National Service Trust

CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

45 CFR Parts 2525, 2526, 2527, 2528, and 2529

National Service Trust

AGENCY: Corporation for National and Community Service.

ACTION: Interim final rule.

-----------------------------------------------------------------------

SUMMARY: The Corporation for National and Community Service (the

Corporation) is issuing this interim final rule implementing

requirements of subtitle D of the National and Community Service Act of

1990 (the Act). This rule describes the following: the National Service

Trust (the Trust); who is eligible to receive education awards from the

Trust; how the amount of the education awards is determined; the

purposes for which the education awards may be used; and the

circumstances under which AmeriCorps participants will receive

forbearance and payment of interest expenses on qualified student

loans. This rule is intended to allow for the provision of educational

benefits to AmeriCorps participants.

DATES: Interim rule effective June 15, 1994; comments must be received

on or before August 1, 1994.

ADDRESSES: Comments must be mailed to the Corporation for National and

Community Service, P.O. Box 34680, Washington, DC 20034-4680 or hand

delivered to the Office of the General Counsel, room 9200, 1100 Vermont

Avenue, Washington, DC 20525. Comments received may be inspected at the

Corporation for National and Community Service, Office of the General

Counsel, room 9200, 1100 Vermont Avenue NW., Washington, DC 20525,

between 9 a.m. and 5 p.m. Eastern daylight savings time.

FOR FURTHER INFORMATION CONTACT:

Terry Russell, (202) 606-4949 (Voice) or (202) 606-5256 (TDD), between

the hours of 9 a.m. and 6 p.m. Eastern daylight savings time. For

individuals with disabilities, information will be made available in

alternative formats upon request.

SUPPLEMENTARY INFORMATION: The Corporation has published this rule as

an interim final rule rather than as a proposed rule pursuant to 44

U.S.C. 553(b)(3)(B). The Corporation is making grants to AmeriCorps

programs that will operate over the summer of 1994 and whose

participants will need to receive education awards under the terms and

conditions of this rule. Since it would be contrary to the public

interest to publish this rule as a proposed rule, it is published as an

interim final rule to take effect immediately.

On March 23, 1994, the Corporation published final regulations

governing the Corporation's grantmaking programs and various support

and investment activities authorized by the Act (59 FR 13772). This

rule establishes regulations to implement sections 145 through 148 of

subtitle D of the Act, which requires the Corporation to make payments

from the National Service Trust for education awards for AmeriCorps

participants and for interest expenses that accrue on qualified student

loans for which participants have obtained forbearance during a term of

service in an AmeriCorps program.

Overview of This Interim Final Rule and Discussion of Policy

Decisions

In general, this rule incorporates, without substantive change, the

statutory requirements regarding the eligibility of AmeriCorps

participants to receive and use education awards, the standards for

determining the amount of the education award, the possible uses of and

procedures for using education awards, the procedures for obtaining

forbearance in repaying qualified student loans while serving in an

AmeriCorps program, and the procedures for making interest payments

from the National Service Trust.

Some sections of the regulations interpret and elaborate on

provisions in the statute. Those sections are discussed below.

AmeriCorps participants who are released for cause are not eligible

to receive any portion of the education award. However, participants

who are released for compelling personal circumstances, at the

discretion of their respective programs, either may have their service

suspended and return at a later date to complete their terms or may

receive a pro-rated education award. Sections 2526.20 and 2527.10 of

this rule set some guidelines for programs to make these

determinations.

First, the corporation encourages programs--whenever possible and

appropriate--to suspend a participant's term of service rather than

offer a pro-rated education award. The intent is to always encourage

participants to complete their terms of service if at all possible.

Second, the regulations further clarify that participants who are

released for compelling personal circumstances only may receive a pro-

rated education award if they have completed at least 15% of their

terms of service. There are a number of reasons for this policy. From a

logistical standpoint, 15% of a full-time term of service equates to

approximately six weeks; similarly, programs are allowed to fill an

approved AmeriCorps position left vacant due to attrition only within

the first six weeks of a term of service. Programs that offered pro-

rated education awards within this first six weeks would forfeit those

AmeriCorps positions--an outcome that is desirable neither for the

programs nor for the Corporation. From an economic standpoint, the

value of a pro-rated education award for significantly less than 15% of

a term of service would be insufficient to pay for most educational

expenses and, in many cases, would be less than the administrative

costs of providing that award. Finally, the Corporation did not set the

limit at a higher percentage because it recognizes that there may be

compelling cases in which participants legitimately would be unable to

continue service even after a period of suspension but would benefit

from and should receive a relatively small, pro-rated education award.

Section 2526.50 clarifies that the suspension of an individual's

eligibility to use an education award as a result of the conviction of

the possession or sale of a controlled substance does not constitute a

valid reason for the extension of the seven-year period for using an

education award.

The sections in part 2528 describe the uses of and the procedures

for using education awards. The regulations in these sections are

designed to ensure that the necessary documentation and verification

are obtained at each stage of the process without imposing too great a

burden on holders of qualified student loans, institutions of higher

education, participants, or the Corporation.

Part 2529 describes the procedures for participants to obtain

forbearance in the repayment of qualified student loans and for the

Corporation to pay interest expenses that accrue during such periods of

forbearance. Similar to the regulations in part 2528, the regulations

in this part are designed to ensure that the necessary documentation

and verification is obtained while minimizing administrative burdens.

Section 2529.20 clarifies that individuals who are eligible for a pro-

rated education awards or for pro-rated Stafford Loan Forgiveness also

are eligible for pro-rated payments of interest expenses based on the

portion of the term of service that was completed. The Corporation will

not, however, pay interest expenses that accrue during a period of

suspension of a term of service. Section 2529.30 clarifies that

different repayment requirements apply to VISTA volunteers.

Invitation to Comment

The Corporation invites written comments on the text of this

interim final rule and requests that the comments identify the specific

sections of the regulations to which they relate and provide reasons

for any suggested changes.

Miscellaneous Requirements

Interested parties should be advised that because the assistance

provided under the authority of this rule constitutes Federal financial

assistance for the purposes of title VI of the Civil Rights Act of 1964

(which bars discrimination based on race, color, or national origin),

title IX of the Education Amendments of 1972 (which bars discrimination

on the basis of gender), the Rehabilitation Act of 1973 (which bars

discrimination on the basis of disability), and the Age Discrimination

Act of 1975 (which bars discrimination on the basis of age), grantees

will be required to comply with the aforementioned provisions of

Federal law.

Grant recipients will be expected to expend Corporation grants in a

judicious and reasonable manner, consistent with pertinent provisions

of Federal law and regulations. Grantees must keep records according to

Corporation guidelines, including records that fully disclose the

amount and disposition of the proceeds of a Corporation grant. The

Inspector General of the Corporation (or other authorized official)

shall have access, for the purpose of audit and examination, to the

books and records of grantees that may be related or pertinent to the

Corporation grant.

Grantees should further be advised that Uniform Administrative

Requirements for Grants and Cooperative Agreements to State and Local

Governments, and Administrative Requirements for Grants and Cooperative

Agreements to other than State and Local Governments, as well as

regulations for the Privacy Act, Freedom of Information Act, Sunshine

Act, Government-wide Debarment and Suspension, and Government-wide

Requirements for Drug-Free Workplace will also be published.

As required by the Regulatory Flexibility Act, it is hereby

certified that this rule will not have a significant impact on small

business entities.

As required by the Paperwork Reduction Act of 1980, the Corporation

will submit the information collection requirements contained in this

rule to the Office of Management and Budget for its review (44 U.S.C.

3504(h)). The information collection requirements are needed in order

to provide assistance to parties affected by these regulations, in

accordance with statutory mandates.

(Catalog of Federal Domestic Assistance Numbers: 94.003 for State

Commissions, Alternative Administrative Entities, and Transitional

Entities; 94.004 for K-12 Service-Learning Programs; 94.005 for

Higher Education Service-Learning Programs; 94.006 for AmeriCorps

Programs; 94.007 for Investment for Quality and Innovation Programs)

List of Subjects

45 CFR Part 2525

Grant programs--social programs, Student aid, Volunteers.

45 CFR Part 2526

Grant programs--social programs, Student aid, Volunteers.

45 CFR Part 2527

Grant programs--social programs, Student aid, Volunteers.

45 CFR Part 2528

Grant programs--social programs, Student aid, Volunteers.

45 CFR Part 2529

Grant programs--social programs, Student aid, Volunteers.

Dated: June 7, 1994.

Terry Russell,

General Counsel.

Accordingly, the Corporation amends title 45, chapter XXV of the

Code of Federal Regulations by adding parts 2525 through 2529 to read

as follows:

PART 2525--NATIONAL SERVICE TRUST: PURPOSE AND DEFINITIONS

Sec.

2525.10 What is the National Service Trust?

2525.20 Definitions.

Authority: 42 U.S.C. 12601-12604.

Sec. 2525.10 What is the National Service Trust?

The National Service Trust is an account in the Treasury of the

United States from which the Corporation makes payments of education

awards, Stafford loan forgiveness awards, and pays interest that accrue

on qualified student loans for AmeriCorps participants during terms of

service in approved AmeriCorps positions.

Sec. 2525.20 Definitions.

In addition to the definitions in Sec. 2510.20 of this chapter, the

following definitions apply to terms used in parts 2525 through 2529 of

this chapter:

Approved school-to-work program. The term approved school-to-work

program means a school-to-work program officially approved by the

Secretaries of the Departments of Education and Labor.

Cost of attendance. The term cost of attendance has the same

meaning as in title IV of the Higher Education Act of 1965, as amended

(20 U.S.C. 1070 et. seq.).

Education award. The term education award means the financial

assistance available under parts 2526 through 2528 of this chapter for

which an individual in an approved AmeriCorps position--except for an

individual in a Stafford Loan Forgiveness program (SLF program)--may be

eligible.

Holder. The term holder means--

(1) The original lender; or

(2) Any other entity to whom a loan is subsequently sold,

transferred, or assigned if such entity acquires a legally enforceable

right to receive payments from the borrower.

Institution of higher education. For the purposes of parts 2525

through 2529 of this chapter, the term institution of higher education

has the same meaning given the term in section 481(a) of the Higher

Education Act of 1965, as amended (20 U.S.C. 1088(a)).

Qualified student loan. The term qualified student loan means any

loan made, insured, or guaranteed pursuant to title IV of the Higher

Education Act of 1965 (20 U.S.C. 1070 et. seq.), other than a loan to a

parent of a student pursuant to section 428B of such Act (20 U.S.C.

1078-2), and any loan made pursuant to title VII or VIII of the Public

Service Health Act (42 U.S.C. 292a et. seq.).

Term of service. The term term of service means--

(1) For AmeriCorps participants other than VISTA volunteers, any of

the terms of service specified in Sec. 2522.220 of this chapter; and

(2) For VISTA volunteers, not less than a full year of service as a

VISTA volunteer.

PART 2526--ELIGIBILITY TO RECEIVE AND USE EDUCATIONAL BENEFITS

Sec.

2526.10 What types of AmeriCorps educational benefits are

available?

2526.20 Who is eligible to receive a full education award from the

National Service Trust?

2526.30 Who is eligible to receive a full Stafford loan forgiveness

award from the National Service Trust?

2526.40 Is an AmeriCorps participant who does not complete a term

of service eligible to receive a pro-rated education or Stafford

loan forgiveness award?

2526.50 What conditions must an AmeriCorps participant who has

received an education award meet in order to use that education

award?

2526.60 How do convictions for the possession or sale of controlled

substances affect an education award recipient's ability to use that

award?

2526.70 What is the time period during which an individual must use

an education award?

2526.80 How many education or Stafford loan forgiveness awards may

an individual receive?

2526.90 May an individual receive an education or Stafford loan

forgiveness award and loan cancellations for the same service?

2526.100 How are education and Stafford loan forgiveness awards

treated in determining eligibility for financial assistance under

the Higher Education Act of 1965, as amended?

Authority: 42 U.S.C. 12601-12604.

Sec. 2526.10 What types of AmeriCorps educational benefits are

available?

Individuals serving in approved AmeriCorps positions may be

eligible to receive either AmeriCorps education awards or Stafford loan

forgiveness awards, but may not receive both awards for the same term

of service.

Sec. 2526.20 Who is eligible to receive a full education award from

the National Service Trust?

(a) General. To receive a full education award from the National

Service Trust, an AmeriCorps participant must meet the eligibility

requirements for, and successfully complete the required term of

service in, an approved AmeriCorps position, including approved

AmeriCorps positions in the VISTA program established by the Domestic

Volunteer Service Act of 1973 (42 U.S.C. 4950 et. seq.) and the

National Civilian Community Corps program established by the National

and Community Service Act of 1990.

(b) Conditions. (1) For any term of service, a VISTA Volunteer who

successfully completes his or her required term of service is only

eligible to receive an education award from the National Service Trust

if he or she does not accept the postservice stipend authorized under

section 105(a)(1) of the Domestic Volunteer Service Act of 1973.

(2) For any term of service, a National Civilian Community Corps

participant who successfully completes his or her required term of

service is only eligible to receive an education award from the

National Service Trust if he or she does not accept the alternative

benefit described in section 158(g) of the National and Community

Service Act of 1990.

Sec. 2526.30 Who is eligible to receive a full Stafford loan

forgiveness award from the National Service Trust?

An individual who successfully completes a term of service in an

approved AmeriCorps position in a Stafford Loan Forgiveness program is

eligible to receive a full Stafford loan forgiveness award.

Sec. 2526.40 Is an AmeriCorps participant who does not complete a term

of service eligible to receive a pro-rated education or Stafford loan

forgiveness award?

(a) An individual who is released from a term of service for

compelling personal circumstances, in accordance with Sec. 2522.230(a)

of this chapter, is eligible to receive a pro-rated education or

Stafford loan forgiveness award as determined according to

Sec. 2527.10(d)(1) of this chapter if--

(1) The individual completed at least fifteen percent of his or her

required term of service prior to the release; and

(2) The program chooses to provide the individual with a pro-rated

education or Stafford loan forgiveness award pursuant to

Sec. 2522.230(a)(1) of this chapter rather than permitting the

individual to complete the remainder of the term of service after a

temporary suspension of service pursuant to Sec. 2522.230(a)(2) of this

chapter.

(b) Programs are encouraged, when appropriate, to suspend service

rather than offer prorated educational benefits.

(c) An individual who is released from a term of service for cause

in accordance with Sec. 2522.230(b) of this chapter is not eligible for

any portion of an education or Stafford loan forgiveness award.

(d) A VISTA volunteer who does not complete a term of service as a

result of the early closure of the project in which he or she is

serving is eligible to receive a pro-rated education award as

determined according to Sec. 2527.10(d)(1) of this chapter.

Sec. 2526.50 What conditions must an individual who has received an

education award meet in order to use that education award?

An individual who receives an education award is eligible to use

the award if the individual--

(a) Has received a high school diploma or its equivalent, is

enrolled at an institution of higher education, or has received a

waiver based on an individual education assessment conducted by the

AmeriCorps program in which the individual participated;

(b) Is a citizen, national, or permanent resident alien of the

United States; and

(c) Is not eligible to use the education award under Sec. 2526.40

as a result of a conviction of the possession or sale of a controlled

substance.

Sec. 2526.60 How do convictions for the possession or sale of

controlled substances affect an education award recipient's ability to

use that award?

(a) Except as provided in paragraph (b) of this section, a

recipient of an education award who is convicted under pertinent

Federal or State law of the possession or sale of a controlled

substance is not eligible to use his or her education award from the

date of the conviction until the end of a specified time period, which

is determined based on the type of conviction as follows:

(1) For conviction of the possession of a controlled substance, the

ineligibility periods are--

(i) One year for a first conviction;

(ii) Two years for a second conviction; and

(iii) For a third or subsequent conviction, indefinitely, as

determined by the Corporation according to the following factors--

(A) Type of controlled substance;

(B) Amount of controlled substance;

(C) Whether firearms or other dangerous weapons were involved in

the offense;

(D) Nature and extent of any other criminal record;

(E) Nature and extent of any involvement in trafficking of

controlled substances;

(F) Length of time between offenses;

(G) Employment history;

(H) Service to the community;

(I) Recommendations from community members and local officials,

including experts in substance abuse and treatment; and

(J) Any other relevant aggravating or ameliorating circumstances.

(2) For conviction of the sale of a controlled substance, the

ineligibility periods are--

(i) Two years for a first conviction; and

(ii) Two years plus such additional time as the Corporation

determines as appropriate for second and subsequent convictions, based

on the factors set forth in paragraphs (a)(1)(iii) (A) through (J) of

this section.

(b) (1) If the Corporation determines that an individual who has

had his or her eligibility to use the education award suspended

pursuant to paragraph (a) of this section has successfully completed a

legitimate drug rehabilitation program, or in the case of a first

conviction that the individual has enrolled in a legitimate drug

rehabilitation program, the individual's eligibility to use the

education award will be restored.

(2) In order for the Corporation to determine that the requirements

of paragraph (b)(1) of this section have been met--

(i) The drug rehabilitation program must be recognized as

legitimate by appropriate Federal, State or local authorities; and

(ii) The individual's enrollment in or successful completion of the

legitimate drug rehabilitation program must be certified by an

appropriate official of that program.

Sec. 2526.70 What is the time period during which an individual must

use an education award?

(a) General requirement. An individual must use an education award

within seven years of the date on which the individual successfully

completes a term of service, unless the individual applies for and

receives an extension in accordance with the requirements of paragraph

(b) of this section.

(b) Extensions. In order to receive an extension of the seven-year

time period for using an education award, an individual must apply to

the Corporation for an extension prior to the end of that time period.

The Corporation will grant an application for an extension under the

following circumstances:

(1) If the Corporation determines that an individual was performing

another term of service in an approved AmeriCorps position during the

seven-year period, the Corporation will grant an extension for a time

period that is equivalent to the time period during which the

individual was performing the other term of service.

(2) If the Corporation determines that an individual was

unavoidably prevented from using the education award during the seven-

year period, the Corporation will grant an extension for a period of

time that the Corporation deems appropriate. An individual who is

ineligible to use an education award as a result of the individual's

conviction of the possession or sale of a controlled substance under

Sec. 2526.40 is not considered to be unavoidably prevented from using

the education award for the purposes of this paragraph.

Sec. 2526.80 How many education or Stafford loan forgiveness awards

may an individual receive?

An individual may receive an education or Stafford loan forgiveness

award for each of up to two terms of service. For the purposes of this

section, full-time, part-time and reduced part-time terms of service

described in Sec. 2522.220 of this chapter are each considered terms of

service.

Sec. 2526.90 May an individual receive an education or Stafford loan

forgiveness award and loan cancellations for the same service?

No. Although an education award may be used to repay qualified

student loans pursuant to Sec. 2528.20 of this chapter, an individual

may not receive an education or Stafford loan forgiveness award for a

term of service and have that same service credited toward repayment of

other student loans.

Sec. 2526.100 How are education and Stafford loan forgiveness awards

treated in determining eligibility for financial assistance under the

Higher Education Act of 1965, as amended?

Institutions of higher education shall consider education and

Stafford loan forgiveness awards neither as income in calculating

expected family contributions nor as estimated financial assistance in

packaging assistance under the Higher Education Act of 1965, as amended

(20 U.S.C. 1070 et seq.).

PART 2527--AMOUNT OF AMERICORPS EDUCATIONAL BENEFITS

Sec.

2527.10 How are the amounts of the education and Stafford loan

forgiveness awards determined?

Authority: 42 U.S.C. 12601-12604.

Sec. 2527.10 How are the amounts of the education and Stafford loan

forgiveness awards determined?

(a) Education awards for full-time service. The education award for

full-time service is equal to 90 percent of--

(1) One-half of an amount equal to the aggregate basic educational

assistance allowance provided in 38 U.S.C. 3015(b)(1) (as in effect on

July 28, 1993), for the period referred to in 38 U.S.C. 3013(a)(1) (as

in effect on July 28, 1993), for a member of the Armed forces who is

entitled to such an allowance under 38 U.S.C. 3011 and whose initial

obligated period of active duty is two years; less

(2) One-half of the aggregate basic contribution required to be

made by the member in 38 U.S.C. 3011(b) (as in effect on July 28,

1993).

(b) Stafford loan forgiveness awards for full-time service. The

Stafford loan forgiveness award for a full-time participant in a

Stafford Loan Forgiveness program is equal to 15 percent of that

greater of--

(1) That participant's current Stafford loan obligations that were

incurred during the final two years of that participant's undergraduate

education; or

(2) That participant's current Stafford loan obligations that were

incurred during the most recent two years of that participant's

graduate education in a teaching program.

(c) Part-time service. The education and Stafford loan forgiveness

awards for part-time terms of service are equal to one-half of the

corresponding full-time education and Stafford loan forgiveness awards

described in paragraphs (a) and (b) of this section.

(d) Incomplete or reduced terms of service. (1) The education or

Stafford loan forgiveness awards for individuals who are released from

a term of service for compelling personal circumstances and are

eligible for a pro-rated full- or part-time education or Stafford loan

forgiveness award in accordance with the requirements in Sec. 2526.40

of this chapter, or for VISTA volunteers who are released due to the

early of a project, are equal to the product of--

(i) The ratio of the portion of the term of service completed to

the required term of service; and

(ii) The amount of the full- or part-time education award available

for that term of service as determined pursuant to paragraph (a), (b)

or (c) of this section.

(2) The education award for individuals serving in a reduced part-

time term of service described in Sec. 2522.220 of this chapter is

equal to the product of--

(i) The ratio of the number of hours of service required for the

reduced part-time term of service to 900; and

(ii) The amount of the part-time education or Stafford loan

forgiveness award as determined pursuant to paragraph (c) of this

section.

(e) Authority to aggregate awards. An individual who serves two

terms of service in a Stafford loan forgiveness program(s) may elect

(prior to the end of the first such term of service) to aggregate the

two Stafford loan forgiveness awards that the individual receives such

that the individual receives a single Stafford loan forgiveness award

at the end of the second term of service that is equal to the sum of

the awards for each of the terms. An individual who wishes to aggregate

his or her Stafford loan forgiveness awards must comply with the

procedural requirements of Sec. 2528.60 of this chapter.

PART 2528--USES OF AND PROCEDURES FOR USING EDUCATIONAL BENEFITS

Sec.

2528.10 For what purposes may education awards be used?

2528.20 What are the procedural requirements for using education

awards to repay qualified student loans?

2528.30 What are the procedural requirements for using education

awards to pay for all or part of the cost of attendance at an

institution of higher education or to pay for expenses incurred in

participating in an approved school-to-work program?

2528.40 Is there a limit on the amount of an individual's education

award that the Corporation will disburse to an institution of higher

education for a given period of enrollment?

2528.50 What happens if an individual withdraws or fails to

complete the period of enrollment in an institution of higher

education or school-to-work program for which the Corporation has

disbursed all or part of that individual's education award?

2528.60 What are the procedural requirements for using a Stafford

loan forgiveness award to repay Stafford loans?

Authority: 42 U.S.C. 12601-12604.

Sec. 2528.10 For what purposes may education awards be used?

(a) Education awards may be used--

(1) To repay qualified student loans or portions thereof in

accordance with Sec. 2528.20:

(2) To pay all or part of the cost of attendance at an institution

of higher education in accordance with Secs. 2528.30 through 2528.50;

and

(3) To pay expenses incurred in participating in approved school-

to-work programs in accordance with Sec. 2528.60.

(b) Education awards are divisible and may be applied to any

combination of those loans, costs and expenses described in paragraph

(a) of this section.

Sec. 2528.20 What are the procedural requirements for using education

awards to repay qualified student loans?

(a) In order to use an education award to repay qualified student

loans, the recipient of the award must submit an application to the

Corporation, in a manner prescribed by the corporation that:

(1) Identifies, or permits the Corporation to identify, the holder

or holders of the loans;

(2) Indicates, or permits the Corporation to determine, the amounts

of principal and interest outstanding on the loans;

(3) Specifies, if the outstanding balance of the principal on the

loans is greater than the amount to be disbursed by the Corporation,

which of the loans the individual prefers to have paid; and

(4) Contains whatever other information the Corporation may

require.

(b) Upon receipt of an application under paragraph (a) of this

section, the Corporation will notify each holder of a loan that has

been designated for payment in the individual's application and will

identify any information or documentation that the holder must provide

to the corporation before the Corporation will make payment.

(c) When the Corporation receives all required information from the

holder of the loan, the Corporation will pay the holder of the loan in

accordance with the instructions in the application of the education

award recipient and will notify the recipient of the payment.

(d) The Corporation may establish procedures to aggregate payments

to holders of loans for more than a single individual.

Sec. 2528.30 What are the procedural requirements for using education

awards to pay for all or part of the cost of attendance at an

institution of higher education or to pay for expenses incurred in

participating in an approved school-to-work program?

(a) In order to use an education award to pay for the cost of full-

time or part-time attendance at an institution of higher education or

to pay for expenses incurred in participating in an approved school-to-

work program, the recipient of an award must submit an application to

the institution of higher education or school-to-work program in which

the individual is or will be enrolled, on a form prescribed by the

Corporation, that contains such information as the Corporation may

require to verify that the individual is a recipient of and eligible to

use an education award.

(b) An institution of higher education or approved school-to-work

program that receives one or more applications submitted in accordance

with the requirements of paragraph (a) of this section shall submit to

the Corporation, in a manner prescribed by the Corporation, a statement

that--

(1) Identifies each eligible individual filing an application;

(2) Specifies the amounts for which such eligible individuals are

qualified;

(3)(i) For institutions of higher education, certifies that--

(A) The institution of higher education has in effect a program

participation agreement under section 487 of the Higher Education Act

of 1965;

(B) The institution's eligibility to participate in any of the

programs under title IV of such Act has not been limited, suspended, or

terminated; and

(C) Individuals using education awards to pay for the cost of

attendance at that institution do not comprise more than 15 percent of

the total student population of the institution;

(ii) For school-to-work programs, certifies that the program has

been approved by the Departments of Education and Labor;

(4) Indicates the costs of attendance or participation for any

period(s) of enrollment for which the individual(s) are applying the

education award(s); and

(5) Contains such provisions concerning financial compliance as the

Corporation may require in the application.

(c) When the Corporation receives a statement from an institution

of higher education or a school-to-work program in accordance with the

requirements of paragraph (b) of this section, the Corporation will pay

a first installment for the first period of enrollment, which shall be

not more than half of the total monetary value of the education awards

that the individuals identified on the institution's statement are

scheduled to receive. The Corporation will pay installments for each

subsequent period of enrollment upon receipt of statements updating the

information required under paragraph (b) of this section for the

relevant period of enrollment.

Sec. 2528.40 Is there a limit on the amount of an individual's

education award that the Corporation will disburse to an institution of

higher education for a given period of enrollment?

Yes. The Corporation's disbursement from an individual's education

award for any period of enrollment may not exceed the difference

between--

(a) The individual's cost of attendance for that period of

enrollment, determined in accordance with section 472 of the Higher

Education Act of 1965; and

(b) The sum of--

(1) The student's estimated financial assistance for that period

under part A of title IV of such Act; and

(2) The student's veterans' education benefits, determined in

accordance with section 480(c) of such Act.

Sec. 2528.50 What happens if an individual withdraws or fails to

complete the period of enrollment in an institution of higher education

or school-to-work program for which the Corporation has disbursed all

or part of that individual's education award?

(a) (1) An institution of higher education or school-to-work

program that receives a disbursement of education award funds from the

Corporation must have in effect a fair and equitable refund policy that

includes procedures for providing a refund to the Corporation if an

individual for whom the Corporation has disbursed education award funds

withdraws or otherwise fails to complete the period of enrollment at

that institution or program for which the assistance was provided.

(2) (i) For purposes of this section, an institution of higher

education's refund policy is deemed ``fair and equitable'' if it is

consistent with the requirements of paragraphs (b) and (c) of section

484B of the Higher Education Act of 1965, as amended.

(ii) For the purposes of this section, a school-to-work program's

refund policy is deemed ``fair and equitable'' if it complies with any

standards that may be developed by the Departments of Education and

Labor.

(b) The Corporation credits to the individual's education award

allocation in the National Service Trust the amount of any refund

received for that individual under paragraph (a) of this section.

Sec. 2528.60 What are the procedural requirements for using a Stafford

loan forgiveness award to repay Stafford loans?

(a) In order to apply a Stafford loan forgiveness award to the

repayment of a Stafford loan(s), a participant in an AmeriCorps

Stafford Loan Forgiveness program must submit an application to the

Corporation that--

(1) Identifies the holder or holders of the participant's Stafford

loans as described in Sec. 2527.10(b) of this chapter;

(2) Indicates the amounts of outstanding principal and the rates of

interest on those loans;

(3) Indicates, where appropriate, to which of the loans the

individual would prefer to apply the Stafford loan forgiveness award;

(4) If the participant serves two terms of service in a Stafford

Loan Forgiveness program, indicates whether the participant wishes to

aggregate the Stafford loan forgiveness awards pursuant to

Sec. 2527.10(e) of this chapter; and

(5) Contains whatever other information the Corporation may

require.

(b) When a participant receives a Stafford loan forgiveness award,

the Corporation will notify each holder of a Stafford loan identified

in the participant's application of the portion of the loan that the

Corporation will repay and will identify any information or

documentation that the holder must provide to the Corporation.

(c) When the Corporation receives all required information from the

holder of the loan(s) pursuant to paragraph (b) of this section, the

Corporation will pay the holder(s) an amount determined according to

Sec. 2527.10 of this chapter and will notify the participant of the

payment.

(d) The Corporation may establish procedures to aggregate payments

to holders of Stafford loans for more than one individual.

PART 2529--FORBEARANCE AND INTEREST PAYMENT PROCEDURES

Sec.

2529.10 What are the procedural requirements for obtaining

forbearance in the repayment of a qualified student loan during an

individual's term of service in an approved AmeriCorps position?

2529.20 What are the procedural requirements for using National

Service Trust funds to pay interest that accrues on a qualified

student loan for which an individual has obtained forbearance?

2529.30 What additional student loan forbearance benefits are

available for VISTA volunteers?

Authority: 42 U.S.C. 12601-12604.

Sec. 2529.10 What are the procedural requirements for obtaining

forbearance in the repayment of a qualified student loan during an

individual's term of service in an approved AmeriCorps position?

(a) In order to obtain forbearance in the repayment of a qualified

student loan during a term of service in an approved AmeriCorps

position, an individual, other than a VISTA volunteer, must submit a

written request to the holder of the loan.

(b) Upon receipt of a request under paragraph (a) of this section,

the holder of a qualified student loan must contact the Corporation to

verify that the individual is serving in an approved AmeriCorps

position and to determine the period for which the holder must grant

forbearance.

(c) The holder shall grant forbearance in the repayment of a

qualified student loan for the period of an individual's required term

of service after obtaining the verification required under paragraph

(b) of this section.

(d) The holder shall promptly report to the Corporation each

individual and loan for which it grants forbearance, the period for

which it has granted forbearance, and the projected amount of interest

that will accrue on the loan during the period of forbearance.

(e) If an individual who has obtained forbearance on a qualified

student loan(s) does not complete his or her term of service, or if

that individual's term of service is suspended, the Corporation will

promptly notify the holder(s) of that loan(s).

(f) The holder is not required to grant forbearance in the

repayment of qualified student loans for any period during which an

individual's service in an approved AmeriCorps position has been

suspended.

Sec. 2529.20 What are the procedural requirements for using National

Service Trust funds to pay interest that accrues on a qualified student

loan for which an individual has obtained forbearance?

The Corporation will make payments from the National Service Trust

for interest that accrues on qualified student loans for which an

individual, other than a VISTA volunteer, has obtained forbearance

under Sec. 2529.10 in accordance with the following requirements:

(a) Completed terms of service. (1) If an individual successfully

completes a term of service, the Corporation will notify the holder of

the individual's loan of the date of completion; the holder shall

document the accrued interest expense to the Corporation; and the

Corporation will pay all or a portion of the accrued interest and

notify the individual and the holder of the loan of the payment.

(2) The percentage of the accrued interest that the Corporation

will pay pursuant to paragraph (a)(1) of this section is equal to the

lesser of--

(i) The product of--

(A) The required number of hours for the term of service divided by

the total number of days for which forbearance was granted; and

(B) 365 divided by 17; and

(ii) 100.

(b) Incomplete terms of service. (1) If an individual does not

successfully complete a term of service, but is eligible for a pro-

rated educational benefits under Sec. 2527.10(c) of this chapter or

pro-rated Stafford Loan Forgiveness under Sec. 2522.650(c) of this

chapter, the Corporation will notify the holder of the loan if the date

of the individual's release, the holder of the loan shall document to

the Corporation the amount of accrued interest as of the date of the

release, and the Corporation will pay all or a portion of such interest

and notify the individual and the holder of the loan of the payment.

(2) The percentage of the accrued interest that the Corporation

will pay pursuant to paragraph (b)(1) of this section is equal to

lesser of--

(i) The product of--

(A) The number of hours of service completed divided by the number

of days for which forbearance was granted; and

(B) 365 divided by 17; and

(ii) 100.

(3) The individual is responsible for the repayment of any accrued

interest that is not paid by the Corporation pursuant to paragraph

(b)(2) of this section.

(4) If the individual does not successfully complete the required

term of service and is not eligible for a pro-rated education award

under Sec. 2527.10(c) of this chapter or pro-rated Stafford Loan

Forgiveness under Sec. 2522.605(c) of this chapter, the Corporation

will notify the holder of the loan of the circumstances and date of the

individual's release but will pay no portion of the accrued interest.

(c) Suspended service. The Corporation will not pay any interest

expenses that accrue on an individual's qualified student loan(s)

during a period of suspended service.

Sec. 2529.30 What additional student loan forbearance benefits are

available for VISTA volunteers?

(a) VISTA volunteers may be eligible to have periodic installment

payments of principal deferred for up to three years during periods of

economic hardship, in accordance with the Higher Education Act of 1965,

as amended.

(b) VISTA volunteers also may qualify for interest benefits on

Stafford loans from the Department of Education under 34 CFR 682.301.

[FR Doc. 94-14231 Filed 6-14-94; 8:45 am]

BILLING CODE 6820-BA-M