[Federal Register Volume 74, Number 208 (Thursday, October 29, 2009)]
[Rules and Regulations]
[Pages 55902-55969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-25373]



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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; Final Rule

  Federal Register / Vol. 74, No. 208 / Thursday, October 29, 2009 / 
Rules and Regulations  

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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: Final regulations.

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SUMMARY: The Secretary amends 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) to 
implement various general and non-loan provisions of the Higher 
Education Act of 1965 (HEA), as amended by the Higher Education 
Opportunity Act of 2008 (HEOA) and other recently enacted legislation.

DATES: Effective Date: These regulations are effective July 1, 2010.
    Implementation date: The Secretary has determined, in accordance 
with section 482(c)(2)(A) of the HEA, that institutions may, at their 
discretion, choose to implement the new and amended provisions of 
Sec. Sec.  600.32(d), 668.28, 668.23(d)(4), 668.43, 675.16, 675.18(g), 
675.18(i), 686.41, and 686.42 on or after November 1, 2009. For further 
information, see the section entitled Implementation Date of These 
Regulations in the SUPPLEMENTARY INFORMATION section of this preamble.

FOR FURTHER INFORMATION CONTACT: For general information or information 
regarding these regulations 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 FWS 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 (TDD), 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: On August 21, 2009, the Secretary published 
a notice of proposed rulemaking (NPRM) for general and non-loan 
programmatic issues in the Federal Register (74 FR 42380).
    In the preamble to the NPRM, the Secretary discussed on pages 42383 
through 42415 the major regulations proposed in that document to 
implement provisions of the HEOA, including the following:
     Amending Sec. Sec.  690.63(h), 690.64, and 690.67 to 
establish the conditions under which students may receive up to two 
Federal Pell Grant Scheduled Awards during a single award year.
     Amending Sec. Sec.  686.12(c), 686.41, and 686.42(c) to 
establish the extenuating circumstances under which a TEACH Grant 
recipient may be excused from fulfilling all or part of his or her 
service obligation.
     Amending Sec.  675.18(g) to permit institutions to use FWS 
funds to compensate students employed in projects that teach civics in 
school, raise awareness of government functions or resources, or 
increase civic participation.
     Amending Sec.  675.18 by adding paragraph (i) to allow 
institutions located in major disaster areas to make FWS payments to 
disaster-affected students.
     Amending Sec. Sec.  675.41 and 675.43 to revise 
definitions and terms relating to work colleges.
     Adding Sec.  668.28 to establish the requirement that 
proprietary institutions derive at least 10 percent of their revenue 
from sources other than Title IV, HEA program funds and specify how 
institutions calculate the revenue percentage.
     Amending Sec.  668.41(a) and (d) and Sec.  668.45 to 
expand 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; the placement rate for any 
program offered by the institution, if the institution calculates this 
rate; and the completion and graduation rate data that is disaggregated 
by gender, race, and grant or loan assistance.
     Amending Sec.  668.41(e) to provide that institutions that 
maintain on-campus housing facilities must publish annually a fire 
safety report, maintain a fire log, and report fire statistics to the 
Department.
     Amending Sec.  668.46 by adding paragraph (h) to require 
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.
     Amending Sec.  668.46(c) to expand the list of crimes that 
institutions must include in the hate crimes statistics reported to the 
Department.
     Amending Sec.  668.46 by adding paragraph (g) to require 
institutions to include in their annual security report a statement of 
emergency response and evacuation procedures.
     Adding subpart O to 34 CFR part 668, to specify the 
conditions under which students with intellectual disabilities may 
receive Federal Pell Grant, FWS, and FSEOG Program funds.
     Adding Sec.  668.18 to establish requirements under which 
an institution must readmit servicemembers to the same academic status 
they had when they last attended the institution.
     Amending Sec.  600.32(d) to provide that an institution 
that conducts a teach-out at a site of a closed institution may,

[[Page 55903]]

under certain conditions, establish that site as an additional 
location.
     Amending Sec.  600.5(a) and (e) to include in the 
definition of ``proprietary institution of higher education'' an 
institution that provides 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.
     Amending Sec.  668.14(b) to provide that an institution 
must have developed and implemented written plans to effectively combat 
unauthorized distribution of copyrighted material and that the 
institution will offer alternatives to illegal downloading or peer-to-
peer distribution of intellectual property.
     Amending Sec.  668.43(a) to include, as part of the 
information an institution must make available to prospective and 
enrolled students, a description of any plans the institution has to 
improve its academic program.
     Amending Sec.  692.10(b) to provide 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.
     Amending Sec.  692.21(k) to provide that the State program 
must 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.
     Adding subpart C to 34 CFR part 692 to establish 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.

Technical Amendments

    In addition to the changes necessary to implement provisions of the 
HEOA, these final regulations also incorporate technical amendments 
made to the HEA by The Higher Education Technical Corrections (Pub. L. 
111-39), enacted on July 1, 2009. These changes are as follows: In 
Sec.  690.75(e) we proposed that a student whose parent was in the 
Armed Forces and died in Iraq or Afghanistan could receive the maximum 
Federal Pell Grant eligibility if the student was under 24 years old or 
enrolled in an institution of higher education at the time the parent 
died, in accordance with section 401(f)(4) of the HEA, as amended by 
the HEOA. However, Public Law 111-39 removed section 401(f)(4) from the 
HEA and added new sections 473(b) and 420R effective July 1, 2009. 
Section 401(f)(4) provided that, for purposes of Federal Pell Grants 
only, a student was deemed to have an expected family contribution 
(EFC) of zero if the student's parent was in the Armed Forces and died 
in Iraq or Afghanistan when the student was under 24 years old or 
enrolled in an institution of higher education at the time the parent 
died.
    Section 473(b) was added to Part F--Need Analysis of the HEA and 
provides that, beginning with the 2009-2010 and succeeding award years, 
each student with a Federal Pell Grant-eligible EFC 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, will be determined to have an EFC of zero that will 
generally apply to all Title IV, HEA programs. Because part F of the 
HEA, where these changes are reflected, is subject to section 478(a) of 
the HEA, which generally prohibits regulating the requirements in part 
F, we are removing proposed Sec.  690.75(e).
    Section 420R of the HEA establishes a new, non-need-based program 
called the Iraq and Afghanistan Service Grants Program (IASG Program) 
starting in the 2010-2011 award year. To qualify for an IASG, a student 
must have a parent or guardian who died as a result of military service 
in Iraq or Afghanistan after September 11, 2001, and must be, at the 
time of the parent or guardian's death, less than 24 years of age or 
enrolled at an institution of higher education. A qualifying student 
who is not eligible for a Federal Pell Grant would be eligible to 
receive an IASG that is the same amount as a maximum Federal Pell Grant 
to assist in paying the student's cost of attendance at an institution 
of higher education. Grants under the IASG Program may not exceed the 
student's cost of attendance, and payments are adjusted like Federal 
Pell Grants if the student is enrolled less than full-time; unlike 
Federal Pell Grants, IASG Program grants are not considered to be 
estimated financial assistance. Under this program, the student's EFC 
will not be changed as a result of a parent or guardian's service. 
Regulations are necessary to implement this Title IV, HEA program. 
However, section 409 of Public Law 111-39 waives the provisions of 
sections 482 and 492 of the HEA concerning the master calendar for 
regulatory effective dates and the requirement to use negotiated 
rulemaking to formulate regulations for the IASG Program. We, 
therefore, expect to initiate the regulatory process without negotiated 
rulemaking and adopt the necessary regulations that would be effective 
on July 1, 2010, for the 2010-2011 award year.
     Section 401(a)(6) of Public Law 111-39 also amended 
section 415E(b)(1)(B) of the HEA governing allotments to States under 
the Grants for Access and Persistence Program (GAP). The allotment 
formula provides that a State with a prior year allotment shall receive 
not less than that amount in the next year's allotment. The HEA 
provides that, if a State received an allotment for 2010-2011 under 34 
CFR part 692, subpart B, the Special Leveraging Educational Assistance 
Partnership Program (SLEAP), the State's 2011-2012 allotment for the 
GAP Program shall not be less than its 2010-2011 SLEAP allotment. We 
are revising Sec.  692.110(a) to reflect this statutory change. We are 
also revising appendix A to subpart C of part 692 that provides a case 
study illustrating the requirements for allotting funds under the GAP 
Program to reflect these changes to the regulations.
    We have also made a number of minor technical corrections and 
conforming changes. Changes that are statutory or that involve only 
minor technical corrections are generally not discussed in the Analysis 
of Comments and Changes section.

Waiver of Proposed Rulemaking for Additional Conforming Changes

    These final regulations incorporate a statutory change made to the 
HEA by the HEOA that was not included on Team V's negotiating agenda or 
in the NPRM published on August 21, 2009. However, this statutory 
change in section 485(h) of the HEA is referenced in Sec.  602.24 of 
the Team III (Accreditation) final regulations published in the Federal 
Register as Docket ID ED-2009-OPE-0009. We are amending Sec.  668.43(a) 
of these regulations to reflect the statutory provisions by adding new 
paragraph (a)(11).
    We are also amending Sec.  690.6 by adding paragraph (e) to reflect 
a statutory change made by the HEOA to section 401(c)(5) of the HEA. 
Section 690.6(e) provides that, if a student receives a Federal Pell 
Grant for the first time on or after July 1, 2008, the student may 
receive no more than the equivalent of nine Scheduled Awards.
    Because these amendments implement changes to the HEA that were not 
negotiated, we do not discuss them in the Analysis of Comments and 
Changes section.

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    Under the Administrative Procedure Act (5 U.S.C. 553) (APA), the 
Department is generally required to publish a notice of proposed 
rulemaking and provide the public with an opportunity to comment on 
proposed regulations prior to issuing final regulations. In addition, 
all Department regulations for programs authorized under title IV of 
the HEA are subject to the negotiated rulemaking requirements of 
section 492 of the HEA. However, both the APA and the HEA provide for 
exemptions from these rulemaking requirements. The APA provides that an 
agency is not required to conduct notice-and-comment rulemaking when 
the agency for good cause finds that notice and comment are 
impracticable, unnecessary, or contrary to the public interest. 
Similarly, section 492 of the HEA provides that the Secretary is not 
required to conduct negotiated rulemaking for Title IV, HEA program 
regulations if the Secretary determines that applying that requirement 
is impracticable, unnecessary, or contrary to the public interest 
within the meaning of the HEA.
    Although the regulations implementing the HEOA are subject to the 
APA's notice-and-comment and the HEA's negotiated rulemaking 
requirements, the Secretary determined that it was unnecessary to 
conduct negotiated rulemaking or notice-and-comment rulemaking on the 
changes needed in Sec.  668.43. These changes simply amend the 
Department's regulations to reflect statutory changes made by the HEOA 
to paragraph (h) of section 485 of the HEA, and these changes are 
already effective. The Secretary does not have discretion in whether or 
how to implement these changes. Accordingly, negotiated rulemaking and 
notice-and-comment rulemaking are unnecessary.

Implementation Date of These Regulations

    Section 482(c) of the HEA requires that regulations affecting 
programs under title IV of the HEA be published in final form by 
November 1 prior to the start of the award year (July 1) to which they 
apply. However, that section also permits the Secretary to designate 
any regulation as one that an entity subject to the regulation may 
choose to implement earlier and the conditions under which the entity 
may implement the provisions early.
    Consistent with the intent of this regulatory effort to strengthen 
and improve the administration of the Title IV, HEA programs, the 
Secretary is using the authority granted him under section 482(c) of 
the HEA to designate the following new and amended provisions for early 
implementation, at the discretion of each institution, lender, guaranty 
agency, or servicer, as appropriate:
     The closed school teach out provisions in Sec.  600.32(d).
     The readmission requirements for returning servicemembers 
in Sec.  668.18.
     The 90/10 revenue requirements in Sec. Sec.  668.28 and 
668.23(d)(4).
     The institutional information requirements in Sec.  
668.43.
     The FWS provisions in Sec. Sec.  675.16, 675.18(g), and 
675.18(i).
     The teach grant provisions regarding extenuating 
circumstances in Sec. Sec.  686.12, 686.41, and 686.42.
    In addition, the revisions to Sec. Sec.  690.63, 690.64, and 690.67 
of the Federal Pell Grant Program regulations may apply to the 
crossover payment period that is in both the 2009-10 and 2010-11 award 
years, i.e., a payment period that includes June 30, 2010, and July 1, 
2010. If an institution does not implement these regulations prior to 
July 1, 2010, but, prior to July 1, 2010, designates a student's 2010 
crossover payment period as being in the 2009-10 award year, the 
Secretary does not consider these revisions to be applicable to the 
crossover payment period. Nothing will prevent the institution from 
subsequently designating the 2010 payment period as being in the 2009-
10 award year with the revisions to Sec. Sec.  690.63, 690.64, and 
690.67 then being applicable.

Analysis of Comments and Changes

    Except as noted under Waiver of Proposed Rulemaking for Additional 
Conforming Changes, the regulations in this document were developed 
through the use of negotiated rulemaking. Section 492 of the HEA 
requires that, before publishing any proposed regulations to implement 
programs under title IV of the HEA, the Secretary must obtain public 
involvement in the development of the proposed regulations. After 
obtaining advice and recommendations, the Secretary must conduct a 
negotiated rulemaking process to develop the proposed regulations. The 
negotiated rulemaking committee did not reach consensus on the proposed 
regulations that were published on August 21, 2009. The Secretary 
invited comments on the proposed regulations by September 21, 2009. 
More than 113 parties submitted comments, a number of which were 
substantially similar. An analysis of the comments and of the changes 
in the regulations since publication of the NPRM follows.
    We group major issues according to subject, with appropriate 
sections of the regulations referenced in parentheses. We discuss other 
substantive issues under the sections of the regulations to which they 
pertain. Generally, we do not address minor, non-substantive changes, 
recommended changes that the law does not authorize the Secretary to 
make, or comments pertaining to operational processes. We also do not 
address comments pertaining to issues that were not within the scope of 
the NPRM.

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)

    Comments: One commenter supported the proposed change, stating that 
it was a reasonable way to clarify the term program leading to a 
baccalaureate degree in liberal arts. One commenter stated that the 
requirement that an institution ``has provided that program since 
January 1, 2009'' should be interpreted to mean that any new liberal 
arts program added from January 1, 2009, forward will qualify an 
otherwise eligible institution as an eligible proprietary institution, 
so long as the institution has been accredited by a recognized regional 
accrediting agency or association since October 1, 2007, or earlier.
    Discussion: The Department does not agree that the requirement that 
the institution ``has provided that program since January 1, 2009'' 
should be interpreted to mean that any new liberal arts program added 
from January 1, 2009, forward will qualify an otherwise eligible 
institution as an eligible proprietary institution. Rather, the 
requirement means that an institution was providing the program (i.e., 
was enrolling students in the program) on January 1, 2009, and has 
continued to do so.
    Changes: Section 600.5(a)(5)(i)(B)(1) has been revised to clarify 
that an institution meets the definition of a proprietary institution 
of higher education if, in addition to being accredited by a recognized 
regional accrediting agency or association continuously since October 
1, 2007, it has provided a program leading to a baccalaureate degree in 
liberal arts continuously since January 1, 2009.

[[Page 55905]]

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

    Comments: Several commenters supported the proposed changes. One 
commenter stated that Sec.  600.32(d) should be expanded to provide 
that the exemptions from the two-year in existence requirement, the 
assumption of liabilities, and the assumption of the cohort default 
rate apply when an institution conducts a teach-out at an institution 
that closes because a guaranty agency initiated an action to limit, 
suspend, or terminate (LS&T) the participation of an institution, or 
took an emergency action against the institution. One commenter 
explained that a closing can be a very confusing time for students if 
they were not given accurate information about what was happening at 
their institution, and urged the Department to monitor closely the 
process for establishing an additional location under these 
regulations. The commenter noted that accurate and effective 
communication to students is especially critical when the teach-out 
institution is establishing a permanent location at a closed 
institution. The commenter asserted that an institution establishing a 
permanent location at the site of a closed institution must be able to 
provide a teach-out option that meets appropriate quality standards 
even in cases when the prior institution did not meet these standards. 
The commenter stated that the mere submission of a teach-out plan 
should not be viewed as evidence that these standards were met for 
purposes of the closed school discharge.
    Discussion: LS&T and emergency actions initiated by a guaranty 
agency against an institution are promptly reported to the Department, 
and the Department investigates those reports to determine whether to 
initiate a separate LS&T or emergency action against the institution. 
Therefore, we do not believe it is necessary to include as a trigger an 
LS&T or emergency action initiated by a guaranty agency that would 
provide the two-year requirement, liability, and default rate 
exemptions to an institution conducting a teach-out at a closed 
institution. Because of the interplay between the actions taken by a 
guaranty agency and the Department, there may be some instances when an 
institution may close prior to the Department initiating an LS&T or 
emergency action. In other instances, an institution may close 
precipitously before the Department has time to initiate an appropriate 
action under the circumstances. To address these instances, the final 
regulations have been modified so that the action taken by the 
Department may be initiated after the institution closes. The 
Department recognizes that a school closure and teach-out can be a 
confusing time for students, and intends to work closely with the 
States and accrediting agencies to make sure that students are given 
accurate information about their options during this transition. The 
opportunity for another institution to perform the teach-out, and open 
a permanent location under this exemption, should also ensure that the 
teach-out is adequately staffed and designed to serve the students that 
attended the closed school.
    Changes: Section 600.32(d)(1)(i) is revised to clarify that 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 the 
closed institution ceased operations because the Secretary has taken an 
LS&T or emergency action, regardless of whether the Secretary took that 
action before or after the institution closed.

Part 668 Student Assistance General Provisions

Readmission Requirements for Servicemembers (Sec.  668.18)

    Comments: One commenter supported the proposed regulations, 
including the proposed requirement limiting the institutional charges 
that an institution may charge a returning servicemember. Several 
commenters opposed the proposed requirement limiting the institutional 
charges that an institution may charge a returning servicemember 
because they stated it would be administratively and financially 
burdensome for institutions. For the same reason, some of these 
commenters also opposed the requirement that an institution waive 
charges for previously purchased equipment for the first academic year 
in which the servicemember returns if the returning servicemember is 
readmitted to the same program for the same reason. Many of these 
commenters asserted that, because many of the affected servicemembers 
will receive full tuition and fee benefits under the Post-9/11 GI Bill, 
charging the returning servicemember the current institutional charges 
for a program, rather than the same charges that the returning 
servicemember was or would have been assessed for the academic year 
during which he or she left the institution, will not penalize the 
student for having left to serve in the uniform services. One commenter 
added that this argument is supplemented by the fact that at least one 
State waives any tuition charges not paid by the GI Bill at public 
universities. One of these commenters stated that limiting charges to 
the first year only would create an unrealistic expectation for 
returning servicemembers for the full cost of the program. A few of the 
commenters stated that limiting institutional charges for returning 
servicemembers would be unfair to other students at the institution who 
would assume higher costs, or noted that the proposed requirement could 
preempt State requirements.
    Several commenters asserted that the forced manual billing 
determinations that the regulations would require of institutions would 
be unduly burdensome as the billing software used by most institutions, 
which uses pre-programmed data, including current year charges, does 
not accommodate special case situations, such as the proposed 
regulations would create. Specifically, a few commenters noted that 
institutions would be forced to maintain multi-faceted data tables over 
an undetermined number of years to recreate the prior institutional 
charges for servicemembers who may or may not return, as institutions 
do not keep student financial records for the entire period covered by 
the readmission requirements and billing systems are not designed to 
archive the data necessary to calculate institutional charges years 
later. The commenters contended that, even if an institution has all 
the information necessary, recreating the institutional charges would 
be complicated as institutional charges cover many types of charges 
involving variations by program. One commenter asserted that some 
Department of Defense tuition assistance systems, such as GoArmy, do 
not allow variations in tuition rates and could potentially delay 
tuition assistance processing for both impacted and nonimpacted 
servicemembers. A few commenters stated that determining institutional 
charges for returning servicemembers who may have been admitted, but 
were not enrolled or attending prior to leaving to serve, would be 
particularly difficult as they had never incurred specific charges, 
with one of these commenters noting that their institution has an open 
admission policy resulting in a large number of these students.
    One commenter generally supported the requirement limiting the 
institutional charges that an institution may charge a returning 
servicemember, but stated that an institution should be permitted to 
charge a returning servicemember for new classes when a program has 
changed, requiring the servicemember to take additional

[[Page 55906]]

classes in the form of prerequisites or new requirements. A few 
commenters noted that requiring an institution to provide, if 
necessary, refresher courses at no extra cost seemed to preclude an 
institution from collecting funding from other entities to cover those 
expenses. One commenter stated that requiring an institution to make 
reasonable efforts to help the servicemember become prepared to resume 
the program or to enable the servicemember to complete the program at 
no extra cost, would impose an undue financial hardship and 
administrative burden on the institution. The commenter asserted that, 
when there is only the normal reasonable progression from one year to 
the next, rather than any actual change to the program in the 
servicemember's absence, it is the servicemember's responsibility to 
retain the knowledge attained in the normal course of educational 
progression. In addition, the commenter stated that the definition of 
``reasonable efforts'' is ambiguous and would be difficult to 
determine.
    Discussion: The Department believes that the goal of these 
provisions is to minimize the disruption to the lives of persons 
performing service in the uniformed services, allowing a servicemember 
to return to an institution without penalty for having left because of 
that service. We believe that limiting charges for the year in which 
the servicemember returns to the charges the servicemember was or would 
have been assessed for the academic year during which the servicemember 
left is an important part of this goal, and may necessitate additional 
efforts by institution as well as the absorption of some costs. 
However, we agree that this goal would still be achieved if any 
increase in charges from the amount the servicemember was or would have 
been assessed for the academic year during which the servicemember left 
the institution is covered by veterans' or servicemember education 
benefits. In addition, we believe that requiring institutions to 
maintain only past tuition and fee charges, rather than requiring them 
to maintain all institutional charges and waive charges for new 
equipment required in lieu of equipment previously paid for, will 
accomplish this goal, while minimizing burden to institutions that may 
have had difficulty determining the previous institutional charges 
beyond tuition and fees, as well as difficulty determining which of the 
current institutional charges beyond tuition and fees would be covered 
by veterans' and servicemember education benefits. Therefore, for a 
servicemember who is readmitted to the same program, an institution 
will be considered to have admitted the servicemember with the same 
academic status if, for the first academic year in which the 
servicemember returns, the institution does not increase the tuition 
and fee charges above the prior amount the servicemember was or would 
have been assessed for the academic year when the servicemember left 
the institution, unless there are sufficient veterans' education 
benefits or other servicemember education benefits to pay the increased 
amount of those tuition and fee charges. Consider, for example, a 
servicemember who is readmitted to the same program and was assessed 
tuition and fee charges of $5,000 for the academic year when the 
servicemember left the institution. The current tuition and fee charges 
for the program are $7,000, a $2,000 increase over the charges formerly 
assessed the student. In addition to the original $5,000 in charges, 
the institution may charge the readmitted servicemember for any portion 
of that $2,000 increase that will be covered by veterans' education 
benefits or other servicemember education benefits. If this student 
receives $1,000 in veterans' education benefits or other servicemember 
education benefits for tuition and fees, the institution may assess the 
student tuition and fee charges of up to $6,000. If the student 
receives $2,000 or more in veterans' education benefits or other 
servicemember education benefits for tuition and fees, the institution 
may assess up to $7,000, the tuition and fee charges for other students 
admitted to the program for the current academic year. This approach 
will significantly reduce the burden on institutions to track many of 
the variable charges that were included in the proposed regulation, and 
will simplify the determinations of what tuition or fee amounts would 
be subject to the one-year transition period for a returning 
servicemember. The portion of tuition and fees that are subject to this 
temporary restriction may also be reduced or eliminated by other 
policies set by the institution, or under State law, but the Federal 
requirement will provide a consistent base line for all institutions in 
every State and serve the purpose intended by this provision in the 
law.
    We agree that students who are not informed of any increase in 
tuition and fee charges for subsequent years may have unrealistic 
expectations of the total cost of the program. We would expect that an 
institution would actively inform affected servicemembers upon 
readmission of any subsequent increase and the total expected charges 
for the program (an institution is required to make this information 
available at all times and include it in its annual distribution of 
institutional and financial information to all enrolled students in 
accordance with Sec.  668.41(c) and (d)). To the extent that this 
temporary restriction on the amount of tuition and fees for returning 
servicemembers is a benefit not provided to the other students at an 
institution, it is provided under the law to ease the transition back 
to the institution for the returning servicemembers. We also believe 
that this provision will not create conflicts for benefits provided to 
other servicemembers under the GoArmy education program.
    Although we appreciate that current institutional billing software 
may not easily accommodate affected servicemembers, we believe that any 
burden incurred by an institution that must manually process such a 
student is outweighed by the benefit to the returning servicemember. We 
also believe that limiting the covered costs to tuition and fees 
significantly simplifies this provision for institutions.
    In accordance with Sec.  668.18(a)(2)(iv), an institution may not 
charge a returning servicemember for additional classes offered by the 
institution that are prerequisites for the program. The institution 
does not have to readmit such a servicemember if the institution can 
demonstrate that providing the classes at no cost places an undue 
hardship on the institution. If new classes are required for the 
program and those classes are taken by the servicemember in the 
academic year in which he or she returns, the institution may not 
charge the additional tuition and fees for those programs unless doing 
so does not increase the tuition and fee charges above the prior amount 
the student was or would have been assessed for the academic year when 
he or she left the institution, or there are sufficient veterans' 
education benefits or other servicemember education benefits to pay the 
increased amount of those tuition and fee charges. In requiring an 
institution to provide, if necessary, refresher courses at no extra 
cost, we did not intend to preclude an institution from collecting 
funding from other assisting agencies to cover those expenses. Also, we 
note that any reasonable efforts an institution must make to help the 
student become prepared to resume the program, or to enable the student 
to complete the

[[Page 55907]]

program must be provided at no extra cost to the student. We do not 
agree that requiring an institution to make reasonable efforts to help 
a servicemember become prepared to resume the program or to enable the 
servicemember to complete the program at no extra cost, would 
automatically impose an undue financial hardship and administrative 
burden on the institution, nor do we agree that, in cases where there 
is only the normal reasonable progression from one year to the next, 
rather than any actual change to the program in the servicemember's 
absence, it is the servicemember's responsibility to retain the 
knowledge attained in the normal course of educational progression. 
Again, the goal of these provisions is to minimize the disruption to 
the lives of persons performing service in the uniformed services, 
allowing a servicemember to return to an institution without penalty 
for having left because of that service. Holding a servicemember 
responsible for retaining all knowledge attained through previous 
attendance of the program would be penalizing the servicemember for 
having left to serve. ``Reasonable efforts'' are actions that do not 
place an undue hardship on an institution. An action places an undue 
hardship on an institution if it requires significant difficulty or 
expense to the institution. The mere fact that the readmission of a 
student will create additional expenses or burden to the institution is 
not enough for an institution to deny a student readmission. The 
expenses must be significant when considered in light of the overall 
financial resources of the institution and the impact otherwise of such 
action upon the operation of the institution. An institution carries 
the burden to prove by a preponderance of the evidence that the expense 
or difficulty of readmitting a student would be significant.
    Changes: Section 668.18(a)(2)(iii)(E) is revised to provide that, 
for a servicemember who is readmitted to the same program, an 
institution will be considered to have admitted the servicemember with 
the same academic status if, for the first academic year in which he or 
she returns, the institution does not increase the tuition and fee 
charges above the prior amount the student was or would have been 
assessed for the academic year when the student left the institution, 
unless there are sufficient veterans' education benefits or other 
servicemember education benefits to pay the increased amount of those 
tuition and fee charges. Proposed Sec.  668.18(a)(2)(iii)(F), which 
would have required an institution to waive charges for previously 
purchased equipment, is removed. Section 668.18(a)(2)(iv)(A) has been 
revised: (1) To make clear that any reasonable efforts an institution 
must make to help the servicemember become prepared to resume the 
program, or to enable the servicemember to complete the program must be 
provided at no extra cost, and (2) to make clear that those efforts 
must be provided at no extra cost to the student, to permit an 
institution to collect from other entities for costs associated with 
making such reasonable efforts. The definition of undue hardship in 
Sec.  668.18(a)(2)(iv)(C)(2) is amended to clarify that difficulty and 
expenses must be significant when considered in light of the overall 
financial resources of the institution and the impact otherwise of such 
action on the operation of the institution.
    Comments: One commenter asked what would be required of an 
institution to ``promptly readmit'' an affected servicemember if the 
program to which the servicemember was previously admitted is offered 
infrequently, or is no longer offered. One commenter asked how long a 
servicemember may delay readmission to an institution by requesting to 
be readmitted at a later date, and at what point the institutional 
charges would be locked in. The commenter also questioned whether the 
unusual circumstances under which an institution may admit a 
servicemember at a date later than the next class or classes in the 
program pertain to the institution or just to the servicemember.
    Discussion: If the program to which the servicemember was 
previously admitted is no longer offered, Sec.  668.18(a)(2)(iii)(A) 
requires the institution to admit the servicemember to the program that 
is most similar to that program, unless the student requests or agrees 
to admission to a different program. An institution readmits a 
servicemember ``promptly'' if, in accordance with Sec.  
668.18(a)(2)(ii), the institution readmits the servicemember into the 
next class or classes in the program beginning after he or she provides 
notice of his or her intent to re-enroll, unless the servicemember 
requests a later date of readmission or unusual circumstances require 
the institution to admit the servicemember at a later date.
    These regulations presume that a returning servicemember who 
provides notice of his or her intent to reenroll at an institution 
plans to do so soon after providing such notice. The provision that an 
institution must admit a returning servicemember to the next class or 
classes in the student's program unless the student requests a later 
date of admission was included to ensure that an institution could not 
delay a servicemember's readmission until, for example, the next 
semester if classes in the student's program were offered during the 
upcoming semester. However, the regulations do not preclude the 
returning servicemember from deciding that a later admission date, such 
as the next semester, is acceptable. No matter when the student 
actually resumes his or her program, if the returning servicemember is 
within the window of eligibility in Sec.  668.18(c)(iii), the 
requirements of this section apply. Thus, for the first academic year 
in which the servicemember returns, the institution cannot increase the 
tuition and fee charges above the prior amount the servicemember was or 
would have been assessed for the academic year when the servicemember 
left the institution, unless there are sufficient veterans' education 
benefits or other servicemember education benefits to pay the increased 
amount of those tuition and fee charges. Unusual circumstances under 
which an institution may admit a servicemember at a date later than the 
next class or classes in the program may pertain to the institution or 
to the servicemember. There are a number of factors an institution may 
consider when determining whether unusual circumstances require a later 
date of readmission, such as the length of any necessary retraining or 
intervening changes in the circumstances of the institution. State laws 
or requirements (including any local law or ordinance) or institutional 
requirements that restrict enrollment, due to class size, for example, 
or otherwise conflict with the requirements of this section are not 
``unusual circumstances'' as such laws and requirements are superseded 
by the requirements of this section for the initial enrollment period. 
Institutions should take reasonable steps to resolve such restrictions 
as soon as possible to come into compliance with those provisions.
    Changes: None.

Non-Title IV Revenue Requirement

Compliance Audits and Audited Financial Statements (Sec.  668.23)

    Comments: A few commenters asked the Department to clarify the 
proposed requirement in Sec.  668.23(d)(4) under which a proprietary 
institution must disclose in a footnote to its audited financial 
statements the 90/10 revenue percentage and the components of that 
percentage. The commenters suggested

[[Page 55908]]

that the Department specify that the reference in the regulations to 
Federal revenue means Title IV, HEA revenue and confirm their 
understanding that an institution must disclose: (1) The dollar amount 
of the numerator and denominator of the 90/10 ratio; (2) the dollar 
amount of the temporary relief attributed to institutional loans under 
the Net Present Value (NPV) calculation; and (3) the amount of loan 
funds that exceed the loan limits in effect before ECALSA that are 
treated as non-Federal revenue in the denominator of the 90/10 ratio.
    Discussion: Under proposed Sec.  668.23(d)(4), a proprietary 
institution would have to disclose, by source, the amount of Federal 
and non-Federal revenue the institution included in its 90/10 
calculation. We are amending the regulations to clarify that ``source'' 
means the individual categories of revenues identified in Appendix C to 
subpart B of part 668. To calculate its 90/10 percentage, an 
institution would have to compile the information detailed in Appendix 
C, particularly the aggregated and adjusted amounts in section 2. We 
therefore believe that it is reasonable to require the institution to 
disclose this information. Given the added complexities that come from 
these additional categories of revenue, disclosing the institution's 
calculation will simplify the presentation in the financial statements 
and facilitate the review of that information by the Department.
    Changes: Section 668.23(d)(4) is amended to provide that a 
proprietary institution must disclose in a footnote to its audited 
financial statements, the dollar amount of the numerator and 
denominator of its 90/10 ratio as well as the individual revenue 
amounts identified in section 2 of Appendix C to part 668.

Revenue Generated From Programs and Activities (Sec.  668.28)

    Comments: One commenter asked the Department to clarify whether the 
revenue from students taking a course offered by an institution as part 
of an eligible Title IV, HEA educational program counts for 90/10 
purposes if the students are taking the course to prepare for an 
industry recognized credential or to transfer to another institution. 
For example, students that are not enrolled in a Title IV, HEA-eligible 
program take an Accounting 400 course, normally offered as part of a 
Title IV, HEA-eligible accounting program, as a refresher course to sit 
for the Certified Public Accounting exam or to transfer the credits 
from the course to another institution.
    Discussion: An institution may count the revenue described by the 
commenter as long as the course or program is offered for the purpose 
of preparing students for taking an examination for an industry 
recognized credential, or for any other purpose described in Sec.  
668.28(a)(3)(iii) that would otherwise qualify the revenue from that 
course or program to be included in the 90/10 calculation. However, 
payments from a student taking the class for transfer credits would not 
count as revenue because the student is not taking the class for any of 
these purposes. An institution should make sure that it appropriately 
documents any revenue the institution includes from these classes in 
its 90/10 calculation.
    Changes: None.

Revenue Generated From Institutional Aid (Sec.  668.28)

    Comments: A few commenters asked the Department to clarify whether 
installment sales contracts are considered to be loans made to students 
under Sec.  668.28(a)(5)(i). Other commenters noted that funds are not 
advanced to a student under an installment sales contract, and funds 
are not paid in full to a student's account. Rather, an installment 
sales contract is paid over time by the student to the institution. As 
a result, the commenters concluded that installment sales contracts 
should not be treated as loans under the NPV formula.
    Some commenters asked for clarification of the preamble discussion 
(74 FR 42390) regarding the disposition of third-party loans made to 
students that are subsequently acquired by the institution.
    Other commenters urged the Department to reconsider the provision 
in Sec.  668.28(a)(5)(iv) that a tuition discount is a form of a 
scholarship that must be disbursed from a restricted account with funds 
from an outside source. The commenters stated that treating a tuition 
discount in this way is inconsistent with the intent of the HEOA and 
would encourage students to incur more debt.
    A few commenters asked the Department to clarify that payments made 
by students on financing arrangements that do not qualify as 
institutional loans count as cash collected by the institution for 90/
10 purposes.
    Discussion: An installment sales contract was included in the 
proposed regulations because we believed that it could be structured to 
satisfy all of the conditions of an institutional loan that were set 
forth in proposed Sec.  668.28(a)(5)(i). However, although we noted in 
the preamble to the NPRM (74 FR 42389) that, to be included in the NPV 
calculation, an installment sales contract that would be classified as 
an institutional loan would have to be credited in full to the 
student's account, this condition was not included in the proposed 
regulations. To address the confusion reflected in the comments over 
the qualifying conditions for institutional loans, and the general 
public view that a typical installment sales contract does not provide 
for funds to be credited to a student's account, we agree to remove 
installment sales contracts from this section of the regulations.
    With regard to a loan made by a third party to a student at an 
institution, in the normal course, the proceeds of the loan would be 
credited to the student's account, and the amount credited that paid 
for tuition and fees not covered by Title IV, HEA aid would count as 
non-Title IV, HEA revenue in the 90/10 calculation. If the institution 
made the same loan itself, it would only be permitted to count the NPV 
of the loan in the 90/10 calculation. In both cases the institution has 
credited loan proceeds of the same value to the student's account but 
the institution would derive a greater benefit for 90/10 purposes from 
the loan that was made by the third party. For example, assuming the 
loan proceeds from a third party pay $1,000 for tuition and fees not 
covered by Title IV, HEA aid, the entire $1,000 is counted as non-
Federal revenue for 90/10 purposes. If the institution made the same 
loan, the amount of funds counted as non-Federal revenue would be less 
because of the NPV calculation. For instance, if the institution uses 
the simpler alternative NPV approach, the amount of the non-Federal 
revenue would be $500 or 50% of the loan. This different treatment of 
the loan proceeds is based upon which party is making the loan to the 
student without transferring it afterwards to, or from, the 
institution. These provisions are not intended to permit an institution 
to arrange with a third party to transfer student loans after they are 
made in order to distort the way the revenue from those loans is 
treated under this provision. To equalize the outcome between an 
institution and a third party making and purchasing a loan, an 
institution that purchases a student loan must treat it for 90/10 
purposes as if the institution made the loan itself.
    Similarly, if an institution makes a loan and transfers it to a 
third party, the Department would not view that loan as a loan that 
could be included in any NPV calculation pursuant to section 
487(d)(1)(d)(III) of the HEA. That section

[[Page 55909]]

requires a loan that is included in the NPV calculation to be subject 
to regular loan repayment and collection. Any institutional loan that 
is sold to a third party within a year of when it was made must be 
treated for 90/10 purposes as a loan made by a third party. The amount 
the institution may count as non-Federal revenue may not be more than 
the amount paid to the institution for that loan, less any amount the 
institution agrees to pay the third party if the loan goes into default 
or otherwise triggers a contingent payment by the institution. 
Consistent with the Department's current treatment of recourse loans 
and the requirement to use the cash basis of accounting, the 
institution must adjust its 90/10 revenue for any such payment on an 
institutional loan in the fiscal year when the payment is made.
    We disagree with the commenters that the proposed regulations 
regarding tuition discounts are inconsistent with the intent of the 
law. The regulations simply reflect section 487(d)(1)(D)(iii) of the 
HEA by specifying that an institution may include scholarships as 
revenue if the scholarships are disbursed from an established 
restricted account and that funds in that account represent designated 
funds from an outside source or from income earned on those funds. That 
section of the HEA states that scholarships may be provided by an 
institution in the form of monetary aid or tuition discounts.
    With regard to financing arrangements that are not loans, there is 
no change in the Department's policy that cash payments made under 
those arrangement count as non-Title IV, HEA revenue for 90/10 
purposes.
    Changes: Section 668.28(a)(5)(i) is revised to provide that, to be 
included as an institutional loan for NPV purposes, a loan made to a 
student must be credited in full to the student's account.

Net Present Value (NPV)

    Comments: Several commenters objected to the provision in Sec.  
668.28(b)(2) that an institution may not sell a loan it made to student 
until the loan is in repayment for at least two years. Although this 
provision would apply only if an institution chose to use the 
alternative approach to calculating the NPV of its loans (using 50 
percent of loans made as the NPV), the commenters argued that holding 
the loans for at least two years is contrary to both statutory intent 
and institutional mission. The commenters reasoned that in response to 
the loss of availability of private student loans, the NPV approach 
provided by the HEOA is intended to give an immediate benefit to an 
institution that had to fill a funding gap itself by making loans to 
its students. To the second point, the commenters stated that the 
primary mission of an institution is to provide education and training, 
not to become a lender or remain in the lending business.
    Other commenters agreed with the rationale for the two-year ban on 
selling loans, but argued that the two-year period was too long and 
would unfairly impact an institution that provided loan funds to 
students who are not ``high risk'' and whose loans would perform within 
commercially acceptable norms. To mitigate this impact, the commenters 
recommended reducing the ban to one year.
    One commenter questioned whether the proposed regulations ensure 
that the calculation of the NPV for institutional loans takes into 
account the possibility that institutions do not intend to collect the 
loans they make to students. The commenter asserted that this practice 
calls into question an institution's willingness or ability to 
accurately report estimates of annual payments due, as well as annual 
payments collected on these loans. The commenter also asked whether 
institutional loans that default are properly accounted for 90/10 
purposes and if the Department has the authority to require, or would 
require, an institution to disclose information about its loan 
defaults.
    Discussion: As stated in the NPRM (74 FR 42391), we proposed the 
alternative approach for calculating the NPV as an administrative 
convenience for an institution that either prefers a simpler method to 
determine the NPV or does not need the additional non-Federal revenues 
that might be counted if the NPV formula is used. It is solely up to 
the institution whether to use this alternative method or the actual 
NPV calculation. Each approach has costs and benefits that must be 
weighed by the institution. If the institution believes the alternative 
approach is too restrictive or somehow not in keeping with its mission, 
it should use the NPV calculation.
    With regard to the comments about an institution's unwillingness to 
collect the loans it makes, we note that the institution might benefit 
initially from the NPV calculation, but because its collection rate 
would decrease significantly if it continues this practice, the 
institution would derive no benefit from future NPV calculations. We 
also note that the two-year ban on selling institutional loans, which 
applies to institutions that choose to use the alternate NPV approach, 
is necessary to ensure that the Department and other oversight entities 
have sufficient time to monitor whether the loans are subjected to 
routine collection efforts.
    Changes: None.

Revenue From Loan Funds (Sec.  668.28)

    Comments: A few commenters noted that, although the proposed 
regulations in Sec.  668.28(a)(6) provide that an institution may count 
as non-Title IV, HEA revenue the amount of a loan disbursement for a 
payment period that exceeds the amount a student would have received 
before the enactment of ECALSA, the regulations did not address how an 
institution should treat the excess loan funds when a student withdraws 
during a payment period. The commenters suggested that the excess loan 
funds should be returned in proportion to the overall loan disbursement 
for the payment period. Another commenter requested that when a student 
takes sequential courses within a non-term program, and is charged on a 
course-by-course basis, the excess loan funds should be attributed 
within a payment period on a course-by-course basis. In this case, 
several courses make up the payment period.
    Discussion: When some of a student's loan funds are classified as 
funds in excess of loan limits existing prior to ECASLA, those excess 
loan amounts are included as revenue from a source other than Title IV, 
HEA program funds under Sec.  668.28(a)(6) if those excess amounts pay 
for institutional charges remaining on the student's account after 
Title IV, HEA funds are applied. The determination of which loan funds 
are classified as ``post-ECASLA'' funds, i.e., are funds in excess of 
loan limits existing prior to ECASLA, is generally made on a payment 
period basis. That is, if a student's loan for the loan period contains 
a post-ECASLA amount and the post-ECASLA amount is \1/3\ of the total 
loan amount, then each payment period's loan disbursement is generally 
considered to consist of \1/3\ post-ECASLA loan funds and \2/3\ pre-
ECASLA loan funds. However, if a student takes sequential courses 
within a non-term program where several courses make up a payment 
period, and the student is charged on a course-by-course basis, then 
the determination of which loan funds are classified as post-ECASLA 
funds may be determined on a course-by-course basis. Under Sec.  
668.28(a)(7)(iv), loan funds that are returned pursuant to Sec.  668.22 
when a student withdraws from school are excluded from school revenues. 
The Secretary intends that, when a school determines the amount of loan 
funds that are excluded from revenues under

[[Page 55910]]

Sec.  668.28(a)(7)(iv), it considers the returned loan funds to be pre-
ECASLA loan amounts and post-ECASLA loan amounts based on the ratio 
that existed for those categories of funds in the student's loan for 
the loan period.
    Changes: Section 668.28(a)(7)(iv) is amended to provide that, in 
determining the amount of loan funds that are excluded from 90/10 
revenues under Sec.  668.28(a)(7)(iv) when a student withdraws pursuant 
to Sec.  668.22, and the institution returns loan funds from a loan 
disbursement considered to consist of pre-ECASLA loan funds and loan 
funds that were in excess of loan limits existing prior to ECASLA, the 
funds that the institution returns are pre-ECASLA loan amounts and 
post-ECASLA loan amounts based on the proportion of those loan amounts 
that existed in the loan disbursement used in the Return calculation. 
For example, a student's loan disbursement for a payment period is 
$3,000, and $1,000 represents the funds in excess of loan limits 
existing prior to ECASLA. The proportional breakdown of the funds 
returned under the Return calculation is two-thirds pre-ECALSA loan 
funds and one-third post-ECASLA loan funds.

Application of Funds (Sec.  668.28)

    Comments: A few commenters noted that the proposed regulations did 
not address how military education benefits are treated for 90/10 
purposes. The commenters argued that because students have earned these 
benefits through employment in difficult and often dangerous 
conditions, and are free to use the benefits at an eligible 
institution, the benefits should be treated for 90/10 purposes as 
earned employment benefits. However, a student receiving these 
benefits, which are essentially restricted to pay for tuition and fees, 
may also be fully eligible for Title IV, HEA aid. Consequently, the 
commenters asked the Department to revise the regulations to provide 
that military education benefits overcome the presumption that Title 
IV, HEA funds are used first to pay for tuition and fees.
    Discussion: Section 487(d)(1)(C) of the HEA contains the list of 
funds or sources of aid that overcome the presumption that Title IV, 
HEA funds are used first to pay for tuition and fees. The Department 
does not have the authority to expand that list.
    Changes: None.

Notification to the Department (Sec.  668.28)

    Comments: Several commenters objected to the proposal in Sec.  
668.28(c)(3) that an institution must notify the Department that it 
failed the 90/10 requirement no later than 45 days after the end of its 
fiscal year. Some of the commenters stated that there was no reason to 
shorten the current 90-day notification period. Other commenters argued 
that because the penalty for failing 90/10 (especially for a second 
consecutive year) is so severe, an institution should not be required 
to report unaudited data. According to the commenters, this may result 
because the small number of independent auditors who are experts in 90/
10 calculations may be unavailable to the large percentage of for-
profit institutions that have fiscal years ending December 31, because 
this is time that the auditors would normally be busy doing audit and 
tax work.
    Discussion: We are not persuaded that an institution that knows it 
is close to failing the 90/10 requirement could not plan for or take 
the steps necessary to engage an audit firm in time to meet the 45-day 
reporting deadline.
    Changes: None.

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

    Comments: A few commenters stated that the requirement in the 
proposed regulations that an institution make readily available to 
enrolled and prospective students any plans by the institution for 
improving the academic program of the institution should include the 
statement in the preamble of the NPRM that an institution is allowed to 
determine what a ``plan'' is, including when a plan becomes a plan.
    Discussion: We agree that including the concept that an institution 
has the discretion to determine when a plan exists would clarify the 
intent of the regulations.
    Changes: Section 668.43(a)(5)(iv) is amended to clarify that an 
institution must make readily available to students any plans by the 
institution for improving the academic program of the institution, upon 
a determination by the institution that such a plan exists.

Peer-to-Peer File Sharing and Copyrighted Material (Sec. Sec.  
668.14(b)(30) and 668.43(a)(10))

    Comments: A few commenters supported the proposed changes asserting 
that they represented a fair interpretation of the intent of the 
statute and would aid institutions in both interpreting and properly 
following the new statute. One commenter asked whether the requirement 
that an institution offer, to the extent practicable, legal 
alternatives to illegal downloading or otherwise acquiring copyrighted 
material could be satisfied by the institution simply not blocking 
legal alternatives. One commenter expressed concern that the 
requirement that, as a part of an institution's plans for combating the 
unauthorized distribution of copyrighted material, the institution must 
include the use of one or more technology-based deterrents as well as 
procedures for periodically reviewing the effectiveness of the plans 
would be unduly financially and administratively burdensome for 
institutions.
    Discussion: We do not believe that simply not blocking legal 
alternatives for downloading or otherwise acquiring copyrighted 
material qualifies as ``offering'' legal alternatives. The requirements 
of Sec.  668.14(b)(30)(ii)(A) and (B), that an institution must 
periodically review the legal alternatives and make available the 
results of the review to its students through a Web site or other 
means, support the notion that an institution's actions in this area 
must be active, rather than passive. We note, however, that an 
institution must offer such legal alternatives ``to the extent 
practicable.'' Thus, how or whether the institution offers such 
alternatives is controlled by the extent to which it is practicable for 
the institution to do so. As stated in the preamble to the NPRM (74 FR 
42393), the Department anticipates that individual institutions, 
national associations, and commercial entities will develop and 
maintain up-to-date lists of legal alternatives to illegal downloading 
that may be referenced for compliance with this provision.
    The requirement that, as a part of an institution's plans for 
combating the unauthorized distribution of copyrighted material, the 
institution must include the use of one or more technology-based 
deterrents is statutory (see section 485(a)(1)(P) of the HEA) and we do 
not have the authority to remove this requirement. Moreover, we believe 
that the requirement that an institution's plans include procedures for 
periodically reviewing the effectiveness of the institution's plans for 
combating the unauthorized distribution of copyrighted material is 
essential for institutions to comply with the requirements in section 
485(a)(1)(P) and 487(a)(29) of the HEA.
    Changes: None.

Consumer Information (Sec. Sec.  668.41 and 668.45)

    Comment: One commenter suggested that we remove the definition of 
``Retention rate'' from the regulations in Sec.  668.41. The commenter 
stated that it is unnecessary because the regulations already instruct 
institutions to disclose

[[Page 55911]]

retention rates as they are reported to the Integrated Postsecondary 
Education Data System (IPEDS) and IPEDS provides the definition on its 
Web site for institutions when they report that information. Of greater 
importance is the fact that, if the National Center for Education 
Statistics decides to modify the definition in the future, it would be 
better for them not to be constrained by having the current definition 
codified in the regulations.
    Discussion: We agree.
    Changes: We have removed the definition of ``Retention rate'' from 
the regulations.
    Comments: Although some commenters agreed with some or all of the 
proposed regulations addressing consumer information disclosures, a 
number of them objected to the proposed provision in Sec.  
668.41(d)(5)(iii) that would require an institution to disclose any 
placement rates it calculates, noting that, regarding placement, the 
statute only requires disclosure of information, not an actual rate. 
The statute addresses the requirement to report information about the 
``placement in employment of, and types of employment obtained by, 
graduates of the institution's degree or certificate programs.'' 
Because the statute specifically uses the term ``rates'' when it 
addresses graduation, completion, and retention, but not when it 
addresses placement, the commenters stated that the reporting of a 
``rate'' for placement information exceeds the scope of the statute.
    For similar reasons, some of the commenters objected to the 
requirement to report the methodology that the institution uses in 
determining placement information, because a methodology would appear 
to be applicable only to an officially calculated rate. Further, some 
commenters noted that, although institutions may calculate various 
placement rates for their own purposes, those rates are not necessarily 
intended to be disclosed to the public. One commenter added that 
requiring institutions to report placement rate data that they 
voluntarily produce for their own purposes (such as for internal 
assessment of their programs) would be a disincentive to the 
institution to engage in that activity.
    This commenter did, however, support the concept of requiring an 
institution to make available to students any placement data that are 
used in advertising, marketing, or recruitment. Noting that some rates 
might be calculated on individual programs or other subcategories of 
the institution, several commenters suggested that the requirement to 
report placement rates that the institution voluntarily calculates 
should only be applicable to institution-wide placement rates. One 
commenter noted that reporting placement rates for individual programs 
is not required by the statute, cannot reasonably be implemented, and 
is unnecessary. The commenter specifically noted that current 
regulations addressing an institution's requirement to have a program 
participation agreement require an institution that advertises job 
placement rates as a means of attracting students to provide 
information about its employment and graduation statistics.
    A number of commenters stated that the reporting of actual 
placement rates would be excessively burdensome for institutions and 
that the burden would outweigh the value of this reporting. A couple of 
commenters expressed concern that the regulations would force colleges 
to obtain information from graduates that the graduates are not 
obligated to provide, resulting in biased responses that would 
``taint'' the information made available to students. On the other 
hand, a couple of other commenters stated that ``when an institution 
has calculated placement rates, suggesting that it wants to know 
whether, when, and where its graduates are employed, then it is 
reasonable to think that the subject is of interest and value to 
students and prospective students as well, and should be shared with 
them.'' Finally, although these same two commenters supported removing 
the words ``upon request'' from the several places in the regulations 
where institutions are required to make certain information available 
to students and prospective students, another commenter stated that the 
Department should not delete those words when describing the 
institution's responsibility to make job placement information 
available to its consumers. The commenters who supported removing those 
words stated that removing them would make it clearer that the consumer 
information in question must be easily available. However, the 
commenter who opposed removing those words stated that, because the 
words were in the HEA, the Department did not have the authority to 
exclude them from the regulatory language implementing that part of the 
HEA.
    Discussion: The Department believes that, in addressing information 
dissemination activities, congressional intent was that students and 
prospective students be provided pertinent information related to an 
institution's completion, graduation, transfer-out, and placement 
record. Only when sufficient information is available in these areas 
can students and prospective students make informed choices about the 
institution. The statute allows institutions to use placement 
information that the institution obtains from sources such as alumni 
and student satisfaction surveys, and it does not mandate that 
institutions calculate an actual rate for this purpose. However, when 
an institution has voluntarily calculated a placement rate, regardless 
of whether it is an institution-wide placement rate or a placement rate 
of only one or more programs or other subcategories of the institution, 
and regardless of whether the institution advertises its job placement 
rates, we believe that it is consistent with congressional intent to 
have the institution disclose this information to its consumers. Thus, 
although the regulations do not mandate that the institution calculate 
a placement rate, when the institution has voluntarily chosen to do so, 
the regulations require it to provide that information to its students 
and prospective students. To help ensure that the information is as 
meaningful as possible, the regulations require that the institution 
disclose not only the source of the information provided, but the time 
frames and methodology associated with the calculation or production of 
the information.
    Finally, regarding the exclusion of ``upon request'' when 
describing the institution's responsibility to make job placement 
information available to its students and prospective students, the 
Department notes that institutions typically compile and make the 
information available on their Web sites, but possibly in paper form as 
well. Consequently, we view the inclusion of the phrase ``upon 
request'' to mean that this information is readily available to 
students who wish to see it. As a matter of course, students coming to 
an institution's Web site to learn about the institution should be able 
to find this information, and students inquiring directly may be 
referred to the Web site or provided with the information on paper.
    Changes: None.
    Comment: With regard to the disaggregation of completion or 
graduation rates by receipt or non receipt of certain types of aid, one 
commenter expressed concern that the wording in Sec.  668.45(a)(6)(ii), 
which states that ``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,'' would exclude students

[[Page 55912]]

who received aid for the first term (the period in question), but who 
had the receipt of that aid delayed beyond the period in question due 
to an unanticipated deferral of payment, such as for verification. The 
commenter stated that receipt of aid in this circumstance would have 
the same effect on access and enrollment as if the aid were paid in the 
first term. The commenter expressed hope that the Department's intent 
was not to have the students listed as not receiving the aid in 
question.
    Discussion: We agree that students who receive aid in a second term 
that was intended for the first term should be listed in the same 
category as students who actually received their aid in the first term.
    Changes: We have changed the word ``in'' to ``for'' in Sec.  
668.45(a)(6)(ii).
    Comment: Several commenters expressed concern that recordkeeping 
and reporting requirements in Sec.  668.45 could serve as a 
disincentive to institutions to offer a comprehensive transition and 
postsecondary education program (as addressed in subpart O of the 
regulations, Financial Assistance for Students with Intellectual 
Disabilities). The commenters questioned whether these students would 
negatively affect an institution's completion or graduation rate 
because students with intellectual disabilities do not typically 
matriculate and graduate with a regular diploma.
    Discussion: Section 668.45 requires an institution to prepare a 
completion or graduation rate (and sometimes a transfer out rate) for 
its certificate- or degree-seeking, first-time, full-time undergraduate 
students. If an institution has a comprehensive transition and 
postsecondary education program, some of its students with intellectual 
disabilities who are enrolled in that program may factor into the 
institution's completion and graduation rate. It is unlikely that they 
would be part of an institution's transfer out rate. A comprehensive 
transition and postsecondary education program may be a degree or 
certificate program, or it may be a non-degree or non-certificate 
program. Certificate or degree-seeking, first-time, full-time 
undergraduate students with intellectual disabilities who are enrolled 
in a comprehensive transition and postsecondary education program will 
be part of an institution's completion and graduation rate 
calculations. As with other students, if they complete or graduate from 
their degree or certificate program within the time frames listed in 
Sec.  668.45(b), they will be listed. The Department does not believe 
that first-time, full-time, undergraduate students with intellectual 
disabilities who are enrolled in a comprehensive transition and 
postsecondary education program designed to lead to a degree or 
certificate will necessarily have completion or graduation rates 
significantly different from first-time, full-time, undergraduate 
students without intellectual disabilities. Students with intellectual 
disabilities who are enrolled in a comprehensive transition and 
postsecondary education program that does not lead to a degree or 
certificate will not be a factor in an institution's graduation and 
completion rate.
    Changes: None.
    Comments: Two commenters noted that removing the reference to 
paragraph (d) in Sec.  668.48(b) leaves out the exclusion of students 
who have 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 from the completion or graduation, or transfer-out rate 
information required by Sec.  668.48.
    Discussion: The commenters are correct. The proposal to remove the 
reference to paragraph (d) and replace it with paragraph (e) was a 
mistake.
    Changes: None.

Campus Safety Provisions

Reporting and Disclosure of Information (Sec.  668.41(a))

    Comment: One commenter requested clarification of what would be 
considered an ``on-campus student housing facility.'' Specifically, the 
commenter questioned how this definition should be applied in cases in 
which there are public-private partnerships or third parties who may 
own or control property on areas contiguous to the campus or on 
university-owned property.
    Discussion: The Department recognizes that there are a myriad of 
possible arrangements that an institution may have for housing 
facilities for students. Regarding whether a particular student housing 
facility is an ``on-campus'' facility, we refer to the current 
definition of the term ``campus'' in Sec.  668.46(a). To clarify, any 
student housing facility that is owned or controlled by the 
institution, or is located on property that is owned or controlled by 
the institution, and is within the reasonably contiguous geographic 
area that makes up the campus is considered an on-campus student 
housing facility.
    Changes: None.

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

    Comment: A number of commenters requested clarification of how the 
proposed requirement in Sec.  668.46(h) relates to requirements under 
the Family Educational Rights and Privacy Act (FERPA). Under this 
section, institutions must provide students living in an on-campus 
student housing facility an option to register a confidential contact 
person to be notified in the case that the student is determined 
missing.
    Discussion: Although missing student contact information would be 
considered part of a student's education records under FERPA, section 
485(j) of the HEA, as amended by section 488(g) of the HEOA, requires 
that students be provided the option to register ``confidential'' 
contact information. This indicates that a student's contact 
information should receive greater privacy protections than FERPA 
provides. Under section 485(j) of the HEA, only authorized campus 
officials and law enforcement officers in furtherance of a missing 
person investigation may have access to this confidential contact 
information. We view a student's identification of a contact person 
pursuant to section 485(j) of the HEA and Sec.  668.46(h) as providing 
permission for law enforcement personnel to contact the identified 
individual under the circumstances identified in these statutory and 
regulatory provisions.
    Changes: None.
    Comment: Some commenters expressed concern that the proposed 
notification procedures in Sec.  668.46(h)(2) may lead to unnecessary 
alarm on the part of parents, guardians, and emergency contact persons, 
as well as a needless burden on campus and local law enforcement 
agencies. Specifically, they requested clarification that the 
notification procedures would only take effect if, after a brief 
investigation, the missing student report is found to be valid. In 
addition, several commenters requested clarification about the 24 hour 
time period requirements associated with the notification procedures, 
suggesting that an institution's policy statement must explicitly state 
that the institution must make the notification within 24 hours after 
an official determination has been made that the student has been 
missing for 24 hours.
    Discussion: The proposed regulations in Sec.  668.46(h)(2) specify 
that an institution's notification procedures must go into effect 
within 24 hours after a student has been officially determined to have 
been missing for 24 hours by the

[[Page 55913]]

campus security department or local law enforcement agency, as 
applicable. This does not preclude an institution from either making a 
determination that a student is missing before the student has been 
missing for a full 24 hours or initiating notification procedures as 
soon as it determines that the student is missing. A brief 
investigation as suggested by the commenter would presumably be 
included in this official determination, e.g., authorities could check 
sources such as Facebook in trying to determine whether the student is 
missing. We agree, nevertheless, that the regulations could be clearer 
in delineating the 24 hour time periods.
    Changes: Section 668.46(h) is revised to clarify the time frame 
within which notification must occur.
    Comment: A commenter stated that the regulations in Sec.  668.46 
were unclear and suggested a new structure.
    Discussion: We reviewed the commenter's suggested language, but we 
continue to believe the current structure is sufficiently clear. This 
language reflects the tentative agreement reached by the Team V 
committee during negotiated rulemaking, and the Department wishes to 
preserve this agreement.
    Changes: None.

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

    Comment: One commenter suggested that the definition of value of 
property damage should be revised to include only the damage to 
property, furnishings, and equipment that is owned, leased, or 
otherwise controlled by the institution. The commenter argued that it 
could be burdensome for institutions to determine the value of property 
and contents that are owned by third parties and that this information 
could be deemed private by the other party. In addition, the commenter 
suggested that institutions should have the option to provide 
explanatory text and clarifying information for estimates of property 
damage. The concern was that a high dollar value may create false 
concern as to the safety on campus, when in reality, a high value could 
be from damage to a single piece of expensive equipment.
    Discussion: The definition of the value of property damage applies 
to an on-campus student housing facility and includes the value of 
property and the contents within. The Department recognizes that many 
of the contents on a property may be owned by third parties. However, 
because the statute requires that information be provided about damage 
caused by fires in on-campus student housing facilities, this estimate 
should include the value of property that is not owned or controlled by 
the institution. Although an institution may not be able to determine 
the exact value of the contents, it must give the most accurate 
estimate possible in order to be in compliance with the regulation. 
With regard to explanatory text, institutions have the flexibility to 
include additional information in the annual fire safety report. In 
reporting statistics to the Department, the Web-based collection tool 
will include space for institutions to include explanatory text for 
each item that will be viewable on the public Web site.
    Changes: None.
    Comment: One commenter stated that the definition of fire in Sec.  
668.49(a) was ambiguous and needed to be clarified. Specifically, the 
commenter suggested that phrases such as ``open flame or other burning 
in a place not intended to contain the burning or in an uncontrolled 
manner'' and ``place'' could be interpreted differently by institutions 
and, therefore, could undermine the consistency of the definition of 
``fire'' for statistical and comparative purposes. Further, the 
commenter suggested an alternate definition drawn from insurance law 
that would include the concept of a ``hostile fire,'' or one that 
includes any combustion that cannot be controlled, escapes from where 
it was initially set and confined, and that was not intended to exist. 
The commenter also questioned the feasibility of gathering statistics 
on each instance of a fire that does not result in injury, death, or 
property damage, suggesting that reports of insignificant fires will 
obscure attention to serious fire problems or trends.
    Discussion: Section 485(i)(1)(A) of the HEA requires that 
institutions collect and report statistics on the number of fires in 
each on-campus student housing facility, and section 485(i)(3) of the 
HEA further requires that institutions maintain a log of all fires that 
occur in any on-campus student housing facility. The Department and 
non-Federal negotiators worked diligently to define the term fire, 
understanding that it is difficult to devise a definition that will 
cover all of the fires that we intend to be included yet still exclude 
the ones that we do not. The negotiators reached a tentative agreement 
on the definition of fire, and the Department wishes to preserve this 
language. We continue to believe that the definition set forth in the 
proposed regulations can reasonably be interpreted and applied by 
institutions.
    In addition, under the HEA all fires will be included in the 
institution's statistics and in the fire log. Therefore, the definition 
of fire arguably may not be limited to only fires that result in 
injury, death, or property damage. Further, as stated in the preamble 
to the NPRM, an institution's policies regarding fire safety do not 
affect the classification of whether a fire meets the definition of 
fire. As an example, one commenter suggested that a candle wick might 
be a ``place'' that is intended to contain burning, but that student 
residence hall policies might prohibit candles, rendering the candle 
wick no longer a ``place'' intended to contain a flame because the 
candle should not be there at all. However, a candle wick is still a 
place intended to contain burning, regardless of whether candles are 
prohibited under an institution's policies. The Department anticipates 
including additional examples in a revised version of the Handbook for 
Campus Crime Reporting to provide guidance to institutions in complying 
with these regulations.
    Changes: None.

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

    Comment: One commenter suggested that an institution should not be 
responsible for tracking an individual with a fire-related injury who 
has separated from the university for the purpose of potentially 
including that individual in the institution's statistics on fire-
related deaths. If that individual dies within one year of sustaining 
injuries as a result of a fire, then the institution may not know 
whether that individual died as a result of those injuries.
    Discussion: The regulations do not require an institution to track 
an individual that separates from, and is no longer in contact with, 
the institution. However, the institution is expected to make a 
reasonable effort to ascertain whether an individual's death is 
considered a fire-related death, as defined in Sec.  668.49(a). For 
example, if an individual with fire-related injuries is hospitalized a 
few miles from the institution, the institution may reasonably be 
expected to track this person for potential inclusion in the 
institution's statistics. By contrast, if an individual separates from 
the institution and travels to another country, the institution may not 
be expected to track them for inclusion in the institution's 
statistics.
    Changes: None.

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

    Comment: One commenter suggested that we revise the language 
related to the reporting of fire statistics under

[[Page 55914]]

proposed Sec.  668.49 to specify that these statistics include fires 
that are reported to a ``campus fire authority.''
    Discussion: Institutions are expected to collect information about, 
and report on, all fires regardless of whether they were reported to a 
campus fire authority. Fires may be reported to a variety of 
authorities at an institution other than a campus fire authority (e.g., 
to a residence life officer). The intent of the regulations is to 
include these fires in an institution's statistics and fire log.
    Changes: None.
    Comment: Two commenters suggested that the Department require that 
institutions have fire doors and other doors in the path of exit from a 
fire inspected at least annually and disclose in their annual fire 
safety report how often the doors are inspected. The commenters noted 
that proper maintenance and inspection of every fire safety system 
element is critical to ensure that these elements can function in the 
case of a fire.
    Discussion: We define a fire safety system in Sec.  668.49(a) as 
``any mechanism or system related to the detection of a fire, the 
warning resulting from a fire, or the control of a fire,'' listing 
elements including, among others, sprinkler systems, fire detection 
devices, stand-alone smoke alarms, and fire doors and walls as examples 
of what might be included in a fire safety system. The commenter 
correctly states that maintenance and inspection of a fire safety 
system can help ensure that the elements are properly functioning. 
Institutions are required to describe the fire safety system in each 
on-campus student housing facility, and an institution may provide 
information about how often the elements of each fire safety system are 
inspected or maintained in this description. The Department expects 
that an institution will adequately maintain the elements of its fire 
safety systems. However, we do not intend to specify a maintenance or 
inspection schedule for each of these elements.
    Changes: None.

Annual Fire Safety Report--General (Sec.  668.49)

    Comment: One commenter suggested a number of minor changes to a 
variety of provisions, including:
     Replacing the phrase ``may include'' in the definition of 
a fire-related injury in Sec.  668.49(a) with the word ``includes'';
     Replacing the words ``faculty, staff'' in the definition 
of a fire-related injury in Sec.  668.49(a) and in the requirement that 
an institution include policies regarding fire safety education and 
training programs in its annual fire safety report in Sec.  
668.49(b)(6) with the word ``employees'';
     Replacing the words ``resulting from'' in the definition 
of a fire-safety system in Sec.  668.49(a) with ``of'';
     Replacing the phrase ``smoke, water, and overhaul'' in the 
definition of value of property damage in Sec.  668.49(a) with ``smoke 
and water''; and
     Revising the Sec.  668.49(c)(1)(ii) to read ``The number 
of persons who received fire-related injuries that resulted in 
treatment at a medical facility, including at an on-campus health 
center.''
    Discussion: We agree to make some of these changes. In particular, 
we agree with the commenter that institutions should include the number 
of persons who received fire-related injuries, as opposed to the actual 
number of injuries, as a single person may have more than one injury. 
We also agree that the term ``employees'' is more precise than the 
words ``faculty, staff'' and have revised the regulations accordingly.
    Changes: We have revised the language in Sec.  668.49(c)(1)(ii) to 
clarify that the number of injuries refers to the number of people with 
fire-related injuries. We have also replaced the words ``faculty, 
staff'' with the word ``employees'' in both Sec.  668.49(a) and Sec.  
668.49(b)(6).
    Comment: One commenter suggested that we revise Sec.  668.43 to 
include two additional disclosures specified in the HEOA that require 
institutions to disclose their policies on vaccination, and information 
on diversity of the student body.
    Discussion: The Department is not addressing all of the self-
implementing provisions of the HEOA in these regulations. We intend to 
publish separate regulations covering these new disclosures.
    Changes: None.

Subpart O--Financial Assistance for Students With Intellectual 
Disabilities

Scope and Purpose (Sec.  668.230)

    Comment: One commenter expressed concern that the limit on the 
amount of time for which a student can receive a Pell Grant would 
adversely affect the completion time of a student with an intellectual 
disability because the student may need to spend additional time in 
remedial or developmental classes. The commenter suggested that the 
Department waive the cap on the number of Federal Pell Grant awards a 
student with an intellectual disability may receive.
    Discussion: The Federal Pell Grant statutory cap is 18 semesters or 
9 years. Because students with intellectual disabilities are not yet 
enrolled in comprehensive transition and postsecondary programs 
approved by the Department under these regulations, we do not have any 
data that suggests that these students will need longer to complete 
their comprehensive transition and postsecondary programs. For this 
reason, we believe it is inappropriate to waive the Federal Pell Grant 
cap for these students as part of these regulations.
    Changes: None.
    Comment: Two commenters requested that proposed Sec.  668.230 be 
revised to require the Secretary to waive any rules necessary to ensure 
that students enrolled in eligible comprehensive transition and 
postsecondary programs remain eligible for Federal Pell, FSEOG, and FWS 
program funds.
    Discussion: Section 484(s)(3) of the HEA authorizes the Secretary 
to waive any statutory provision applicable to the Federal Pell Grant, 
FSEOG, and FWS programs--other than the need analysis provisions in 
part F of the HEA--as well as any institutional eligibility provisions 
that the Secretary determines necessary to ensure that programs 
enrolling students with intellectual disabilities otherwise determined 
to be eligible may receive financial assistance. While this section of 
the HEA authorizes the Secretary to grant the waivers of the sort 
described by the commenters, it does not require the Secretary to do 
so. The Secretary generally does not regulate the Department's own 
procedures.
    Changes: None.

Definitions (Sec.  668.231)

    Comment: A few commenters expressed concern that the proposed 
regulations do not sufficiently convey the importance of employment as 
a desired outcome for students with intellectual disabilities who 
enroll in eligible comprehensive transition and postsecondary programs.
    Discussion: We agree with the commenters that gainful employment is 
an important outcome for students with intellectual disabilities 
participating in comprehensive transition and postsecondary programs. 
In fact, the Department has a long history of providing national 
leadership for, and administration of, programs that develop and 
implement comprehensive and coordinated programs of vocational 
rehabilitation, supported employment and independent living for 
individuals with disabilities, through services, training and economic 
opportunities, in order to maximize their employability, independence 
and integration into the workplace and the community.

[[Page 55915]]

    We believe that the regulations sufficiently ensure that the 
comprehensive transition and postsecondary programs approved by the 
Department will focus on ensuring that enrolled students will be 
prepared for gainful employment. Specifically, in the definition of the 
term comprehensive transition and postsecondary program in Sec.  
668.231, paragraph (a)(3) provides that the program is one that 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. Under Sec.  668.232(a), an institution 
applying to offer a comprehensive transition and postsecondary program 
as an eligible program under title IV of the HEA must provide to the 
Secretary a detailed description of that program, including a 
description that addresses all of the components of the program, as 
defined in Sec.  668.231. Because Sec.  668.231(a)(3) specifically 
references that a comprehensive transition and postsecondary program is 
one that is designed to prepare enrolled students for gainful 
employment, the detailed description required under Sec.  668.232(a) 
must include a description of how the program meets this definitional 
requirement. We, therefore, believe that the regulations sufficiently 
ensure that any comprehensive transition and postsecondary program will 
focus on the outcome of gainful employment for students participating 
in these programs.
    Changes: None.
    Comment: Two commenters requested clarification of how half-time 
participation for students with intellectual disabilities should be 
determined, specifically, whether ``half-time'' is based on real time 
or credit hours, and whether it is calculated per semester or across 
the length of the program. In a related issue, commenters also 
suggested that the proposed regulations place too much emphasis on the 
academic portions of the program, arguing that the half-time 
integration criterion should not be linked exclusively to coursework 
and internships but should be expanded to include outside activities.
    Discussion: Section 668.231(a)(5) specifies that a comprehensive 
transition and postsecondary program is a program that 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 a variety of 
activities that integrate students with intellectual disabilities into 
academic contexts with students without disabilities. Institutions have 
a fair degree of flexibility in determining the meaning of ``half-time 
participation'' in designing a comprehensive transition and 
postsecondary program: It may be reasonably based on real hours, credit 
hours, or a combination of the two, and it may be calculated across the 
span of the program or by term, as long as an institution clearly 
explains in its application to add an eligible program how this will be 
determined.
    With regard to the comments stating that the proposed regulations 
place too much emphasis on the academic portions of the program, we 
disagree. Section 668.231(a)(5) only requires that the program require 
enrolled students to have at least one half of their participation in 
the program focus on academic components. We fully expect that the 
remaining portion of the program will consist of other activities that 
include having enrolled students with intellectual disabilities 
participate with students without disabilities in such non-academic 
settings as clubs, organizations, service projects, or other university 
or community life activities.
    Changes: None.
    Comment: A few commenters expressed concern that the proposed 
definition of a student with an intellectual disability in Sec.  
668.231(b) does not exist in the Individuals with Disabilities 
Education Act (IDEA). Specifically, several commenters asked which 
students would be considered students with intellectual disabilities 
under the HEA.
    Discussion: Under Sec.  668.231(b), a student with an intellectual 
disability is defined as a student with mental retardation or a 
cognitive impairment characterized by significant limitations 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 special education or related 
services under the IDEA. The Department recognizes that disabilities 
other than mental retardation, such as certain forms of autism and 
traumatic brain injury, may be considered intellectual disabilities. 
Under Sec.  668.233(c), a student with an intellectual disability is 
eligible to receive Federal Pell, FSEOG, and FWS program assistance 
under subpart O of part 668 (Financial Assistance for Students with 
Intellectual Disabilities) if the institution that offers the eligible 
comprehensive transition and postsecondary program obtains a record 
from a local educational agency (LEA) that the student is or was 
eligible for special education and related services under the IDEA. 
This section clarifies that if that record does not specifically 
identify the student as having an intellectual disability, the 
institution must review all documentation obtained, such as a 
documented comprehensive and individualized psycho-educational 
evaluation and diagnosis of an intellectual disability by a 
psychologist or other qualified professional; or a record of the 
disability from an LEA or State educational agency (SEA), or government 
agency, such as the Social Security Administration or a vocational 
rehabilitation agency, that identifies the intellectual disability. 
Ultimately, the institution determines whether a student meets the 
definition of a student with an intellectual disability for the 
purposes of this subpart.
    Changes: None.
    Comment: Many commenters disagreed with the requirement that a 
student with an intellectual disability must have gone through the 
formal IDEA eligibility process to be eligible for Title IV, HEA 
program assistance. They argued that the Conference report indicates 
that Congress intended to include students who were home-schooled or 
went to a private school in the definition of a student with an 
intellectual disability. The commenters further suggested that if the 
Department maintains its position that only students who have gone 
through the formal IDEA eligibility process are eligible for Title IV, 
HEA program assistance, then the Department should issue guidance and 
alerts to States, LEAs, students, parents, parent training centers, and 
advocacy organizations, reminding them that the IDEA's Child Find and 
Free Appropriate Public Education (FAPE) in the Least Restrictive 
Environment requirements apply to all individuals who are still at an 
age at which they could receive special education services in their 
State.
    Discussion: As discussed in the preamble to the NPRM, we interpret 
the statute as providing that a student who has not gone through the 
formal IDEA eligibility process does not meet the definition of a 
student with an intellectual disability. Specifically, section 760(2) 
states that a student with an intellectual disability means a student 
who ``is currently, or was formerly, eligible for a FAPE under the 
IDEA.'' While the Department does not wish to exclude students who have 
not gone through this process, we do not believe the statutory language 
permits the Department to make these students eligible. We encourage 
students to obtain an IDEA eligibility determination

[[Page 55916]]

while they are still age-eligible for IDEA services. The Department 
will continue to remind States and LEAs of their responsibilities under 
the IDEA, including under the child find provision in section 
612(a)(3), that they locate, identify, and evaluate all children with 
disabilities residing in the State, including those who are in private 
schools or are home-schooled.
    Changes: None.

Program Eligibility (Sec.  668.232)

    Comment: One commenter suggested that, rather than requiring an 
institution to apply to have a comprehensive transition and 
postsecondary program for students with intellectual disabilities 
approved by the Department for Title IV, HEA funding, the Department 
simply require the institution to provide assurances that it offers a 
program that meets the criteria of a comprehensive transition and 
postsecondary program for students with intellectual disabilities. The 
commenter argued that this would provide a more streamlined application 
process. The commenter also noted that the HEOA authorizes a new model 
demonstration program and a coordinating center that will enable the 
Department to gather information on best practices and to work to 
develop model accreditation standards for these programs.
    Discussion: The process for adding a comprehensive transition and 
postsecondary program to the list of eligible programs at an 
institution should not pose a large burden on institutions, because it 
will be part of the same process an institution now uses to notify the 
Department of any new program it seeks to include as an eligible Title 
IV, HEA program. As far as the model demonstration program and 
coordination center, the Department has a current National Institute of 
Disability and Rehabilitation Research center evaluating promising 
practices in this area.
    Changes: None.
    Comment: One commenter requested that the Department clarify 
whether only currently existing comprehensive transition and 
postsecondary programs can be eligible for Department approval under 
Sec.  668.232. The commenter asked if any comprehensive transition and 
postsecondary program offered by an institution is an eligible 
comprehensive transition and postsecondary program.
    Discussion: An institution may submit to the Secretary for approval 
under Sec.  668.232 a comprehensive transition and postsecondary 
program that it currently offers or a program that it is ready to 
implement. The Secretary will consider for approval any comprehensive 
transition and postsecondary program that meets the definitional 
requirements in Sec.  668.231(a) for which an institution submits an 
application in accordance with Sec.  668.232. There are currently no 
comprehensive transition and postsecondary programs approved by the 
Department.
    Changes: None.
    Comment: Commenters suggested that we add a new provision in Sec.  
668.232 to require an institution to include in its application for 
approval of a comprehensive transition and postsecondary program, a 
description of how students with intellectual disabilities are socially 
and academically integrated into the campus community to the maximum 
extent possible.
    Discussion: We do not believe that the suggested language is 
necessary. Section 668.232(a) requires that institutions provide 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, in their application for approval by the Department. 
One of those elements, in Sec.  668.231(a)(6), specifies that a 
comprehensive transition and postsecondary program must provide 
students with intellectual disabilities opportunities to participate in 
coursework and other activities with students without disabilities. To 
comply with these regulations, an institution applying to add an 
eligible comprehensive transition and postsecondary program must 
address this element by explaining how its program will ensure that 
students with intellectual disabilities are integrated socially and 
academically with students without disabilities.
    Changes: None.
    Comment: One commenter asserted that the concept of a program is 
different in special education than it is in higher education in that, 
in the special education context, a program is typically an 
individualized set of services and supports designed for a single 
student. This commenter stated that a set of services and supports 
designed for a single individual student to participate in regular 
college courses, internships, and the like should constitute a 
comprehensive transition and postsecondary program. The commenter 
questioned whether the Department would approve such a comprehensive 
transition and postsecondary program for a single student, and, if so, 
whether it would be necessary for each individualized set of services 
and supports to be approved by the Department as a separate program. 
The commenter believed that, as long as a basic structure of support is 
in place for these programs, the services may be individualized to meet 
the needs of a single student or a group of students and that the 
institution should only be required to apply once for the ``basic'' 
program structure, and then be able to offer individual variations of 
the program as needed to individuals without having to reapply for 
program eligibility for each version of the program.
    Discussion: In general, an institution must demonstrate in its 
application that its comprehensive transition and postsecondary program 
satisfies the definitional criteria in Sec.  668.231(a). An institution 
may have one, or more than one, comprehensive transition and 
postsecondary program. A program may be for only one student or for a 
group of students, but each program must be approved by the Department. 
To be clear, the Department will not approve a generalized structure 
that can later be modified by the institution to be a different program 
for specific students. That said, once a program is approved, it can be 
modified slightly for different students. For example, a program 
approved under Sec.  668.231 may require a specific number and type of 
courses, along with other program requirements, but that does not mean 
that each student in that program will take exactly the same courses. 
Much like the variation in any student's curriculum that results from 
individual choices in elective coursework and required academic areas 
within a program, individual students enrolled in an approved 
comprehensive transition and postsecondary program may end up taking 
some different courses. All such courses must be part of the same 
approved program or part of a separately approved program.
    Changes: None.
    Comment: One commenter suggested that if a student with an 
intellectual disability is dually enrolled in an LEA and in a 
comprehensive transition and postsecondary program, then the State 
Accrediting Agency, SEA, and other stakeholders should have input into 
the accrediting process of the comprehensive transition and 
postsecondary program.
    Discussion: The Department is not requiring programmatic 
accreditation as a condition for approving a comprehensive transition 
and postsecondary program. Under Sec.  668.232(e), the institution is 
required to inform its institutional accrediting agency of its 
comprehensive transition and postsecondary program if the

[[Page 55917]]

institution applies to have that program approved by the Department as 
an eligible program for Title IV, HEA program purposes. The accrediting 
agency determines what it does with that information.
    Changes: None.
    Comment: One commenter asked how accreditation status was 
determined when an institution and a non-profit agency share 
responsibility for providing and operating a comprehensive transition 
and postsecondary program through a formal memorandum of agreement. The 
commenter suggested that the accreditation status of the non-profit 
agency should be considered in the accreditation of the program. 
Further, under a situation such as this, the commenter requested 
clarification as to whether Title IV, HEA program assistance could be 
applied toward the costs for services and fees provided by both the 
institution and the non-profit agency.
    Discussion: Only an institution participating in the Title IV, HEA 
programs may offer an eligible comprehensive transition and 
postsecondary program, as that term is defined in Sec.  668.231(a). For 
this reason, the Department will take into account only the 
institution's accreditation status in approving a comprehensive 
transition and postsecondary program. The accreditation of the non-
profit agency would not have an impact on the eligibility of the 
program. Under Sec.  668.5, an eligible institution may contract out a 
portion of the eligible program through a written arrangement with 
another eligible institution, an ineligible institution, or an 
ineligible organization to provide the educational program. Section 
668.5(c)(3) of the regulations specifies that--
    (1) The ineligible institution or organization may not provide more 
than 25 percent of the educational program; or
    (2) The ineligible institution or organization may provide more 
than 25 percent but not more than 50 percent of the educational 
program, as long as--
    (a) The eligible institution and ineligible institution or 
organization are not owned, or controlled by the same individual, 
partnership, or corporation; and
    (b) The eligible institution's accrediting agency, or if the 
institution is a public postsecondary vocational educational 
institution, the State agency listed in the Federal Register in 
accordance with 34 CFR part 603, has specifically determined that the 
institution's arrangement meets the agency's standards for the 
contracting out of educational services.
    In terms of funding, the amount of Title IV, HEA program assistance 
that a student may receive for enrollment in a comprehensive transition 
and postsecondary program is based on the student's need, which is 
defined in section 471 of the HEA as the cost of attendance minus the 
student's expected family contribution minus any estimated financial 
assistance received by the student. Need-based aid that a student 
receives may be used toward any costs in the student's cost of 
attendance, including those incurred through parts of the program that 
have been contracted out to a non-profit agency or other institution or 
organization through a written arrangement with the eligible 
institution that offers the program.
    Changes: None.

Student Eligibility (Sec.  668.233)

    Comment: One commenter questioned whether a student with an 
intellectual disability would be disqualified from receiving Title IV, 
HEA program assistance if he or she has a legal guardian.
    Discussion: Having a legal guardian would not preclude a student 
with an intellectual disability from receiving Federal student aid 
funds. It may, however, affect the student's dependency status, which 
is taken into account in determining a student's financial need. 
Therefore, having a legal guardian may affect the amount of financial 
aid funds for which the student may be eligible.
    Changes: None.
    Comment: Several commenters asked for clarification on whether a 
high school student who receives special education and related services 
can also be enrolled in a comprehensive transition and postsecondary 
program.
    Discussion: It is the Department's longstanding position that a 
student with a disability may be dually enrolled in secondary school 
and a postsecondary institution, although such dual enrollment 
precludes the student from being eligible for Title IV, HEA aid.
    The provisions in section 612(a)(2) of the IDEA and 34 CFR 300.110 
require States to ensure that public agencies take steps to ensure that 
children with disabilities have access to the same program options that 
are available to nondisabled children in the area served by the agency. 
This would apply to dual enrollment programs in postsecondary or 
community-based settings. However, we do not believe that the IDEA, or 
its implementing regulations, requires public agencies to provide dual 
enrollment programs in postsecondary or community-based settings for 
students with disabilities, if such programs are not available to 
secondary school students without disabilities. In a State that offers 
dual enrollment programs to secondary school students, a high school 
student with an intellectual disability, as defined under Sec.  
668.231(b), who is receiving special education and related services may 
be dually enrolled in an eligible comprehensive transition and 
postsecondary program under Sec.  668.232.
    Changes: None.
    Comment: Several commenters expressed concern regarding the 
provision of special education and related services to a student with 
an intellectual disability who is dually enrolled in secondary school 
and a comprehensive transition and postsecondary program. The 
commenters asked whether the LEA would pay for the comprehensive 
transition and postsecondary program or whether the student with an 
intellectual disability would apply for Federal Pell, FSEOG and FWS 
program assistance.
    Discussion: Under section 612(a)(1) of the IDEA and 34 CFR 300.101, 
each State and its LEAs must make FAPE available to all children with 
specified disabilities residing in the State, in mandatory age ranges. 
Under 34 CFR 300.17(c) of the regulations implementing Part B of the 
IDEA, FAPE includes an appropriate preschool, elementary school, or 
secondary school education in the State involved. Under the IDEA, LEAs 
are not required to provide FAPE in postsecondary education settings. 
In general, Part B, IDEA funds could be used for appropriate education 
services included in an IEP that are provided outside of a public or 
private elementary or secondary school though, if, under State law, the 
education would be considered secondary school education.
    A student with an intellectual disability is eligible to receive 
Federal Pell Grant, FSEOG, and FWS program assistance under Sec.  
668.233 if the student satisfies the general student eligibility 
requirements under Sec.  668.32, except for paragraphs (a), (e), and 
(f) of that section. Section 668.32(b) states that a student is not 
eligible to receive Federal Pell Grant, FSEOG, or FWS program 
assistance if he or she is enrolled in elementary or secondary school. 
In other words, if a student is dually enrolled in a secondary school 
and an eligible comprehensive transition and postsecondary program, he 
or she is not eligible for Federal Pell, FSEOG, and FWS program 
assistance. Therefore,

[[Page 55918]]

while an LEA could use Part B, IDEA funds to support a dually enrolled 
student with a disability's participation in a comprehensive transition 
and postsecondary program if the services the student received in that 
program were considered secondary school education under State law and 
were included in the student's IEP, the student would not be eligible 
to apply for Federal Pell Grant, FSEOG, and FWS program assistance. The 
Department will monitor the establishment of these comprehensive 
transition and postsecondary programs, and may consider at some point 
in the future using the Secretary's waiver authority under the statute 
to permit qualifying students who are dually enrolled in these programs 
to also receive Federal Pell Grant, FSEOG, and FWS program assistance. 
If the Department were to adopt such an approach, we would provide 
additional information concerning the procedures and availability of 
any such waivers at that time.
    Changes: None.
    Comment: A few commenters requested that the regulations clarify 
whether the LEA is responsible for monitoring the progress of a student 
who is dually enrolled in a secondary school and a comprehensive 
transition and postsecondary program.
    Discussion: If a student with an intellectual disability who is 
dually enrolled in a comprehensive transition and postsecondary program 
receives services in that program that are considered secondary 
education in the State and are included in the student's IEP, the SEA 
or LEA must monitor the student's progress toward annual academic and 
functional goals, because those entities are responsible, under the 
IDEA, for ensuring that the services identified in the student's IEP 
are provided. Additionally, eligible comprehensive transition and 
postsecondary programs, which operate through institutions, must meet 
the program requirements in Sec.  668.232, including establishing a 
policy for determining whether a student enrolled in the comprehensive 
transition and postsecondary program is making satisfactory academic 
progress. In all cases, the Department encourages the SEA or LEA and 
the institution offering the comprehensive transition and postsecondary 
program to enter into a formal agreement of understanding that 
identifies what the SEA or LEA will provide to the dually-enrolled 
student, and what the institution will provide to meet the requirements 
of an eligible comprehensive transition and postsecondary program, and 
how the student's progress will be assessed. Furthermore, section 
612(a)(12) of the IDEA and its implementing regulations at 34 CFR 
300.154 require States to develop and implement interagency agreements 
or other written mechanisms for interagency coordination to ensure that 
services necessary to provide FAPE to children with disabilities within 
the State that are provided or paid for by other public agencies are 
provided or paid for. These provisions mean that if public agencies of 
a State operate comprehensive transition and postsecondary programs 
that dually enroll students who are covered by the IDEA to provide 
services included in the students' IEPs, the State must ensure that 
interagency agreements or other written mechanisms meeting these 
requirements are in place.
    Changes: None.
    Comment: A few commenters requested that the Department clarify the 
interaction between the receipt of Title IV, HEA aid and other benefits 
that the student may receive, such as Medicaid or vocational 
rehabilitation funding. Specifically, commenters expressed concern that 
a student's receipt of Medicaid benefits or other benefits may be 
disrupted due to the student's receipt of Federal Pell Grant, FSEOG, or 
FWS program assistance.
    Discussion: These final regulations implement provisions of the HEA 
only. They do not attempt to address any overlap between the 
protections and requirements of the State Medicaid program under Title 
XIX of the Social Security Act. Additional information concerning 
eligibility requirements for other programs may be sought from the 
agency responsible for implementing those programs.
    With respect to financial aid available to students under the HEA, 
a student's financial aid assistance may be affected by aid received 
under other programs, such as Medicaid. While a student's Federal Pell 
Grant award would not be reduced based on any other aid received, the 
amount of FSEOG and FWS program assistance for which a student is 
eligible is based, in part, on the student's total estimated financial 
assistance (EFA), as defined in Sec.  673.5(c). A student's FSEOG and 
FWS awards, when combined with the student's other EFA, may not exceed 
the student's financial need. Therefore, a student's FSEOG and FWS 
awards may be affected by other aid the student receives.
    Changes: None.
    Comment: Several commenters expressed concern regarding the use of 
a student's summary of academic and functional performance to meet the 
requirements under Sec.  668.233(c). Commenters stated that a student's 
summary of academic and functional performance should not serve as 
acceptable documentation to establish that the student has an 
intellectual disability.
    Discussion: To better prepare for the student's enrollment in a 
comprehensive transition and postsecondary program, the Department 
encourages institutions to consider using a student's summary of 
academic achievement and functional performance (SOP) as described in 
34 CFR 300.305(e)(3). That said, the Department recommends that 
institutions use the SOP only as supplemental information under Sec.  
668.233(c).
    Section 300.305(e)(3) of the implementing regulations of the IDEA, 
consistent with section 614(c)(5)(B)(ii) of the IDEA, states that the 
summary required when a child graduates with a regular diploma or 
exceeds the age eligibility under State law must include information 
about the child's academic achievement and functional performance, as 
well as recommendations on how to assist the child in meeting the 
child's postsecondary goals. The Department believes that this 
supplemental information would provide the institution with a better 
understanding of a student's abilities and limitations in determining 
an appropriate comprehensive transition and postsecondary program for 
the student.
    Changes: None.
    Comment: A few commenters expressed concern that a student's 
documentation from an SEA under Sec.  668.233(c) might not include 
terms such as ``intellectual disability'' or ``mental retardation'' 
and, therefore, may not be useful in establishing eligibility as 
student with an intellectual disability. One commenter stated that, in 
its school district, a student's IEP does not include a disability 
category. The commenter asked how a student's eligibility in this 
situation would be determined and whether the school district would 
have to complete an evaluation that states that the student has an 
intellectual disability. Another commenter asked if a student would 
need to have a specific diagnosis of intellectual disability to be 
eligible.
    Discussion: The issue raised by these comments is similar to the 
one addressed in response to comments on Sec.  668.231(b). Section 
668.233(c) requires that an institution obtain a record from an LEA 
that the student is or was eligible for special education and related 
services under the IDEA, and if

[[Page 55919]]

the record does not identify the student as having an intellectual 
disability, documentation establishing that the student has an 
intellectual disability. The Department recognizes that documentation 
from an LEA (an IEP or transition plan, for example) may not state that 
a student has an intellectual disability. The Department believes that 
Sec.  668.233(c)(1) and (c)(2) addresses this issue, by requiring the 
institution to review all documentation obtained to establish that the 
student has an intellectual disability. Nothing in these provisions, 
however, requires LEAs to perform or pay for evaluations that they do 
not need for purposes of meeting requirements of the IDEA.
    Changes: None.
    Comment: A few commenters suggested that, whenever possible, 
existing documentation from school records or other sources, such as 
previous evaluations conducted by qualified professionals from public 
agencies, be used to determine that the student has an intellectual 
disability, and that the process for making this determination should 
be minimally burdensome for students, families, and institutions.
    Discussion: During negotiated rulemaking, some negotiators 
expressed concern that institutions would require updated evaluations 
that could be costly or cost prohibitive. In the preamble to the NPRM, 
the Department stated that an institution, as the party responsible for 
determining students' eligibility for the Federal Pell, FSEOG, and FWS 
programs, would be allowed to accept the most recent documentation, 
even if it is more than a few years old. To further clarify, we do not 
believe it is appropriate to require in these regulations that the 
documentation submitted by the student have a minimum or maximum age, 
as long as the information used is the best available under the 
circumstances. Under Sec.  668.233(c), if the record from the LEA does 
not state that the student has an intellectual disability, the 
institution also would have to obtain documentation to establish that 
the student has an intellectual disability, as defined under Sec.  
668.231(b).
    Changes: None.

Part 690 Federal Pell Grant Program

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

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

    Comments: Several commenters agreed with the proposed regulations 
that would amend Sec.  690.67(a)(1) to provide that a student would be 
eligible for a second Scheduled Award if the student has earned in an 
award year at a minimum the credit or clock hours of the first academic 
year of the student's eligible program. However, a significant number 
of commenters objected to the proposed regulations as they would apply 
to term-based programs. In general, the commenters were concerned that 
the regulations would unduly limit the benefits to students of two 
Federal Pell Grants in an award year, would be overly complex and 
burdensome for institutions to administer, and would create confusion 
for students due to uncertainty in determining the students' Federal 
Pell Grants and due to the different eligibility requirements for a 
second Scheduled Award. The commenters also believed that enabling an 
individual student to enroll in additional coursework during an award 
year should be considered acceleration without reference to the 
program's length. Some commenters proposed that eligibility for 
payments be determined based on previous eligibility used and without 
reference to completion of the credit hours of an academic year. Some 
commenters proposed, as an alternative, for the Department to require 
that a student successfully complete the hours for which the Federal 
Pell Grant was paid to qualify for the second Scheduled Award.
    One commenter was concerned that the requirements would adversely 
affect students taking noncredit and reduced credit remedial 
coursework.
    Several commenters questioned the Department's concern 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 HEA that a 
student's lifetime eligibility is limited to nine Scheduled Awards if a 
student receives a Federal Pell Grant for the first time on or after 
July 1, 2008, did not provide sufficient minimum standards for ensuring 
a student's advancement in his or her eligible program. Two commenters 
recommended revising the satisfactory academic progress requirements as 
an alternative to the proposed regulations.
    Discussion: We agree that the proposed regulations might unduly 
limit a Federal Pell Grant-eligible student's ability to meet the costs 
of attending additional courses that would enable the student in an 
award year to accelerate his or her progress toward program completion 
and that the final regulations should not impede such acceleration. In 
addition, we agree that the proposed regulations could be considered 
complex and burdensome for some institutions to administer. We agree, 
in principle, with the recommendations of some commenters that payment 
should be tied to successful completion of the credit or clock hours 
for which a student has received Federal Pell Grant payments. Based on 
these comments, we believe it would be appropriate to require that, for 
a student to be eligible for payments from a second Scheduled Award in 
an award year, the student must be enrolled in credit or clock hours 
that were attributable to the student's second academic year. A student 
in a term-based program would cease to be eligible for a payment from 
the second Scheduled Award if the student ceased to be enrolled in the 
credit hours attributable to the second Scheduled Award prior to the 
date for any recalculation for changes in enrollment status required by 
the institution's recalculation policies established under Sec.  
690.80(b).
    The eligibility requirements for a second Scheduled Award in an 
award year must be different from those for a first award, in that 
section 401(b)(5)(A)(i) of the HEA requires enrollment on at least a 
half-time basis to receive a second Scheduled Award. This difference 
may be disconcerting to some students. However, we believe that 
students will be able to understand these requirements.
    We do not believe the regulations would adversely affect a student 
enrolled in noncredit or reduced-credit remedial coursework. The 
student's remedial coursework would be considered in accordance with 
the requirements for determining equivalence to full-credit coursework 
under 34 CFR 668.20 when determining the student's eligibility for a 
second Scheduled Award in an award year.
    We do not agree with the commenters concerning the efficacy of the 
current satisfactory academic progress standards and the new lifetime 
limit of nine Scheduled Awards in providing a sufficient basis for 
encouraging a student to accelerate program completion. Some 
institutions have adopted reasonable standards of satisfactory academic 
progress that would address our concerns. Others have used the 
flexibilities and options in the current regulations to fashion 
institutional standards that may meet the letter of the requirements in 
34 CFR 668.16(e) but in our view allow students who are not progressing 
satisfactorily to continue to receive title IV aid. Because of this 
variability and our belief that the new lifetime limit for Federal Pell 
Grants does not provide sufficient encouragement to accelerate program 
completion, we do not agree with the

[[Page 55920]]

suggestions that a payment of a second Scheduled Award may be made 
without reference to a student's completion of the first academic year 
in an award year. Further, we believe that relying on current 
satisfactory progress standards would not be in accord with the student 
achievement and accountability principles for using additional funds 
appropriated for Federal Pell Grants under the American Recovery and 
Reinvestment Act of 2009 (Pub. L. 111-5). We agree with the commenters 
who recommended that we consider revising the satisfactory academic 
progress standards and have included this issue as a likely topic in 
the negotiated rulemaking on program integrity issues that is scheduled 
to commence on November 2, 2009. Information on this new negotiated 
rulemaking was published in the Federal Register on May 26, 2009 (74 FR 
24728) and September 9, 2009 (74 FR 46399), respectively.
    Changes: We are revising Sec.  690.67(a)(1) to provide that an 
institution participating in the Federal Pell Grant Program shall award 
a payment of a second Scheduled Award to a student in an award year if 
an otherwise eligible student is enrolled for credit or clock hours 
that are attributable to the student's second academic year in the 
award year. As a result of this change, we are also making conforming 
changes in Sec.  690.67(c) for special circumstances in determining 
whether a student may qualify for a second Scheduled Award and in Sec.  
690.64 as discussed under the heading ``Payment Period in Two Award 
Years (Sec.  690.64).''

Transfer Students (Sec.  690.67(b))

    Comments: One commenter supported Sec.  690.67(b) as a 
straightforward treatment of transfer students. Another believed no 
provision was needed for transfer students if the Secretary ceased to 
require that eligibility for payment from a second Scheduled Award be 
based on completing the hours of the first academic year. One commenter 
cited examples where the provisions in Sec.  690.67(b) would result in 
inequitable treatment between continuously enrolled and transfer 
students. Another commenter believed that we should provide an ``hours-
earned'' method as an option under which an institution with the 
necessary information may determine the credits or clock hours earned 
in the award year at other institutions that would be applicable to 
completing the first academic year. The commenter believed that there 
should also be a limitation on the need to recalculate a student's 
eligibility based on the receipt of information subsequent to 
disbursements of a second Scheduled Award. Some commenters believed 
that the determination of a transfer student's credit or clock hours 
should be based on the percentage of the student's Scheduled Award used 
at the prior institution.
    Discussion: Based on the Department's revision of Sec.  
690.67(a)(1), determining a transfer student's credit or clock hours 
toward completion of the first academic year in an award year is still 
required. During negotiated rulemaking, the non-Federal negotiators 
noted that determination of the actual credits or clock hours earned at 
other institutions would be burdensome to the institution into which a 
student transfers and generally would be administratively difficult. To 
perform a determination of the actual credit or clock hours earned at 
other institutions, an institution would need to have the necessary 
information to determine whether credit or clock hours were earned in 
the current award year, regardless of whether the institution accepted 
them on transfer. The institution would also be required to resolve 
ambiguities such as whether the credit or clock hours of a summer 
payment period were considered earned in the current award year or 
whether credit or clock hours in a transcript were nonapplicable hours 
based on Advanced Placement (AP) programs, International Baccalaureate 
(IB) programs, testing out, life experience, or similar competency 
measures.
    While we recognized that there will be some inequities in applying 
the assumption method in Sec.  690.67(b), we continue to believe that 
this method is appropriate for evaluating a transfer student's 
eligibility when the alternative would be administratively burdensome 
to an institution. However, we also agree with the commenter who 
recommended that, if an institution chooses to do so, it may use an 
hours-earned method to determine the actual credit or clock hours 
earned at other institutions during the award year.
    Under Sec.  690.67(b)(2) an institution that chooses to use the 
assumption method 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. These same 
proportions are used to calculate the percentage of Scheduled Award 
used by a student. Following the provisions of Sec.  690.67(b)(2) would 
yield a more accurate determination of the credit or clock hours 
considered to be transferred than merely applying the percentage of 
Scheduled Award used.
    We agree with the concern regarding the receipt of additional 
information regarding a student's payments at other institutions 
subsequent to determining the student's eligibility for a second 
Scheduled Award and agree that some limitation on requiring a 
recalculation of prior payments would be appropriate. An institution 
may correctly make a determination of a student's eligibility for a 
second Scheduled Award for a prior payment period based on the 
information available at that time. We do not believe it is necessary 
to impose the burden of requiring the institution to adjust a 
determination for a prior payment period that was correctly made during 
that prior payment period. However, we believe it is appropriate to 
provide that the institution may, at its option, revise the student's 
eligibility for a prior payment based the receipt of additional 
information.
    Changes: We are revising Sec.  690.67(b) to provide that an 
institution may, on an individual student basis, use an hours-earned 
method for determining a student's credit or clock hours earned at 
other institutions in an award year as an alternative to the assumption 
method. We are also clarifying that an institution may, but is not 
required to, recalculate a student's payment in a prior payment period 
in an award year if the institution receives information that would 
change the student's eligibility for a second Scheduled Award in the 
prior payment period. The institution would be required to take into 
consideration the new information in determining eligibility for the 
current payment period if that payment period is in the same award 
year.

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

    Comment: One commenter did not support excluding the AP, IB, 
testing out, life experience, or similar competency measures in 
determining a student's eligibility for a second Scheduled Award. The 
commenter believed that the exclusion would be burdensome to 
administer.
    Discussion: We do not agree with the commenter. 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. We continue to believe that this 
provision ensures that only those credits or clock hours earned in the 
award year are considered in determining the

[[Page 55921]]

student's eligibility. While the provision may create some burden, it 
is essential to making a valid determination of a student's eligibility 
for a second Scheduled Award.
    Changes: None.

Payment Period in Two Award Years (Sec.  690.64)

    Comments: Several commenters supported the concept of requiring 
that a payment period scheduled to occur in two award years, a 
``crossover'' payment period, be assigned to the award year in which 
the student would receive the greater payment for the payment period. A 
significant number of commenters believed these requirements would be 
administratively difficult to administer. Several commenters believed 
that the financial aid administrator should continue to have the 
discretion to assign a ``crossover'' payment period to either award 
year and should not be required to assign a crossover payment period to 
the award year in which the student would receive the greater payment 
for the payment period. The commenters also believed that a financial 
aid administrator should not be required to reassign the crossover 
payment period if subsequent information is received that would lead to 
a higher Federal Pell Grant for a student as required in Sec.  690.64 
in the case of students enrolled on at least a three-quarter-time 
basis. One commenter believed that these requirements mandated that a 
student must file a Free Application for Federal Student Aid (FAFSA) 
for a crossover payment period. One commenter believed that a deadline 
should be established for being required to make reassignments of 
crossover payment periods.
    Several commenters believed that the determination of the higher 
payment should be made only at the time the Federal Pell Grant is 
initially awarded or packaged. Some commenters were concerned that 
increasing a crossover payment would necessitate cancelling all or a 
portion of a student's loan. One commenter believed the increased 
payments would lead to overpayments in Federal Work-Study (FWS) 
assistance. The commenters believed these adjustments in the students' 
awards would confuse students. Some commenters were concerned that 
requiring that the crossover payment period be in the second award year 
would adversely affect a student's eligibility for loans since the 
institution would be required to place the crossover payment period in 
the second award year for purposes of awarding FFEL and Direct Loans. 
Two commenters stated that the award year placement of a student's 
Federal Pell Grant may adversely affect the amount of the student's 
State grant aid. Commenters were also concerned that institutions would 
delay disbursement to students eligible for a higher payment from the 
second award year until Federal funds were available on July 1 for that 
year. One of these commenters noted that State law prohibited an 
institution from advancing funds not yet received. The commenter 
proposed that, if necessary due to State law, an institution should be 
allowed to disburse funds at the beginning of a crossover payment 
period from the first award year to a student eligible for a higher 
payment form the second award year and then make the necessary 
adjustments after July 1 to provide the higher payment from the second 
award year. The commenter believed that this process would ensure funds 
are available to the student at the start of the payment period but 
ultimately yield the greater payment. One commenter questioned whether 
the results of verifying application information could lead to a 
reassignment of the payment period and adversely affect a student. 
Several commenters recommended that if a payment must be assigned to 
the subsequent award year, the Federal Pell Grant should be considered 
disbursed for purposes of the return of title IV funds under 34 CFR 
668.22 even when the student withdraws prior to July 1.
    Discussion: We continue to believe that a crossover payment period 
should be assigned in a way that maximizes a student's eligibility for 
that payment period even if this causes some administrative 
difficulties. The Department would consider an institution that delays 
disbursing funds from the second award year until July 1 of that year, 
to be in compliance with these requirements if the institution 
disbursed funds at the beginning of the crossover payment period from 
the first award year to a student eligible for a higher payment from 
the second award year and then made the necessary adjustments after 
July 1 to provide the higher payment from the second award year as soon 
as funds were available on July 1. There is no requirement that a 
student submit a FAFSA for both award years to receive payment for a 
crossover payment period. We believe these benefits will be understood 
and appreciated by students. Further, with the changes made by the 
Department in these final regulations to Sec.  690.67(a)(1), assigning 
a crossover payment period to the subsequent award year would generally 
no longer adversely impact a student's ability to establish eligibility 
for a second Scheduled Award in that subsequent year.
    Contrary to the concerns expressed by some commenters, one of the 
major additional benefits for students of this requirement in Sec.  
690.64 is a reduction in student borrowing. The increase in the 
student's Federal Pell Grant payment would increase the student's 
estimated financial assistance and thus reduce the student's need for 
loan funds for the payment period. Also, while it is unlikely that a 
combination of an increased Federal Pell Grant payment and FWS would 
result in a need to reduce the FWS award as one commenter indicated, no 
overaward for earnings from work would be created in the very limited 
cases in which a student may need to have FWS assistance canceled.
    We do not agree with the commenters who were concerned that 
requiring that the crossover payment period in the second award year 
would adversely affect a student's eligibility for loans. The 
commenters believed that the institution would be required to place the 
crossover payment period in the new award year for purposes of awarding 
FFEL and Direct Loans. Under the requirements of the Title IV, HEA 
programs, the award year assignment of a student's Federal Pell Grant 
has no affect on the award year assignment of the student's other 
Federal student assistance, including loans. The amount of the Federal 
Pell Grant is estimated financial assistance for determining the need 
in the other programs. Institutions should ensure that their 
information technology systems provide for this necessary flexibility 
to ensure that students receive appropriate assistance in each award 
year. System requirements should not be the basis for limiting the 
assistance for which a student is eligible.
    We agree with the commenters that, in some limited instances under 
the current award regulations for State grant programs, a student's 
State grant may be reduced because of an increase in the student's 
Federal Pell Grant. We do not believe that we should use these limited 
circumstances as the basis for denying a student a higher Federal Pell 
Grant crossover payment. We believe that the States can make the 
necessary adjustments to their programs to maximize the overall aid 
available to these needy students.
    We do not agree that a reassignment of the payment period as a 
result of verification of application information would adversely 
affect a student. If, as a result of verification of application 
information, a student's EFC and Federal Pell Grant eligibility changes 
for

[[Page 55922]]

an award year, that result would be taken into consideration in 
assigning a student's crossover payment. If, for example, the crossover 
payment period were assigned to the first award year because it yielded 
the maximum Federal Pell Grant payment but verification of application 
information resulted in a lower EFC and increased Federal Pell Grant 
eligibility for the second award year, the crossover payment period 
would be reassigned to the second award year.
    With regard to the return of title IV funds, a disbursement for the 
subsequent award year may be made prior to July 1 using institutional 
funds rather than waiting to disburse when the subsequent award year 
Federal funds become available on July 1. Also, notwithstanding whether 
an institution chooses to make such a disbursement, the return of title 
IV funds takes into consideration both funds that were disbursed as 
well as funds that could have been disbursed.
    Based on these comments, we will establish deadlines specifically 
for these determinations through publication of a Federal Register 
notice. We will clarify the deadline when the receipt of information 
would require reassignment for a higher crossover payment and a 
deadline for a subsequent period when the receipt of information would 
support, but not require, an institution to make reassignments for a 
higher crossover payment. We expect to set the initial deadline based 
on the last date for submitting Student Aid Reports or Institutional 
Student Information Records for the first award year or a similar date 
as appropriate. During the subsequent period of time prior to the 
second deadline, an institution may establish such policies concerning 
reassignment of the crossover payment period as it determines best meet 
the needs of its students and the institution.
    Changes: We are revising proposed Sec.  690.64(b) to require that, 
regardless of a student's enrollment status, the crossover payment 
period must be assigned to the award year in which the student would 
receive the greater payment for the payment period at the time the 
student's Federal Pell Grant is initially calculated. We are also 
clarifying the deadlines by which an institution must take into account 
any information that changes a student's payment by providing that an 
institution must make a reassignment to the award year providing the 
greater payment based on any additional information received by a 
deadline that the Secretary establishes through publication in the 
Federal Register for each award year. We are further providing that an 
institution may make, but is not required to make, a reassignment if 
additional information is received after the date established for 
required reassignments and not later than the deadline date for the 
first award year for administrative relief based on unusual 
circumstances that the Secretary establishes through publication in the 
Federal Register for each award year.
    We are also removing proposed Sec.  690.64(a)(2) and (c). Section 
690.64(a)(2) provided that a student may request a determination 
concerning the assignment of a crossover payment period, and Sec.  
690.64(c) required the assignment of a payment period with more than 
six months scheduled to occur within one award year to be assigned to 
that award year. These proposed provisions are no longer relevant under 
these revised requirements.

Part 692--Leveraging Educational Assistance Partnership Program Grants 
for Access and Persistence Program (Subpart C of Part 692 Consisting of 
Sec. Sec.  692.90 Through 692.130)

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

    Comment: One commenter was concerned that early information and 
intervention, mentoring, or outreach programs (early intervention 
programs) are integral to the GAP Program, and the commenter believed 
that it would be difficult to identify students participating in early 
intervention programs who would be eligible for a LEAP Grant under GAP. 
The commenter believed that under current privacy laws identifying 
students who have participated in an eligible early intervention 
program and matching them with their FAFSA submissions and then with a 
GAP-participating postsecondary institution would appear to be 
impossible. The commenter questioned whether these requirements could 
be redefined to indicate that if the State partners with itself or 
another organization to provide early intervention programs at a 
particular high school that anyone who graduates with that high school 
cohort would be considered a ``participating student.'' The commenter 
believed this definition would remove the requirement of having to have 
personally identifiable information for each participant. The commenter 
also noted that additional guidelines would be needed for home-schooled 
students or those who participate in an early intervention program 
through a non-school-based program.
    Discussion: To the extent that the privacy provisions of FERPA (34 
CFR part 99) apply to the particular circumstances of a State agency 
and other GAP participants in the State, the Department will provide 
technical assistance on any issues raised by the applicability of FERPA 
on a case-by-case basis.
    Changes: None.

Executive Order 12866

1. 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 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. Therefore, 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

    As discussed in the NPRM, these 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, peer-to-peer file 
sharing and copyright infringement, teach-outs, readmission of 
servicemembers, and non-title IV revenue.

[[Page 55923]]

Regulatory Alternatives Considered

    Regulatory alternatives were considered as part of the rulemaking 
process. These alternatives were reviewed in detail in the preamble to 
the NPRM under both the Regulatory Impact Analysis and the Reasons 
sections accompanying the discussion to each regulatory provision. To 
the extent that they were addressed in response to comments received on 
the NPRM, alternatives are also considered elsewhere in this preamble 
to the final regulations under the Discussions sections related to each 
provision. No comments were received related to the Regulatory Impact 
Analysis discussion of these alternatives.
    As discussed above in the Analysis of Comments and Changes section, 
these final regulations reflect specific HEOA requirements, in many 
cases using language drawn directly from the statute, and minor 
revisions in response to public comments. In most cases, these 
revisions were technical in nature and intended to address drafting 
issues or to provide additional clarity. None of these changes result 
in revisions to cost estimates prepared for and discussed in the 
Regulatory Impact Analysis of the NPRM.

Benefits

    As discussed in the NPRM, benefits provided in these regulations 
include greater transparency about consumer information and campus 
safety for prospective and current students at institutions 
participating in the Federal student financial assistance programs, 
copyright infringement policies, requirements for readmission of 
servicemembers, explanation of extenuating circumstances under which 
TEACH Grant service obligations may be excused, requirements for 
programs serving students with intellectual disabilities, and 
additional guidelines for Federal grant and work-study programs. It is 
difficult to quantify benefits related to the new institutional 
requirements, as there is little specific data available on consumers' 
use of such information and the effect of the other provisions. In the 
NPRM, the Department requested comments or data that would support a 
more rigorous analysis of the impact of these provisions. No comments 
or additional data were received.
    Benefits under these regulations 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, or by changes made in response to comments on the NPRM. As 
noted in the Regulatory Impact Analysis in the NPRM, these provisions 
result in net costs to the government $1,644 million over years 2010-
2014.

Costs

    As discussed extensively in the Regulatory Impact Analysis of the 
NPRM, many of the statutory provisions implemented though these 
regulations will require regulated entities to develop new disclosures 
and other materials, as well as accompanying dissemination processes. 
In total, these changes are estimated to increase burden on entities or 
individuals participating in the Federal student assistance programs by 
253,718 hours. Virtually all this increased burden is associated with 
institutions, with 80 percent related to two provisions: peer-to-peer 
file sharing and the award of two Pell Grants in a single award year. 
An extremely small amount--384 hours--is associated with students. The 
monetized cost of this additional burden, using loaded wage data 
developed by the Bureau of Labor Statistics, is $4.7 million.
    Given the limited availability of data underlying these burden 
estimates, in the NPRM the Department requested comments and supporting 
information for use in developing more robust estimates. In particular, 
we asked institutions to provide detailed data on actual staffing and 
system costs associated with implementing these regulations, especially 
the provisions related to peer-to-peer file sharing and administering 
two Pell Grants in one year. No comments or additional data were 
provided.

Net Budget Impacts

    HEOA provisions implemented by these regulations are estimated to 
have a net budget impact of $297.4 million in 2010 and $1.6 billion 
over FY 2011-2014. Consistent with the requirements of the Credit 
Reform Act of 1990, budget cost estimates for the student loan programs 
reflect the estimated net present value of all future non-
administrative Federal costs associated with a cohort of loans. A 
cohort reflects all loans originated in a given fiscal year.
    The budgetary impact of the regulations is entirely driven by 
statutory changes involving the provision of two Pell Grants in a 
single award year. The Department estimates almost no budgetary impact 
for other provisions included in these regulations. There is no data 
indicating that the extensive new requirements for disclosures for 
student loan program participants will have any impact on the volume or 
composition of Federal student loans.

Assumptions, Limitations, and Data Sources

    As noted in the NPRM, because these regulations largely restate 
statutory requirements that would be self-implementing in the absence 
of regulatory action, impact estimates provided in the preceding 
section reflect a pre-statutory baseline in which the HEOA changes 
implemented in these regulations do not exist. Costs have been 
quantified for five years. In developing these estimates, a wide range 
of data sources were used, including data from the National Student 
Loan Data System; operational and financial data from Department of 
Education systems, including especially the Fiscal Operations Report 
and Application to Participate (FISAP); 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. Data from other sources, such as the U.S. 
Census Bureau, were also used. Elsewhere in this SUPPLEMENTARY 
INFORMATION section we identify and explain burdens specifically 
associated with information collection requirements. See the heading 
Paperwork Reduction Act of 1995.

Accounting Statement

    As required by OMB Circular A-4 (available at http://www.Whitehouse.gov/omb/Circulars/a004/a-4.pdf), in Table 2 below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with the provisions of these regulations. This 
table provides our best estimate of the changes in Federal student aid 
payments as a result of these regulations. The estimate for the period 
from 2010 to 2014 uses OMB discounting methodology and discount rates 
of seven and three percent. Expenditures are classified as transfers 
from the Federal government to student loan borrowers (for expanded 
loan discharges and teacher loan forgiveness payments).

[[Page 55924]]



 Table 2--Accounting Statement: Classification of Estimated Expenditures
                              [In millions]
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $281 (7% discount rate).
                                         $277 (3% discount rate).
From Whom to Whom?.....................  Federal Government to Student
                                          Loan Borrowers.
------------------------------------------------------------------------

Regulatory Flexibility Act Certification

    The Secretary certifies that these regulations will not have a 
significant economic impact on a substantial number of small entities. 
These regulations affect institutions of higher education, lenders, and 
guaranty agencies that participate in Title IV, HEA programs and 
individual students and loan borrowers. 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 small governmental jurisdictions, which are comprised of 
cities, counties, towns, townships, villages, school districts, or 
special districts, with a population of less than 50,000.
    As discussed in more detail in the Regulatory Flexibility Act 
section of the NPRM, data from the Integrated Postsecondary Education 
Data System (IPEDS) indicate that roughly 2,660 institutions 
participating in the Federal student assistance programs meet the 
definition of ``small entities.'' More than half of these institutions 
are short-term, for-profit schools focusing on vocational training. 
Other affected small institutions include small community colleges and 
tribally controlled schools. The Department estimates that total burden 
on small institutions from these regulations will be thirty-nine hours 
or less. Burden on institutions associated with these regulations is 
largely associated with the requirements to establish systems to limit 
illegal peer-to-peer file sharing, readmission requirements for 
servicemembers, and new disclosures related to graduation rates, 
retention rates, fire safety, and campus safety. In each of these 
cases, the Department believes the new provisions do not represent a 
significant burden on a large number of schools. Provisions related to 
peer-to-peer file sharing, for example, only affect schools that 
provide students with school-maintained and operated internet services; 
many small institutions lack the resources or need to provide such 
services and so will not be affected by the provisions. For those that 
will be affected, the Department is encouraging the adoption of best 
practices which should reduce institutional burden.
    Data from the National Center for Education Statistics indicate 
that roughly two percent of students at small institutions receive 
veteran's benefits; this figure significantly overstates the number of 
servicemembers likely to be readmitted under the regulations, but even 
using the two percent figure as a proxy for affected students, the 
Department believes this limited population will not represent a 
significant burden for small institutions. For the consumer information 
requirements, vocational institutions, which make up more than half of 
the schools meeting the definition of ``small entities,'' are already 
required to collect and distribute much of the required data. Even for 
schools that will face new requirements to collect and disseminate 
information about campus activities, the Department estimates 
additional burden at most institutions of three hours or less.
    In the NPRM, the Secretary invited small institutions to submit 
data supporting comments related to whether they believe the changes 
would have a significant economic impact on them. No data was received. 
In the absence of this data, and based on our internal analyses, the 
Department believes the new requirements contained in these regulations 
do not impose significant new costs on a substantial number of small 
institutions.
    Guaranty agencies are State and private nonprofit entities that act 
as agents of the Federal government, and as such are not considered 
``small entities'' under the Regulatory Flexibility Act. The impact of 
the regulations on individuals is not subject to the Regulatory 
Flexibility Act.

Paperwork Reduction Act of 1995

    Final 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, 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 final change to Sec.  600.5(a)(5) adds 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 continuously 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 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 reported under the redesignated OMB Control Number 1845-
0012.

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

    The final regulations in Sec.  668.14(b)(31) 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 final 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 final Sec.  668.18 of the regulations include the general 
requirements that an institution may not deny readmission to a 
servicemember, but must readmit the

[[Page 55925]]

servicemember with the same academic status as when the student was 
last admitted to the institution. The final 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 final regulations specify that the institution 
must promptly readmit a student, and 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 final 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 final regulations 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 intent to return to the 
institution. However, such notices do 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 U.S. 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 do not 
count against the period of uniformed service which is limited to the 
five years.
    The final regulations list the documentation that supports the 
institution's determination for readmission that a student must submit 
with an application for readmission. The final regulations make clear 
that the types of documentation available or necessary will vary from 
case to case.
    The final regulations list the circumstances that a student's 
eligibility for readmission to an institution would be terminated.
    We estimate that the final 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 final 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 final regulations establish that institutional 
loans 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 final 
regulations allow institutions to count the excess amount on a payment-
period basis.
    We estimate that the final regulations will increase burden for 
institutions; however, these final 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 final regulation in Sec.  668.28(b) defines the NPV as the sum 
of the discounted cash flows. Appendix C illustrates how an institution 
calculates its 90/10 revenue percentage.
    The final 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 final 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 final regulations in Sec.  668.28(c) removes all of the 90/10 
provisions from 34 CFR 600.5 and relocates the amended provisions to 
subpart B of part 668. The final 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 final regulations require the institution to notify 
the Department no later than 45 days after the end of its fiscal year 
that it failed to satisfy the 90/10 requirement. In keeping with 
provisional certification requirements the current regulations are 
amended by adding final 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 final 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 final 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 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 final 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 final regulations in Sec.  668.43(a) amend 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 is allowed to determine what a ``plan'' is, including when 
a plan becomes a plan.
    We estimate that the final 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 final 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

[[Page 55926]]

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 final 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 final regulations require 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 final regulations 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 final 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 final 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 final 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 final 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 final 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 final 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 reports 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 final 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 final 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 final regulations 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 final 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 final 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 final language clarifies 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 final 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 final regulations outline the elements that an institution must 
include in its statement of policy

[[Page 55927]]

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 required.
    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 final 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 final 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 final definition is added to clarify what is meant by on-campus 
student housing facility and to link the meaning of ``on-campus'' to 
the current regulatory definition of campus in Sec.  668.46(a), which 
is used for crime reporting under Sec.  668.46(c). The final 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 final regulations in Sec.  668.46(b) require an institution to 
include its missing student notification policy and procedures in its 
annual security report. This is required beginning with the annual 
security report distributed by October 1, 2010.
    We estimate that the final 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 final regulations in Sec.  668.46(h) implement 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 final regulations 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.
    The final 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 final 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 final 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 final regulations 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.
    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 final 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 final regulations require an institution to report to the 
public, the statistics that it submits to the Department in its annual 
fire safety report. The institution must 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 final 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

[[Page 55928]]

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 final 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 the public. These final 
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 final Sec.  668.49(b).
    We estimate that the final 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 final regulations in Sec.  600.5(a)(5)(i)(B)(2)(ii) define 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. This 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 final change in the regulations.

Section 668.8--Eligible Program

    The final regulations in Sec.  668.8(n) define a comprehensive 
transition and postsecondary program as an eligible program when it is 
approved by the Secretary. The final 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 final change in the 
regulations.

Section 668.232--Program Eligibility

    The final regulations require an institution that wishes to provide 
a comprehensive transition and postsecondary program to apply and 
receive approval from the Secretary. The final 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 final regulations will increase burden for 
institutions by 66 hours in OMB Control Number 1845-NEW4.

Section 668.233--Student Eligibility

    The final 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 LEA that the student is or was eligible for 
FAPE under the IDEA. If the FAPE record does not indicate that the 
student has an intellectual disability, the institution must obtain 
documentation from another source that identifies the intellectual 
disability.
    We estimate that the final regulations will increase burden for 
institutions by 768 hours in OMB Control Number 1845-NEW4.

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

    The final regulations change the phrase ``any special facilities 
and services'' to ``the services and facilities,'' and replaces the 
phrase ``disabled students'' with ``students with disabilities.'' The 
final changes 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 final 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 final regulations in Sec.  675.16(b)(1)(ii) and (b)(2), amend 
the FWS regulations 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 increases to not more than $200. Second, the FWS provision that 
allows an institution to pay for prior award year charges of $100 or 
more is 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 final 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 final 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 final 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.

[[Page 55929]]

    To obtain the discharge, the recipient (or his or her 
representative) is 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 U.S. 
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 is responsible for 
fulfilling any teaching service obligation that is not discharged.
    We estimate that the final 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 final regulations amend Sec.  690.67(a) to provide that a 
student is eligible for a second Scheduled Award if the student is 
enrolled for credit or clock hours attributable to the student's second 
academic year in the award year, 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 regulations will increase burden for 
institutions by 47,432 hours in OMB Control Number 1845-NEW5.

Section 690.67(b)--Transfer Students

    The final regulations in Sec.  690.67(b) 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 final regulations will increase burden for 
institutions by 14,400 hours in OMB Control Number 1845-NEW5.

Section 690.67(c)--Special Circumstances

    The final regulations in Sec.  690.67(c) provide that in a payment 
period where there is insufficient remaining eligibility from the first 
Scheduled Award to make full payment for the payment period, 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 is 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.

Section 690.67(d)--Nonapplicable Credit or Clock Hours

    The final regulation in Sec.  690.97(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 institutions will be making determinations about 
the applicability of AP, IB, or other non-applicable courses, 
institutions 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 final 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

    The final regulation in Sec.  690.64 states that, if a student is 
enrolled in a crossover payment period as a half-time or less-than-
half-time student, the current requirements generally 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 is required to 
reassign the payment to the award year providing the greater payment 
within specified time frames.
    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 final 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 final 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

[[Page 55930]]

the award year up to the total amount of the payment for the payment 
period.
    We estimate that the final regulations will increase burden for 
institutions by 8,471 hours in OMB Control Number 1845-NEW5.

Part 692 Leveraging Educational Assistance Partnership Program

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

    The final regulations require that the State program notify 
eligible students that grants under the LEAP Grant Program are (1) LEAP 
Grants and (2) funded by the Federal Government, the State, and, where 
applicable, other contributing partners.
    The implementation of the final 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 final 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 ensure 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 final 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 
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 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 final 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 final 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 ensure 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 final 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 final 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 final 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 ensure 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 final 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 final notice will also include any additional 
requirements that the State may require for receipt of a LEAP Grant 
under GAP.
    The implementation of the final 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 final 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 ensure 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 this discussion, the following chart describes the 
sections of the final 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. There
                               requirements for      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).

[[Page 55931]]

 
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 final
                               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 final
                               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).
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
                               student 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.

[[Page 55932]]

 
692.21, 692.100, 692.101,     Requiring the State   OMB 1845-NEW6. 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).
------------------------------------------------------------------------

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(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: October 16, 2009.
Arne Duncan,
Secretary of Education.


0
For the reasons discussed in the preamble, the Secretary amends 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

0
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.


0
2. Section 600.2 is amended by:
0
A. Revising paragraph (1)(i) of the definition of educational program.
0
B. Adding, in alphabetical order, a definition for teach-out plan.
0
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))



0
3. Section 600.4 is amended by:
0
A. Revising paragraph (a)(4).
0
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))



0
4. Section 600.5 is amended by:
0
A. Revising paragraph (a)(5).
0
B. In paragraph (a)(6), adding the word ``and'' after the punctuation 
``;''.

[[Page 55933]]

0
C. In paragraph (a)(7), removing the word ``; and'' and adding, in its 
place, the punctuation ``.''.
0
D. Removing paragraph (a)(8).
0
E. Removing paragraphs (d) through (g).
0
F. Redesignating paragraph (h) as paragraph (d).
0
G. Adding a new paragraph (e).
0
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) Has provided a program leading to a baccalaureate degree in 
liberal arts, as defined in paragraph (e) of this section, continuously 
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:
    (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)



0
5. Section 600.6 is amended by:
0
A. Revising paragraph (a)(4).
0
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))



0
6. Section 600.32 is amended by:
0
A. In paragraph (a), removing the words ``(b) and (c)'' and adding, in 
their place, the words ``(b), (c), and (d)''.
0
B. Redesignating paragraph (d) as paragraph (e).
0
C. Adding a new paragraph (d).
0
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 and the Secretary has 
taken an action to limit, suspend, or terminate the institution's 
participation under Sec.  600.41 or subpart G of this part, or has 
taken an emergency action 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 in existence 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 paragraph (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

0
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.


0
8. Section 668.8 is amended by:
0
A. In paragraph (d)(2)(iv)(B), removing the word ``or'' that appears 
after the punctuation ``;''.
0
B. In paragraph (d)(3)(v), removing the punctuation ``.'' and adding, 
in its place, the word ``; or''.
0
C. Adding paragraph (d)(4).
0
D. Revising paragraph (n).
0
E. Removing the OMB control number at the end of the section.
    The addition and revision read as follows:


Sec.  668.8  Eligible program.

    (d) * * *
    (4) For purposes of a proprietary institution of higher education 
only, is a program leading to a baccalaureate degree in liberal arts, 
as defined in 34 CFR 600.5(e), that--
    (i) Is provided by an institution that is accredited by a 
recognized regional accrediting agency or association, and has 
continuously held such accreditation since October 1, 2007, or earlier; 
and
    (ii) The institution has provided continuously since January 1, 
2009.
* * * * *
    (n) For Title IV, HEA program purposes, eligible program includes a

[[Page 55934]]

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.
* * * * *

0
9. Section 668.13(c)(1) 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 and subpart L of this part 
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 at the start of a fiscal year after it did not 
derive at least 10 percent of its revenue for its preceding fiscal year 
from sources other than Title IV, HEA program funds, as required under 
Sec.  668.14(b)(16).
* * * * *

0
10. Section 668.14 is amended by:
0
A. Adding paragraph (b)(16).
0
B. In paragraph (b)(25)(ii), removing the word ``and'' that appears 
after the punctuation ``;''.
0
C. Adding paragraph (b)(30).
0
D. Adding paragraph (b)(31).
0
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 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)
* * * * *

0
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

[[Page 55935]]

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; and
    (E)(1) If the student is readmitted to the same program, for the 
first academic year in which the student returns, assessing--
    (i) The tuition and fee charges that the student was or would have 
been assessed for the academic year during which the student left the 
institution; or
    (ii) Up to the amount of tuition and fee charges that other 
students in the program are assessed for that academic year, if 
veterans' education benefits, as defined in section 480(c) of the HEA, 
or other servicemember education benefits, will pay the amount in 
excess of the tuition and fee charges assessed for the academic year in 
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 tuition and fee charges that other students 
in the program are assessed for that academic year.
    (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 at no extra cost 
to the student 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 to the student and 
allowing the student to retake a pretest at no extra cost to the 
student.
    (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 when considered in light of the overall financial 
resources of the institution and the impact otherwise of such action on 
the operation of the institution.
    (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 for the period 
of enrollment during which the student resumes attendance, and 
continuing so long as the institution is unable to comply with such 
requirements through other means.
    (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, not later than 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

[[Page 55936]]

    (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 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.)



0
12. Section 668.23 is amended by revising 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

[[Page 55937]]

accordance with Sec.  668.28. The institution must also report in the 
footnote the dollar amount of the numerator and denominator of its 90/
10 ratio as well as the individual revenue amounts identified in 
section 2 of appendix C to subpart B of part 668.
* * * * *

0
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 meets 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 special tax treatment under the Internal Revenue Code of 
1986; or
    (iv) Institutional scholarships that meet the requirements in 
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 and credited in full to the 
students' accounts at the institution 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 and deemed to be 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 other 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. If any funds from the loan disbursement used in the 
return calculation under Sec.  668.22 were counted as non-title IV 
revenue under paragraph (a)(6) of this section, the amount of Title IV, 
HEA program funds refunded or returned under Sec.  668.22 is considered 
to consist of pre-ECASLA loan amounts and loan amounts in excess of the 
loan limits prior to ECASLA in the same proportion to the loan 
disbursement; 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--

[[Page 55938]]

    (i) Using the formula, NPV = sum of the discounted cash flows 
Rt/(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 ``Rt'' 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)


0
14. Appendix C is added to subpart B of part 668 to read as follows:
BILLING CODE 4000-01-P

[[Page 55939]]

[GRAPHIC] [TIFF OMITTED] TR29OC09.006


[[Page 55940]]


[GRAPHIC] [TIFF OMITTED] TR29OC09.007


[[Page 55941]]


[GRAPHIC] [TIFF OMITTED] TR29OC09.008


[[Page 55942]]


[GRAPHIC] [TIFF OMITTED] TR29OC09.009

BILLING CODE 4000-01-C

0
15. Section 668.32 is amended by:
0
A. Revising the introductory text.
0
B. In paragraph (a)(1)(iii), adding the word ``and'' after the 
punctuation ``;''.
0
C. In paragraph (a)(2), removing the punctuation ``;'' and adding, in 
its place, the punctuation ``.''.
0
D. In paragraph (b), removing the punctuation ``;'' and adding, in its 
place, the punctuation ``.''.
0
E. In paragraph (c)(4)(ii), removing the punctuation ``;'' and adding, 
in its place, the punctuation ``.''.
0
F. In paragraph (d), removing the punctuation ``;'' and adding, in its 
place, the punctuation ``.''.
0
G. In paragraph (e)(4)(ii), removing the punctuation ``;'' and adding, 
in its place, the punctuation ``.''.
0
H. In paragraph (f), removing the punctuation ``;'' and adding, in its 
place, the punctuation ``.''.
0
I. In paragraph (g)(4), removing the punctuation ``;'' at the end of 
the paragraph and adding, in its place, the punctuation ``.''.
0
J. In paragraph (h), removing the punctuation ``;'' and adding, in its 
place, the punctuation ``.''.
0
K. In paragraph (i), removing the punctuation ``;'' and adding, in its 
place, the punctuation ``.''.
0
L. In paragraph (j), removing the punctuation ``;'' and adding, in its 
place, the punctuation ``.''.
0
M. In paragraph (k)(9), removing the word ``; and'' and adding, in its 
place, the punctuation ``.''.
0
N. In paragraph (l), removing the word ``; and'' and adding, in its 
place, the punctuation ``.''.
0
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.
* * * * *

0
16. Section 668.41 is amended by:
0
A. In paragraph (a), adding, in alphabetical order, the definition of 
on-campus student housing facility.
0
B. Revising paragraph (d).
0
C. Revising paragraph (e).
0
D. In paragraph (g)(1)(i), removing the words ``on request''.
0
E. In the OMB control number parenthetical at the end of the section, 
removing the words, ``and 1845-0010''.
    The addition and revisions read as follows:

[[Page 55943]]

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 institution's 
campus, as defined in Sec.  668.46(a).
* * * * *
    (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.
* * * * *

0
17. Section 668.43 is amended by:
0
A. In the introductory text of paragraph (a), removing the words ``upon 
request''.
0
B. In paragraph (a)(5)(ii), removing the word ``and'' that appears 
after the punctuation ``;''.
0
C. In paragraph (a)(5)(iii), adding the word ``and'' after the 
punctuation ``;''.
0
D. Adding paragraph (a)(5)(iv).
0
E. Revising paragraph (a)(7).
0
F. In paragraph (a)(8), removing the word ``and'' that appears after 
the punctuation ``;''.
0
G. In paragraph (a)(9), removing the punctuation ``.'' and adding, in 
its place, the punctuation ``;''.
0
H. Adding paragraph (a)(10).
0
I. Adding paragraph (a)(11).
0
J. In paragraph (b), removing the words ``, upon request,''.
    The additions and revision read as follows:


Sec.  668.43  Institutional information.

    (a) * * *
    (5) * * *
    (iv) Any plans by the institution for improving the academic 
program of the institution, upon a determination by the institution 
that such a plan exists;
* * * * *
    (7) A description of the services and facilities available to 
students with

[[Page 55944]]

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; and
    (11) A description of the transfer of credit policies established 
by the institution which must include a statement of the institution's 
current transfer of credit policies that includes, at a minimum--
    (i) Any established criteria the institution uses regarding the 
transfer of credit earned at another institution; and
    (ii) A list of institutions with which the institution has 
established an articulation agreement.
* * * * *

0
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 for 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

[[Page 55945]]

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 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)


0
19. Section 668.46 is amended by:
0
A. In paragraph (a), adding, in alphabetical order, a definition of 
test.
0
B. Adding paragraphs (b)(13) and (b)(14).
0
C. Revising paragraph (c)(3).
0
D. Revising the heading for paragraph (e).
0
E. Adding paragraph (e)(3).
0
F. Adding paragraph (g).
0
G. 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

[[Page 55946]]

enforcement agency that has jurisdiction in the area;
    (iii) Contain an option for each student to identify a contact 
person or persons whom the institution shall notify within 24 hours of 
the determination that the student is missing, if the student has been 
determined 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 
within 24 hours of the determination that the student is missing, in 
addition to notifying any additional contact person designated by the 
student; and
    (vi) Advise students that, the institution will notify the local 
law enforcement agency within 24 hours of the determination that the 
student is missing, unless the local law enforcement agency was the 
entity that made the determination 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 that the student is missing;
    (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 that the student is 
missing; 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 
within 24 hours that the student is missing.
* * * * *

0
20. 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, employees, 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 and employees. 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 persons who received fire-related injuries 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)

[[Page 55947]]


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


0
21. Appendix A to subpart D of part 668 is amended by:
0
A. Revising the introductory text.
0
B. Under the heading, ``Crime Definitions From the Uniform Crime 
Reporting Handbook,'' by:
0
i. Removing the definition of Weapon Law Violations;
0
ii. Adding a new definition of Weapons: Carrying, Possessing, Etc.; and
0
iii. Revising the definitions of Drug Abuse Violations and Liquor Law 
Violations.
0
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.

0
22. Section 668.161 is amended by revising the section heading and 
paragraph (a)(4) to 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]

0
23. 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''.

0
24. 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:
    (a) 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

[[Page 55948]]

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.
    (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.
    (b) 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

0
25. The authority citation for part 675 is revised to read as follows:

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


Sec.  675.2  [Amended]

0
26. 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,''.
0
27. 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.

[[Page 55949]]

    (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 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 
occurred on the account.
    (d) Student authorizations. (1) Except for the noncash 
contributions allowed under paragraph (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)


0
28. Section 675.18 is amended by:
0
A. Adding paragraph (g)(4).
0
B. Adding paragraph (i).
0
C. Revising 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;

[[Page 55950]]

    (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
    (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, 2756b)


0
29. Section 675.26 is amended by:
0
A. In paragraph (d)(2)(iii), removing the word ``or'' that appears 
after the punctuation ``;''.
0
B. In paragraph (d)(2)(iv), removing the punctuation ``.'' and adding, 
in its place, the word ``; or''.
0
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).
* * * * *

0
30. Section 675.41 is amended by:
0
A. Revising paragraph (a).
0
B. Revising the paragraph heading and introductory text in paragraph 
(b).
0
C. In paragraph (b)(2), removing the word ``, participation,''.
0
D. In paragraph (b)(5), removing the words ``work-learning'' and 
adding, in their place, the words ``work-learning-service''.
0
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]

0
31. 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]

0
32. 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]

    33. Section 675.45 is amended by:

0
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''.
0
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

0
34. 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]

0
35. 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''.
0
36. Section 686.41 is amended by:
0
A. In the introductory text of paragraph (a)(2), removing the words 
``and (ii)'' and adding, in their place, the words ``, (ii), and 
(iii)''.
0
B. Revising paragraphs (a)(2)(ii), (b), and (c).
0
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)
* * * * *

0
37. Section 686.42 is amended by:
0
A. Adding paragraph (c).
0
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--

[[Page 55951]]

    (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--
    (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

0
38. The authority citation for part 690 continues to read as follows:

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

0
39. Section 690.6 is amended by:
0
A. Revising the section heading.
0
B. Adding paragraph (e).
    The revision and addition read as follows:


Sec.  690.6  Duration of student eligibility.

* * * * *
    (e) If a student receives a Federal Pell Grant for the first time 
on or after July 1, 2008, the student may receive no more than nine 
Scheduled Awards.
* * * * *

0
40. Section 690.63 is amended by:
0
A. Adding paragraph (h).
0
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)



0
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) 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;
    (2) The institution must reassign the payment to the award year 
providing the greater payment if 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--
    (i) Subsequent to the initial calculation of the student's payment 
for the payment period; and
    (ii) Not later than the deadline date for the first award year that 
the Secretary establishes through publication in the Federal Register 
for each award year; and
    (3) The institution may reassign the payment to the award year 
providing the greater payment if 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--
    (i) Subsequent to the deadline date established in paragraph (b)(2) 
of this section; and
    (ii) Not later than the deadline date for the first award year for 
administrative relief based on unusual circumstances that the Secretary 
establishes through publication in the Federal Register for each award 
year;
    (c) 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
    (d) 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)



0
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) Is enrolled for credit or clock hours that are attributable to 
the student's second 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. (1) Options. If a student transfers to an 
institution during an award year, the institution must determine the 
credit or clock hours earned in the award year at the other 
institutions in accordance with paragraph (b)(2) or (3) of this 
section.
    (2) Assumption method. (i) The institution may 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
    (ii) If less than the first Scheduled Award has been disbursed at a 
prior

[[Page 55952]]

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--
    (A) 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
    (B) 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.
    (3) Hours-earned method. (i) If the institution has information 
concerning the credit or clock hours earned by a student while 
attending other institutions, the institution may determine the credit 
or clock hours actually earned at other institutions.
    (ii) To make a determination under paragraph (b)(3)(i) of this 
section, the institution must have information that--
    (A) Includes the time periods when the credit or clock hours were 
earned; and
    (B) Does not include nonapplicable credit or clock hours described 
in paragraph (d) of this section.
    (iii) An institution must attribute to the current award year any 
credit or clock hours earned at other institutions that were earned in 
a payment period that it determines was scheduled to occur in the prior 
award year and the current award year.
    (4) Receipt of additional information. (i) If an institution 
receives additional information concerning, for paragraph (b)(2) of 
this section, Federal Pell Grant disbursements or, for paragraph (b)(3) 
of this section, credit or clock hours earned at other institutions and 
related information, subsequent to a prior payment period in which the 
institution disbursed a payment of a second Scheduled Award in the 
award year based on the application of paragraph (b)(2) or (3) of this 
section, the institution is not required to apply the information to 
the prior payment period.
    (c) Special circumstances. (1) In a payment period in which there 
is insufficient remaining eligibility from a student's first Scheduled 
Award to provide a full payment for the payment period, the financial 
aid administrator at the institution may waive the requirement in 
paragraph (a)(1) of this section, if the financial aid administrator--
    (i) Determines that the student due to circumstances beyond the 
student's control was unable to complete the credit or clock hours of 
the first academic year that are necessary to be enrolling for credit 
or clock hours that are attributable to the second academic year; 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 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)

PART 692--LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP PROGRAM

0
43. 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]

0
44. Section 692.10 is amended by:
0
A. In paragraph (a)(1), adding the words ``for the programs under this 
part'' after the number ``1979''.
0
B. In paragraph (a)(2), removing the word ``If'' and adding, in its 
place, the words ``For the programs under this part, if''.
0
C. In paragraph (a)(2), removing the word ``LEAP'' each time it 
appears.
0
D. In paragraph (b), removing the word ``-appropriated'' after the word 
``State'', both times it appears.
0
E. In the authority citation at the end of the section, adding ``, 
1070c-2'' after the number ``1070c''

0
45. Section 692.21 is amended by:
0
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''.
0
B. In paragraph (j), removing the word ``and'' that appears after the 
punctuation ``;''.
0
C. Redesignating paragraph (k) as paragraph (l).
0
D. Adding a new paragraph (k).
0
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)
* * * * *

0
46. 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)



0
47. Subpart C, consisting of Sec. Sec.  692.90 through 692.130 and 
Appendix A, 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?

[[Page 55953]]

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 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;

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    (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 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.
    (4) For fiscal year 2011, the prior fiscal year allotment to a 
State for purposes of paragraph (a)(3) of this section shall include 
any fiscal year 2010 allotment made to that State under subpart B of 
this part.
    (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.

[[Page 55955]]

    (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.
    (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 
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

[[Page 55956]]

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

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

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[FR Doc. E9-25373 Filed 10-28-09; 8:45 am]
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