 
postsecondary program for students with intellectual disabilities must 
be delivered to students who physically attend the institution and that 
such a program must provide opportunities for students with 
intellectual disabilities to participate in coursework and other 
activities with students without disabilities.
    Work-Study: The Secretary determined that written authorizations 
from students will no longer be required before an institution can 
credit a student's account or hold a credit balance for the student.
    TEACH Grant Program Periods of Suspension and Discharge of 
Agreement to Serve: The Secretary determined that a TEACH Grant 
recipient's teaching service obligation should be discharged in cases 
when the recipient cannot comply with his or her agreement to teach 
because of a call or order to active military duty for an extended 
period of time.
    Two Federal Pell Grants in an Award Year: The Secretary determined 
that a student would be eligible for a second Scheduled Award if the 
student has earned in an award year at least the credit or clock hours 
of the first academic year of the student's eligible program, and is 
enrolled as at least a half-time student in a program leading to a 
bachelor's or associate degree or other recognized educational 
credential, except as provided for students with intellectual 
disabilities. The Secretary determined that a financial aid 
administrator may, on an individual basis, waive the requirement that a 
student complete the credit or clock hours in the student's first 
academic year in the award year due to special circumstances beyond the 
student's control. The Secretary determined that in calculating a 
transfer student's eligibility to receive a second Scheduled Award, an 
institution determines the credit or clock hours the student has earned 
at a prior institution during the award year based on the Federal Pell 
Grant disbursements that the student received at the prior institution 
during the award year in relation to the student's Scheduled Award at 
that prior institution.
    The Secretary determined that if a student is enrolled as a three-
quarter-time or full-time student, an institution must consider a 
crossover payment period, i.e., a payment period that occurs in two 
award years, to be in the award year in which the student would receive 
the greater payment for the payment period based on the information 
available at the time that the student's Federal Pell Grant is 
initially calculated. If the institution subsequently receives 
information that the student would receive a greater payment for the 
payment period by reassigning the payment to the other award year, the 
institution would be required to reassign the crossover payment to the 
award year providing the greater payment.
    A student may request that the institution place the payment period 
in the award year that can be expected to result in the student 
receiving a greater amount of Federal Pell Grants over the two award 
years in which the payment period is scheduled to occur. If the student 
makes that request, the institution must assign the payment period to 
that award year.
    Maximum Federal Pell Grant for Children of Soldiers: The Secretary 
determined that a student whose parent or guardian died as a result of 
performing military service in Iraq or Afghanistan after September 11, 
2001 is deemed to have a zero expected family contribution (EFC) for 
the Federal Pell Grant Program.

Regulatory Alternatives Considered

    This section addresses the alternatives that the Secretary 
considered in implementing the discretionary portions of the HEOA 
provisions. Except where noted, alternatives considered did not have a 
measurable effect on Federal costs. These alternatives are discussed in 
more detail in the Reasons sections of this preamble related to the 
specific regulatory provisions.
    Campus-Safety Provisions: In general, the Secretary adopted 
alternatives that maximized the availability of information provided to 
students and parents while avoiding unnecessary burden on institutions. 
Specific examples of this process are discussed in the Reasons sections 
accompanying individual regulatory provisions.
    Two Federal Pell Grants in an Award Year: The Department proposed 
that a student would be eligible to receive payment from a second 
Scheduled Award if the student was also completing the hours of the 
first academic year in that payment period. In conjunction with this 
provision, the Department proposed to require recalculation of a 
student's payment for any payment period in which the student is 
receiving a second Scheduled Award if the projected enrollment status 
of a student enrolled in a term-based program changed. This 
recalculation requirement would ensure that a student who is not 
accelerating does not receive the benefit of a payment from a second 
Scheduled Award. Non-Federal negotiators objected to the recalculation 
requirements, citing concern that they would be administratively 
burdensome and create a different treatment compared to recalculations 
for first Scheduled Awards. As discussed extensively above in the 
Reasons section related to this provision, the Department rejected a 
number of alternatives proposed by non-Federal negotiators, because 
they failed to encourage a student to accelerate the completion of his 
or her program of study within a shorter time period than the regularly 
scheduled completion time, i.e., the published length of the program. 
Consensus was not reached on this issue.
    Maximum Federal Pell Grant for Children of Soldiers: During the 
negotiation of these proposed regulations, the Department proposed that 
a student must have an EFC in the numerical range that would make a 
student eligible for a Federal Pell Grant to qualify for a zero EFC 
under this provision. Non-Federal negotiators objected that this added 
an additional student eligibility requirement not

[[Page 42418]]

provided for in the statute. Based on this objection and the 
Department's belief that any student with a parent or guardian who died 
in Iraq or Afghanistan after September 11, 2001 should receive a zero 
EFC, the Department agreed with the non-Federal negotiators' proposed 
language although the Department's alternative would have cost 
approximately $450,000 less over five years than the proposed 
regulations that drew consensus.
    Non-Federal negotiators also suggested that recipients should 
receive a Maximum Pell Award instead of a zero EFC. The Department 
declined on the basis that it conflicted with the explicit language of 
the statute.
    TEACH Grant Program Periods of Suspension and Discharge of 
Agreement to Serve: Several non-Federal negotiators suggested that the 
Department should expand the categories of extenuating circumstances 
under which a TEACH Grant recipient who is unable to fulfill all or a 
portion of his or her teaching service obligation may be excused from 
fulfilling that portion of the teaching service obligation to include 
economic hardship, noting that teachers were being laid off in a number 
of areas and TEACH Grant recipients might not be able to find full-time 
employment in their high-need fields due to the current economic 
conditions. The Department rejected this alternative, believing that 
the eight-year timeframe to complete the four-year service requirement 
is sufficient to overcome temporary hardship in locating a suitable 
position.

Benefits

    Benefits provided in these proposed regulations include greater 
transparency for prospective and enrolled students at institutions 
participating in the Federal Student Financial Assistance programs; 
increased eligibility for certain recipients of Federal Student 
Financial Assistance program funds; established requirements under 
which servicemembers are readmitted to participating institutions; 
established extenuating circumstances under which a TEACH Grant 
recipient may be excused from fulfilling all or part of his or her 
service obligation; expanded use of FWS funds to permit institutions to 
compensate students employed in projects that teach civics in school, 
raise awareness of government functions or resources, or increase civic 
participation; allowing institutions located in major disaster areas to 
make FWS payments to disaster-affected students; new requirements for 
determining how proprietary institutions calculate the amount and 
percent of revenue derived from sources other than title IV, HEA 
program funds; providing that an institution that conducts a teach-out 
at a site of a closed institution may, under certain conditions, 
establish that site as an additional location; amending the definition 
of ``proprietary institution of higher education'' to include 
institutions that provide a program leading to a baccalaureate degree 
in liberal arts, if the institution provided that program since January 
1, 2009, and has been accredited by a regional accrediting agency since 
October 1, 2007, or earlier; providing that the non-Federal share of 
LEAP Grants no longer has to come from a direct appropriation of State 
funds; increased information to LEAP Grant recipients and recipients of 
the new GAP program; and the establishment of the activities, awards, 
allotments to States, matching funds requirements, consumer information 
requirements, application requirements, and other requirements needed 
to begin and continue participating in the GAP Program. In most cases, 
the Department lacks data to accurately assess the impact of these 
benefits. The Department is interested in receiving comments or data 
that would support a more rigorous analysis of the impact of these 
provisions.
    These benefits all flow directly from statutory changes included in 
the HEOA; they are not materially affected by discretionary choices 
exercised by the Department in developing these regulations. As 
discussed in greater detail under Net Budget Impacts, these proposed 
provisions result in net costs to the government of $1,644 million over 
2010-2014.

Costs

    Many of the statutory provisions implemented though this NPRM will 
require regulated entities to develop new disclosures and other 
materials, as well as accompanying dissemination processes. Other 
proposed regulations generally would require discrete changes in 
specific parameters associated with existing guidance--such as changes 
to FWS cash management practices and TEACH Grant service suspension and 
discharge benefits.
    Entities wishing to continue to participate in the student aid 
programs have already absorbed most of the administrative costs related 
to implementing these proposed regulations. Marginal costs over this 
baseline are primarily related to one-time system changes that, while 
possibly significant in some cases, are an unavoidable cost of 
continued program participation. In assessing the potential impact of 
these proposed regulations, the Department recognizes that certain 
provisions--such as the requirement for additional disclosures--are 
likely to increase workload for some program participants. This 
additional workload is discussed in more detail under the Paperwork 
Reduction Act of 1995 section of this preamble. Additional workload 
would normally be expected to result in estimated costs associated with 
either the hiring of additional employees or opportunity costs related 
to the reassignment of existing staff from other activities. Given the 
limited data available, the Department is particularly interested in 
comments and supporting information related to possible burden stemming 
from the proposed regulations. Estimates included in this notice will 
be reevaluated based on any information received during the public 
comment period.
    Federal Pell Grant Program:
    Statutory changes implemented by these proposed regulations are 
estimated to increase grant awards under the Federal Pell Grant Program 
by $297 million over award year 2009-2010 and a total of $1,643 million 
over five years. This will increase Federal costs by the same amount.
    Statutory changes implemented by these proposed regulations to 
grant children of deceased soldiers a zero EFC are estimated to 
increase grant awards under the Federal Pell Grant Program by 
approximately $280,000 over award year 2009-2010 and a total of 
$500,000 over five years. This will increase Federal costs by the same 
amount.
    Because institutions of higher education affected by these 
regulations already participate in the Federal Pell Grant Program, 
these schools have already established systems and procedures to meet 
program eligibility requirements. Accordingly, entities wishing to 
continue to participate in the program have already absorbed most of 
the administrative costs related to implementing these regulations. 
Marginal costs over this baseline are primarily related to one-time 
system changes that, while possibly significant in some cases, are an 
unavoidable cost of continued program participation.

Net Budget Impacts

    HEOA provisions implemented by these proposed regulations are 
estimated to have a net budget impact of $297.4 million in 2010 and 
$1.6 billion over FY 2011-2013. Absent evidence on the impact of these 
regulations on student behavior, budget cost estimates were based on 
behavior as reflected in various Department data

[[Page 42419]]

sets and longitudinal surveys listed under Assumptions, Limitations, 
and Data Sources in this preamble. The budgetary impact of the proposed 
regulations is almost entirely driven by statutory changes involving 
the provision of two Pell Grants in one year.

Assumptions, Limitations, and Data Sources

    Because these proposed regulations would largely restate statutory 
requirements that would be self-implementing in the absence of 
regulatory action, impact estimates provided in the preceding section 
reflect a pre-statutory baseline in which the HEOA changes implemented 
in these proposed regulations do not exist. Costs have been quantified 
for five years. In general, these estimates should be considered 
preliminary; they will be reevaluated in light of any comments or 
information received by the Department prior to the publication of the 
final regulations. The final regulations will incorporate this 
information in a revised analysis.
    In developing these estimates, a wide range of data sources were 
used, including data from 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 2004 National Postsecondary Student 
Aid Survey, the 1994 National Education Longitudinal Study, and the 
1996 Beginning Postsecondary Student Survey. For the regulations 
related to the Federal Pell Grant Program, the sample file used for the 
Pell Grant estimation model is created from a representative portion of 
FAFSA applicants merged to Pell recipient data from the most current 
completed academic year (currently AY 2007-08). The sample data is 
``aged'' using OMB economic assumptions and applicant growth 
assumptions to project future awards. Data from other sources, such as 
the Census Bureau, were also used. Data on administrative burden at 
participating schools and third-party servicers are extremely limited; 
accordingly, as noted above, the Department is particularly interested 
in comments in this area.
    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 1, we have 
prepared an accounting statement showing the classification of the 
expenditures associated with the provisions of these proposed 
regulations. This table provides our best estimate of the changes in 
Federal student aid payments as a result of these proposed regulations. 
Expenditures are classified as transfers from the Federal government to 
student loan borrowers (for expanded loan discharges, teacher loan 
forgiveness payments).

 Table 1--Accounting Statement: Classification of Estimated Expenditures
                              (in millions)
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  $297.4 million in 2010.
From Whom To Whom?                          Federal Government To
                                             Student Loan Borrowers.
------------------------------------------------------------------------

Clarity of the Regulations

    Executive Order 12866 and the Presidential memorandum ``Plain 
Language in Government Writing'' requires each agency to write 
regulations that are easy to understand.
    The Secretary invites comments on how to make these proposed 
regulations easier to understand, including answers to questions such 
as the following:
     Are the requirements in the proposed regulations clearly 
stated?
     Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
     Does the format of the proposed regulations (grouping and 
order of sections, use of headings, paragraphing, etc.) aid or reduce 
their clarity?
     Would the proposed regulations be easier to understand if 
we divided them into more (but shorter) sections? (A ``section'' is 
preceded by the symbol ``Sec.  '' and a numbered heading; for example, 
Sec.  682.209 Repayment of a loan.)
     Could the description of the proposed regulations in the 
``Supplementary Information'' section of this preamble be more helpful 
in making the proposed regulations easier to understand? If so, how?
     What else could we do to make the proposed regulations 
easier to understand?
    To send any comments that concern how the Department could make 
these proposed regulations easier to understand, see the instructions 
in the ADDRESSES section of this preamble.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities. These proposed regulations would affect institutions of 
higher education that participate in Title IV, HEA programs and 
individual students and parents. The U.S. Small Business Administration 
Size Standards define institutions and lenders 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. A significant percentage of the 
institutions participating in the Federal student loan programs meet 
the definition of ``small entities.'' For these institutions, the new 
requirements imposed under the proposed regulations are not expected to 
impose significant new costs. The impact of the proposed regulations on 
individuals is not subject to the Regulatory Flexibility Act.
    The Secretary invites comments from small institutions and lenders 
as to whether they believe the proposed changes would have a 
significant economic impact on them and, if so, requests evidence to 
support that belief.

Paperwork Reduction Act of 1995

    Proposed Sec. Sec.  668.14, 668.18, 668.23, 668.28, 668.41, 668.43, 
668.45, 668.46, 668.49, 668.232, 668.233, 686.41, 686.42, 690.63, 
690.64, 690.67, 690.75, 692.21, and 692.100, 692.101, 692.111 contain 
information collection requirements. Under the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3507(d)), the Department of Education has submitted 
a copy of these sections to the Office of Management and Budget (OMB) 
for its review.

Section 600.5(a)(5)--Definition of Baccalaureate Liberal Arts Programs 
Offered by Proprietary Institutions

    The proposed change to Sec.  600.5(a)(5) would add to the 
definition of proprietary institution of higher education, an 
institution that provides a program leading to a baccalaureate degree 
in liberal arts that the institution has provided since January 1, 
2009, so long as the institution has been accredited by a recognized 
regional accreditation agency or organization since October 1, 2007, or 
earlier. This proposed change in the definition of a proprietary 
institution does not impact burden.
    While the current regulations point to OMB 1840-0098, we estimate 
that there is no change in burden associated with this section of the 
regulations as

[[Page 42420]]

reported under the redesignated OMB Control Number 1845-0012.

Section 668.14(b)(31)--Institutional Requirements for Teach-Outs/
Eligibility and Certification Procedures

    The proposed regulations in Sec.  668.14(b)(31) are amended to 
require an institution to submit a teach-out plan to its accrediting 
agency whenever (1) the Department or their accrediting agency 
initiates an LS&T, or an emergency action against the institution, as 
required by statute; (2) the institution's State licensing or 
authorizing agency revokes the institution's license or legal 
authorization to provide an educational program; (3) the institution 
intends to close a location that provides 100 percent of at least one 
program; or (4) the institution otherwise intends to cease operations.
    While the current regulations in Sec.  668.14 point to OMB 1840-
0537, we estimate that the proposed changes in Sec.  668.14 will 
increase burden by 160 hours for institutions under the redesignated 
OMB Control Number 1845-0022.

Section 668.18--Readmission Requirements for Servicemembers

    The proposed Sec.  668.18 of the regulations include the general 
requirements that an institution may not deny readmission to a 
servicemember, but must readmit the servicemember with the same 
academic status as when the student was last admitted to the 
institution. The proposed regulations clarify that the requirements 
also apply to a student who was admitted to an institution, but did not 
begin attendance because of service in the uniformed services. The 
proposed regulations specify that the institution must promptly readmit 
a student, and would define ``promptly readmit'' as readmitting a 
student into the next class or classes in the student's program unless 
the student requests a later date of admission, or unusual 
circumstances require the institution to admit the student at a later 
date. The proposed regulations require the institution to make 
reasonable efforts to help the student become prepared or to enable the 
student to complete the program including, but not limited to, 
providing refresher courses at no extra cost and allowing the student 
to retake a pretest at no extra cost. The institution would not be 
required to readmit the student if, after reasonable efforts by the 
institution, the student is still not prepared to resume the program at 
the point where he or she left off, or is still unable to complete the 
program.
    The proposed regulation requires an institution to designate one or 
more offices for the purpose of receiving advance notice from students 
of their absence from the institution necessitated by service in the 
uniformed services, and notice from students of intent to return to the 
institution. However, such notice would not need to follow any 
particular format, nor would a student have to indicate if the student 
intends to return to the institution. Also, any such notice may be 
provided by an appropriate officer of the Armed Forces. The notice of 
intent to return may be provided orally or in writing and would not 
need to follow any particular format. A period of absence from the 
institution before or after performing service in the uniformed 
services would not count against the period of uniformed service which 
is limited to the five years.
    The proposed regulations list the documentation that support the 
institution's determination for readmission that a student must submit 
with an application for readmission. The proposed regulations make 
clear that the types of documentation available or necessary will vary 
from case to case.
    The proposed regulations list the circumstances that a student's 
eligibility for readmission to an institution would be terminated.
    We estimate that the proposed changes will increase burden for 
students by 384 hours and for institutions by 1,129 hours for a total 
increase in burden of 1,513 hours in OMB Control Number 1845-NEW1.

Non-Title IV Revenue Requirement (90/10)

Section 668.28(a)--Calculating the Revenue Percentage

    The proposed regulations in Sec.  668.28(a) implement the statutory 
provisions relating to counting revenue from non-title IV eligible 
programs.
    Regarding institutional loans for which a net present value (NPV) 
would be calculated, the proposed regulations establish that 
institutional loans would have to be credited in-full to the students' 
accounts, be evidenced by standalone repayment agreements between 
students and the institution, and be separate from enrollment contracts 
signed by students.
    To count revenue from loan funds in excess of the loan limits in 
effect prior to ECASLA in the allowable revenue category, the proposed 
regulations allow institutions to count the excess amount on a payment-
period basis.
    We estimate that the proposed regulations will increase burden for 
institutions; however, these proposed regulations only define non-title 
IV revenue. The burden increase is found in Sec.  668.28(b) and (c) 
under OMB 1845-NEW2.

Section 668.28(b)--Net Present Value

    The proposed regulation 668.28(b) defines the NPV as the sum of the 
discounted cash flows. Proposed Appendix C illustrates how an 
institution calculates its 90/10 revenue percentage.
    The proposed regulations allow a simpler alternative to performing 
the NPV calculation, by allowing an institution to use 50 percent of 
the total amount of loans it made during the fiscal year as the NPV. 
However, as a condition of using the 50 percent alternative 
calculation, if the institution chooses to use this alternative, it may 
not sell any of the associated loans until they have been in repayment 
for at least two years.
    We estimate that the proposed regulations will increase burden for 
institutions by 3,087 hours in the new OMB Control Number 1845-NEW2.

Section 668.28(c)--Non-title IV Revenue (90/10)

    The proposed regulations in Sec.  668.28(c) would remove all of the 
90/10 provisions from 34 CFR 600.5 and relocate the amended provisions 
to subpart B of part 668. The proposed regulations amend the program 
participation agreement to specify that a proprietary institution must 
derive at least 10 percent of its revenue from sources other than title 
IV, HEA program funds. If an institution does not satisfy the 90/10 
requirement, the proposed regulations require the institution to notify 
the Department no later than 45 days after the end of its fiscal year 
that it failed the 90/10 requirement. In keeping with provisional 
certification requirements the current regulations are amended by 
adding proposed language to provide that a proprietary institution's 
certification automatically becomes provisional if it fails the 90/10 
requirement for any fiscal year.
    We estimate that the proposed regulations in Sec.  668.28(c) will 
increase burden for institutions by 1 hour in the new OMB Control 
Number 1845-NEW2.

Section 668.23(d)(4)--Audited Financial Statements

    The proposed regulations in Sec.  668.23(d)(4) require that a 
proprietary institution must disclose in a footnote to its financial 
statement audit the percentage of its revenues derived from the title 
IV, HEA program funds that the

[[Page 42421]]

institution received during the fiscal year covered by that audit. The 
institution must also report in the footnote the non-Federal and 
Federal revenue by source that was included in the 90/10 calculation.
    While the current regulations point to OMB Control Number 1840-
0697, we estimate that the proposed regulations in Sec.  668.23(d)(4) 
will increase burden for institutions by 165 hours for the redesignated 
OMB Control Number 1845-0038.

Section 668.43(a)(5)(iv)--Institutional Plans for Improving the 
Academic Program

    The proposed regulation in Sec.  668.43(a) amends the information 
about the academic program that the institution must make readily 
available to enrolled and prospective students about any plans by the 
institution for improving any academic program at the institution. An 
institution would be allowed to determine what a ``plan'' is, including 
when a plan becomes a plan.
    We estimate that the proposed regulations will increase burden for 
institutions by 968 hours in OMB Control Number 1845-0022.

Sections 668.14(b) and 668.43(a)--Peer-to-Peer File Sharing/Copyrighted 
Material

Section 668.14(b)(30)--Program Participation Agreement (PPA)

    The proposed regulations require an institution, as a condition of 
participation in a title IV, HEA program, to agree that it has 
developed and implemented plans to effectively combat the unauthorized 
distribution of copyrighted material by users of the institution's 
network without unduly interfering with the educational and research 
use of the network.
    An institution's plan must include:
    The use of one or more technology-based deterrents;
    Mechanisms for educating and informing its community about 
appropriate versus inappropriate use of copyrighted material;
    Procedures for handling unauthorized distribution of copyrighted 
material, including disciplinary procedures; and
    Procedures for periodically reviewing the effectiveness of the 
plans.
    The proposed regulations make clear that no particular technology 
measures are favored or required for inclusion in an institution's 
plans, and each institution retains the authority to determine what its 
particular plans for compliance will be, including those that prohibit 
content monitoring.
    The proposed regulation requires an institution, in consultation 
with the chief technology officer or other designated officer of the 
institution, to the extent practicable, offer legal alternatives to 
illegal downloading or otherwise acquiring copyrighted material, as 
determined by the institution. The proposed regulations would also 
require that institutions (1) periodically review the legal 
alternatives for downloading or otherwise acquiring copyrighted 
material and (2) make the results of the review available to their 
students through a Web site and/or other means.
    While the current regulations in Sec.  668.14 point to OMB 1840-
0537, we estimate that the proposed changes in Sec.  668.14(b)(30) will 
increase burden by 91,120 hours for institutions under the redesignated 
OMB Control Number 1845-0022.

Section 668.43(a)(10)--Consumer Information

    The proposed regulations requires information regarding 
institutional policies and sanctions related to the unauthorized 
distribution of copyrighted material be included in the list of 
institutional information provided upon request to prospective and 
enrolled students. This information must (1) explicitly inform enrolled 
and prospective students that unauthorized distribution of copyrighted 
material, including peer-to-peer file sharing, may subject a student to 
civil and criminal liabilities; (2) include a summary of the penalties 
for violation of Federal copyright laws; and (3) delineate the 
institution's policies with respect to unauthorized peer-to-peer file 
sharing, including disciplinary actions that are taken against students 
who engage in illegal downloading or unauthorized distribution of 
copyrighted materials using the institution's information technology 
system.
    We estimate that the proposed regulations in Sec.  668.43(a)(10) 
will increase burden for institutions by 1,424 hours in OMB Control 
Number 1845-0022.

Section 668.41--Reporting and Disclosure of Information

    The proposed regulations in Sec.  668.41 add retention rate 
information, placement rate information, and information on the types 
of graduate and professional education in which graduates of the 
institution's four-year degree programs enroll, to the types of 
information that an institution must provide to its enrolled and 
prospective students. When reporting its retention rate, an institution 
must disclose the institution's retention rate as defined by and 
reported to the Integrated Postsecondary Education Data System (IPEDS). 
The institution may use various sources of retention rate information 
and information on types of graduate and professional education in 
which graduates of the institution's four-year degree programs enroll 
(such as State data systems, surveys, or other relevant sources). If an 
actual placement rate is calculated by the institution, it must be 
disclosed. The institution would have to identify the source of the 
information it discloses, as well as the time frames and methodology 
associated with that information.
    While the current regulations point to both OMB 1845-0004 and OMB 
1845-0010, OMB 1845-0010 has been recently discontinued, therefore, we 
estimate that the proposed regulations will increase burden for 
institutions 8,541 hours in OMB Control Number 1845-0004.

Section 668.45--Information on Completion or Graduation Rates

    Under the proposed regulations in Sec.  668.45, an institution's 
completion and graduation rate information must be disaggregated by 
gender, by each major racial and ethnic subgroup, and by whether or not 
the institution's students received certain types of Federal student 
aid. The disaggregation by receipt of aid is categorized by:
    Recipients of a Federal Pell Grant;
    Recipients of a Federal Family Education Loan or a Federal Direct 
Loan (other than an Unsubsidized Stafford Loan); and
    Recipients of neither a Federal Pell Grant nor a Federal Family 
Education Loan or a Federal Direct Loan (other than an Unsubsidized 
Stafford loan).
    The institution would report its completion and graduation rate 
information in a disaggregated fashion only if the number of students 
in each category is sufficient to yield statistically reliable 
information, and doing so would not reveal personally identifiable 
information about an individual student.
    We estimate that the proposed regulations will increase burden for 
institutions 7,488 hours in OMB Control Number 1845-0004.

Campus Safety Provisions

Section 668.46(c)(3)--Hate Crime Reporting

    The proposed regulations add the crimes of ``larceny-theft,'' 
``simple assault,'' ``intimidation,'' and ``destruction/damage/
vandalism of property'' to the crimes that must be reported in hate 
crime statistics. Additionally, the proposed regulations

[[Page 42422]]

update the definitions of the terms ``Weapons: carrying, possessing, 
etc.,'' ``Drug abuse violations,'' and ``Liquor law violations'' which 
are excerpted from the Federal Bureau of Investigation's Uniform Crime 
Reporting Program, to reflect changes made by the FBI to these 
definitions in 2004.
    We estimate that the proposed regulations will increase burden for 
institutions by 5,695 hours in OMB Control Number 1845-0022.

Reporting Emergency Response and Evacuation Procedures

Section 668.46(e)--Timely Warning and Emergency Notification

    The proposed regulations clarify the difference between the 
existing timely warning requirement and the new requirement for an 
emergency notification policy. While a timely warning must be issued in 
response to specific crimes, an emergency notification is required in 
the case of an immediate threat to the health or safety of students or 
employees occurring on campus. The proposed language would clarify that 
an institution that follows its emergency notification procedures is 
not required to issue a timely warning based on the same circumstances; 
however, the institution must provide adequate follow-up information to 
the community as needed.
    We estimate that the proposed regulations will increase burden for 
institutions by 1,424 hours in OMB Control Number 1845-0022.

Section 668.46(g)--Emergency Response and Evacuation Procedures

    The proposed regulations outline the elements that an institution 
must include in its statement of policy describing its emergency 
response and evacuating procedures in its annual security report to 
include the following:
    Procedures to immediately notify the campus community upon the 
confirmation of a significant emergency or dangerous situation 
involving an immediate threat occurring on the campus.
    A description of the process that (1) confirms that there is a 
significant emergency or dangerous situation, (2) determines the 
appropriate segment or segments of the campus community to receive a 
notification, (3) determines the content of the notification, and (4) 
initiates the notification system.
    A statement that the institution will, without delay, and taking 
into account the safety of the community, determine the content of the 
notification and initiate the notification system, unless issuing the 
notification will, in the professional judgment of responsible 
authorities, compromise efforts to assist a victim or to contain, 
respond to, or otherwise mitigate the emergency.
    A list of the titles of the persons or organizations responsible 
for carrying out the actions proposed.
    Procedures for disseminating emergency information to the larger 
community.
    Procedures for testing its emergency response and evacuation 
procedures on at least an annual basis with at least one test per 
calendar year, and be documented, including a description of the 
exercise, the date, time, and if it was announced or unannounced.
    We estimate that the proposed regulations will increase burden for 
institutions by 11,390 hours in OMB Control Number 1845-0022.

Missing Student Procedure

Section 668.41(a)--Definition of On-Campus Student Housing Facility

    The proposed regulations in Sec.  668.41(a) would add a definition 
of the term on-campus student housing facility to mean a dormitory or 
other residential facility for students that is located on an 
institution's campus.
    The proposed definition would be added to clarify what is meant by 
on-campus student housing facility and to link the meaning of ``on-
campus'' to the existing regulatory definition of campus in Sec.  
668.46(a), which is used for crime reporting under Sec.  668.46(c). The 
proposed change is to a definition and does not impact burden.
    While the current regulations point to both OMB 1845-0004 and OMB 
1845-0010, OMB 1845-0010 has recently been discontinued. We estimate 
that there is no change in burden associated with this section of the 
regulations as reported under OMB Control Number 1845-0004.

Section 668.46(b)--Annual Security Report

    The proposed regulations in Sec.  668.46(b) require an institution 
to include its missing student notification policy and procedures in 
its annual security report. This would be required beginning with the 
annual security report distributed by October 1, 2010.
    We estimate that the proposed regulations will increase burden for 
institutions by 456 hours for an increase in burden in OMB Control 
Number 1845-0022.

Section 668.46(h)--Missing Student Notification Policy

    The proposed regulation in Sec.  668.46(h) implements the new 
statutory requirements, specifying that a statement of policy regarding 
missing student notification for students residing in on-campus student 
housing facilities must include:
    A list of the titles of the persons or organizations to which 
students, employees, or other individuals should report that a student 
has been missing for 24 hours;
    A requirement that any official missing student report be 
immediately referred to the institution's police or campus security 
department or, if not applicable, to the local law enforcement agency 
with jurisdiction in the area;
    The option for each student to identify a contact person to be 
notified if the student is determined missing by the institutional 
police or campus security department, or the local law enforcement 
agency; and
    A disclosure that contact information will be registered and 
maintained confidentially.
    The proposed regulation further requires an institution to advise 
students who are under 18 and not emancipated that if the student is 
missing it will notify a custodial parent or guardian in addition to 
any contact person designated by the student. All students must also be 
advised that, regardless of whether they name a contact person, the 
institution must notify the local law enforcement agency that the 
student is missing, unless the local law enforcement was the entity 
that determined that the student is missing.
    The proposed regulations reflect the new statutory requirements. 
These regulations do not preclude the institution from contacting the 
student's contact person or the parent immediately upon determination 
that the student has been missing for 24 hours.
    We estimate that the proposed regulations will increase burden for 
institutions by 2,423 hours for an increase in burden in OMB Control 
Number 1845-0022.

Fire Safety Standards

Section 668.41(e)--Annual Fire Safety Report

    The proposed regulations provide that institutions that maintain an 
on-campus student housing facility must distribute an annual fire 
safety report and to create publication requirements for the annual 
fire safety report that are similar to the long-standing rules for the 
annual security report.
    The proposed regulations allow an institution to publish the annual 
security report and the annual fire safety

[[Page 42423]]

report together, as long as the title of the document clearly states 
that it contains both the annual security report and the annual fire 
safety report. If an institution chooses to publish the reports 
separately, it would have to include information in each of the two 
reports about how to directly access the other report.
    While the current regulations point to both OMB 1845-0004 and OMB 
1845-0010, OMB 1845-0010 has recently been discontinued. The burden 
associated with the data collection and reporting for the annual fire 
safety report is reflected in Sec.  668.49 as reported under OMB 
Control Number 1845-NEW3.

Section 668.49--Annual Fire Safety Report

    The proposed regulations define the following terms relevant to the 
fire safety reporting requirements: Cause of fire; Fire; Fire drill; 
Fire-related injury; Fire-related death; Fire-safety system; and Value 
of property damage.
    The proposed regulation requires an institution to report to the 
public, the statistics that it submits to the Department in its annual 
fire safety report. The institution would have to provide data for the 
three most recent calendar years for which data are available. The 
first full report to contain the full three years of data would be the 
report due on October 1, 2012.
    The proposed regulations outline the elements that an institution 
must disclose in its annual fire safety report, including: Fire 
statistics; A description of each on-campus student housing facility 
fire safety system; The number of regular, mandatory, supervised fire 
drills held during the previous calendar year; Policies or rules on 
portable electrical appliances, smoking, and open flames in student 
housing facilities; Procedures for student housing evacuation in the 
case of a fire; Policies on fire safety education and training programs 
provided to students, faculty, and staff; A list of the titles of each 
person or organization to which students and employees should report 
that a fire has occurred; and Plans for future improvements in fire 
safety.
    The proposed regulations specify that an institution that maintains 
an on-campus student housing facility must maintain a written and 
easily understood fire log that records, by the date that the fire was 
reported (as opposed to by the date that the fire occurred), any fire 
that occurred in an on-campus student housing facility. The log would 
have to include the nature, date, time, and general location of each 
fire, and require that the log be available for public. These proposed 
regulations also implement the statutory requirement that an 
institution make an annual report to the campus community on the fires 
recorded in the fire log; however, this requirement may be satisfied by 
the annual fire safety report described in proposed Sec.  668.49(b).
    We estimate that the proposed regulations will increase burden for 
institutions by 7,283 hours in OMB Control Number 1845-NEW3.

Financial Assistance for Students With Intellectual Disabilities

Section 600.5--Proprietary Institution of Higher Education

    The proposed regulation in Sec.  600.5(a)(5)(i)(B)(2)(ii) defines a 
proprietary institution of higher education as one that may have a 
comprehensive transition and postsecondary program as an eligible 
program when it is approved by the Secretary. The proposed change in 
the definition of an eligible program does not impact burden.
    While the current regulations in Sec.  600.5 point to OMB 1840-
0098, this information collection has been discontinued and 
redesignated to 1845-0012. We estimate that there is no change in 
burden associated with this proposed change in the regulations.

Section 668.8--Eligible Program

    The proposed regulation in Sec.  668.8(n) defines a comprehensive 
transition and postsecondary program as an eligible program when it is 
approved by the Secretary. The proposed change in the definition of an 
eligible program does not impact burden.
    While the current regulations in Sec.  668.8 point to OMB 1845-
0537, this collection package has been discontinued; we estimate that 
there is no change in burden associated with this proposed change in 
the regulations.

Section 668.232--Program Eligibility

    The proposed regulations require an institution that wishes to 
provide a comprehensive transition and postsecondary program to apply 
and receive approval from the Secretary. The proposed regulations 
outline the elements that an institution must include in its 
application, including: A detailed description of the comprehensive 
transition and postsecondary program; The policy for determining 
whether a student enrolled in the program is making satisfactory 
academic progress; A statement of the number of weeks of instructional 
time and the number of semester or quarter credit hours or clock hours 
in the program; A description of the educational credential offered or 
identified outcome or outcomes established by the institution for all 
students enrolled in the program; A copy of the letter or notice sent 
to the institution's accrediting agency informing the agency of its 
comprehensive transition and postsecondary program; and Any other 
information the Department may require. We estimate that the proposed 
regulations will increase burden for institutions by 66 hours in OMB 
Control Number 1845-NEW4.

Section 668.233--Student Eligibility

    The proposed regulations in Sec.  668.233 provide that a student 
with intellectual disabilities enrolled in a comprehensive transition 
and postsecondary program may be eligible for title IV, HEA program 
assistance under the Federal Pell grant, FSEOG, and FWS programs if: 
The student is making satisfactory academic program in accordance with 
the institution's published standards for students enrolled in the 
comprehensive transition and postsecondary program; and The institution 
obtains a record from a local educational agency that the student is or 
was eligible for FAPE under IDEA. If the FAPE record does not indicate 
that the student has an intellectual disability, the institution would 
have to obtain documentation from another source that identifies the 
intellectual disability.
    We estimate that the proposed regulations will increase burden for 
institutions by 768 hours in OMB Control Number 1845-NEW4.

Section 668.43(a)(7)--Institutional Information

    The proposed regulation changes the phrase ``any special facilities 
and services'' to ``the services and facilities,'' and replaces the 
phrase ``disabled students'' with ``students with disabilities.'' The 
proposed changes would also clarify that a description of services and 
facilities for students with disabilities must also contain the 
services and facilities available for students with intellectual 
disabilities.
    We estimate that the proposed regulations will increase burden for 
institutions by 44 hours in OMB Control Number 1845-0022.

Federal Work Study Programs

Section 675.16--Conforming FWS Payment Requirements to the Cash 
Management Regulations

    The proposed regulations in Sec.  675.16(b)(1)(ii) and (b)(2), 
amend the FWS regulations in three ways regarding

[[Page 42424]]

the use of current award year FWS funds to pay prior award year 
charges. First, the amount of prior award year charges that could be 
paid with current award year FWS funds would increase to not more than 
$200. Second, the FWS provision that allows an institution to pay for 
prior award year charges of $100 or more would be removed. Finally, we 
clarify that the $200 limit applies to all title IV, HEA program funds 
that an institution uses to pay prior-year charges. These changes to 
conform the FWS payment requirements to the current cash management 
regulations do not impact burden.
    We estimate that there is no change in burden associated with this 
section of the regulations under OMB Control Number 1845-0019.

TEACH Grant Program

Section 686.41--Period of Suspension

    The proposed regulations in Sec.  686.41 provide that a TEACH Grant 
recipient who is called or ordered to active military duty (or his or 
her representative) may request a suspension of the eight-year period 
in increments not to exceed three years. Once the recipient has 
exceeded the 3-year suspension period, the recipient (or his or her 
representative) may request a discharge of all or a portion of his or 
her teaching service obligation.
    We estimate that the proposed regulations will increase burden for 
institutions in OMB Control Number 1845-0083. The Department will 
submit an 83-C incorporating the changes after the final regulations 
have published.

Section 686.42--Discharge of Agreement To Serve

    The proposed regulations in Sec.  686.42 provide that the recipient 
may qualify for a proportional discharge of his or her service 
obligation based on the number of years the recipient has been called 
or ordered to active military duty.
    To obtain the discharge, the recipient (or his or her 
representative) would be required to provide the Department:
    A written statement from his or her commanding or personnel officer 
certifying that the recipient is on active duty status in the Armed 
Forces, the date on which that service began, and the date the service 
is expected to end; and a copy of his or her official military orders 
and military identification.
    The Department would notify a TEACH Grant recipient of the decision 
reached on his or her request for a partial or full discharge of the 
teaching service obligation. The grant recipient would be responsible 
for fulfilling any teaching service obligation that is not discharged.
    We estimate that the proposed regulations will increase burden for 
institutions in OMB Control Number 1845-0083. The Department will 
submit an 83-C incorporating the changes after the final regulations 
have published.

Federal Pell Grant Program

Two Federal Pell Grants in an Award Year

Section 690.67(a)--Student Eligibility for a Second Scheduled Award

    The proposed regulations would amend Sec.  690.67 to provide that a 
student would be eligible for a second Scheduled Award if the student 
has earned in an award year at least the credit or clock hours of the 
first academic year of the student's eligible program, and is enrolled 
as at least a half-time student in a program leading to a bachelor's or 
associate degree or other recognized educational credential (such as a 
postsecondary certificate or diploma), except as provided for students 
with intellectual disabilities. To the extent that the institution will 
be reporting these second scheduled award Pell disbursements via the 
Common Origination and Delivery (COD) system, there will be some 
additional burden for institutions.
    We estimate that the proposed regulations will increase burden for 
institutions by 47,432 hours in OMB Control Number 1845-NEW5.

Section 690.67(b)--Transfer Students

    The proposed regulations in Sec.  690.67(b) would provide that an 
institution determine the credit or clock hours that a transfer student 
has earned at a prior institution during the award year based on the 
Federal Pell Grant disbursements that the student received at the prior 
institution during the award year in relation to the student's 
Scheduled Award at that prior institution. The credit or clock hours 
that the student would be considered to have earned would be in the 
same proportion to credit or clock hours in the current institution's 
academic year as the disbursements that the student has received at the 
prior institution in the award year are in proportion to the student's 
Scheduled Award at the prior institution.
    To the extent that the institution will be reviewing the transfer 
records of these students and subsequently reporting second scheduled 
award Pell disbursements via the Common Origination and Delivery (COD) 
system, there will be some additional burden for institutions.
    We estimate that the proposed regulations will increase burden for 
institutions by 14,400 hours in OMB Control Number 1845-NEW5.

Section 690.67(c)--Special Circumstances

    The proposed regulations in Sec.  690.67(c) would provide that a 
financial aid administrator may waive the requirement that a student 
complete the credit or clock hours in the student's first academic year 
in the award year due to circumstances beyond the student's control. 
The financial aid administrator would be required to make and document 
the determination on an individual basis.
    To the extent that the institution will be documenting these 
special circumstances and subsequently awarding second Pell grants, the 
institutions will be reporting the second Pell disbursements via the 
Common Origination and Delivery (COD) system, there will be some 
additional burden for institutions.
    We estimate that the proposed regulations will increase burden for 
institutions by 3,429 hours in OMB Control Number 1845-NEW5.

Section 690.67(d)--Nonapplicable credit or clock hours

    The proposed regulation in Sec.  690.67(d) states that, in 
determining a student's eligibility for a second Scheduled Award in an 
award year, an institution may not use credit or clock hours that the 
student received based on Advanced Placement (AP) programs, 
International Baccalaureate (IB) programs, testing out, life 
experience, or similar competency measures.
    To the extent that the institution will be making determinations 
about the applicability of AP, IB, or other non- applicable courses, 
institution will subsequently award second Pell grants and thereafter 
report Pell disbursements via the Common Origination and Delivery (COD) 
system, thus there will be some additional reporting burden for 
institutions.
    We estimate that the proposed regulations will increase burden for 
institutions by 2,032 hours in OMB Control Number 1845-NEW5.

Section 690.64--Payment Period in Two Award Years

    In this proposed regulation in Sec.  690.64, if a student is 
enrolled in a crossover payment period as a half-time or less-than-
half-time student, the current requirements generally would apply.
    If a student is enrolled as a three-quarter-time or full-time 
student, an institution must consider the payment period to be in the 
award year in which

[[Page 42425]]

the student would receive the greater payment for the payment period 
based on the information available at the time that the student's 
Federal Pell Grant is initially calculated. If the institution 
subsequently receives information that the student would receive a 
greater payment for the payment period by reassigning the payment to 
the other award year, the institution would be required to reassign the 
payment to the award year providing the greater payment.
    A student may request that the institution place the payment period 
in the award year that can be expected to result in the student 
receiving a greater amount of Federal Pell Grants over the two award 
years in which the payment period is scheduled to occur. If the student 
makes that request, the institution must assign the payment period to 
that award year.
    To the extent that the institution will be reviewing enrollment 
status in each of the two award years and making determinations about 
which award year must be used and subsequently reporting these second 
scheduled award Pell disbursements via the Common Origination and 
Delivery (COD) system, there will be some additional burden for 
institutions.
    We estimate that the proposed regulations will increase burden for 
institutions by 33,881 hours in OMB Control Number 1845-NEW5.

Section 690.63(h)--Payment From Two Scheduled Awards

    Under the proposed regulations in Sec.  690.63(h), if a student is 
eligible for the remaining portion of a first Scheduled Award in an 
award year and for a payment from the second Scheduled Award, the 
student's payment would be calculated using the annual award for his or 
her enrollment status for the payment period. The student's payment 
would be the remaining amount of the first Scheduled Award being 
completed plus an amount from the second Scheduled Award in the award 
year up to the total amount of the payment for the payment period.
    We estimate that the proposed regulations will increase burden for 
institutions by 8,471 hours in OMB Control Number 1845-NEW5.

Section 690.75(e)--Maximum Pell Grant for Children of Soldiers

    Under the proposed regulation in Sec.  690.75(e), a student whose 
parent or guardian was a member of the Armed Forces of the United 
States and died as a result of performing military service in Iraq or 
Afghanistan after September 11, 2001, would automatically receive a 
zero EFC for purposes of the Federal Pell Grant Program if he or she 
was under 24 years old or enrolled in an institution of higher 
education at the time of the parent's or guardian's death.
    We estimate that the proposed regulations will increase burden for 
institutions by 48 hours in OMB Control Number 1845-NEW6.

Part 692 Leveraging Educational Assistance Partnership Program

Section 692.21(k)--Notification to Students of LEAP Grant Funding 
Sources

    The proposed regulations require that the State program notify 
eligible students that grants under the LEAP Grant Program are (1) LEAP 
Grants and (2) are funded by the Federal Government, the State, and, 
where applicable, other contributing partners.
    The implementation of the proposed regulations for the changes to 
LEAP and the introduction of the GAP program will increase burden to 
States. We estimate that the burden in these proposed regulations will 
be associated with the application and performance report forms under 
development. These forms will be developed after the final regulations 
are published to insure that the forms comport with the finalized 
requirements. The new forms will be submitted to OMB for approval under 
OMB Control Number 1845-NEW7.

Section 692.100--Requirements a State Must Meet To Receive GAP Funds

    The proposed regulations in Sec.  692.100 describe the requirements 
that a State must meet to receive an allotment under this program 
including submitting an application on behalf of a partnership and 
serving as the primary administrative unit of the partnership. Under 
proposed Sec.  692.100(a)(6), a State must include in its application 
the steps it plans to take to ensure, to the extent practicable, that 
students who receive a LEAP Grant under GAP would persist to degree 
completion.
    Under proposed Sec.  692.100(a)(8) a State GAP Program is required 
to notify eligible students that the grants they receive under GAP are 
LEAP Grants and that the grants are funded by the Federal Government, 
the State and where applicable, other contributing partners.
    The implementation of the proposed regulations for the changes to 
LEAP and the introduction of the GAP program will increase burden to 
States. We estimate that the burden in these proposed regulations will 
be associated with the application and performance report forms under 
development. These forms will be developed after the final regulations 
are published to insure that the forms comport with the finalized 
requirements. The new forms will be submitted to OMB for approval under 
OMB Control Number 1845-NEW7.

Section 692.101--Requirements That Must Be Met by a State Partnership

    The proposed regulations in Sec.  692.101(b)(2) provide that a 
degree-granting institution of higher education that is in a 
partnership under the GAP Program must recruit, admit, and provide 
institutional grant aid to participating eligible students as agreed to 
with the State agency.
    The implementation of the proposed regulations for the changes to 
LEAP and the introduction of the GAP program will increase burden to 
States. We estimate that the burden in these proposed regulations will 
be associated with the application and performance report forms under 
development. These forms will be developed after the final regulations 
are published to insure that the forms comport with the finalized 
requirements. The new forms will be submitted to OMB for approval under 
OMB Control Number 1845-NEW7.

Section 692.111--Purposes for Which a State May Use Its GAP Grant

    The proposed regulations in Sec.  692.111 provide that each State 
receiving an allotment shall annually notify potentially eligible 
students in grades 7 through 12 in the State, and their families, of 
their potential eligibility for student financial assistance, including 
a LEAP Grant under GAP, to attend a LEAP-participating institution of 
higher education.
    The notice shall include information about early information and 
intervention, mentoring, or outreach programs available to the student. 
The notice shall provide a nonbinding estimate of the total amount of 
financial aid that an eligible student with a similar income level may 
expect to receive, including an estimate of the amount of a LEAP Grant 
under GAP and an estimate of the amount of grants, loans, and all other 
available types of aid from the major Federal and State financial aid 
programs. The proposed notice will also include any additional 
requirements that the State may require for receipt of a LEAP Grant 
under GAP.
    The implementation of the proposed regulations for the changes to 
LEAP and the introduction of the GAP program will increase burden to 
States. We estimate that the burden in these proposed regulations will 
be associated with the application and performance report forms under 
development. These forms will be developed after the final

[[Page 42426]]

regulations are published to insure that the forms comport with the 
finalized requirements. The new forms will be submitted to OMB for 
approval under OMB Control Number 1845-NEW7.
    Consistent with the discussion above, the following chart describes 
the sections of the proposed regulations involving information 
collections, the information being collected, and the collections that 
the Department will submit to the Office of Management and Budget for 
approval and public comment under the Paperwork and Reduction Act.

------------------------------------------------------------------------
     Regulatory section        Information section       Collection
------------------------------------------------------------------------
668.14(b)(31)...............  Providing that an     OMB 1845-0022. There
                               institution that      will be an increase
                               conducts a teach-     in burden of 160
                               out at a site of a    hours.
                               closed institution
                               may, under certain
                               conditions,
                               establish that site
                               as an additional
                               location (see
                               sections 487(f) and
                               498 of the HEA).
668.18......................  Establishing          OMB 1845-NEW1. There
                               requirements under    will be a new
                               which an              collection. A
                               institution must      separate 60-day
                               readmit               Federal Register
                               servicemembers to     notice will be
                               the same academic     published to
                               status they had       solicit comments.
                               when they last        There will be an
                               attended the          increase in burden
                               institution (see      of 1,513 hours.
                               section 484C of the
                               HEA).
668.23(d)(4)................  Adds new              OMB 1845-0038. There
                               requirements to       will be an increase
                               include in the        in burden of 165
                               audited financial     hours.
                               statement footnote
                               the non-Federal and
                               Federal revenue
                               that was included
                               in the 90/10
                               calculation.
668.28......................  Establishing new      OMB 1845-NEW2.
                               requirements for     There will be a new
                               determining how       collection. A
                               proprietary           separate 60-day
                               institutions          Federal Register
                               calculate the         notice will be
                               amount and percent    published to
                               of revenue derived    solicit comments.
                               from sources other    There will be an
                               than title IV, HEA    increase in burden
                               program funds (see    of 3,088 hours.
                               section 487(d) of
                               the HEA).
668.43(a)(5)(iv)............  Expanding the         OMB 1845-0022. There
                               information that an   will be an increase
                               institution must      in burden of 968
                               make available to     hours.
                               prospective and
                               enrolled students
                               to include a
                               description of any
                               plans the
                               institution has to
                               improve its
                               academic program
                               (see section 485(a)
                               of the HEA).
668.14(b)(30), 668.43(a)(10)  Providing that an     OMB 1845-0022. There
                               institution must      will be an increase
                               certify that it has   in burden of 92,544
                               plans to              hours.
                               effectively combat
                               unauthorized
                               distribution of
                               copyrighted
                               material and will
                               offer alternatives
                               to illegal
                               downloading or peer-
                               to-peer
                               distribution of
                               intellectual
                               property (see
                               sections 485(a)(1)
                               and 487(a) of the
                               HEA).
668.41......................  Expanding the         OMB 1845-0004. There
                               information that      will be an increase
                               institutions must     in burden of 8,541
                               make available to     hours.
                               prospective and
                               enrolled students
                               to include
                               information on: the
                               employment and
                               placement of
                               students, and the
                               retention rates of
                               first-time, full-
                               time undergraduate
                               students.
668.45......................  Expanding the         OMB 1845-0004. There
                               information that      will be an increase
                               institutions must     in burden of 7,488
                               make available to     hours.
                               prospective
                               students to include
                               completion and
                               graduation rate
                               data that is
                               disaggregated by
                               gender, race, and
                               grant or loan
                               assistance (see
                               section 485(a) of
                               the HEA).
668.46(c)(3), (e), (g)......  Expanding the list    OMB 1845-0022. There
                               of crimes that        will be an increase
                               institutions must     in burden of 18,509
                               include in the hate   hours.
                               crimes statistics
                               reported to the
                               Department.
                               Requiring
                               institutions to
                               include in the
                               annual security
                               report a statement
                               of emergency
                               response and
                               evacuation
                               procedures (see
                               section 485(f) of
                               the HEA).
668.41(a)...................  Requiring             OMB 1845-0004. There
                               institutions that     is no change in
                               provide on-campus     burden associated
                               housing facilities    with this section
                               to develop and make   of the proposed
                               available a missing   regulations.
                               student
                               notification policy
                               and allow students
                               who reside on
                               campus to
                               confidentially
                               register contact
                               information (see
                               section 485(j) of
                               the HEA).
668.46(b), (h)..............  Requiring             OMB 1845-0022. There
                               institutions that     will be an increase
                               provide on-campus     in burden of 2,879
                               housing facilities    hours.
                               to develop and make
                               available a missing
                               student
                               notification policy
                               and allow students
                               who reside on
                               campus to
                               confidentially
                               register contact
                               information (see
                               section 485(j) of
                               the HEA).
668.41(e)...................  Establishing          OMB 1845-0004. There
                               requirements for      is no change in
                               institutions that     burden associated
                               maintain on-campus    with this section
                               housing facilities    of the proposed
                               to publish annually   regulations.
                               a fire safety
                               report, maintain a
                               fire log, and
                               report fire
                               statistics to the
                               Department (see
                               section 485(i) of
                               the HEA).

[[Page 42427]]

 
668.49......................  Establishing          OMB 1845-NEW3. There
                               requirements for      will be a new
                               institutions that     collection. A
                               maintain on-campus    separate 60-day
                               housing facilities    Federal Register
                               to publish annually   notice will be
                               a fire safety         published to
                               report, maintain a    solicit comments.
                               fire log, and         There will be an
                               report fire           increase in burden
                               statistics to the     of 7,283 hours.
                               Department (see
                               section 485(i) of
                               the HEA).
668.232.....................  Expanding the         OMB 1845-NEW4. There
                               eligibility for       will be a new
                               Federal Pell Grant,   collection. A
                               FWS, and FSEOG        separate 60-day
                               Program funds to      Federal Register
                               students with         notice will be
                               intellectual          published to
                               disabilities (see     solicit comments.
                               sections 484(s) and   There will be an
                               760 of the HEA).      increase in burden
                                                     of 66 hours.
668.233.....................  Expanding the         OMB 1845-NEW4. There
                               eligibility for       will be a new
                               Federal Pell Grant,   collection. A
                               FWS, and FSEOG        separate 60-day
                               Program funds to      Federal Register
                               students with         notice will be
                               intellectual          published to
                               disabilities (see     solicit comments.
                               sections 484(s) and   There will be an
                               760 of the HEA).      increase in burden
                                                     of 768 hours.
688.43(a)(7)................  Requires that         OMB 1845-0022. There
                               institutions report   will be an increase
                               a description of      in burden of 44
                               services and          hours.
                               facilities for
                               students with
                               intellectual
                               disabilities.
686.41, 686.42..............  Establishing          OMB 1845-0083.
                               extenuating           Changes will be
                               circumstances under   incorporated into
                               which a TEACH Grant   the Agreement to
                               recipient may be      Serve form.
                               excused from
                               fulfilling all or
                               part of his or her
                               service obligation
                               (see section
                               420N(d)(2) of the
                               HEA).
690.67, 690.64, 690.63(h)...  Establishing          OMB 1845-NEW5. There
                               requirements under    will be a new
                               which students may    collection. A
                               receive up to two     separate 60-day
                               Federal Pell Grant    Federal Register
                               Scheduled Awards      notice will be
                               during a single       published to
                               award year (see       solicit comments.
                               section               There will be an
                               401(b)(5)(A) of the   increase in burden
                               HEA).                 of 109,645 hours.
690.75(e)...................  Providing the         OMB 1845-NEW6. There
                               maximum Federal       will be a new
                               Pell Grant            collection. A
                               eligibility to a      separate 60-day
                               student whose         Federal Register
                               parent was in the     notice will be
                               armed forces and      published to
                               died in Iraq or       solicit comments.
                               Afghanistan if the    There will be an
                               student was under     increase in burden
                               24 years old or       of 48 hours.
                               enrolled in an
                               institution of
                               higher education at
                               the time the parent
                               died (see section
                               401(F)(4) of the
                               HEA).
692.21, 692.100, 692.101,     Requiring the State   OMB 1845-NEW7. There
 692.111.                      program to notify     will be a new
                               students that         collection. A
                               grants are LEAP       separate 60-day
                               Grants that are       Federal Register
                               funded by the         notice will be
                               Federal Government,   published to
                               the State, and for    solicit comments.
                               LEAP Grants to
                               students under the
                               new Grants for
                               Access and
                               Persistence (GAP)
                               Program, other
                               contributing
                               partners (see
                               section 415C(b) of
                               the HEA).
                               Establishing the
                               activities, awards,
                               allotments to
                               States, matching
                               funds requirements,
                               consumer
                               information
                               requirements,
                               application
                               requirements, and
                               other requirements
                               needed to begin and
                               continue
                               participating in
                               the GAP Program
                               (see sections 415B
                               and 415E of the
                               HEA).
------------------------------------------------------------------------

    If you want to comment on the proposed information collection 
requirements, please send your comments to the Office of Information 
and Regulatory Affairs, OMB, Attention: Desk Officer for U.S. 
Department of Education. Send these comments by e-mail to [email protected] or by fax to (202) 395-6974. You may also send a 
copy of these comments to the Department contact named in the ADDRESSES 
section of this preamble.
    We consider your comments on these proposed collections of 
information in--
     Deciding whether the proposed collections are necessary 
for the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden of 
the proposed collections, including the validity of our methodology and 
assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology; e.g., permitting electronic submission of 
responses.
    OMB is required to make a decision concerning the collections of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives the comments within 30 days of 
publication. This does not affect the deadline for your comments to us 
on the proposed regulations.

Intergovernmental Review

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

Assessment of Educational Impact

    In accordance with section 411 of the General Education Provisions 
Act, 20 U.S.C. 1221e-4, the Secretary particularly requests comments on 
whether these proposed regulations would require transmission of 
information that any other agency or authority of the United States 
gathers or makes available.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site: 
http://www.ed.gov/news/fedregister.

[[Page 42428]]

    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.gpoaccess.gov/nara/index.html.


(Catalog of Federal Domestic Assistance Numbers: 84.063 Federal Pell 
Grant Program; 84.033 Federal Work-Study Program; 84.379 TEACH Grant 
Program; 84.069 LEAP)

List of Subjects

34 CFR Part 600

    Colleges and universities, Foreign relations, Grant programs-
education, Loan programs-education, Reporting and recordkeeping 
requirements, Student aid, Vocational education.

34 CFR Part 668

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

34 CFR Part 675

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

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

    Colleges and universities, Education of disadvantaged, Grant 
programs-education, Reporting and recordkeeping requirements, Student 
aid.

34 CFR Part 692

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

    Dated: July 30, 2009.
Arne Duncan,
Secretary of Education.

    For the reasons discussed in the preamble, the Secretary proposes 
to amend parts 600, 668, 675, 686, 690, and 692 of title 34 of the Code 
of Federal Regulations as follows:

PART 600--INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT 
OF 1965, AS AMENDED

    1. The authority citation for part 600 continues to read as 
follows:

    Authority:  20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, 
and 1099c, unless otherwise noted.

    2. Section 600.2 is amended by:
    A. Revising paragraph (1)(i) of the definition of educational 
program.
    B. Adding, in alphabetical order, a definition for teach-out plan.
    C. Revising the authority citation at the end of the section.
    The revisions and addition read as follows:


Sec.  600.2  Definitions.

* * * * *
    Educational program: (1) * * *
    (i) Leads to an academic, professional, or vocational degree, or 
certificate, or other recognized educational credential, or is a 
comprehensive transition and postsecondary program, as described in 34 
CFR part 668, subpart O; and
* * * * *
    Teach-out plan: A written plan developed by an institution that 
provides for the equitable treatment of students if an institution, or 
an institutional location that provides 100 percent of at least one 
program, ceases to operate before all students have completed their 
program of study, and may include, if required by the institution's 
accrediting agency, a teach-out agreement between institutions.
* * * * *

(Authority: 20 U.S.C. 1071 et seq., 1078-2, 1088, 1091, 1094, 1099b, 
1099c, 1141; 26 U.S.C. 501(c))


    3. Section 600.4 is amended by:
    A. Revising paragraph (a)(4).
    B. Revising the authority citation at the end of the section.
    The revisions read as follows:


Sec.  600.4  Institution of higher education.

    (a) * * *
    (4)(i) Provides an educational program--
    (A) For which it awards an associate, baccalaureate, graduate, or 
professional degree;
    (B) That is at least a two-academic-year program acceptable for 
full credit toward a baccalaureate degree; or
    (C) That is at least a one-academic-year training program that 
leads to a certificate, degree, or other recognized educational 
credential and prepares students for gainful employment in a recognized 
occupation; and
    (ii) May provide a comprehensive transition and postsecondary 
program, as described in 34 CFR part 668, subpart O; and
* * * * *

(Authority: 20 U.S.C. 1091, 1094, 1099b, 1141(a))


    4. Section 600.5 is amended by:
    A. Revising paragraph (a)(5).
    B. In paragraph (a)(6), adding the word ``and'' after the 
punctuation ``;''.
    C. In paragraph (a)(7), removing the word ``; and'' and adding, in 
its place, the punctuation ``.''.
    D. Removing paragraph (a)(8).
    E. Removing paragraphs (d) through (g).
    F. Redesignating paragraph (h) as paragraph (d).
    G. Adding a new paragraph (e).
    H. Revising the OMB control number and authority citation at the 
end of the section.
    The revisions and addition read as follows:


Sec.  600.5  Proprietary institution of higher education.

    (a) * * *
    (5)(i)(A) Provides an eligible program of training, as defined in 
34 CFR 668.8, to prepare students for gainful employment in a 
recognized occupation; or
    (B)(1) Provides a program leading to a baccalaureate degree in 
liberal arts, as defined in paragraph (e) of this section, and has 
provided that program since January 1, 2009; and
    (2) Is accredited by a recognized regional accrediting agency or 
association, and has continuously held such accreditation since October 
1, 2007, or earlier; and
    (ii) May provide a comprehensive transition and postsecondary 
program for students with intellectual disabilities, as provided in 34 
CFR part 668, subpart O;
* * * * *
    (e) For purposes of this section, a ``program leading to a 
baccalaureate degree in liberal arts'' is a program that the 
institution's recognized regional accreditation agency or organization 
determines, is a general instructional program in the liberal arts 
subjects, the humanities disciplines, or the general curriculum, 
falling within one or more of the following generally-accepted 
instructional categories comprising such programs, but including only 
instruction in regular programs, and excluding independently-designed 
programs, individualized programs, and unstructured studies:

[[Page 42429]]

    (1) A program that is a structured combination of the arts, 
biological and physical sciences, social sciences, and humanities, 
emphasizing breadth of study.
    (2) An undifferentiated program that includes instruction in the 
general arts or general science.
    (3) A program that focuses on combined studies and research in the 
humanities subjects as distinguished from the social and physical 
sciences, emphasizing languages, literatures, art, music, philosophy, 
and religion.
    (4) Any single instructional program in liberal arts and sciences, 
general studies, and humanities not listed in paragraph (e)(1) through 
(e)(3) of this section.

(Approved by the Office of Management and Budget under control 
number 1845-0012)

(Authority: 20 U.S.C. 1088, 1091)


    5. Section 600.6 is amended by:
    A. Revising paragraph (a)(4).
    B. Revising the authority citation at the end of the section.
    The revisions read as follows:


Sec.  600.6  Postsecondary vocational institution.

    (a) * * *
    (4)(i) Provides an eligible program of training, as defined in 34 
CFR 668.8, to prepare students for gainful employment in a recognized 
occupation; and
    (ii) May provide a comprehensive transition and postsecondary 
program for students with intellectual disabilities, as provided in 34 
CFR part 668, subpart O;
* * * * *

(Authority: 20 U.S.C. 1088, 1091, 1094(c)(3))


    6. Section 600.32 is amended by:
    A. In paragraph (a), removing the words ``(b) and (c)'' and adding, 
in their place, the words ``(b), (c), and (d)''.
    B. Redesignating paragraph (d) as paragraph (e).
    C. Adding a new paragraph (d).
    D. Revising the authority citation at the end of the section.
    The addition and revision read as follows:


Sec.  600.32  Eligibility of additional locations.

* * * * *
    (d)(1) An institution that conducts a teach-out at a site of a 
closed institution may apply to have that site approved as an 
additional location if--
    (i) The closed institution ceased operations as result of an action 
taken by the Secretary to limit, suspend, or terminate the 
institution's participation under Sec.  600.41 or subpart G of this 
part, or as a result of an emergency action taken by the Secretary 
under 34 CFR 668.83; and
    (ii) The teach-out plan required under 34 CFR 668.14(b)(31) is 
approved by the closed institution's accrediting agency.
    (2)(i) An institution that conducts a teach-out and is approved to 
add an additional location described in paragraph (d)(1) of this 
section--
    (A) Does not have to meet the two-year requirement of Sec.  
600.5(a)(7) or Sec.  600.6(a)(6) for the additional location described 
in paragraph (d)(1) of this section;
    (B) Is not responsible for any liabilities of the closed 
institution as provided under paragraphs (c)(1) and (c)(2) of this 
section if the institutions are not related parties and there is no 
commonality of ownership or management between the institutions, as 
described in 34 CFR 668.188(b) and 34 CFR 668.207(b); and
    (C) Will not have the default rate of the closed institution 
included in the calculation of its default rate, as would otherwise be 
required under 34 CFR 668.184 and 34 CFR 668.203, if the institutions 
are not related parties and there is no commonality of ownership or 
management between the institutions, as described in 34 CFR 668.188(b) 
and 34 CFR 668.207(b).
    (ii) As a condition for approving an additional location under 
paragraph (d)(1) of this section, the Secretary may require that 
payments from the institution conducting the teach-out to the owners or 
related parties of the closed institution, are used to satisfy any 
liabilities owed by the closed institution.
* * * * *

(Authority: 20 U.S.C. 1088, 1099c, 1141)

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

    7. The authority citation for part 668 continues 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.

    8. Section 668.8 is amended by:
    A. Revising paragraph (n).
    B. Removing the OMB control number at the end of the section.
    The revision reads as follows:


Sec.  668.8  Eligible program.

* * * * *
    (n) For title IV, HEA program purposes, eligible program includes a 
direct assessment program approved by the Secretary under Sec.  668.10 
and a comprehensive transition and postsecondary program approved by 
the Secretary under Sec.  668.232.
* * * * *
    9. Section 668.13(c) is revised to read as follows:


Sec.  668.13  Certification procedures.

* * * * *
    (c) Provisional certification. (1)(i) The Secretary may 
provisionally certify an institution if--
    (A) The institution seeks initial participation in a Title IV, HEA 
program;
    (B) The institution is an eligible institution that has undergone a 
change in ownership that results in a change in control according to 
the provisions of 34 CFR part 600;
    (C) The institution is a participating institution--
    (1) That is applying for a certification that the institution meets 
the standards of this subpart;
    (2) That the Secretary determines has jeopardized its ability to 
perform its financial responsibilities by not meeting the factors of 
financial responsibility under Sec.  668.15 or the standards of 
administrative capability under Sec.  668.16; and
    (3) Whose participation has been limited or suspended under subpart 
G of this part, or voluntarily enters into provisional certification;
    (D) The institution seeks a renewal of participation in a title IV, 
HEA program after the expiration of a prior period of participation in 
that program; or
    (E) The institution is a participating institution that was 
accredited or preaccredited by a nationally recognized accrediting 
agency on the day before the Secretary withdrew the Secretary's 
recognition of that agency according to the provisions contained in 34 
CFR part 603.
    (ii) A proprietary institution's certification automatically 
becomes provisional if it does not derive at least 10 percent of its 
revenue for any fiscal year from sources other than title IV, HEA 
program funds, as required under Sec.  668.14(b)(16).
* * * * *
    10. Section 668.14 is amended by:
    A. Adding paragraph (b)(16).
    B. In paragraph (b)(25)(ii), removing the word ``and'' that appears 
after the punctuation ``;''.
    C. Adding paragraph (b)(30).
    D. Adding paragraph (b)(31).
    E. Revising the OMB control number at the end of the section.
    The additions and revision read as follows:


Sec.  668.14  Program participation agreement.

* * * * *
    (b) * * *
    (16) For a proprietary institution, the institution will derive at 
least 10

[[Page 42430]]

percent of its revenues for each fiscal year from sources other than 
title IV, HEA program funds, as provided in Sec.  668.28(a) and (b), or 
be subject to sanctions described in Sec.  668.28(c);
* * * * *
    (30) The institution--
    (i) Has developed and implemented written plans to effectively 
combat the unauthorized distribution of copyrighted material by users 
of the institution's network, without unduly interfering with 
educational and research use of the network, that include--
    (A) The use of one or more technology-based deterrents;
    (B) Mechanisms for educating and informing its community about 
appropriate versus inappropriate use of copyrighted material, including 
that described in Sec.  668.43(a)(10);
    (C) Procedures for handling unauthorized distribution of 
copyrighted material, including disciplinary procedures; and
    (D) Procedures for periodically reviewing the effectiveness of the 
plans to combat the unauthorized distribution of copyrighted materials 
by users of the institution's network using relevant assessment 
criteria. No particular technology measures are favored or required for 
inclusion in an institution's plans, and each institution retains the 
authority to determine what its particular plans for compliance with 
paragraph (b)(30) of this section will be, including those that 
prohibit content monitoring; and
    (ii) Will, in consultation with the chief technology officer or 
other designated officer of the institution--
    (A) Periodically review the legal alternatives for downloading or 
otherwise acquiring copyrighted material;
    (B) Make available the results of the review in paragraph 
(b)(30)(ii)(A) of this section to its students through a Web site or 
other means; and
    (C) To the extent practicable, offer legal alternatives for 
downloading or otherwise acquiring copyrighted material, as determined 
by the institution; and
    (31) The institution will submit a teach-out plan to its 
accrediting agency in compliance with 34 CFR 602.24(c), and the 
standards of the institution's accrediting agency upon the occurrence 
of any of the following events:
    (i) The Secretary initiates the limitation, suspension, or 
termination of the participation of an institution in any title IV, HEA 
program under 34 CFR 600.41 or subpart G of this part or initiates an 
emergency action under Sec.  668.83.
    (ii) The institution's accrediting agency acts to withdraw, 
terminate, or suspend the accreditation or preaccreditation of the 
institution.
    (iii) The institution's State licensing or authorizing agency 
revokes the institution's license or legal authorization to provide an 
educational program.
    (iv) The institution intends to close a location that provides 100 
percent of at least one program.
    (v) The institution otherwise intends to cease operations.
* * * * *
(Approved by the Office of Management and Budget under control 
number 1845-0022)
* * * * *
    11. Section 668.18 is added to subpart B of part 668 to read as 
follows:


Sec.  668.18  Readmission requirements for servicemembers.

    (a) General. (1) An institution may not deny readmission to a 
person who is a member of, applies to be a member of, performs, has 
performed, applies to perform, or has an obligation to perform, service 
in the uniformed services on the basis of that membership, application 
for membership, performance of service, application for service, or 
obligation to perform service.
    (2)(i) An institution must promptly readmit to the institution a 
person described in paragraph (a)(1) of this section with the same 
academic status as the student had when the student last attended the 
institution or was last admitted to the institution, but did not begin 
attendance because of that membership, application for membership, 
performance of service, application for service, or obligation to 
perform service.
    (ii) ``Promptly readmit'' means that the institution must readmit 
the student into the next class or classes in the student's program 
beginning after the student provides notice of his or her intent to 
reenroll, unless the student requests a later date of readmission or 
unusual circumstances require the institution to admit the student at a 
later date.
    (iii) To readmit a person with the ``same academic status'' means 
that the institution admits the student--
    (A) To the same program to which he or she was last admitted by the 
institution or, if that exact program is no longer offered, the program 
that is most similar to that program, unless the student requests or 
agrees to admission to a different program;
    (B) At the same enrollment status that the student last held at the 
institution, unless the student requests or agrees to admission at a 
different enrollment status;
    (C) With the same number of credit hours or clock hours completed 
previously by the student, unless the student is readmitted to a 
different program to which the completed credit hours or clock hours 
are not transferable;
    (D) With the same academic standing (e.g., with the same 
satisfactory academic progress status) the student previously had;
    (E)(1) If the student is readmitted to the same program, for the 
first academic year in which the student returns, assessing the same 
institutional charges that the student was or would have been assessed 
for the academic year during which the student left the institution; or
    (2) If the student is admitted to a different program, and for 
subsequent academic years for a student admitted to the same program, 
assessing no more than the institutional charges that other students in 
the program are assessed for that academic year; and
    (F) Waiving charges for equipment required in lieu of equipment the 
student paid for when the student was previously enrolled.
    (iv)(A) If the institution determines that the student is not 
prepared to resume the program with the same academic status at the 
point where the student left off, or will not be able to complete the 
program, the institution must make reasonable efforts to help the 
student become prepared or to enable the student to complete the 
program including, but not limited to, providing refresher courses at 
no extra cost and allowing the student to retake a pretest at no extra 
cost.
    (B) The institution is not required to readmit the student on his 
or her return if--
    (1) After reasonable efforts by the institution, the institution 
determines that the student is not prepared to resume the program at 
the point where he or she left off;
    (2) After reasonable efforts by the institution, the institution 
determines that the student is unable to complete the program; or
    (3) The institution determines that there are no reasonable efforts 
the institution can take to prepare the student to resume the program 
at the point where he or she left off or to enable the student to 
complete the program;
    (C)(1) ``Reasonable efforts'' means actions that do not place an 
undue hardship on the institution.
    (2) ``Undue hardship'' means an action requiring significant 
difficulty or expense.

[[Page 42431]]

    (D) The institution carries the burden to prove by a preponderance 
of the evidence that the student is not prepared to resume the program 
with the same academic status at the point where the student left off, 
or that the student will not be able to complete the program.
    (3) This section applies to an institution that has continued in 
operation since the student ceased attending or was last admitted to 
the institution but did not begin attendance, notwithstanding any 
changes of ownership of the institution since the student ceased 
attendance.
    (4) The requirements of this section supersede any State law 
(including any local law or ordinance), contract, agreement, policy, 
plan, practice, or other matter that reduces, limits, or eliminates in 
any manner any right or benefit provided by this section.
    (b) Service in the uniformed services. For purposes of this 
section, service in the uniformed services means service, whether 
voluntary or involuntary, in the Armed Forces, including service by a 
member of the National Guard or Reserve, on active duty, active duty 
for training, or full-time National Guard duty under Federal authority, 
for a period of more than 30 consecutive days under a call or order to 
active duty of more than 30 consecutive days.
    (c) Readmission procedures. (1) Any student whose absence from an 
institution is necessitated by reason of service in the uniformed 
services shall be entitled to readmission to the institution if--
    (i) Except as provided in paragraph (d) of this section, the 
student (or an appropriate officer of the Armed Forces or official of 
the Department of Defense) gives advance oral or written notice of such 
service to an office designated by the institution, and provides such 
notice as far in advance as is reasonable under the circumstances;
    (ii) The cumulative length of the absence and of all previous 
absences from that institution by reason of service in the uniformed 
services, including only the time the student spends actually 
performing service in the uniformed services, does not exceed five 
years; and
    (iii) Except as provided in paragraph (f) of this section, the 
student gives oral or written notice of his or her intent to return to 
an office designated by the institution--
    (A) For a student who completes a period of service in the 
uniformed services, not later than three years after the completion of 
the period of service; or
    (B) For a student who is hospitalized for or convalescing from an 
illness or injury incurred in or aggravated during the performance of 
service in the uniformed services, two years after the end of the 
period that is necessary for recovery from such illness or injury.
    (2)(i) An institution must designate one or more offices at the 
institution that a student may contact to provide notification of 
service required by paragraph (c)(1)(i) of this section and 
notification of intent to return required by paragraph (c)(1)(iii) of 
this section.
    (ii) An institution may not require that the notice provided by the 
student under paragraph (c)(1)(i) or (c)(1)(iii) of this section follow 
any particular format.
    (iii) The notice provided by the student under paragraph (c)(1)(i) 
of this section--
    (A) May not be subject to any rule for timeliness; timeliness must 
be determined by the facts in any particular case; and
    (B) Does not need to indicate whether the student intends to return 
to the institution.
    (iv) For purposes of paragraph (c)(1)(i) of this section, an 
``appropriate officer'' is a commissioned, warrant, or noncommissioned 
officer authorized to give such notice by the military service 
concerned.
    (d) Exceptions to advance notice. (1) No notice is required under 
paragraph (c)(1)(i) of this section if the giving of such notice is 
precluded by military necessity, such as--
    (i) A mission, operation, exercise, or requirement that is 
classified; or
    (ii) A pending or ongoing mission, operation, exercise, or 
requirement that may be compromised or otherwise adversely affected by 
public knowledge.
    (2) Any student (or an appropriate officer of the Armed Forces or 
official of the Department of Defense) who did not give advance written 
or oral notice of service to the appropriate official at the 
institution in accordance with paragraph (c)(1) of this section may 
meet the notice requirement by submitting, at the time the student 
seeks readmission, an attestation to the institution that the student 
performed service in the uniformed services that necessitated the 
student's absence from the institution.
    (e) Cumulative length of absence. For purposes of paragraph 
(c)(1)(ii) of this section, a student's cumulative length of absence 
from an institution does not include any service--
    (1) That is required, beyond five years, to complete an initial 
period of obligated service;
    (2) During which the student was unable to obtain orders releasing 
the student from a period of service in the uniformed services before 
the expiration of the five-year period and such inability was through 
no fault of the student; or
    (3) Performed by a member of the Armed Forces (including the 
National Guard and Reserves) who is--
    (i) Ordered to or retained on active duty under--
    (A) 10 U.S.C. 688 (involuntary active duty by a military retiree);
    (B) 10 U.S.C. 12301(a) (involuntary active duty in wartime);
    (C) 10 U.S.C. 12301(g) (retention on active duty while in captive 
status);
    (D) 10 U.S.C. 12302 (involuntary active duty during a national 
emergency for up to 24 months);
    (E) 10 U.S.C. 12304 (involuntary active duty for an operational 
mission for up to 270 days);
    (F) 10 U.S.C. 12305 (involuntary retention on active duty of a 
critical person during time of crisis or other specific conditions);
    (G) 14 U.S.C. 331 (involuntary active duty by retired Coast Guard 
officer);
    (H) 14 U.S.C. 332 (voluntary active duty by retired Coast Guard 
officer);
    (I) 14 U.S.C. 359 (involuntary active duty by retired Coast Guard 
enlisted member);
    (J) 14 U.S.C. 360 (voluntary active duty by retired Coast Guard 
enlisted member);
    (K) 14 U.S.C. 367 (involuntary retention of Coast Guard enlisted 
member on active duty); or
    (L) 14 U.S.C. 712 (involuntary active duty by Coast Guard Reserve 
member for natural or man-made disasters);
    (ii) Ordered to or retained on active duty (other than for 
training) under any provision of law because of a war or national 
emergency declared by the President or the Congress, as determined by 
the Secretary concerned;
    (iii) Ordered to active duty (other than for training) in support, 
as determined by the Secretary concerned, of an operational mission for 
which personnel have been ordered to active duty under section 12304 of 
title 10, United States Code;
    (iv) Ordered to active duty in support, as determined by the 
Secretary concerned, of a critical mission or requirement of the Armed 
Forces (including the National Guard or Reserve); or
    (v) Called into Federal service as a member of the National Guard 
under chapter 15 of title 10, United States Code, or section 12406 of 
title 10, United States Code (i.e., called to respond to an invasion, 
danger of

[[Page 42432]]

invasion, rebellion, danger of rebellion, insurrection, or the 
inability of the President with regular forces to execute the laws of 
the United States).
    (f) Notification of intent to reenroll. A student who fails to 
apply for readmission within the periods described in paragraph 
(c)(1)(iii) of this section does not automatically forfeit eligibility 
for readmission to the institution, but is subject to the institution's 
established leave of absence policy and general practices.
    (g) Documentation. (1) A student who submits an application for 
readmission to an institution under paragraph (c)(1)(iii) of this 
section shall provide to the institution documentation to establish 
that--
    (i) The student has not exceeded the service limitation in 
paragraph (c)(1)(ii) of this section; and
    (ii) The student's eligibility for readmission has not been 
terminated due to an exception in paragraph (h) of this section.
    (2)(i) Documents that satisfy the requirements of paragraph (g)(1) 
of this section include, but are not limited to, the following:
    (A) DD (Department of Defense) 214 Certificate of Release or 
Discharge from Active Duty.
    (B) Copy of duty orders prepared by the facility where the orders 
were fulfilled carrying an endorsement indicating completion of the 
described service.
    (C) Letter from the commanding officer of a Personnel Support 
Activity or someone of comparable authority.
    (D) Certificate of completion from military training school.
    (E) Discharge certificate showing character of service.
    (F) Copy of extracts from payroll documents showing periods of 
service.
    (G) Letter from National Disaster Medical System (NDMS) Team Leader 
or Administrative Officer verifying dates and times of NDMS training or 
Federal activation.
    (ii) The types of documents that are necessary to establish 
eligibility for readmission will vary from case to case. Not all of 
these documents are available or necessary in every instance to 
establish readmission eligibility.
    (3) An institution may not delay or attempt to avoid a readmission 
of a student under this section by demanding documentation that does 
not exist, or is not readily available, at the time of readmission.
    (h) Termination of readmission eligibility. A student's eligibility 
for readmission to an institution under this section by reason of such 
student's service in the uniformed services terminates upon the 
occurrence of any of the following events:
    (1) A separation of such person from the Armed Forces (including 
the National Guard and Reserves) with a dishonorable or bad conduct 
discharge.
    (2) A dismissal of a commissioned officer permitted under section 
1161(a) of title 10, United States Code by sentence of a general court-
martial; in commutation of a sentence of a general court-martial; or, 
in time of war, by order of the President.
    (3) A dropping of a commissioned officer from the rolls pursuant to 
section 1161(b) of title 10, United States Code due to absence without 
authority for at least three months; separation by reason of a sentence 
to confinement adjudged by a court-martial; or, a sentence to 
confinement in a Federal or State penitentiary or correctional 
institution.

(Approved by the Office of Management and Budget under control 
number 1845-NEW1)

Authority:

    20 U.S.C. 1088 et seq.)

    12. In 668.23, revise paragraph (d)(4) to read as follows:


Sec.  668.23  Compliance audits and audited financial statements.

* * * * *
    (d) * * *
    (4) Disclosure of title IV, HEA program revenue. A proprietary 
institution must disclose in a footnote to its financial statement 
audit the percentage of its revenues derived from the title IV, HEA 
program funds that the institution received during the fiscal year 
covered by that audit. The revenue percentage must be calculated in 
accordance with Sec.  668.28. The institution must also report in the 
footnote the non-Federal and Federal revenue by source that was 
included in the 90/10 calculation.
* * * * *
    13. Section 668.28 is added to subpart B of part 668 to read as 
follows:


Sec.  668.28  Non-title IV revenue (90/10).

    (a) General. (1) Calculating the revenue percentage. A proprietary 
institution determines whether it satisfies the requirement in Sec.  
668.14(b)(16) that at least 10 percent of its revenue is derived from 
sources other than title IV, HEA program funds by using the formula in 
appendix C of this subpart to calculate its revenue percentage for its 
latest complete fiscal year.
    (2) Cash basis accounting. Except for institutional loans made to 
students under paragraph (a)(5)(i) of this section, the institution 
must use the cash basis of accounting in calculating its revenue 
percentage.
    (3) Revenue generated from programs and activities. The institution 
must consider as revenue only those funds it generates from--
    (i) Tuition, fees, and other institutional charges for students 
enrolled in eligible programs as defined in Sec.  668.8;
    (ii) Activities conducted by the institution that are necessary for 
the education and training of its students provided those activities 
are--
    (A) Conducted on campus or at a facility under the institution's 
control;
    (B) Performed under the supervision of a member of the 
institution's faculty; and
    (C) Required to be performed by all students in a specific 
educational program at the institution; and
    (iii) Funds paid by a student, or on behalf of a student by a party 
other than the institution, for an education or training program that 
is not eligible under Sec.  668.8 if the program--
    (A) Is approved or licensed by the appropriate State agency;
    (B) Is accredited by an accrediting agency recognized by the 
Secretary under 34 CFR part 602;
    (C) Provides an industry-recognized credential or certification, or 
prepares students to take an examination for an industry-recognized 
credential or certification issued by an independent third party;
    (D) Provides training needed for students to maintain State 
licensing requirements; or
    (E) Provides training needed for students to meet additional 
licensing requirements for specialized training for practitioners that 
already meet the general licensing requirements in that field.
    (4) Application of funds. The institution must presume that any 
title IV, HEA program funds it disburses, or delivers, to or on behalf 
of a student will be used to pay the student's tuition, fees, or 
institutional charges, regardless of whether the institution credits 
the funds to the student's account or pays the funds directly to the 
student, except to the extent that the student's tuition, fees, or 
other charges are satisfied by--
    (i) Grant funds provided by non-Federal public agencies or private 
sources independent of the institution;
    (ii) Funds provided under a contractual arrangement with a Federal, 
State, or local government agency for the purpose of providing job 
training to low-income individuals who need that training;
    (iii) Funds used by a student from a savings plan for educational 
expenses established by or on behalf of the student if the saving plan 
qualifies for

[[Page 42433]]

special tax treatment under the Internal Revenue Code of 1986; or
    (iv) Institutional scholarships as provided under paragraph 
(a)(5)(iv) of this section.
    (5) Revenue generated from institutional aid. The institution must 
include the following institutional aid as revenue:
    (i) For loans made to students, including funds advanced to 
students under installment sales contracts, on or after July 1, 2008 
and prior to July 1, 2012, include as revenue the net present value of 
the loans made to students during the fiscal year, as calculated under 
paragraph (b) of this section, if the loans--
    (A) Are bona fide as evidenced by standalone repayment agreements 
between the students and the institution that are enforceable 
promissory notes;
    (B) Are issued at intervals related to the institution's enrollment 
periods;
    (C) Are subject to regular loan repayments and collections by the 
institution; and
    (D) Are separate from the enrollment contracts signed by the 
students.
    (ii) For loans made to students before July 1, 2008, include as 
revenue only the amount of payments made on those loans that the 
institution received during the fiscal year.
    (iii) For loans made to students on or after July 1, 2012, include 
as revenue only the amount of payments made on those loans that the 
institution received during the fiscal year.
    (iv) For scholarships provided by the institution in the form of 
monetary aid or tuition discount and based on the academic achievement 
or financial need of its students, include as revenue the amount 
disbursed to students during the fiscal year. The scholarships must be 
disbursed from an established restricted account and only to the extent 
that the funds in that account represent designated funds from an 
outside source or income earned on those funds.
    (6) Revenue generated from loan funds in excess of loan limits 
prior to the Ensuring Continued Access to Student Loans Act of 2008 
(ECASLA). For each student who receives an unsubsidized loan under the 
FFEL or Direct Loan programs on or after July 1, 2008 and prior to July 
1, 2011, the amount of the loan disbursement for a payment period that 
exceeds the disbursement for which the student would have been eligible 
for that payment period under the loan limit in effect on the day prior 
to enactment of the ECASLA is included as revenue from a source other 
than title IV, HEA program funds but only to the extent that the excess 
amount pays for tuition, fees, or institutional charges remaining on 
the student's account after title IV, HEA program funds are applied.
    (7) Funds excluded from revenues. For the fiscal year, the 
institution does not include--
    (i) The amount of Federal Work Study (FWS) wages paid directly to 
the student. However, if the institution credits the student's account 
with FWS funds, those funds are included as revenue;
    (ii) The amount of funds received by the institution from a State 
under the LEAP, SLEAP, or GAP programs;
    (iii) The amount of institutional funds used to match title IV, HEA 
program funds;
    (iv) The amount of title IV, HEA program funds refunded or returned 
under Sec.  668.22, including funds refunded or returned under 
paragraph (a)(6) of this section; or
    (v) The amount the student is charged for books, supplies, and 
equipment unless the institution includes that amount as tuition, fees, 
or other institutional charges.
    (b) Net present value (NPV). (1) As illustrated in appendix C of 
this subpart, an institution calculates the NPV of the loans it made 
under paragraph (a)(5)(i) of this section by--
    (i) Using the formula, NPV = sum of the discounted cash flows R\t\/
(1+i)\t\, where--
    (A) The variable ``i'' is the discount rate. For purposes of this 
section, an institution must use the most recent annual inflation rate 
as the discount rate;
    (B) The variable ``t'' is time or period of the cash flow, in 
years, from the time the loan entered repayment; and
    (C) The variable ``R\t\'' is the net cash flow at time or period t; 
and
    (ii) Applying the NPV formula to the loans made during the fiscal 
year by--
    (A) If the loans have substantially the same repayment period, 
using that repayment period for the range of values of variable ``t''; 
or
    (B) Grouping the loans by repayment period and using the repayment 
period for each group for the range of values of variable ``t''; and
    (C) For each group of loans, as applicable, multiplying the total 
annual payments due on the loans by the institution's loan collection 
rate (e.g., the total amount of payments collected divided by the total 
amount of payments due). The resulting amount is used for variable 
``R'' in each period ``t'', for each group of loans that a NPV is 
calculated.
    (2) Instead of performing the calculations in paragraph (b)(1) of 
this section, using 50 percent of the total amount of loans that the 
institution made during the fiscal year as the NPV. However, if the 
institution chooses to use this 50 percent calculation, the institution 
may not sell any of these loans until they have been in repayment for 
at least two years.
    (c) Sanctions. If an institution does not derive at least 10 
percent of its revenue from sources other than title IV, HEA program 
funds--
    (1) For two consecutive fiscal years, it loses its eligibility to 
participate in the title IV, HEA programs for at least two fiscal 
years. To regain eligibility, the institution must demonstrate that it 
complied with the State licensure and accreditation requirements under 
34 CFR 600.5(a)(4) and (a)(6), and the financial responsibility 
requirements under subpart L of this part, for a minimum of two fiscal 
years after the fiscal year it became ineligible; or
    (2) For any fiscal year, it becomes provisionally certified under 
Sec.  668.13(c)(1)(ii) for the two fiscal years after the fiscal year 
it failed to satisfy the revenue requirement. However, the 
institution's provisional certification terminates on--
    (i) The expiration date of the institution's program participation 
agreement that was in effect on the date the Secretary determined the 
institution failed this requirement; or
    (ii) The date the institution loses its eligibility to participate 
under paragraph (c)(1) of this section; and
    (3) It must notify the Secretary no later than 45 days after the 
end of its fiscal year that it failed to meet this requirement.

(Approved by Office of Management and Budget under control number 
1845-NEW2)

(Authority: 20 U.S.C. 1085, 1088, 1091, 1092, 1094, 1099a-3, 1099c, 
1141)


    14. Appendix C is added to subpart B of part 668 to read as 
follows:
BILLING CODE 4000-01-P

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BILLING CODE 4000-01-C
    15. Section 668.32 is amended by:
    A. Revising the introductory text.
    B. In paragraph (a)(1)(iii), adding the word ``and'' after the 
punctuation ``;''.
    C. In paragraph (a)(2), removing the punctuation ``;'' and adding, 
in its place, the punctuation ``.''.
    D. In paragraph (b), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    E. In paragraph (c)(4)(ii), removing the punctuation ``;'' and 
adding, in its place, the punctuation ``.''.
    F. In paragraph (d), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    G. In paragraph (e)(4)(ii), removing the punctuation ``;'' and 
adding, in its place, the punctuation ``.''.
    H. In paragraph (f), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    I. In paragraph (g)(4), removing the punctuation ``;'' at the end 
of the paragraph and adding, in its place, the punctuation ``.''.
    J. In paragraph (h), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    K. In paragraph (i), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    L. In paragraph (j), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
    M. In paragraph (k)(9), removing the word ``; and'' and adding, in 
its place, the punctuation ``.''.
    N. In paragraph (l), removing the word ``; and'' and adding, in its 
place, the punctuation ``.''.
    O. Adding paragraph (n).
    The revision and addition read as follows:


Sec.  668.32  Student eligibility--general.

    A student is eligible to receive title IV, HEA program assistance 
if the student either meets all of the requirements in paragraphs (a) 
through (m) of this section or meets the requirement in paragraph (n) 
of this section as follows:
* * * * *
    (n) Is enrolled in a comprehensive transition and postsecondary 
program under subpart O of this part and meets the student eligibility 
criteria in that subpart.
* * * * *
    16. Section 668.41 is amended by:
    A. In paragraph (a), adding, in alphabetical order, definitions of 
on-campus student housing facility and retention rate.
    B. Revising paragraph (d).
    C. Revising paragraph (e).
    D. In paragraph (g)(1)(i), removing the words ``on request''.
    E. In the OMB control number parenthetical at the end of the 
section, removing the words, ``and 1845-0010''.
    The additions and revisions read as follows:


Sec.  668.41  Reporting and disclosure of information.

    (a) * * *
    On-campus student housing facility: A dormitory or other 
residential facility for students that is located on an

[[Page 42438]]

institution's campus, as defined in Sec.  668.46(a).
* * * * *
    Retention rate means a measure of the rate at which students 
persist in their educational program at an institution expressed as a 
percentage. For four-year institutions, this is the percentage of 
first-time bachelors (or equivalent) degree-seeking undergraduates from 
the previous fall who are again enrolled in the current fall. For all 
other institutions, this is the percentage of first-time degree- or 
certificate-seeking students from the previous fall who either re-
enrolled or successfully completed their program by the current fall.
* * * * *
    (d) General disclosures for enrolled or prospective students. An 
institution must make available to any enrolled student or prospective 
student through appropriate publications, mailings or electronic media, 
information concerning--
    (1) Financial assistance available to students enrolled in the 
institution (pursuant to Sec.  668.42).
    (2) The institution (pursuant to Sec.  668.43).
    (3) The institution's retention rate as reported to the Integrated 
Postsecondary Education Data System (IPEDS). In the case of a request 
from a prospective student, the information must be made available 
prior to the student's enrolling or entering into any financial 
obligation with the institution.
    (4) The institution's completion or graduation rate and, if 
applicable, its transfer-out rate (pursuant to Sec.  668.45). In the 
case of a request from a prospective student, the information must be 
made available prior to the student's enrolling or entering into any 
financial obligation with the institution.
    (5) The placement of, and types of employment obtained by, 
graduates of the institution's degree or certificate programs.
    (i) The information provided in compliance with this paragraph may 
be gathered from--
    (A) The institution's placement rate for any program, if it 
calculates such a rate;
    (B) State data systems;
    (C) Alumni or student satisfaction surveys; or
    (D) Other relevant sources.
    (ii) The institution must identify the source of the information 
provided in compliance with this paragraph, as well as any time frames 
and methodology associated with it.
    (iii) The institution must disclose any placement rates it 
calculates.
    (6) The types of graduate and professional education in which 
graduates of the institution's four-year degree programs enroll.
    (i) The information provided in compliance with this paragraph may 
be gathered from--
    (A) State data systems;
    (B) Alumni or student satisfaction surveys; or
    (C) Other relevant sources.
    (ii) The institution must identify the source of the information 
provided in compliance with this paragraph, as well as any time frames 
and methodology associated with it.
    (e) Annual security report and annual fire safety report--(1) 
Enrolled students and current employees--annual security report and 
annual fire safety report. By October 1 of each year, an institution 
must distribute to all enrolled students and current employees its 
annual security report described in Sec.  668.46(b), and, if the 
institution maintains an on-campus student housing facility, its annual 
fire safety report described in Sec.  668.49(b), through appropriate 
publications and mailings, including--
    (i) Direct mailing to each individual through the U.S. Postal 
Service, campus mail, or electronic mail;
    (ii) A publication or publications provided directly to each 
individual; or
    (iii) Posting on an Internet Web site or an Intranet Web site, 
subject to paragraph (e)(2) and (3) of this section.
    (2) Enrolled students--annual security report and annual fire 
safety report. If an institution chooses to distribute either its 
annual security report or annual fire safety report to enrolled 
students by posting the disclosure or disclosures on an Internet Web 
site or an Intranet Web site, the institution must comply with the 
requirements of paragraph (c)(2) of this section.
    (3) Current employees--annual security report and annual fire 
safety report. If an institution chooses to distribute either its 
annual security report or annual fire safety report to current 
employees by posting the disclosure or disclosures on an Internet Web 
site or an Intranet Web site, the institution must, by October 1 of 
each year, distribute to all current employees a notice that includes a 
statement of the report's availability, the exact electronic address at 
which the report is posted, a brief description of the report's 
contents, and a statement that the institution will provide a paper 
copy of the report upon request.
    (4) Prospective students and prospective employees--annual security 
report and annual fire safety report. For each of the reports, the 
institution must provide a notice to prospective students and 
prospective employees that includes a statement of the report's 
availability, a description of its contents, and an opportunity to 
request a copy. An institution must provide its annual security report 
and annual fire safety report, upon request, to a prospective student 
or prospective employee. If the institution chooses to provide either 
its annual security report or annual fire safety report to prospective 
students and prospective employees by posting the disclosure on an 
Internet Web site, the notice described in this paragraph must include 
the exact electronic address at which the report is posted, a brief 
description of the report, and a statement that the institution will 
provide a paper copy of the report upon request.
    (5) Submission to the Secretary--annual security report and annual 
fire safety report. Each year, by the date and in a form specified by 
the Secretary, an institution must submit the statistics required by 
Sec. Sec.  668.46(c) and 668.49(c) to the Secretary.
    (6) Publication of the annual fire safety report. An institution 
may publish its annual fire safety report concurrently with its annual 
security report only if the title of the report clearly states that the 
report contains both the annual security report and the annual fire 
safety report. If an institution chooses to publish the annual fire 
safety report separately from the annual security report, it must 
include information in each of the two reports about how to directly 
access the other report.
* * * * *
    17. Section 668.43 is amended by:
    A. In the introductory text of paragraph (a), removing the words 
``upon request''.
    B. In paragraph (a)(5)(ii), removing the word ``and'' that appears 
after the punctuation ``;''.
    C. In paragraph (a)(5)(iii), adding the word ``and'' after the 
punctuation ``;''.
    D. Adding paragraph (a)(5)(iv).
    E. Revising paragraph (a)(7).
    F. In paragraph (a)(8), removing the word ``and'' that appears 
after the punctuation ``;''.
    G. In paragraph (a)(9), removing the punctuation ``.'' And adding, 
in its place, the word ``; and''.
    H. Adding paragraph (a)(10).
    I. In paragraph (b), removing the words ``, upon request,''.
    The additions and revision read as follows:


Sec.  668.43  Institutional information.

    (a) * * *

[[Page 42439]]

    (5) * * *
    (iv) Any plans by the institution for improving the academic 
program of the institution;
* * * * *
    (7) A description of the services and facilities available to 
students with disabilities, including students with intellectual 
disabilities as defined in subpart O of this part;
* * * * *
    (10) Institutional policies and sanctions related to copyright 
infringement, including--
    (i) A statement that explicitly informs its students that 
unauthorized distribution of copyrighted material, including 
unauthorized peer-to-peer file sharing, may subject the students to 
civil and criminal liabilities;
    (ii) A summary of the penalties for violation of Federal copyright 
laws; and
    (iii) A description of the institution's policies with respect to 
unauthorized peer-to-peer file sharing, including disciplinary actions 
that are taken against students who engage in illegal downloading or 
unauthorized distribution of copyrighted materials using the 
institution's information technology system.
* * * * *
    18. Section 668.45 is revised to read as follows:


Sec.  668.45  Information on completion or graduation rates.

    (a)(1) An institution annually must prepare the completion or 
graduation rate of its certificate- or degree-seeking, first-time, 
full-time undergraduate students, as provided in paragraph (b) of this 
section.
    (2) An institution that determines that its mission includes 
providing substantial preparation for students to enroll in another 
eligible institution must prepare the transfer-out rate of its 
certificate- or degree-seeking, first-time, full-time undergraduate 
students, as provided in paragraph (c) of this section.
    (3)(i) An institution that offers a predominant number of its 
programs based on semesters, trimesters, or quarters must base its 
completion or graduation rate, retention rate, and, if applicable, 
transfer-out rate calculations, on the cohort of certificate- or 
degree-seeking, first-time, full-time undergraduate students who enter 
the institution during the fall term of each year.
    (ii) An institution not covered by the provisions of paragraph 
(a)(3)(i) of this section must base its completion or graduation rate, 
retention rate, and, if applicable, transfer-out rate calculations, on 
the cohort of certificate- or degree-seeking, first-time, full-time 
undergraduate students who enter the institution between September 1 of 
one year and August 31 of the following year.
    (4)(i) An institution covered by the provisions of paragraph 
(a)(3)(i) of this section must count as an entering student a first-
time undergraduate student who is enrolled as of October 15, the end of 
the institution's drop-add period, or another official reporting date 
as defined in Sec.  668.41(a).
    (ii) An institution covered by paragraph (a)(3)(ii) of this section 
must count as an entering student a first-time undergraduate student 
who is enrolled for at least--
    (A) 15 days, in a program of up to, and including, one year in 
length; or
    (B) 30 days, in a program of greater than one year in length.
    (5) An institution must make available its completion or graduation 
rate and, if applicable, transfer-out rate, no later than the July 1 
immediately following the 12-month period ending August 31 during which 
150 percent of the normal time for completion or graduation has elapsed 
for all of the students in the group on which the institution bases its 
completion or graduation rate and, if applicable, transfer-out rate 
calculations.
    (6)(i) Completion or graduation rate information must be 
disaggregated by gender, by each major racial and ethnic subgroup (as 
defined in IPEDS), by recipients of a Federal Pell Grant, by recipients 
of a Federal Family Education Loan or a Federal Direct Loan (other than 
an Unsubsidized Stafford Loan made under the Federal Family Education 
Loan Program or a Federal Direct Unsubsidized Stafford Loan) who did 
not receive a Federal Pell Grant, and by recipients of neither a 
Federal Pell Grant nor a Federal Family Education Loan or a Federal 
Direct Loan (other than an Unsubsidized Stafford Loan made under the 
Federal Family Education Loan Program or a Federal Direct Unsubsidized 
Loan) if the number of students in such group or with such status is 
sufficient to yield statistically reliable information and reporting 
will not reveal personally identifiable information about an individual 
student. If such number is not sufficient for such purpose, i.e., is 
too small to be meaningful, then the institution shall note that the 
institution enrolled too few of such students to so disclose or report 
with confidence and confidentiality.
    (ii) With respect to the requirement in paragraph (a)(6)(i) of this 
section to disaggregate the completion or graduation rate information 
by the receipt or nonreceipt of Federal student aid, students shall be 
considered to have received the aid in question only if they received 
such aid in the period specified in paragraph (a)(3) of this section.
    (iii) The requirement in paragraph (a)(6)(i) of this section shall 
not apply to two-year, degree-granting institutions of higher education 
until academic year 2011-2012.
    (b) In calculating the completion or graduation rate under 
paragraph (a)(1) of this section, an institution must count as 
completed or graduated--
    (1) Students who have completed or graduated by the end of the 12-
month period ending August 31 during which 150 percent of the normal 
time for completion or graduation from their program has lapsed; and
    (2) Students who have completed a program described in Sec.  
668.8(b)(1)(ii), or an equivalent program, by the end of the 12-month 
period ending August 31 during which 150 percent of normal time for 
completion from that program has lapsed.
    (c) In calculating the transfer-out rate under paragraph (a)(2) of 
this section, an institution must count as transfers-out students who 
by the end of the 12-month period ending August 31 during which 150 
percent of the normal time for completion or graduation from the 
program in which they were enrolled has lapsed, have not completed or 
graduated but have subsequently enrolled in any program of an eligible 
institution for which its program provided substantial preparation.
    (d) For the purpose of calculating a completion or graduation rate 
and a transfer-out rate, an institution may--
    (1) Exclude students who--
    (i) Have left school to serve in the Armed Forces;
    (ii) Have left school to serve on official church missions;
    (iii) Have left school to serve with a foreign aid service of the 
Federal Government, such as the Peace Corps;
    (iv) Are totally and permanently disabled; or
    (v) Are deceased.
    (2) In cases where the students described in paragraphs (d)(1)(i) 
through (iii) of this section represent 20 percent or more of the 
certificate- or degree-seeking, full-time, undergraduate students at 
the institution, recalculate the completion or graduation rates of 
those students by adding to the 150 percent time-frame they normally 
have to complete or graduate, as described in paragraph (b) of this 
section, the time period the students were not enrolled due to their 
service in the Armed

[[Page 42440]]

Forces, on official church missions, or with a recognized foreign aid 
service of the Federal Government.
    (e)(1) The Secretary grants a waiver of the requirements of this 
section dealing with completion and graduation rate data to any 
institution that is a member of an athletic association or conference 
that has voluntarily published completion or graduation rate data, or 
has agreed to publish data, that the Secretary determines are 
substantially comparable to the data required by this section.
    (2) An institution that receives a waiver of the requirements of 
this section must still comply with the requirements of Sec.  
668.41(d)(3) and (f).
    (3) An institution, or athletic association or conference applying 
on behalf of an institution, that seeks a waiver under paragraph (e)(1) 
of this section must submit a written application to the Secretary that 
explains why it believes the data the athletic association or 
conference publishes are accurate and substantially comparable to the 
information required by this section.
    (f) In addition to calculating the completion or graduation rate 
required by paragraph (a)(1) of this section, an institution may, but 
is not required to--
    (1) Calculate a completion or graduation rate for students who 
transfer into the institution;
    (2) Calculate a completion or graduation rate for students 
described in paragraphs (d)(1)(i) through (iv) of this section; and
    (3) Calculate a transfer-out rate as specified in paragraph (c) of 
this section, if the institution determines that its mission does not 
include providing substantial preparation for its students to enroll in 
another eligible institution.

(Approved by the Office of Management and Budget under control 
number 1845-0004)

(Authority: 20 U.S.C. 1092)


    19. Section 668.46 is amended by:
    A. In paragraph (a), adding, in alphabetical order, a definition of 
test.
    B. In paragraph (b), adding paragraphs (13) and (14).
    C. Revising paragraph (c)(3).
    D. In paragraph (e), revising the paragraph heading and adding 
paragraph (e)(3).
    E. Adding paragraph (g).
    F. Adding paragraph (h).
    The additions and revisions read as follows:


Sec.  668.46  Institutional security policies and crime statistics.

    (a) * * *
    Test: Regularly scheduled drills, exercises, and appropriate 
follow-through activities, designed for assessment and evaluation of 
emergency plans and capabilities.
* * * * *
    (b) * * *
    (13) Beginning with the annual security report distributed by 
October 1, 2010, a statement of policy regarding emergency response and 
evacuation procedures, as described in paragraph (g) of this section.
    (14) Beginning with the annual security report distributed by 
October 1, 2010, a statement of policy regarding missing student 
notification procedures, as described in paragraph (h) of this section.
    (c) * * *
    (3) Reported crimes if a hate crime. An institution must report, by 
category of prejudice, the following crimes reported to local police 
agencies or to a campus security authority that manifest evidence that 
the victim was intentionally selected because of the victim's actual or 
perceived race, gender, religion, sexual orientation, ethnicity, or 
disability:
    (i) Any crime it reports pursuant to paragraph (c)(1)(i) through 
(vii) of this section.
    (ii) The crimes of larceny-theft, simple assault, intimidation, and 
destruction/damage/vandalism of property.
    (iii) Any other crime involving bodily injury.
* * * * *
    (e) Timely warning and emergency notification. * * *
    (3) If there is an immediate threat to the health or safety of 
students or employees occurring on campus, as described in paragraph 
(g)(1) of this section, an institution must follow its emergency 
notification procedures. An institution that follows its emergency 
notification procedures is not required to issue a timely warning based 
on the same circumstances; however, the institution must provide 
adequate follow-up information to the community as needed.
* * * * *
    (g) Emergency response and evacuation procedures. An institution 
must include a statement of policy regarding its emergency response and 
evacuation procedures in the annual security report. This statement 
must include--
    (1) The procedures the institution will use to immediately notify 
the campus community upon the confirmation of a significant emergency 
or dangerous situation involving an immediate threat to the health or 
safety of students or employees occurring on the campus;
    (2) A description of the process the institution will use to--
    (i) Confirm that there is a significant emergency or dangerous 
situation as described in paragraph (g)(1) of this section;
    (ii) Determine the appropriate segment or segments of the campus 
community to receive a notification;
    (iii) Determine the content of the notification; and
    (iv) Initiate the notification system;
    (3) A statement that the institution will, without delay, and 
taking into account the safety of the community, determine the content 
of the notification and initiate the notification system, unless 
issuing a notification will, in the professional judgment of 
responsible authorities, compromise efforts to assist a victim or to 
contain, respond to, or otherwise mitigate the emergency;
    (4) A list of the titles of the person or persons or organization 
or organizations responsible for carrying out the actions described in 
paragraph (g)(2) of this section;
    (5) The institution's procedures for disseminating emergency 
information to the larger community; and
    (6) The institution's procedures to test the emergency response and 
evacuation procedures on at least an annual basis, including--
    (i) Tests that may be announced or unannounced;
    (ii) Publicizing its emergency response and evacuation procedures 
in conjunction with at least one test per calendar year; and
    (iii) Documenting, for each test, a description of the exercise, 
the date, time, and whether it was announced or unannounced.
    (h) Missing student notification policies and procedures. (1) An 
institution that provides any on-campus student housing facility must 
include a statement of policy regarding missing student notification 
procedures for students who reside in on-campus student housing 
facilities in its annual security report. This statement must--
    (i) Indicate a list of titles of the persons or organizations to 
which students, employees, or other individuals should report that a 
student has been missing for 24 hours;
    (ii) Require that any missing student report must be referred 
immediately to the institution's police or campus security department, 
or, in the absence of an institutional police or campus security 
department, to the local law enforcement agency that has jurisdiction 
in the area;
    (iii) Contain an option for each student living in an on-campus 
student housing facility to identify a contact person or persons whom 
the institution shall notify if the student is determined

[[Page 42441]]

missing by the institutional police or campus security department, or 
the local law enforcement agency;
    (iv) Advise students that their contact information will be 
registered confidentially, that this information will be accessible 
only to authorized campus officials, and that it may not be disclosed, 
except to law enforcement personnel in furtherance of a missing person 
investigation;
    (v) Advise students that if they are under 18 years of age and not 
emancipated, the institution must notify a custodial parent or guardian 
when the student is missing, in addition to any additional contact 
person designated by the student; and
    (vi) Advise students that, regardless of whether they name a 
contact person, unless the local law enforcement agency was the entity 
that made the determination that a student is missing, the institution 
will notify the local law enforcement agency that the student is 
missing.
    (2) The procedures that the institution must follow when a student 
who resides in an on-campus student housing facility is determined to 
have been missing for 24 hours include--
    (i) If the student has designated a contact person, notifying that 
contact person within 24 hours;
    (ii) If the student is under 18 years of age and is not 
emancipated, notifying the student's custodial parent or guardian and 
any other designated contact person within 24 hours; and
    (iii) Regardless of whether the student has identified a contact 
person, is above the age of 18, or is an emancipated minor, informing 
the local law enforcement agency that has jurisdiction in the area that 
the student has been reported to be missing within 24 hours.
* * * * *


Sec.  668.48  [Amended]

    20. Section 668.48(b) is amended by removing the parenthetical 
``(d)'' and adding, in its place, the parenthetical ``(e)''.
    21. Section 668.49 is added to subpart D of part 668 to read as 
follows:


Sec.  668.49  Institutional fire safety policies and fire statistics.

    (a) Additional definitions that apply to this section.
    Cause of fire: The factor or factors that give rise to a fire. The 
causal factor may be, but is not limited to, the result of an 
intentional or unintentional action, mechanical failure, or act of 
nature.
    Fire: Any instance of open flame or other burning in a place not 
intended to contain the burning or in an uncontrolled manner.
    Fire drill: A supervised practice of a mandatory evacuation of a 
building for a fire.
    Fire-related injury: Any instance in which a person is injured as a 
result of a fire, including an injury sustained from a natural or 
accidental cause, while involved in fire control, attempting rescue, or 
escaping from the dangers of the fire. The term ``person'' may include 
students, faculty, staff, visitors, firefighters, or any other 
individuals.
    Fire-related death: Any instance in which a person--
    (1) Is killed as a result of a fire, including death resulting from 
a natural or accidental cause while involved in fire control, 
attempting rescue, or escaping from the dangers of a fire; or
    (2) Dies within one year of injuries sustained as a result of the 
fire.
    Fire safety system: Any mechanism or system related to the 
detection of a fire, the warning resulting from a fire, or the control 
of a fire. This may include sprinkler systems or other fire 
extinguishing systems, fire detection devices, stand-alone smoke 
alarms, devices that alert one to the presence of a fire, such as 
horns, bells, or strobe lights; smoke-control and reduction mechanisms; 
and fire doors and walls that reduce the spread of a fire.
    Value of property damage: The estimated value of the loss of the 
structure and contents, in terms of the cost of replacement in like 
kind and quantity. This estimate should include contents damaged by 
fire, and related damages caused by smoke, water, and overhaul; 
however, it does not include indirect loss, such as business 
interruption.
    (b) Annual fire safety report. Beginning by October 1, 2010, an 
institution that maintains any on-campus student housing facility must 
prepare an annual fire safety report that contains, at a minimum, the 
following information:
    (1) The fire statistics described in paragraph (c) of this section.
    (2) A description of each on-campus student housing facility fire 
safety system.
    (3) The number of fire drills held during the previous calendar 
year.
    (4) The institution's policies or rules on portable electrical 
appliances, smoking, and open flames in a student housing facility.
    (5) The institution's procedures for student housing evacuation in 
the case of a fire.
    (6) The policies regarding fire safety education and training 
programs provided to the students, faculty, and staff. In these 
policies, the institution must describe the procedures that students 
and employees should follow in the case of a fire.
    (7) For purposes of including a fire in the statistics in the 
annual fire safety report, a list of the titles of each person or 
organization to which students and employees should report that a fire 
occurred.
    (8) Plans for future improvements in fire safety, if determined 
necessary by the institution.
    (c) Fire statistics. (1) An institution must report statistics for 
each on-campus student housing facility, for the three most recent 
calendar years for which data are available, concerning--
    (i) The number of fires and the cause of each fire;
    (ii) The number of injuries related to a fire that resulted in 
treatment at a medical facility, including at an on-campus health 
center;
    (iii) The number of deaths related to a fire; and
    (iv) The value of property damage caused by a fire.
    (2) An institution is required to submit a copy of the fire 
statistics in paragraph (c)(1) of this section to the Secretary on an 
annual basis.
    (d) Fire log. (1) An institution that maintains on-campus student 
housing facilities must maintain a written, easily understood fire log 
that records, by the date that the fire was reported, any fire that 
occurred in an on-campus student housing facility. This log must 
include the nature, date, time, and general location of each fire.
    (2) An institution must make an entry or an addition to an entry to 
the log within two business days, as defined under Sec.  668.46(a), of 
the receipt of the information.
    (3) An institution must make the fire log for the most recent 60-
day period open to public inspection during normal business hours. The 
institution must make any portion of the log older than 60 days 
available within two business days of a request for public inspection.
    (4) An institution must make an annual report to the campus 
community on the fires recorded in the fire log. This requirement may 
be satisfied by the annual fire safety report described in paragraph 
(b) of this section.

(Approved by the Office of Management and Budget under control 
number 1845-NEW3)

(Authority: 20 U.S.C. 1092)


    22. Appendix A to subpart D of part 668 is amended by:
    A. Revising the introductory text.
    B. Under the heading, ``Crime Definitions From the Uniform Crime 
Reporting Handbook,'' revising and

[[Page 42442]]

renaming the definition of Weapon Law Violations, as Weapons: Carrying, 
Possessing, Etc. and revising the definitions of Drug Abuse Violations 
and Liquor Law Violations.
    C. Adding a heading at the end of the appendix, ``Definitions From 
the Hate Crime Data Collection Guidelines of the Uniform Crime 
Reporting Handbook'' followed by definitions for larceny-theft (except 
motor vehicle theft), simple assault, intimidation, and destruction/
damage/vandalism of property.
    The revisions and additions read as follows:

Appendix A to Subpart D of Part 668--Crime Definitions in Accordance 
With the Federal Bureau of Investigation's Uniform Crime Reporting 
Program

    The following definitions are to be used for reporting the 
crimes listed in Sec.  668.46, in accordance with the Federal Bureau 
of Investigation's Uniform Crime Reporting Program. The definitions 
for murder; robbery; aggravated assault; burglary; motor vehicle 
theft; weapons: carrying, possessing, etc.; law violations; drug 
abuse violations; and liquor law violations are excerpted from the 
Uniform Crime Reporting Handbook. The definitions of forcible rape 
and nonforcible sex offenses are excerpted from the National 
Incident-Based Reporting System Edition of the Uniform Crime 
Reporting Handbook. The definitions of larceny-theft (except motor 
vehicle theft), simple assault, intimidation, and destruction/
damage/vandalism of property are excerpted from the Hate Crime Data 
Collection Guidelines of the Uniform Crime Reporting Handbook.
* * * * *

Crime Definitions From the Uniform Crime Reporting Handbook

* * * * *

Weapons: Carrying, Possessing, Etc.

    The violation of laws or ordinances prohibiting the manufacture, 
sale, purchase, transportation, possession, concealment, or use of 
firearms, cutting instruments, explosives, incendiary devices, or 
other deadly weapons.

Drug Abuse Violations

    The violation of laws prohibiting the production, distribution, 
and/or use of certain controlled substances and the equipment or 
devices utilized in their preparation and/or use. The unlawful 
cultivation, manufacture, distribution, sale, purchase, use, 
possession, transportation, or importation of any controlled drug or 
narcotic substance. Arrests for violations of State and local laws, 
specifically those relating to the unlawful possession, sale, use, 
growing, manufacturing, and making of narcotic drugs.

Liquor Law Violations

    The violation of State or local laws or ordinances prohibiting 
the manufacture, sale, purchase, transportation, possession, or use 
of alcoholic beverages, not including driving under the influence 
and drunkenness.
* * * * *

Definitions From the Hate Crime Data Collection Guidelines of the 
Uniform Crime Reporting Handbook

Larceny-Theft (except motor vehicle theft)

    The unlawful taking, carrying, leading, or riding away of 
property from the possession or constructive possession of another. 
Attempted larcenies are included. Embezzlement, confidence games, 
forgery, worthless checks, etc., are excluded.

Simple Assault

    An unlawful physical attack by one person upon another where 
neither the offender displays a weapon, nor the victim suffers 
obvious severe or aggravated bodily injury involving apparent broken 
bones, loss of teeth, possible internal injury, severe laceration, 
or loss of consciousness.

Intimidation

    To unlawfully place another person in reasonable fear of bodily 
harm through the use of threatening words and/or other conduct, but 
without displaying a weapon or subjecting the victim to actual 
physical attack.

Destruction/Damage/Vandalism of Property

    To willfully or maliciously destroy, damage, deface, or 
otherwise injure real or personal property without the consent of 
the owner or the person having custody or control of it.

    23. Section 668.161 is amended by:
    A. Revising the section heading.
    B. Revising paragraph (a)(4).
    The revisions read as follows:


Sec.  668.161  Scope and purpose (cash management rules).

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


Sec.  668.184  [Amended]

    24. Section 668.184(a)(1) is amended by removing the word ``If'' 
and adding, in its place, the words ``Except as provided under 34 CFR 
600.32(d), if''.
    25. Subpart O, consisting of Sec. Sec.  668.230 through 668.233, is 
added to part 668 to read as follows:

Subpart O--Financial Assistance for Students With Intellectual 
Disabilities

Sec.
668.230 Scope and purpose.
668.231 Definitions.
668.232 Program eligibility.
668.233 Student eligibility.

Subpart O--Financial Assistance for Students With Intellectual 
Disabilities


Sec.  668.230  Scope and purpose.

    This subpart establishes regulations that apply to an institution 
that offers comprehensive transition and postsecondary programs to 
students with intellectual disabilities. Students enrolled in these 
programs are eligible for Federal financial assistance under the 
Federal Pell Grant, FSEOG, and FWS programs. Except for provisions 
related to needs analysis, the Secretary may waive any title IV, HEA 
program requirement related to the Federal Pell Grant, FSEOG, and FWS 
programs or institutional eligibility, to ensure that students with 
intellectual disabilities remain eligible for funds under these 
assistance programs. However, unless provided in this subpart or 
subsequently waived by the Secretary, students with intellectual 
disabilities and institutions that offer comprehensive transition and 
postsecondary programs are subject to the same regulations and 
procedures that otherwise apply to title IV, HEA program participants.

(Authority: 20 U.S.C. 1091)

Sec.  668.231  Definitions.

    The following definitions apply to this subpart:
    Comprehensive transition and postsecondary program means a degree, 
certificate, nondegree, or noncertificate program that--
    (1) Is offered by a participating institution;
    (2) Is delivered to students physically attending the institution;
    (3) Is designed to support students with intellectual disabilities 
who are seeking to continue academic, career and technical, and 
independent living instruction at an institution of higher education in 
order to prepare for gainful employment;
    (4) Includes an advising and curriculum structure;
    (5) Requires students with intellectual disabilities to have at 
least one-half of their participation in the program, as determined by 
the institution, focus on academic components through one or more of 
the following activities:
    (i) Taking credit-bearing courses with students without 
disabilities.
    (ii) Auditing or otherwise participating in courses with students 
without disabilities for which the student does not receive regular 
academic credit.
    (iii) Taking non-credit-bearing, nondegree courses with students 
without disabilities.

[[Page 42443]]

    (iv) Participating in internships or work-based training in 
settings with individuals without disabilities; and
    (6) Provides students with intellectual disabilities opportunities 
to participate in coursework and other activities with students without 
disabilities.
    Student with an intellectual disability means a student--
    (1) With mental retardation or a cognitive impairment characterized 
by significant limitations in--
    (i) Intellectual and cognitive functioning; and
    (ii) Adaptive behavior as expressed in conceptual, social, and 
practical adaptive skills; and
    (2) Who is currently, or was formerly, eligible for special 
education and related services under the Individuals with Disabilities 
Education Act (IDEA) (20 U.S.C. 1401), including a student who was 
determined eligible for special education or related services under the 
IDEA but was home-schooled or attended private school.

(Authority: 20 U.S.C. 1091, 1140)

Sec.  668.232  Program eligibility.

    An institution that offers a comprehensive transition and 
postsecondary program must apply to the Secretary to have the program 
determined to be an eligible program. The institution applies under the 
provisions in 34 CFR 600.20 for adding an educational program, and must 
include in its application--
    (a) A detailed description of the comprehensive transition and 
postsecondary program that addresses all of the components of the 
program, as defined in Sec.  668.231;
    (b) The institution's policy for determining whether a student 
enrolled in the program is making satisfactory academic progress;
    (c) The number of weeks of instructional time and the number of 
semester or quarter credit hours or clock hours in the program, 
including the equivalent credit or clock hours associated with 
noncredit or reduced credit courses or activities;
    (d) A description of the educational credential offered (e.g., 
degree or certificate) or identified outcome or outcomes established by 
the institution for all students enrolled in the program;
    (e) A copy of the letter or notice sent to the institution's 
accrediting agency informing the agency of its comprehensive transition 
and postsecondary program. The letter or notice must include a 
description of the items in paragraphs (a) through (d) of this section; 
and
    (f) Any other information the Secretary may require.

(Approved by the Office of Management and Budget under control 
number 1845-NEW4)

(Authority: 20 U.S.C. 1091)

Sec.  668.233  Student eligibility.

    A student with an intellectual disability is eligible to receive 
Federal Pell, FSEOG, and FWS program assistance under this subpart if--
    (a) The student satisfies the general student eligibility 
requirements under Sec.  668.32, except for the requirements in 
paragraphs (a), (e), and (f) of that section. With regard to these 
exceptions, a student--
    (1) Does not have to be enrolled for the purpose of obtaining a 
degree or certificate;
    (2) Is not required to have a high school diploma, a recognized 
equivalent of a high school diploma, or have passed an ability to 
benefit test; and
    (3) Is making satisfactory progress according to the institution's 
published standards for students enrolled in its comprehensive 
transition and postsecondary programs;
    (b) The student is enrolled in a comprehensive transition and 
postsecondary program approved by the Secretary; and
    (c) The institution obtains a record from a local educational 
agency that the student is or was eligible for special education and 
related services under the IDEA. If that record does not identify the 
student as having an intellectual disability, as described in paragraph 
(1) of the definition of a student with an intellectual disability in 
Sec.  668.231, the institution must also obtain documentation 
establishing that the student has an intellectual disability, such as--
    (1) A documented comprehensive and individualized psycho-
educational evaluation and diagnosis of an intellectual disability by a 
psychologist or other qualified professional; or
    (2) A record of the disability from a local or State educational 
agency, or government agency, such as the Social Security 
Administration or a vocational rehabilitation agency, that identifies 
the intellectual disability.

(Approved by the Office of Management and Budget under control 
number 1845-NEW4)

(Authority: 20 U.S.C. 1091)

PART 675--FEDERAL WORK-STUDY PROGRAMS

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

    Authority: 3 20 U.S.C. 1070g, 1094; 42 U.S.C. 2751-2756b; unless 
otherwise noted.


Sec.  675.2  [Amended]

    27. In Sec.  675.2(b), paragraph (1) of the definition of community 
services is amended by adding the words ``emergency preparedness and 
response,'' after the words ``public safety,''.
    28. Section 675.16 is revised to read as follow:


Sec.  675.16  Payments to students.

    (a) General. (1) An institution must follow the disbursement 
procedures in this section for paying a student his or her wages under 
the FWS Program instead of the disbursement procedures in 34 CFR 
668.164(a), (b), and (d) through (g), and 34 CFR 668.165. The 
institution must follow 34 CFR 668.164(c) on making direct FWS payments 
to students and 34 CFR 668.164(h) on handling the return of FWS funds 
that are not received or negotiated by a student.
    (2) An institution must pay a student FWS compensation at least 
once a month.
    (3) Before an institution makes an initial disbursement of FWS 
compensation to a student for an award period, the institution must 
notify the student of the amount of funds the student is authorized to 
earn, and how and when the FWS compensation will be paid.
    (4) Regardless of who employs the student, the institution is 
responsible for ensuring that the student is paid for work performed.
    (5) A student's FWS compensation is earned when the student 
performs the work.
    (6) An institution may pay a student after the student's last day 
of attendance for FWS compensation earned while he or she was in 
attendance at the institution.
    (7) A correspondence student must submit his or her first completed 
lesson before receiving a payment.
    (8) The institution may not obtain a student's power of attorney to 
authorize any disbursement of funds without prior approval from the 
Secretary.
    (9) An institution makes a disbursement of FWS program funds on the 
date that the institution credits a student's account at the 
institution or pays a student directly with--
    (i) Funds received from the Secretary; or
    (ii) Institutional funds used in advance of receiving FWS program 
funds.
    (b) Crediting a student's account at the institution. (1) If the 
institution obtains the student's authorization described in paragraph 
(d) of this section, the institution may use the FWS

[[Page 42444]]

funds to credit a student's account at the institution to satisfy--
    (i) Current year charges for--
    (A) Tuition and fees;
    (B) Board, if the student contracts with the institution for board;
    (C) Room, if the student contracts with the institution for room; 
and
    (D) Other educationally related charges incurred by the student at 
the institution; and
    (ii) Prior award year charges with the restriction provided in 
paragraph (b)(2) of this section for a total of not more than $200 
for--
    (A) Tuition and fees, room, or board; and
    (B) Other institutionally related charges incurred by the student 
at the institution.
    (2) If the institution is using FWS funds in combination with other 
title IV, HEA program funds to credit a student's account at the 
institution to satisfy prior award year charges, a single $200 total 
prior award year charge limit applies to the use of all the title IV, 
HEA program funds for that purpose.
    (c) Credit balances. Whenever an institution disburses FWS funds by 
crediting a student's account and the result is a credit balance, the 
institution must pay the credit balance directly to the student as soon 
as possible, but no later than 14 days after the credit balance occurs 
on the account.
    (d) Student authorizations. (1) Except for the noncash 
contributions allowed under paragraphs (e)(2) and (3) of this section, 
if an institution obtains written authorization from a student, the 
institution may--
    (i) Use the student's FWS compensation to pay for charges described 
in paragraph (b) of this section that are included in that 
authorization; and
    (ii) Except if prohibited by the Secretary under the reimbursement 
or cash monitoring payment method, hold on behalf of the student any 
FWS compensation that would otherwise be paid directly to the student 
under paragraph (c) of this section.
    (2) In obtaining the student's authorization to perform an activity 
described in paragraph (d)(1) of this section, an institution--
    (i) May not require or coerce the student to provide that 
authorization;
    (ii) Must allow the student to cancel or modify that authorization 
at any time; and
    (iii) Must clearly explain how it will carry out that activity.
    (3) A student may authorize an institution to carry out the 
activities described in paragraph (d)(1) of this section for the period 
during which the student is enrolled at the institution.
    (4)(i) If a student modifies an authorization, the modification 
takes effect on the date the institution receives the modification 
notice.
    (ii) If a student cancels an authorization to use his or her FWS 
compensation to pay for authorized charges under paragraph (b) of this 
section, the institution may use those funds to pay only those 
authorized charges incurred by the student before the institution 
received the notice.
    (iii) If a student cancels an authorization to hold his or her FWS 
compensation under paragraph (d)(1)(ii) of this section, the 
institution must pay those funds directly to the student as soon as 
possible, but no later than 14 days after the institution receives that 
notice.
    (5) If an institution holds excess FWS compensation under paragraph 
(d)(1)(ii) of this section, the institution must--
    (i) Identify the amount of funds the institution holds for each 
student in a subsidiary ledger account designed for that purpose;
    (ii) Maintain, at all times, cash in its bank account in an amount 
at least equal to the amount of FWS compensation the institution holds 
for the student; and
    (iii) Notwithstanding any authorization obtained by the institution 
under this paragraph, pay any remaining balances by the end of the 
institution's final FWS payroll period for an award year.
    (e)(1) Timing of institutional share and noncash contributions. 
Except for the noncash contributions allowed under paragraph (e)(2) or 
(3) of this section, an institution must pay the student its share of 
his or her FWS compensation at the same time it pays the Federal share.
    (2) If an institution pays a student its FWS share for an award 
period in the form of tuition, fees, services, or equipment, it must 
pay that share before the student's final payroll period.
    (3) If an institution pays its FWS share in the form of prepaid 
tuition, fees, services, or equipment for a forthcoming academic 
period, it must give the student a statement before the close of his or 
her final payroll period listing the amount of tuition, fees, services, 
or equipment earned.

(Authority: 20 U.S.C. 1091, 1094; 42 U.S.C. 2753)


    29. Section 675.18 is amended by:
    A. Adding paragraph (g)(4).
    B. Adding paragraph (i).
    C. Revise the authority citation at the end of the section.
    The additions and revisions read as follows:


Sec.  675.18  Use of funds.

* * * * *
    (g) * * *
    (4)(i) In meeting the seven percent community service expenditure 
requirement in paragraph (g)(1) of this section, students may be 
employed to perform civic education and participation activities in 
projects that--
    (A) Teach civics in schools;
    (B) Raise awareness of government functions or resources; or
    (C) Increase civic participation.
    (ii) To the extent practicable, in providing civic education and 
participation activities under paragraph (g)(4)(i) of this section, an 
institution must--
    (A) Give priority to the employment of students in projects that 
educate or train the public about evacuation, emergency response, and 
injury prevention strategies relating to natural disasters, acts of 
terrorism, and other emergency situations; and
    (B) Ensure that the students receive appropriate training to carry 
out the educational services required.
* * * * *
    (i) Flexibility in the event of a major disaster. (1) An 
institution located in any area affected by a major disaster may make 
FWS payments to disaster-affected students for the period of time (not 
to exceed the award period) in which the students were prevented from 
fulfilling their FWS obligations. The FWS payments--
    (i) May be made to disaster-affected students for an amount equal 
to or less than the amount of FWS wages the students would have been 
paid had the students been able to complete the work obligation 
necessary to receive the funds;
    (ii) May not be made to any student who was not eligible for FWS or 
was not completing the work obligation necessary to receive the funds, 
or had already separated from their employment prior to the occurrence 
of the major disaster; and
    (iii) Must meet the matching requirements of Sec.  675.26, unless 
those requirements are waived by the Secretary.
    (2) The following definitions apply to this section:
    (i) Disaster-affected student means a student enrolled at an 
institution who--
    (A) Received an FWS award for the award period during which a major 
disaster occurred;
    (B) Earned FWS wages from an institution for that award period;
    (C) Was prevented from fulfilling his or her FWS obligation for all 
or part of the FWS award period because of the major disaster; and

[[Page 42445]]

    (D) Was unable to be reassigned to another FWS job.
    (ii) Major disaster is defined in section 102(2) of the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 
5122(2)).

(Authority: 20 U.S.C. 1095, 1096; 42 U.S.C. 2753, 2755, 2756(b))


    30. Section 675.26 is amended by:
    A. In paragraph (d)(2)(iii), removing the word ``or'' that appears 
after the punctuation ``;''.
    B. In paragraph (d)(2)(iv), removing the punctuation ``.'' and 
adding, in its place, the word ``; or''.
    C. Adding paragraph (d)(2)(v).
    The addition reads as follows:


Sec.  675.26  FWS Federal share limitations.

* * * * *
    (d) * * *
    (2) * * *
    (v) The student is employed in community service activities and is 
performing civic education and participation activities in a project as 
defined in Sec.  675.18(g)(4).
* * * * *
    31. Section 675.41 is amended by:
    A. Revising paragraph (a).
    B. Revising the paragraph heading and introductory text in 
paragraph (b).
    C. In paragraph (b)(2), removing the word ``, participation,''.
    D. In paragraph (b)(5), removing the words ``work-learning'' and 
adding, in their place, the words ``work-learning-service''.
    E. In paragraph (b)(6), removing the words ``work-learning'' and 
adding, in their place, the words ``work-learning-service''.
    The revisions read as follows:


Sec.  675.41  Special definitions.

* * * * *
    (a) Work-college: An eligible institution that--
    (1) Is a public or private nonprofit, four-year, degree-granting 
institution with a commitment to community service;
    (2) Has operated a comprehensive work-learning-service program for 
at least two years;
    (3) Requires resident students, including at least one-half of all 
students who are enrolled on a full-time basis, to participate in a 
comprehensive work-learning-service program for at least five hours 
each week, or at least 80 hours during each period of enrollment, 
except summer school, unless the student is engaged in an 
institutionally organized or approved study abroad or externship 
program; and
    (4) Provides students participating in the comprehensive work-
learning-service program with the opportunity to contribute to their 
education and to the welfare of the community as a whole.
    (b) Comprehensive student work-learning-service program: A student 
work-learning-service program that--
* * * * *


Sec.  675.43  [Amended]

    32. Section 675.43 is amended by removing the words ``work-
learning'' and adding, in their place, the words ``work-learning-
service''.


Sec.  675.44  [Amended]

    33. Section 675.44(b) is amended by removing the words ``work-
learning'' and adding, in their place, the words ``work-learning-
service''.


Sec.  675.45  [Amended]

    34. Section 675.45 is amended by:
    A. In paragraph (a)(1), in the introductory text of paragraph 
(a)(4), and in paragraph (a)(4)(i) removing the words ``work-learning'' 
and adding, in their place, the words ``work-learning-service''.
    B. In paragraph (a)(5), removing the words ``work service 
learning'' and adding, in their place, the words ``work-learning-
service''.

PART 686--TEACHER EDUCATION ASSISTANCE FOR COLLEGE AND HIGHER 
EDUCATION (TEACH) GRANT PROGRAM

    35. The authority citation for part 686 continues to read as 
follows:

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


Sec.  686.12  [Amended]

    36. Section 686.12(c)(1) is amended by adding the words ``, a 
suspension approved under Sec.  686.41(a)(2), or a military discharge 
granted under Sec.  686.42(c)(2)'' after the words ``teaching 
service''.
    37. Section 686.41 is amended by:
    A. In the introductory text of paragraph (a)(2), removing the words 
``and (ii)'' and adding, in their place, the words ``, (ii), and 
(iii)''.
    B. Revising paragraphs (a)(2)(ii), (b), and (c).
    C. Adding an OMB control number at the end of the section.
    The revisions and addition read as follows:


Sec.  686.41  Periods of suspension.

    (a) * * *
    (2) * * *
    (ii) Does not exceed a total of three years under paragraph 
(a)(1)(iii) of this section.
    (b) A grant recipient, or his or her representative in the case of 
a grant recipient who qualifies under paragraph (a)(1)(iii) of this 
section, 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, or his or her representative in the case of 
a grant recipient who qualifies under paragraph (a)(1)(iii) of this 
section, must provide the Secretary with documentation supporting the 
suspension request as well as current contact information including 
home address and telephone number.

(Approved by the Office of Management and Budget under control 
number 1845-0083)
* * * * *
    38. Section 686.42 is amended by:
    A. Adding paragraph (c).
    B. Adding an OMB control number at the end of the section.
    The additions read as follows:


Sec.  686.42  Discharge of agreement to serve.

* * * * *
    (c) Military discharge. (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 and has exceeded the 
period of time allowed under Sec.  686.41(a)(2)(ii), may qualify for a 
proportional discharge of his or her service obligation due to an 
extended call or order to active duty status. To apply for a military 
discharge, a grant recipient or his or her representative must submit a 
written request to the Secretary.
    (2) A grant recipient described in paragraph (c)(1) of this section 
may receive a--
    (i) One-year discharge of his or her service obligation if a call 
or order to active duty status is for more than three years;
    (ii) Two-year discharge of his or her service obligation if a call 
or order to active duty status is for more than four years;
    (iii) Three-year discharge of his or her service obligation if a 
call or order to active duty status is for more than five years; or
    (iv) Full discharge of his or her service obligation if a call or 
order to active duty status is for more than six years.
    (3) A grant recipient or his or her representative must provide the 
Secretary with--
    (i) A written statement from the grant recipient's commanding or 
personnel officer certifying--

[[Page 42446]]

    (A) That the grant recipient is on active duty in the Armed Forces 
of the United States;
    (B) The date on which the grant recipient's service began; and
    (C) The date on which the grant recipient's service is expected to 
end; or
    (ii)(A) A copy of the grant recipient's official military orders; 
and
    (B) A copy of the grant recipient's military identification.
    (4) For the purpose of this section, the Armed Forces means the 
Army, Navy, Air Force, Marine Corps, and the Coast Guard.
    (5) Based on a request for a military discharge from the grant 
recipient or his or her representative, the Secretary will notify the 
grant recipient or his or her representative of the outcome of the 
discharge request. For the portion on the service obligation that 
remains, the grant recipient remains responsible for fulfilling his or 
her service obligation in accordance with Sec.  686.12.

(Approved by the Office of Management and Budget under control 
number 1845-0083)
* * * * *

PART 690--FEDERAL PELL GRANT PROGRAM

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

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

    40. Section 690.63 is amended by:
    A. Adding paragraph (h).
    B. Adding an OMB control number and authority citation at the end 
of the section.
    The additions read as follows:


Sec.  690.63  Calculation of a Federal Pell Grant for a payment period.

* * * * *
    (h) Payment from two Scheduled Awards. (1) In a payment period, a 
student may receive a payment from the student's first Scheduled Award 
in the award year and the student's second Scheduled Award in the award 
year if--
    (i) The student is an eligible student who meets the provisions of 
Sec.  690.67; and
    (ii) The student's payment for the payment period is greater than 
the remaining balance of the first Scheduled Award.
    (2) The student's payment for the payment period--
    (i) Is calculated based on the total credit or clock hours and 
weeks of instructional time in the payment period; and
    (ii) Is the remaining amount of the first Scheduled Award plus an 
amount from the second Scheduled Award for the balance of the payment 
for the payment period.

(Approved by the Office of Management and Budget under control 
number 1845-NEW5)

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


    41. Section 690.64 is revised to read as follows:


Sec.  690.64  Calculation of a Federal Pell Grant for a payment period 
which 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)(1) Except as provided in paragraph (b)(2) of this section--
    (i) For a full-time or a three-quarter-time student--
    (A) An institution must assign the payment period to the award year 
in which the student receives the greater payment for the payment 
period based on the information available at the time that the 
student's Federal Pell Grant is initially calculated; and
    (B) If, subsequent to the initial calculation of the student's 
payment for the payment period, the institution receives information 
that the student would receive a greater payment for the payment period 
by reassigning the payment to the other award year, the institution 
must reassign the payment to the award year providing the greater 
payment; and
    (ii) For a half-time or less-than-half-time student, an institution 
may assign the payment period to either award year if the student is 
enrolled for the payment period as a half-time or less-than-half-time 
student; and
    (2) Upon request of a student, an institution must assign the 
payment period to the award year in which the student can be expected 
to receive a greater amount of Federal Pell Grants over the two award 
years in which the payment period is scheduled to occur;
    (c) Except as provided in paragraph (b)(1)(i) of this section, the 
institution shall place a payment period with more than six months 
scheduled to occur within one award year in that award year;
    (d) If an institution places the payment period in the first award 
year, it shall pay a student with funds from the first award year; and
    (e) If an institution places the payment period in the second award 
year, it shall pay a student with funds from the second award year.

(Approved by the Office of Management and Budget under control 
number 1845-NEW5)

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


    42. Section 690.67 is revised to read as follows:


Sec.  690.67  Receiving up to two Scheduled Awards during a single 
award year.

    (a) Eligibility. An institution shall award up to the full amount 
of a second Scheduled Award to a student in an award year if the 
student--
    (1) Has successfully completed the credit or clock hours of the 
first academic year in the award year;
    (2) Is enrolled in an eligible program leading to a bachelor's or 
associate degree or other recognized educational credential except as 
provided in 34 CFR part 668, subpart O for students with intellectual 
disabilities; and
    (3) Is enrolled at least as a half-time student.
    (b) Transfer student. If a student transfers to an institution 
during an award year, the institution must--
    (1) Assume that a student has completed the credit or clock hours 
in the first academic year of the award year if the first Scheduled 
Award was disbursed at other institutions during the award year; or
    (2) If less than the first Scheduled Award has been disbursed at a 
prior institution that the student attended during the award year, the 
institution must determine the credit or clock hours the student is 
considered to have previously earned in the award year by--
    (i) Multiplying the amount of the student's Scheduled Award 
disbursed at a prior institution during the award year by the number of 
credit or clock hours in the institution's academic year and dividing 
the product of the multiplication by the amount of the Scheduled Award 
at the prior institution; and
    (ii) If the student previously attended more than one institution 
in the award year, adding the results of paragraph (b)(2)(i) of this 
section for each prior institution.
    (c) Special circumstances. (1) The financial aid administrator at a 
student's institution may waive the requirement in paragraph (a)(1) of 
this section, if the financial aid administrator--
    (i) Determines that, in the period during which the first Scheduled 
Award was disbursed, the student was unable to complete the clock or 
credit hours in the student's first academic year in the award year due 
to circumstances beyond the student's control; and
    (ii) The determination is made and documented on an individual 
basis.
    (2) For purposes of paragraph (c)(1) of this section, circumstances 
beyond a student's control--
    (i) May include, but are not limited to, the student withdrawing 
from classes due to illness or being unable to register for classes 
necessary to complete his or

[[Page 42447]]

her eligible program because those classes were not offered during that 
period; and
    (ii) Do not include, for example, withdrawing to avoid a particular 
grade or failing to register for a necessary class that was offered 
during the period to avoid a particular instructor.
    (d) Nonapplicable credit or clock hours. To determine the student's 
eligibility for a second Scheduled Award in an award year, an 
institution may not use credit or clock hours that the student received 
based on Advanced Placement (AP) programs, International Baccalaureate 
(IB) programs, testing out, life experience, or similar competency 
measures.

(Approved by the Office of Management and Budget under control 
number 1845-NEW5)

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


    43. Section 690.75 is amended by:
    A. Adding paragraph (e).
    B. Revising the OMB control number at the end of the section.
    The additions read as follows:


Sec.  690.75  Determination of eligibility for payment.

* * * * *
    (e) A student is considered to have an expected family contribution 
of zero if--
    (1) The student's parent or guardian was a member of the Armed 
Forces of the United States and the parent or guardian died as a result 
of performing military service in Iraq or Afghanistan after September 
11, 2001; and
    (2) At the time of the parent or guardian's death the student--
    (i) Was under the age of 24; or
    (ii) Was enrolled at an institution of higher education.

(Approved by the Office of Management and Budget under control 
number 1845-NEW6)
* * * * *

PART 692--LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP PROGRAM

    44. The authority citation for part 692 is revised to read as 
follows:

    Authority: 20 U.S.C. 1070c-1070c-4, unless otherwise noted.


Sec.  692.10  [Amended]

    45. Section 692.10 is amended by:
    A. In paragraph (a)(1), adding the words ``for the programs under 
this part'' after the number ``1979''.
    B. In paragraph (a)(2), removing the word ``If'' and adding, in its 
place, the words ``For the programs under this part, if''.
    C. In paragraph (a)(2), removing the word ``LEAP'' each time it 
appears.
    D. In paragraph (b), removing the word ``-appropriated'' after the 
word State, both times it appears.
    E. In the authority citation at the end of the section, adding ``, 
1070c-2'' after the number ``1070c''
    46. Section 692.21 is amended by:
    A. In paragraph (c), removing the figure ``$5,000'' and adding, in 
its place, the words ``the lesser of $12,500 or the student's cost of 
attendance under section 472 of the HEA''.
    B. In paragraph (j), removing the word ``and'' that appears after 
the punctuation ``;''.
    C. Redesignating paragraph (k) as paragraph (l).
    D. Adding a new paragraph (k).
    E. Adding an OMB control number at the end of the section.
    The additions read as follows:


Sec.  692.21  What requirements must be met by a State program?

* * * * *
    (k) Notifies eligible students that the grants are--
    (1) Leveraging Educational Assistance Partnership Grants; and
    (2) Funded by the Federal Government, the State, and, where 
applicable, other contributing partners; and
* * * * *
(Approved by the Office of Management and Budget under control 
number 1845-NEW7)
* * * * *
    47. Section 692.70 is revised to read as follows:


Sec.  692.70  How does the Secretary allot funds to the States?

    For fiscal year 2010-2011, the Secretary allots to each eligible 
State that applies for SLEAP funds an amount in accordance with the 
provisions in Sec.  692.10 prior to calculating allotments for States 
applying for GAP funds under subpart C of this part.

(Authority: 20 U.S.C. 1070c-3a)


    48. Subpart C, consisting of Sec. Sec.  692.90 through 692.130, is 
added to part 692 to read as follows:
Subpart C--Grants for Access and Persistence Program

General

Sec.
692.90 What is the Grants for Access and Persistence Program?
692.91 What other regulations apply to the GAP Program?
692.92 What definitions apply to the GAP Program?
692.93 Who is eligible to participate in the GAP Program?
692.94 What requirements must a State satisfy, as the administrator 
of a partnership, to receive GAP Program funds?

How Does a State Apply To Participate in GAP?

692.100 What requirements must a State meet to receive an allotment 
under this program?
692.101 What requirements must be met by a State partnership?

What Is the Amount of Assistance and How May It Be Used?

692.110 How does the Secretary allot funds to the States?
692.111 For what purposes may a State use its payment under the GAP 
Program?
692.112 May a State use the funds it receives from the GAP Program 
to pay administrative costs?
692.113 What are the matching requirements for the GAP Program?

How Does the Partnership Select Students Under the GAP Program?

692.120 What are the requirements for student eligibility?

How Does the Secretary Approve a Waiver of Program Requirements?

692.130 How does a participating institution request a waiver of 
program requirements?

Appendix A to Subpart C of Part 692--Grants for Access and Persistence 
Program (GAP) State Grant Allotment Case Study

Subpart C--Grants for Access and Persistence Program

General


Sec.  692.90  What is the Grants for Access and Persistence Program?

    The Grants for Access and Persistence (GAP) Program assists States 
in establishing partnerships to provide eligible students with LEAP 
Grants under GAP to attend institutions of higher education and to 
encourage increased participation in early information and 
intervention, mentoring, or outreach programs.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.91  What other regulations apply to the GAP Program?

    The regulations listed in Sec.  692.3 also apply to the GAP 
Program.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.92  What definitions apply to the GAP Program?

    The definitions listed in Sec.  692.4 also apply to the GAP 
Program.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.93  Who is eligible to participate in the GAP Program?

    (a) States. States that meet the requirements in Sec. Sec.  692.94 
and 692.100 are eligible to receive payments under the GAP Program.
    (b) Degree-granting institutions of higher education. Degree-
granting

[[Page 42448]]

institutions of higher education that meet the requirements in Sec.  
692.101 are eligible to participate in a partnership under the GAP 
Program.
    (c) Early information and intervention, mentoring, or outreach 
programs. Early information and intervention, mentoring, or outreach 
programs that meet the requirements in Sec.  692.101 are eligible to 
participate in a partnership under the GAP Program.
    (d) Philanthropic organizations or private corporations. 
Philanthropic organizations or private corporations that meet the 
requirements in Sec.  692.101 are eligible to participate in a 
partnership under the GAP Program.
    (e) Students. Students who meet the requirements of Sec.  692.120 
are eligible to receive assistance or services from a partnership under 
the GAP Program.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.94  What requirements must a State satisfy, as the 
administrator of a partnership, to receive GAP Program funds?

    To receive GAP Program funds for any fiscal year--
    (a) A State must--
    (1) Participate in the LEAP Program;
    (2) Establish a State partnership with--
    (i) At least--
    (A) One public degree-granting institution of higher education that 
is located in the State; and
    (B) One private degree-granting institution of higher education, if 
at least one exists in the State that may be eligible to participate in 
the State's LEAP Program under subpart A of this part;
    (ii) New or existing early information and intervention, mentoring, 
or outreach programs located in the State; and
    (iii) At least one philanthropic organization located in, or that 
provides funding in, the State, or private corporation located in, or 
that does business in, the State;
    (3) Meet the requirements in Sec.  692.100; and
    (4) Have a program under this subpart that satisfies the 
requirements in Sec.  692.21(a), (e), (f), (g), and (j).
    (b) A State may provide an early information and intervention, 
mentoring, or outreach program under paragraph (a)(2)(ii) of this 
section.

(Authority: 20 U.S.C. 1070c-3a)

How Does a State Apply To Participate in GAP?


Sec.  692.100  What requirements must a State meet to receive an 
allotment under this program?

    For a State to receive an allotment under the GAP Program, the 
State agency that administers the State's LEAP Program under subpart A 
of this part must--
    (a) Submit an application on behalf of a partnership in accordance 
with the provisions in Sec.  692.20 at such time, in such manner, and 
containing such information as the Secretary may require including--
    (1) A description of--
    (i) The State's plan for using the Federal funds allotted under 
this subpart and the non-Federal matching funds; and
    (ii) The methods by which matching funds will be paid;
    (2) An assurance that the State will provide matching funds in 
accordance with Sec.  692.113;
    (3) An assurance that the State will use Federal GAP funds to 
supplement, and not supplant, Federal and State funds available for 
carrying out the activities under Title IV of the HEA;
    (4) An assurance that early information and intervention, 
mentoring, or outreach programs exist within the State or that there is 
a plan to make these programs widely available;
    (5) A description of the organizational structure that the State 
has in place to administer the program, including a description of how 
the State will compile information on degree completion of students 
receiving grants under this subpart;
    (6) A description of the steps the State will take to ensure, to 
the extent practicable, that students who receive a LEAP Grant under 
GAP persist to degree completion;
    (7) An assurance that the State has a method in place, such as 
acceptance of the automatic zero expected family contribution under 
section 479(c) of the HEA, to identify eligible students and award LEAP 
Grants under GAP to such students;
    (8) An assurance that the State will provide notification to 
eligible students that grants under this subpart are LEAP Grants and 
are funded by the Federal Government and the State, and, where 
applicable, other contributing partners.
    (b) Serve as the primary administrative unit for the partnership;
    (c) Provide or coordinate non-Federal share funds, and coordinate 
activities among partners;
    (d) Encourage each institution of higher education in the State 
that participates in the State's LEAP Program under subpart A of this 
part to participate in the partnership;
    (e) Make determinations and early notifications of assistance;
    (f) Ensure that the non-Federal funds used as matching funds 
represent dollars that are in excess of the total dollars that a State 
spent for need-based grants, scholarships, and work-study assistance 
for fiscal year 1999, including the State funds reported for the 
programs under this part;
    (g) Provide an assurance that, for the fiscal year prior to the 
fiscal year for which the State is requesting Federal funds, the amount 
the State expended from non-Federal sources per student, or the 
aggregate amount the State expended, for all the authorized activities 
in Sec.  692.111 will be no less than the amount the State expended 
from non-Federal sources per student, or in the aggregate, for those 
activities for the second fiscal year prior to the fiscal year for 
which the State is requesting Federal funds; and
    (h) Provide for reports to the Secretary that are necessary to 
carry out the Secretary's functions under the GAP Program.

(Approved by the Office of Management and Budget under control 
number 1845-NEW7)

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.101  What requirements must be met by a State partnership?

    (a) State. A State that is receiving an allotment under this 
subpart must meet the requirements under Sec. Sec.  692.94 and 692.100.
    (b) Degree-granting institution of higher education. A degree-
granting institution of higher education that is in a partnership under 
this subpart--
    (1) Must participate in the State's LEAP Program under subpart A of 
this part;
    (2) Must recruit and admit participating eligible students and 
provide additional institutional grant aid to participating students as 
agreed to with the State agency;
    (3) Must provide support services to students who receive LEAP 
Grants under GAP and are enrolled at the institution;
    (4) Must assist the State in the identification of eligible 
students and the dissemination of early notifications of assistance as 
agreed to with the State agency; and
    (5) May provide funding or services for early information and 
intervention, mentoring, or outreach programs.
    (c) Early information and intervention, mentoring, or outreach 
program. An early information and

[[Page 42449]]

intervention, mentoring, or outreach program that is in a partnership 
under this subpart shall provide direct services, support, and 
information to participating students.
    (d) Philanthropic organization or private corporation. A 
philanthropic organization or private corporation in a partnership 
under this subpart shall provide non-Federal funds for LEAP Grants 
under GAP for participating students or provide funds or support for 
early information and intervention, mentoring, or outreach programs.

(Approved by the Office of Management and Budget under control 
number 1845-NEW7)

(Authority: 20 U.S.C. 1070c-3a)

What Is the Amount of Assistance and How May It Be Used?


Sec.  692.110   How does the Secretary allot funds to the States?

    (a)(1) The Secretary allots to each State participating in the GAP 
Program an amount of the funds available for the GAP Program based on 
the ratio used to allot the State's Federal LEAP funds under Sec.  
692.10(a).
    (2) If a State meets the requirements of Sec.  692.113(b) for a 
fiscal year, the number of students under Sec.  692.10(a) for the State 
is increased to 125 percent in determining the ratio in paragraph (a) 
of this section for that fiscal year.
    (3) Notwithstanding paragraph (a)(1) and (2) of this section--
    (i) If the Federal GAP funds available from the appropriation for a 
fiscal year are sufficient to allot to each State that participated in 
the prior year the same amount of Federal GAP funds allotted in the 
prior fiscal year, but are not sufficient both to allot the same amount 
of Federal GAP funds allotted in the prior fiscal year to these States 
and also to allot additional funds to additional States in accordance 
with the ratio used to allot the States' Federal LEAP funds under Sec.  
692.10(a), the Secretary allots--
    (A) To each State that participated in the prior year, the amount 
the State received in the prior year; and
    (B) To each State that did not participate in the prior year, an 
amount of Federal GAP funds available to States based on the ratio used 
to allot the State's Federal LEAP funds under Sec.  692.10(a); and
    (ii) If the Federal GAP funds available from the appropriation for 
a fiscal year are not sufficient to allot to each State that 
participated in the prior year at least the amount of Federal GAP funds 
allotted in the prior fiscal year, the Secretary allots to each State 
an amount which bears the same ratio to the amount of Federal GAP funds 
available as the amount of Federal GAP funds allotted to each State in 
the prior fiscal year bears to the amount of Federal GAP funds allotted 
to all States in the prior fiscal year.
    (b) The Secretary allots funds available for reallotment in a 
fiscal year in accordance with the provisions of paragraph (a) of this 
section used to calculate initial allotments for the fiscal year.
    (c) Any funds made available for the program under this subpart but 
not expended may be allotted or reallotted for the program under 
subpart A of this part.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.111  For what purposes may a State use its payment under the 
GAP Program?

    (a) Establishment of a partnership. Each State receiving an 
allotment under this subpart shall use the funds to establish a 
partnership to award grants to eligible students in order to increase 
the amount of financial assistance students receive under this subpart 
for undergraduate education expenses.
    (b) Amount of LEAP Grants under GAP. (1) The amount of a LEAP Grant 
under GAP by a State to an eligible student shall be not less than--
    (i) The average undergraduate in-State tuition and mandatory fees 
for full-time students at the public institutions of higher education 
in the State where the student resides that are the same type of 
institution that the student attends (four-year degree-granting, two-
year degree-granting, or non-degree-granting); minus
    (ii) Other Federal and State aid the student receives.
    (2) The Secretary determines the average undergraduate in-State 
tuition and mandatory fees for full-time students at public 
institutions in a State weighted by enrollment using the most recent 
data reported by institutions in the State to the Integrated 
Postsecondary Education Data System (IPEDS) administered by the 
National Center for Educational Statistics.
    (c) Institutional participation. (1) A State receiving an allotment 
under this subpart may restrict the use of LEAP Grants under GAP only 
to students attending institutions of higher education that are 
participating in the partnership.
    (2) If a State provides LEAP Grants under subpart A of this part to 
students attending institutions of higher education located in another 
State, LEAP Grants under GAP may be used at institutions of higher 
education located in another State.
    (d) Early notification to potentially eligible students. (1) Each 
State receiving an allotment under this subpart shall annually notify 
potentially eligible students in grades 7 through 12 in the State, and 
their families, of their potential eligibility for student financial 
assistance, including a LEAP Grant under GAP, to attend a LEAP-
participating institution of higher education.
    (2) The notice shall include--
    (i) Information about early information and intervention, 
mentoring, or outreach programs available to the student;
    (ii) Information that a student's eligibility for a LEAP Grant 
under GAP is enhanced through participation in an early information and 
intervention, mentoring, or outreach program;
    (iii) An explanation that student and family eligibility for, and 
participation in, other Federal means-tested programs may indicate 
eligibility for a LEAP Grant under GAP and other student aid programs;
    (iv) A nonbinding estimate of the total amount of financial aid 
that an eligible student with a similar income level may expect to 
receive, including an estimate of the amount of a LEAP Grant under GAP 
and an estimate of the amount of grants, loans, and all other available 
types of aid from the major Federal and State financial aid programs;
    (v) An explanation that in order to be eligible for a LEAP Grant 
under GAP, at a minimum, a student shall--
    (A) Meet the eligibility requirements under Sec.  692.120; and
    (B) Enroll at a LEAP-participating institution of higher education 
in the State of the student's residence or an out-of-State institution 
if the State elects to make LEAP Grants under GAP for attendance at 
out-of-State institutions in accordance with paragraph (c)(2) of this 
section;
    (vi) Any additional requirements that the State may require for 
receipt of a LEAP Grant under GAP in accordance with Sec.  
692.120(a)(4); and
    (vii) An explanation that a student is required to file a Free 
Application for Federal Student Aid to determine his or her eligibility 
for Federal and State financial assistance and may include a provision 
that eligibility for an award is subject to change based on--
    (A) A determination of the student's financial eligibility at the 
time of the student's enrollment at a LEAP-participating institution of 
higher education or an out-of-State institution in accordance with 
paragraph (c)(2) of this section;
    (B) Annual Federal and State spending for higher education; and
    (C) Other aid received by the student at the time of the student's 
enrollment at the institution of higher education.

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    (e) Award notification. (1) Once a student, including a student who 
has received early notification under paragraph (d) of this section, 
applies for admission to an institution that is a partner in the 
partnership of the State of the student's residence, files a Free 
Application for Federal Student Aid and any related State form, and is 
determined eligible by the State, the State shall--
    (i) Issue the student a preliminary award certificate for a LEAP 
Grant under GAP with estimated award amounts; and
    (ii) Inform the student that the payment of the grant is subject to 
certification of enrollment and eligibility by the institution.
    (2) If a student enrolls in an institution that is not a partner in 
the partnership of the student's State of residence but the State has 
not restricted eligibility to students enrolling in partner 
institutions, including, if applicable, out-of-State institutions, the 
State shall, to the extent practicable, follow the procedures of 
paragraph (e)(1) of this section.

(Approved by the Office of Management and Budget under control 
number 1845-NEW7)

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.112  May a State use the funds it receives from the GAP 
Program to pay administrative costs?

    (a) A State that receives an allotment under this subpart may 
reserve not more than two percent of the funds made available annually 
for State administrative functions required for administering the 
partnership and other program activities.
    (b) A State must use not less than ninety-eight (98) percent of an 
allotment under this subpart to make LEAP Grants under GAP.

(Authority: 20 U.S.C. 1070c-3a)

Sec.  692.113  What are the matching requirements for the GAP Program?

    (a) The matching funds of a partnership--
    (1) Shall be funds used for making LEAP Grants to eligible students 
under this subpart;
    (2) May be--
    (i) Cash; or
    (ii) A noncash, in-kind contribution that--
    (A) Is fairly evaluated;
    (B) Has monetary value, such as a tuition waiver or provision of 
room and board, or transportation;
    (C) Helps a student meet the cost of attendance at an institution 
of higher education; and
    (D) Is considered to be estimated financial assistance under 34 CFR 
part 673.5(c); and
    (3) May be funds from the State, institutions of higher education, 
or philanthropic organizations or private corporations that are used to 
make LEAP Grants under GAP.
    (b) The non-Federal match of the Federal allotment shall be--
    (1) Forty-three percent of the expenditures under this subpart if a 
State applies for a GAP allotment in partnership with--
    (i) Any number of degree-granting institutions of higher education 
in the State whose combined full-time enrollment represents less than a 
majority of all students attending institutions of higher education in 
the State as determined by the Secretary using the most recently 
available data from IPEDS; and
    (ii) One or both of the following--
    (A) Philanthropic organizations that are located in, or that 
provide funding in, the State; or
    (B) Private corporations that are located in, or that do business 
in, the State; and
    (2) Thirty-three and thirty-four one-hundredths percent of the 
expenditures under this subpart if a State applies for a GAP allotment 
in partnership with--
    (i) Any number of degree-granting institutions of higher education 
in the State whose combined full-time enrollment represents a majority 
of all students attending institutions of higher education in the State 
as determined by the Secretary using the most recently available data 
from IPEDS; and
    (ii) One or both of the following--
    (A) Philanthropic organizations that are located in, or that 
provide funding in, the State; or
    (B) Private corporations that are located in, or that do business 
in, the State.
    (c) Nothing in this part shall be interpreted as limiting a State 
or other member of a partnership from expending funds to support the 
activities of a partnership under this subpart that are in addition to 
the funds matching the Federal allotment.

(Authority: 20 U.S.C. 1070c-3a)

How Does the Partnership Select Students under the GAP Program?


Sec.  692.120  What are the requirements for student eligibility?

    (a) Eligibility. A student is eligible to receive a LEAP Grant 
under GAP if the student--
    (1) Meets the relevant eligibility requirements contained in 34 CFR 
668.32;
    (2) Has graduated from secondary school or, for a home-schooled 
student, has completed a secondary education;
    (3)(i) Has received, or is receiving, a LEAP Grant under GAP for 
each year the student remains eligible for assistance under this 
subpart; or
    (ii) Meets at least two of the following criteria--
    (A) As designated by the State, either has an EFC equal to zero, as 
determined under part F of the HEA, or a comparable alternative based 
on the State's approved criteria for the LEAP Program under subpart A 
of this part;
    (B) Qualifies for the State's maximum undergraduate award for LEAP 
Grants under subpart A of this part in the award year in which the 
student is receiving an additional LEAP Grant under GAP; or
    (C) Is participating in, or has participated in, a Federal, State, 
institutional, or community early information and intervention, 
mentoring, or outreach program, as determined by the State agency 
administering the programs under this part; and
    (4) Any additional requirements that the State may require for 
receipt of a LEAP Grant under GAP.
    (b) Priority. In awarding LEAP Grants under GAP, a State shall give 
priority to students meeting all the criteria in paragraph (a)(3)(i) of 
this section.
    (c) Duration of eligibility. (1) A student may receive a LEAP Grant 
under GAP if the student continues to demonstrate that he or she is 
financially eligible by meeting the provisions of paragraph 
(a)(3)(ii)(A) or (B) of this section.
    (2) A State may impose reasonable time limits to degree completion.

(Authority: 20 U.S.C. 1070c-3a)

How Does the Secretary Approve a Waiver of Program Requirements?


Sec.  692.130  How does a participating institution request a waiver of 
program requirements?

    (a) The Secretary may grant, upon the request of an institution 
participating in a partnership that meets the requirements of Sec.  
692.113(b)(2), a waiver for the institution from statutory or 
regulatory requirements that inhibit the ability of the institution to 
successfully and efficiently participate in the activities of the 
partnership.
    (b) An institution must submit a request for a waiver through the 
State agency administering the partnership.
    (c) The State agency must forward to the Secretary, in a timely 
manner, the request made by the institution and may include any 
additional information or

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recommendations that it deems appropriate for the Secretary's 
consideration.

(Authority: 20 U.S.C. 1070c-3a)

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[FR Doc. E9-18550 Filed 8-20-09; 8:45 am]
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