Federal Pell Grant Program; Presidential Access Scholarship Program; Final Rule

DEPARTMENT OF EDUCATION

34 CFR Parts 690 and 691

RIN 1840-AB73

Federal Pell Grant Program; Presidential Access Scholarship

Program

AGENCY: Department of Education.

ACTION: Final regulations.

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SUMMARY: The Secretary amends the Federal Pell Grant Program

regulations and establishes regulations for the Presidential Access

Scholarship Program. These regulations are needed to implement

provisions of the Higher Education Act of 1965 (HEA) as amended by the

Higher Education Amendments of 1992, Public Law 102-325 (the 1992

Amendments), enacted on July 23, 1992 and the Higher Education

Technical Amendments of 1993, Public Law 103-208 (1993 Technical

Amendments), enacted on December 20, 1993.

The final regulations for the Federal Pell Grant Program change the

program name from ``Pell Grant Program'' to ``Federal Pell Grant

Program.'' In addition, the regulations update student eligibility

requirements and institutional administration requirements.

The final regulations for the Presidential Access Scholarship

Program specify the eligibility requirements for a student to apply for

and receive an award. These regulations also specify the roles of

institutions of higher education, State officials, and State agencies

in administering the program.

EFFECTIVE DATE: These regulations take effect on July 1, 1995 and apply

to the 1995-96 and subsequent award years. However, affected parties do

not have to comply with the information collection requirements in

Secs. 690.12, 690.13, 690.75, 690.82, 691.61, 691.73, 691.82, and

691.83 until the Department of Education publishes in the Federal

Register the control numbers assigned by the Office of Management and

Budget (OMB) to these information collection requirements. Publication

of the control numbers notifies the public that OMB has approved these

information collection requirements under the Paperwork Reduction Act

of 1980.

FOR FURTHER INFORMATION CONTACT: Denise Boulanger, Student Financial

Assistance Programs, Office of Postsecondary Education, U.S. Department

of Education, 600 Independence Avenue SW., Room 4018, Regional Office

Building 3, Washington, D.C. 20202-5447. Telephone (202) 708-4607.

Individuals who use a telecommunications device for the deaf (TDD) may

call the Federal Information Relay Service at 1-800-877-8339 between 8

a.m. and 8 p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION: On February 25, 1994, the Secretary

published a notice of proposed rulemaking (NPRM) for the Federal Pell

Grant Program and the Presidential Access Scholarship Program in the

Federal Register (59 FR 9354) to implement portions of the 1992

Amendments and the 1993 Technical Amendments.

These regulations, a result of the NPRM and public comment on those

proposed rules, implement the statutory changes required under the 1992

Amendments and the 1993 Technical Amendments to the HEA. The revised

regulations--

Rename the Pell Grant Program the Federal Pell Grant

Program;

Eliminate the duration of eligibility limitations for an

undergraduate student without a baccalaureate degree or its equivalent;

Implement the new academic year definition for the Federal

Pell Grant Program by revising the methodology for calculating a

Federal Pell Grant payment for a payment period. Revised methodologies

are also included for programs of study offered by correspondence and

for programs where the Secretary has granted an exception to the

requirement that a program's academic year must include at least 30

weeks of instructional time;

As a result of the passage of the Violent Crime and Law

Enforcement Act of 1993, incarcerated students in Federal or State

penal institutions are ineligible to receive Federal Pell Grants for

any period of enrollment beginning on or after enactment of that Act.

Incarcerated students, other than those in Federal or State penal

institutions, are still eligible to receive Federal Pell Grants. The

cost of attendance of those students under section 472(6) of the HEA is

still limited to ``tuition and fees and, if required, books and

supplies.'' The provisions of this Act also repeal the statutory

requirements that are the basis for the provisions in Sec. 690.75 (f),

(g), and (h) of the NPRM. These provisions are deleted from the final

regulations.

Incorporate references to the expected family contribution

(EFC) under part F, title IV of the HEA and eliminate references to the

Pell Grant Index (PGI);

Eliminate the necessity that a student present a Student

Aid Report (SAR) to an institution in order to be paid his or her

Federal Pell Grant if the institution participates in the electronic or

magnetic disbursement systems.

Require an institution to pay a student on the basis of a

valid Institutional Student Information Record (ISIR), i.e., a report

to an institution generated by the central processor that includes an

applicant's application information and EFC;

Provide that less-than-half-time students receive Federal

Pell Grants; and

Provide that, under certain circumstances, a full-time

student pursuing an associate or baccalaureate degree may receive up to

two Scheduled Federal Pell Grants within one award year. One of those

circumstances is a determination by the Secretary that sufficient funds

are available from the Federal Pell Grant Program appropriation for

that award year to make all or part of a second Scheduled Federal Pell

Grant award.

Conforming changes have also been made to incorporate changes made

in the regulations governing Institutional Eligibility Under the Higher

Education Act of 1965, as Amended, 34 CFR part 600 (59 FR 22324), and

in the Student Assistance General Provisions, 34 CFR part 668 (59 FR

22348).

The regulations also implement the Presidential Access Scholarship

(PAS) Program, a program to encourage students from low- and moderate-

income families to upgrade their course of study at the high school

level, finish high school, and attend college. However, funds have yet

to be appropriated for the PAS Program.

Changes were made to the PAS Program regulations to parallel

changes being made to the Federal Pell Grant Program regulations

because the delivery of PAS Program funds would be done using the same

delivery system as the Federal Pell Grant Program and conforming

changes would simplify the administration of the PAS Program in the

following provisions: Sec. 691.2, Sec. 691.3, Sec. 691.61, Sec. 690.64,

Sec. 691.66, Sec. 691.77, Sec. 691.82, and Sec. 691.83.

Substantive Changes to the NPRMs

Part 690--Federal Pell Grant Program

The Federal Pell Grant Program application process is evolving from

a paper to an electronic application process. To reflect that change

and respond to public comment with regard to this evolution, the

Secretary has made a number of changes in the final regulations.

A student may still submit a paper application to the Secretary for

the latter to calculate the student's expected family contribution. A

student applying using a paper application receives an SAR. Any

institutions listed by the student on his or her application may also

receive the student's application information and expected family

contribution (EFC) from the central processor. At the election of the

institution, the central processor may mail a magnetic record or paper

document to the institution or electronically transmit the student's

information to the institution.

The student may also apply electronically through the institution

he or she is attending or plans to attend. Under this procedure, the

student still may complete a paper application and obtain the necessary

signatures on that application, e.g., the student and at least one of

the student's parents if the student is a dependent student. However,

the student would bring the signed application to the institution.

Alternatively, the student may complete an electronic application, and

the student, and one of the student's parents if the student is

dependent, sign a printout of the information entered on the electronic

application. The institution would then transmit electronically the

student's application information to the central processor. The central

processor would calculate the student's EFC based upon the application

information and transmit electronically the student's application

information and EFC back to any institutions designated by the student

to receive the information.

When an institution receives the student's application information

and EFC from the central processor, the electronic or magnetic record

or the paper document is considered an ``Institutional Student

Information Record'' or ``ISIR.'' If that information is accurate and

complete as of the date of application, that electronic record or paper

document is considered a ``valid ISIR.'' Based upon that valid ISIR,

the institution determines a student's eligibility for a Federal Pell

Grant award and the amount of that award and pays the student his or

her award. An institution receiving ISIRs may not require a student to

submit an SAR as a precondition to receiving a Federal Pell Grant

award. Thus, in general, the ISIR and valid ISIR are taking the place

of the SAR and the valid SAR in the processing of Federal Pell Grant

awards. However, an institution must pay a student a Federal Pell Grant

award on the basis of receiving either a valid SAR or valid ISIR. An

institution is not required to pay a student in circumstances where (1)

the student is not qualified to receive a disbursement, e.g., the

student is in default on a Federal Stafford loan; or (2) the

institution is specifically authorized by the Secretary to withhold

payment, e.g., the institution has requested, but not yet received, a

financial aid transcript under 34 CFR 668.19.

As a result of this change and public comment on the proposed

regulations that pointed out that current and proposed regulatory

provisions were not in keeping with this change, the Secretary is

revising several current and proposed regulatory provisions, as

explained below.

As just noted, an institution pays a Federal Pell Grant award to a

student on the basis of a valid ISIR, which is defined as a paper

document or a computer-generated electronic or magnetic record that the

Federal Pell Grant central processor transmits to an institution. This

document takes the place of what was previously known as an electronic

SAR or ``ESAR'' that an institution would receive under the Electronic

Data Exchange (EDE). Therefore, the Secretary has amended the

definition of a ``valid SAR'' to delete the reference to an SAR

received under EDE.

The Secretary has also changed the signature requirements necessary

to support a Federal Pell Grant award. The Secretary has deleted the

requirement that a valid ISIR be signed. The ISIR is also valid if it

accurately reflects corrections that (1) are based on signed correction

documentation or documentation submitted under 34 CFR 668.57 and (2)

are processed through the central processor.

The Secretary is adding Sec. 690.63(a)(6) that designates the

methodologies in Sec. 690.63 that the institution uses to calculate a

payment for a payment period if an institution is granted a waiver of

the minimum 30-week requirement for the academic year.

The Secretary is removing Sec. 690.64(c) that requires an

institution to combine minisessions during payment periods that occur

within two award years.

The Secretary is revising Sec. 690.66 that establishes how to

calculate a payment for a payment period for a program of study by

correspondence. The revision incorporates the new academic year

definition by requiring that payments for correspondence courses be

calculated in a way that considers both the number of weeks of

instructional time and the number of credit hours.

The Secretary is adding a new Sec. 690.67 to the regulations

allowing for up to 2 Scheduled Federal Pell Grant Program awards in an

award year and is authorizing an institution that provides up to 2

Scheduled Federal Pell Grant awards in an award year to determine which

students qualify for a second Scheduled Award within the award year

using criteria established by the Secretary in this section.

The Secretary is removing Sec. 690.77, Initial disbursement of a

Pell Grant in an award year without a valid SAR.

The Secretary is adding requirements to Sec. 690.82 to specify what

types of application information must be retained at an institution

when the institution submits a student's application information to the

Secretary electronically. An institution has been required to retain a

student's application information under its EDE participation agreement

with the Secretary when that institution has submitted the student's

application information electronically to the central processor.

However, the Secretary believes that it is important to add to the

record retention requirements in the regulations what types of

application information must be retained rather than rely solely on an

institution's EDE participation agreement. In addition, the Secretary,

through publication of a notice in the Federal Register, is allowing

for institutions to retain documents in media formats other than paper

and microform. The Secretary intends to indicate in the notice the

types of media storage acceptable to the Secretary and documents an

institution may retain in media other than paper.

Part 691--Presidential Access Scholarship Program

There are no substantive differences between the PAS Program NPRM

and the final regulations except where conforming changes were made to

coordinate the PAS Program regulations with the Federal Pell Grant

Program regulations.

Analysis of Comments and Changes

In response to the Secretary's invitation to comment on the NPRM,

61 parties submitted comments on the proposed regulations. An analysis

of the comments and of the changes in the regulations since publication

of the NPRM follows.

Substantive issues and changes are discussed under the section of

the regulations to which they pertain. Technical and other minor

changes--and suggested changes the Secretary is not legally authorized

to make under the applicable statutory authority--are not addressed.

Federal Pell Grant Program

Section 690.2 General Definitions

Comments: None.

Discussion: The Secretary published final regulations governing

Institutional Eligibility Under the Higher Education Act of 1965, as

Amended, 34 CFR part 600, and the Student Assistance General

Provisions, 34 CFR part 668, in the Federal Register on April 29, 1994.

The Secretary is amending the Federal Pell Grant Program final

regulations to reference accurately the definitions published in those

final regulations. The Federal Pell Grant Program final regulations now

reference in Sec. 690.2(a) the definitions of ``award year,''

``correspondence course,'' ``incarcerated student,'' ``regular

student,'' and ``State,'' as published in the Institutional Eligibility

Under the Higher Education Act of 1965, as Amended, regulations at 34

CFR part 600, and the references to ``award year,'' ``regular

student,'' and ``State'' in Sec. 690.2(b) are removed. The Federal Pell

Grant Program final regulations also update the references to the

Federal Perkins Loan Program, Federal Supplemental Educational

Opportunity Grant Program, and Federal Work-Study Program and reference

the definitions of ``full-time student'' and ``HEA'' as published in

the Student Assistance General Provisions regulations at 34 CFR 668.2.

The references to the definitions of ``full-time student,'' ``Pell

Grant Index,'' and ``Student Aid Report Payment Document'' under

Sec. 690.2(c) are removed. An institution must use the same definition

of a full-time student for all title IV, HEA programs. The Federal Pell

Grant Program final regulations also remove the reference to the

definition for ``Public or private nonprofit institution of higher

education'' in 34 CFR 668.2(b) since this definition is no longer used.

The final regulations under Sec. 690.2(c) add the definitions for

``annual award,'' ``central processor,'' ``expected family

contribution,'' ``Institutional Student Information Record,'' ``less-

than-half-time student,'' ``Student Aid Report Payment Voucher,'' and

``valid Institutional Student Information Record.''

The proposed definition of the term ``academic year'' in

Sec. 690.2(c) has been deleted. Instead, the final regulations

reference the definition of that term in 34 CFR 668.2 of the Student

Assistance General Provisions.

Changes: Section 690.2 of the final regulations is revised to

reference the definition of the terms ``award year,'' ``incarcerated

student,'' and ``regular student'' in 34 CFR part 600. Also, Sec. 690.2

is revised to reference the definitions of the terms ``full-time

student'' and ``HEA'' in 34 CFR part 668; to remove the reference to

the definitions of the terms ``award year,'' ``regular student,'' and

``Public or private nonprofit institution of higher education'' in

Sec. 690.2(b); and to remove the definitions of the terms ``academic

year'' and ``full-time student'' in Sec. 690.2(c). The final

regulations under Sec. 690.2(c) also add the definitions for ``annual

award,'' ``central processor,'' ``expected family contribution,''

``less-than-half-time student,'' ``Processed Information Record,''

``Student Aid Report Payment Voucher,'' and ``Valid Processed

Information Record.''

Student Aid Report (SAR) Payment Document

Comments: While the definition of the term ``Student Aid Report

(SAR) payment document'' was not discussed in the proposed regulations,

one commenter believed that the definition of the term needed to be

updated because the third part of an SAR is no longer called a

``payment document'' but, instead, is called a ``payment voucher.'' The

commenter also noted that the definition of an SAR payment document did

not address the automated formats that many institutions use to submit

payment information to the U.S. Department of Education (Department).

Discussion: The Secretary agrees that the name of the document used

to report individual payment information to the Secretary has changed

and is now called a ``SAR payment voucher.'' The Secretary also agrees

that automated methods of submitting the payment information are not

addressed in the current definition nor does that definition accurately

reflect the disbursement information that is required to be submitted

by the institution for payment. The Secretary also agrees that the

definition of a payment voucher needs to be updated and needs to

provide for all forms of the payment voucher.

Further, most institutions currently submit their student payment

information to the Secretary in an automated format. To ease the

administrative burden for all institutions by reducing the amount of

paperwork that institutions must handle through the manual encoding and

batch preparation of paper Payment Vouchers in the submission process,

and to accelerate the processing of payment information, the Secretary

intends to provide that all institutions must submit student payment

information to the Department in an automated format beginning with the

1996-97 award year. Therefore, at that time, the Department will no

longer print paper payment vouchers with SARs. The Secretary believes

that new costs to an institution because of this requirement are

generally nonexistent. Most institutions currently have a personal

computer or other technology that will allow them to process Payment

Vouchers in this manner. In addition, the Department will provide all

required software, and also the necessary training and guidance in

using the software for automated Payment Voucher submissions.

Changes: The term ``SAR payment document'' is renamed a ``payment

voucher.'' The definition is revised to provide that a payment voucher

is an electronic or magnetic record, or for the 1995-96 award year a

paper record, that is provided to the Secretary by an institution

showing a student's expected family contribution, cost of attendance,

enrollment status, and student disbursement information.

Valid Institutional Student Information Record (ISIR)

Comments: A commenter noted that valid electronic SARs (ESARs) and

valid ISIRs appear to be the same since they are both records of

students' application information and EFCs provided directly to

institutions by the central processor.

Discussion: The Secretary agrees and is revising the definition of

the term ``valid SAR'' to, in effect, eliminate ESARs.

Changes: The Secretary is removing paragraph (2) in the definition

of the term ``valid SAR'' that references EDE and serves as the basis

for ESARs. A report to an institution of student information that is

generated through EDE is encompassed by the term ISIR in the final

regulations.

Section 690.2 General Definitions, Section 690.13 Notification of

Expected Family Contribution, and Section 690.14 Applicant's Request

for Recalculation of Expected Family Contribution Because of Clerical

or Arithmetic Error

Comments: Several commenters questioned why a valid ISIR has

signature requirements if the student's application for Federal student

aid is properly signed. These commenters noted that the additional

signature on the ISIR did not afford the Secretary additional

protection against Federal Pell Grant awards being made on the basis of

inaccurate information. Another commenter believed that the signature

requirements for a valid ISIR should be consistent with the signature

requirements for a valid paper SAR, which does not require a signature.

Another commenter requested increased flexibility in the program

regulations regarding signature requirements. He believed that

electronic documents increased the need for flexibility in these

requirements and improved delivery of the Federal Pell Grant Program

assistance to students at a large institution. He further believed that

the signature requirements for valid ISIRs negated these improvements

and that signatures were unnecessary because the signatures certifying

the accuracy of the application information are collected on the

application. Another commenter believed that, if the ISIR was the

product of a paper application the student submitted through the postal

service to the central processor, a signature need not be required.

Discussion: The Secretary agrees with the commenters that the

signature requirement for a ``valid ISIR'' does not provide the

Secretary with additional protection against the use of inaccurate

information in calculating Federal Pell Grant awards, delays the award

process and may needlessly increase the administrative burden on an

institution. Therefore, the Secretary is removing that requirement.

Application signatures will be on file, however, at the institution

that transmitted the application data to the central processor or at

the application processor if the student submitted a paper application.

In addition, if a student wishes to make corrections to the

information previously reported for the purpose of having his or her

expected family contribution recalculated, the student would either

send a paper application or Part 2 of an SAR, that was certified by all

appropriate parties, or would have its institution transmit that

information. Under the latter circumstance, the institution would not

transmit that information unless it had the student's certified

``correction application,'' or documentation that contained appropriate

signatures, such as verification documentation required under 34 CFR

668.57, supporting the change. Thus, for example, an institution would

transmit a change in the adjusted gross income of the student's parents

if the student provided the institution with his or her parents' signed

Federal income tax return, and that tax return supported the changed

adjusted gross income.

While the Secretary believes that it is reasonable to remove the

signature requirements for a valid ISIR, he believes that a student

should always receive a copy of his or her application information and

EFC produced by the central processor so that the student has an

opportunity to review the accuracy of his or her processed application

information. Currently, because of processing system constraints, the

Secretary can only generate an SAR if a paper application is received

by one of the application processors. Therefore, for the 1995-96 award

year, the Secretary will continue to provide a student with his or her

application information and EFC only if the student submits a paper

application or a correction on Part 2 of an SAR to an application

processor. Because the Secretary cannot provide an SAR to a student

whose application information is submitted through EDE, the Secretary

is providing that for the 1995-96 award year an institution must

provide to a student a copy of his or her application information and

EFC from the central processor if the institution submits the student's

application information or corrections through EDE since the student

cannot receive his or her information in any other manner. In the 1996-

97 and subsequent award years, once system changes have been

implemented, the Secretary will provide a copy of the student's

application information and EFC directly to each student, including

those whose application information is transmitted to the central

processor under EDE. The Secretary believes this change reduces the

administrative burden associated with the ISIR signature requirements

since signed correction documentation is already required and an

institution will no longer need to collect a second signature on the

ISIR to pay a student.

An ISIR produced from an application submitted to the Secretary

should match the information on the student's application. (An ISIR can

be generated by the central processor and transmitted to an institution

if the student submits a paper application to an application processor

and releases the information to the institution. In addition, an

institution may obtain a ISIR through EDE if the student provides his

or her PIN number to the institution.) If the student's information

requires corrections, the documentation to support those corrections

can be collected in several ways; however, the student's signature, and

a parent's signature if the student is dependent, must be collected.

The correction information and signatures can be collected on Part 2 of

the SAR, a correction application, or, under EDE, a copy of the

corrected information that is sent to the central processor. Also, if

the institution (1) has verification documentation under 34 CFR 668.57

from the student, or one of the student's parents if the student is

dependent, e.g., tax returns, nontax filer statements, and verification

worksheets, (2) makes corrections to the student's information based on

the content of those documents through EDE, and (3) verifies the

accuracy of the ISIR information generated from those corrections, the

ISIR is valid.

Since the student need not return to the financial aid office to

review the information on the ISIR and verify its accuracy, the

institution must assume a greater responsibility for assuring that

application information and corrections to application information

submitted electronically from the institution accurately reflect the

content of the application or correction documentation. The institution

is reminded that it must resolve any inconsistent information

concerning a student's application information in accordance with 34

CFR 668.16(f). If an institution using EDE makes an error and does not

submit accurately the student's information from his or her application

or corrections to the student's application information, the ISIR would

not be valid, and the institution, under Sec. 690.79, as well as the

student would be liable for any overpayments made to the student. An

institution is reminded that if, through institutional error,

disbursements are made to a student without a valid SAR or ISIR, the

institution may also be subject to a penalty, in addition to any

liability for an overpayment, for improper administration of Federal

Pell Grant Program funds. The institution must also assure that funds

are only disbursed to an eligible student that the institution has

documented as being enrolled in an eligible program of study at the

institution before the student is paid.

Changes: The signature requirements for a valid ISIR are removed.

In addition, Secs. 690.2, 690.12, 690.13, and 690.14 of the regulations

are revised. The EDE definition in Sec. 690.2 is revised to reference

the ISIR. Section 690.12 is modified to describe the EDE option of

applying for a Federal Pell Grant. Section 690.13 is modified to

indicate that the Secretary will forward to each applicant his or her

student eligibility information starting in the 1996-97 award year. For

1995-96, under Sec. 690.13(b) an institution must provide to all

applicants whose data the institution transmits to the central

processor through EDE, a copy of the applicant's student eligibility

information received back from the central processor. Institutions must

provide the information to ineligible students and students who do not

attend that institution. Section 690.14 is revised to require that

corrections submitted through EDE be based on (1) information on an

approved form e.g., a correction application or Part 2 of an SAR,

certified by the applicant and, if the applicant is dependent, one of

the applicant's parents or (2) verification documentation provided by

an applicant under 34 CFR 668.57.

Section 690.10 Administrative Cost Allowance to Participating Schools

Comments: Several commenters recommended that the Secretary clarify

the term ``significant number'' of students as it is used in this

section. If an institution enrolls a significant number of less-than-

full-time or independent students, the regulations would require that

the institution use a portion of its Federal Pell Grant administrative

cost allowance funds to assure that financial aid services are

available to those students. The commenters suggested ``significant

number'' be defined as instances where 75 percent of an institution's

students attend less-than-full-time or are independent.

Discussion: The Secretary believes the term ``significant number''

represents a number of students attending less-than-full-time or who

are independent that is substantially less than 75 percent. However,

the Secretary is not defining ``significant number.'' Instead, the

Secretary is relying on the institutions to be able to demonstrate to

the Secretary through its annual audits or in a program review that

their expenditures for financial aid services resulted in those

services being reasonably available to those students.

Changes: None.

Section 690.61 Submission Process and Deadline Date for Student Aid

Reports or Institutional Student Information Record

Comments: Several commenters supported the Secretary's proposal in

Sec. 690.61 to allow the institution to pay a student his or her

Federal Pell Grant from either an SAR or ISIR. One commenter questioned

why an institution was required to base a student's award on an

eligibility document received from the Secretary. Another commenter

requested clarification of the requirements to pay a student if the

institution had received an ISIR and had not yet received an SAR.

Discussion: The Secretary added the use of the ISIR as an

appropriate document to determine a student's Federal Pell Grant to

implement the provisions of section 401(f) of the HEA as amended by the

1992 Amendments. Section 401(f) of the HEA mandates that an institution

pay a student his or her Federal Pell Grant based on that document.

Thus, when an institution receives a valid ISIR, it must pay a Federal

Pell Grant to an otherwise eligible student based on the valid ISIR. An

institution may not require the student to provide an SAR unless the

institution relies solely on the SAR payment voucher to report Federal

Pell Grant expenditures to the Secretary. In response to the other

commenter, an institution must pay a student a Federal Pell Grant based

on the receipt of a valid SAR. There are instances where a student will

receive an SAR before the institution receives an ISIR.

Changes: None.

Section 690.63 Calculation of a Federal Pell Grant for a Payment

Period

General

Comments: A commenter requested clarification concerning whether a

student who had completed the credits for an academic year but had not

yet completed the weeks of instructional time and had remaining

eligibility from his or her Scheduled Federal Pell Grant award could be

paid the remainder of that Scheduled Award.

Discussion: Section 481 of the HEA now defines an ``academic year''

as a period of at least 30 weeks of instructional time during which a

student completes at least 24 semester or trimester hours or 36 quarter

hours unless, for good cause on a case-by-case basis, the Secretary has

reduced the 30-week minimum to not less than 26 weeks. Section 401(d)

of HEA specifies the amount of a Federal Pell Grant that can be paid to

a student for an academic year. Thus, a student must complete an

academic year in both weeks of instructional time and clock or credit

hours to receive his or her Scheduled Award. A student who has

remaining eligibility from his or her Scheduled Award may always

receive a payment for any amount of his or her remaining eligibility as

long as he or she continues to be an eligible student enrolled in an

eligible program for a payment period that is within that award year.

For example, an institution defines a program's academic year as 24

semester hours and 30 weeks of instructional time. A full-time student

enrolls in a program that provides 24 semester hours in 25 weeks of

instructional time and the student completes 24 semester hours in 25

weeks. Therefore, because the student has not completed an academic

year in both credit hours and weeks of instructional time, the student

has not received his or her entire Scheduled Federal Pell Grant award.

If the student enrolls and attends another payment period within that

award year and that payment period is at least 5 weeks, the student may

receive any amount remaining of his or her Scheduled Federal Pell Grant

award.

Changes: None.

Comments: Three commenters at institutions subject to the Student

Assistance General Provisions clock-hour/credit-hour formula in 34 CFR

668.8(d) proposed alternatives to that formula. The commenters proposed

that, rather than determine the number of credit hours through the

clock-hour/credit-hour formula, they retain the credits at their

current value and determine a student's enrollment status simply by

using the methodology in the full-time student definition in 34 CFR

668.2.

Discussion: The Secretary does not agree with the commenters'

proposals that would, in effect, negate the clock-hour/credit-hour

formula in 34 CFR 668.8(d). Thus, an institution subject to the clock-

hour/credit-hour formula in 34 CFR 668.8(d) must first calculate the

number of credit hours under the formula in 34 CFR 668.8(d) before a

payment for a payment period can be determined and must use the result

for all purposes in the title IV, HEA programs including calculating a

Federal Pell Grant award. For example, an institution has a 24-

semester-hour program of study before the clock-hour/credit-hour

formula is applied. The 24 semester hours is completed in 18 weeks of

instructional time. The institution defines the academic year for that

program as 24 semester hours and 30 weeks of instructional time. A

student attends 600 classroom hours to complete the 24 semester hours

in the program. The clock-hour/credit-hour formula in 34 CFR 668.8(d)

requires that one semester hour equals 30 classroom hours. Therefore,

the program is 20 semester hours under the formula for title IV, HEA

program purposes. The institution uses credit hours without terms.

Therefore, it would use Sec. 690.63(e) to calculate the student's

Federal Pell Grant award for a payment period. Assuming the student's

Scheduled Federal Pell Grant award was $2,340, the institution would

first multiply $2,340 by 18/30 (18 being the number of weeks of

instructional time in the program; 30 being the number of weeks of

instructional time in the program's academic year definition) to equal

$1,404; and then multiply $1,404 by 10/24 (10 being the number of

credit hours in the payment period; 24 being the number of credit hours

in the program's academic year definition) to equal $585. Thus, the

student would receive a $585 Federal Pell Grant award for each payment

period.

The Secretary recommends that in addition to the information

presented in the NPRM and these final regulations, an institution

review the information in the 1994-95 Student Financial Aid Handbook

(Handbook) in Chapter 4, Section 4. The Handbook presents detailed

examples and explanations that are generally in accordance with the

methodologies presented in these final regulations for calculating a

payment for a payment period for the Federal Pell Grant Program.

Changes: None.

Payment for a Payment Period at Institutions Using Credit Hours With

Terms

Comments: Several commenters supported the Secretary's proposed

methods of calculating a payment for a payment period at a term

institution. One commenter objected to one of the criteria proposed in

Sec. 690.63(a)(1) for using the methodology in Sec. 690.63(b). The

commenter believed that the requirement to have a full-time academic

enrollment standard of at least 12 credit hours for all terms,

including summer, rather than some lesser figure, such as at least 6

hours, was administratively burdensome. The commenter also suggested

that the Federal Pell Grant Program establish an academic year policy

interpretation similar to that of the Federal Family Education Loan

(FFEL) programs. The commenter stated that under the FFEL programs'

policy, if the ``normal academic year'' (fall through spring terms) for

an institution meets the statutory definition of an academic year, and

the student can be enrolled on at least a half-time basis in the

summer, the summer should be treated as just another term. Another

commenter proposed language to be added to Sec. 690.63(a)(1) that would

allow a student enrolled at least half-time who is taking a

``concentrated course load'' at a standard term institution over a

shorter period of time than the standard term to have his or her award

calculated based on that enrollment status under Sec. 690.63(b).

Discussion: The criteria developed in Sec. 690.63(a) for

determining which methodology under Sec. 690.63 (b) or (c) that an

institution may use to calculate a Federal Pell Grant payment for a

payment period for a term-based credit-hour program provides maximum

institutional flexibility while meeting the intent of the statute and

limiting the potential for fraud and abuse. The Secretary disagrees

with the commenter that requiring a full-time student to be enrolled

for at least 12 credit hours creates a new administrative burden on a

term institution because this requirement is not a change in the

current Federal Pell Grant Program requirements with which an

institution must already comply. The definition of a full-time student

requires that such a student be enrolled for at least 12 semester hours

in a standard term for title IV, HEA program purposes. The only major

change in this requirement is that the definition has been moved from

the Federal Pell Grant Program regulations into the General Provisions

regulations so that it is now consistent among all title IV programs.

Because of statutory program differences between the Federal Pell

Grant Program and the FFEL programs, the academic year criteria cannot

be implemented in the same manner. A Federal Pell Grant payment is

based, in part, on enrollment status; the amount of the Federal Pell

Grant award is reduced if a student attends less-than-full-time.

Moreover, a Federal Pell Grant award is reduced if a student attends

less than a full academic year. An FFEL Program loan can be certified

for the maximum amount even if the student attends only half-time if

the student's financial need supports the amount for which the loan is

being certified.

Changes: None.

Comments: Two commenters believed that the prohibition against

``multiple start dates'' under the methodologies proposed in

Sec. 690.63(a)(1) or (a)(2) would prevent an institution from allowing

a student to start classes at the beginning of any of an institution's

terms rather than a specific term such as the fall quarter. One

commenter asked what method of calculation was his institution to use

in determining a student's payment for a payment period if his

institution did not meet these particular criteria.

Discussion: The Secretary believes that there is not a clear

distinction between the phrases ``multiple start dates'' and

``overlapping terms.'' Therefore, the Secretary is removing the phrase

``multiple start dates'' from the final regulations. ``Overlapping

terms'' refers to such institutional practices as starting new terms

one right after the other. For example, an institution that offers a

program that begins a new term every week or every month for a new

group of students would be considered to have ``overlapping terms'' and

would be required under Sec. 690.63(a)(3) to use the methodology in

Sec. 690.63(d). If a term-based program does not meet the criteria

under Sec. 690.63(a)(1) or (a)(2), it must calculate awards under

Sec. 690.63(d).

Changes: The phrase ``multiple start dates'' is removed from

Sec. 690.63(a)(1)(i)(D) and (a)(2)(i)(D) of the regulations.

Comments: One commenter at a credit-hour term-based institution

stated that the methodologies in Sec. 690.63(b), (c), and (d) appeared

complex. The commenter believed that the complexity arose in two ways.

First, an institution that offered a wide variety of programs would be

required to perform tracking for each program because of differing

definitions of academic year. Second, complications would arise when a

student transferred from one academic program to another within the

same institution necessitating a recalculation of the student's Federal

Pell Grant award. The commenter requested that the Secretary reexamine

the administrative burden before implementing this section of the

proposed regulations.

Discussion: The Secretary believes that at the majority of

institutions, an institution uses the same definition of an academic

year for most programs. In addition, the need to recalculate a

student's award when he or she transfers between programs is not a new

requirement created by the proposed rule. An institution has always had

to redetermine eligibility and recalculate a student's award for any

number of reasons, such as if a student enrolls in a new educational

program that differs in program length from the old program.

Changes: None.

Comments: A commenter requested that the Secretary delay

implementation of Sec. 690.63 and extend the comment period because the

Secretary had deliberately barraged the financial aid community with

notices of proposed rulemaking in an attempt to provide the public with

little time for review and comment. Another commenter expressed

appreciation that the Secretary had provided a 45-day comment period on

this NPRM and thanked the Secretary for his willingness to make

significant changes to this provision before publication of the

proposed regulations as a result of extensive discussions with the

financial aid community.

Discussion: While it is true that a number of proposed rules for

title IV student financial aid programs were published within a short

period of time, it was not the intention of the Secretary to limit

public comment on the proposed regulations. However, the Secretary has

a statutory publication deadline of December 1, 1994, that he must meet

in order for these regulations to be effective for the 1995-96 award

year. In the case of payment period calculations in Sec. 690.63 of the

proposed regulations, the Secretary began disseminating information to

the public and provided training to the financial aid community about

this section before the proposed regulations were published. Therefore,

the Secretary believes that the public had sufficient time to provide

thoughtful comment on these proposed regulations; these comments

provided valuable information both before the proposed rule was

published and in the development of these final regulations.

Changes: None.

Comments: A commenter requested clarification of the preamble

statement regarding Sec. 690.63(a)(1) that ``the student will be

eligible to be paid one-half of his or her Scheduled Award, if he or

she has enough remaining eligibility (including, if eligible, a second

Scheduled Award) for a summer term even if that term is not at least

one-half of the academic year in weeks of instructional time.''

Discussion: The statement is true for an institution that uses the

methodology under Sec. 690.63(b) to calculate a Federal Pell Grant

payment for a payment period. The Secretary believes the following

example clarifies the statement. An institution has a fall and spring

semester. Each semester provides 15 weeks of instructional time in

which a full-time student is required to complete 12 semester hours.

Institution A defines its academic year as 30 weeks of instructional

time in which a full-time student is expected to complete 24 semester

hours. The institution also has a summer term that begins on June 15

and runs for 12 weeks. To be a full-time student in the summer term a

student must enroll for at least 12 semester hours. Because the fall

and spring semesters provide 30 weeks of instructional time, a full-

time student would be paid one-half of his or her Scheduled Federal

Pell Grant award in each of those semesters. If a student attends only

the spring semester, the student would have half of his or her

Scheduled Award remaining if he or she enrolls for the summer term.

Even if the summer term provides only 12 weeks of instructional time, a

full-time student would be eligible to receive the remaining half of

his or her Scheduled Federal Pell Grant award because the institution

satisfied the 30 weeks of institutional time requirement with the fall

and spring semesters.

Changes: None.

Comment: A commenter suggested that the Secretary revise

Sec. 690.63(a)(1) to clarify that an institution may also choose to

calculate the payment for a payment period under Sec. 690.63(d) even if

it qualifies to calculate the payment under Sec. 690.63(b). The

commenter also preferred that seasonal names like fall, winter, and

spring, not be used to indicate terms because some institutions did not

use those names. The commenter believed that the Secretary should

select some other means of describing those terms.

Discussion: The Secretary believes that the language in the

proposed regulations clearly indicates an institution may choose to

calculate the payment for a payment period under Sec. 690.63(d) even if

it qualifies to calculate the payment under Sec. 690.63(b).

The Secretary agrees that many institutions do not attach seasonal

names to their standard terms. However, the Secretary is using the

names generically to describe which methodology or methodologies an

institution can use to calculate a payment for a payment period. The

Secretary does not require that an institution provide seasonal names

for its terms.

Changes: None.

Payments for a Payment Period for a Clock-Hour Program or a Credit Hour

Program Without Terms

Comments: Several commenters believed there was an error in

Sec. 690.63(e) (2) and (3) of the proposed regulations that outline

payment period calculations for credit-hour without terms and clock-

hour programs. Those commenters believed that the requirement that an

institution with a credit-hour without terms or a clock-hour program

calculate the Federal Pell Grant payment for a payment period by

considering both the timeframe and the clock or credit hours to be

completed in the academic year was a mistake. The commenters believed

that creating two ratios, one based on the weeks of instructional time

and a second based on the clock or credit hours, and then multiplying

the Scheduled Federal Pell Grant award by each ratio created a double

reduction of a student's award. Other commenters believed that this

provision was particularly unfair to economically disadvantaged

students in clock-hour or credit-hour vocational programs without terms

and was not legally supportable.

Discussion: The methodology in Sec. 690.63(e) is not in error and

is consistent with the definition of the term ``academic year''

contained in section 481(d) of the HEA and 34 CFR 668.2. Under each of

the methods set forth in Sec. 690.63 for calculating a Pell Grant award

for a payment period, the Secretary takes into account two variables

relating to an academic year: a credit- or clock-hour variable, at

least 24 semester or trimesters, 36 quarters, or 900 clock hours; and a

timeframe variable, at least 30 weeks of instructional time. Moreover,

a student's Pell Grant award for a payment period is subject to

reduction under each variable, if appropriate.

The credit- or clock-hour component is implemented under paragraphs

(b) (1) and (2), (c) (1) and (2), and (d) (1) and (2) of Sec. 690.63 by

determining a student's ``enrollment status'' for a payment period and

by calculating the award of a less-than-full-time student using the

Disbursement Schedules. Under paragraphs (c)(3) and (d)(3), a student's

award for a payment period is reduced again if the institution does not

provide 30 weeks of instructional time. (No such reduction is required

under paragraph (b) because, by definition, an institution may use

paragraph (b) only if it provides at least 30 weeks of instructional

time in its fall through spring terms.)

Under paragraph, (e) the procedure is somewhat different but the

results are the same. An institution does not calculate a student's

enrollment status and does not calculate an award for a less-than-full-

time student by using the Disbursement Schedules. The institution

determines the student's Scheduled Pell Grant award using the Payment

Schedule, reduces that amount by the weeks of instructional time

variable under Sec. 690.63(e)(2) if the institution does not provide 30

weeks of instructional time, then calculates the award using the clock-

or credit-hour variable. The Secretary in all the methodologies in

Sec. 690.63 first takes into consideration the length of a program's

academic year in weeks of instructional time before considering the

number of credit or clock hours within the academic year. For a program

with terms, the institution must either determine the weeks of

instructional time in its fall through spring terms or examine the

weeks of instructional time in each term in relationship to its

academic year definition. For a credit-hour program without terms or a

clock-hour program, the institution examines the weeks of instructional

time it takes a full-time student to complete the clock or credit hours

in the program or the academic year. If it takes less than 30 weeks of

instructional time for a full-time student to complete the clock or

credit hours in the program or academic year, the Federal Pell Grant

award must be reduced just as at a term institution. Second, for a

term-based program an institution must determine a student's enrollment

status. If the student is not attending full-time, the award must be

reduced to reflect the student's enrollment status. In a credit-hour

program without terms or a clock-hour program, the payment for a

payment period is not based on enrollment status but on how many clock

or credit hours the student will complete in the payment period. Thus,

to treat a student in a credit-hour program without terms or a clock-

hour program in the same manner as a student in a term program, a

second calculation must take place that equates to the adjustment for

enrollment status at a term institution. The adjustment is the

calculation of the number of clock or credit hours the student will

complete in the payment period compared to the number of clock or

credit hours in the academic year.

Changes: None.

Comments: Some commenters expressed concern that under the proposed

regulations a student's Federal Pell Grant award in a program using

credit hours without terms or clock hours may be somewhat less than the

percentage of the academic year that the student may have completed.

Discussion: It is true that as a result of the mathematical

formulas in the regulations, the calculations used to adjust a

student's Scheduled Federal Pell Grant award at both a term institution

and an institution using credit hours without terms or clock hours may

result in an award that is somewhat less than the percentage of the

academic year that the student may have completed. The Secretary

believes that an institution has the flexibility to adjust its

enrollment periods to conform to an academic year. Further, the

Secretary believes that it was the intent of the 1992 Amendments that

an institution offer instruction in a reasonable timeframe to ensure a

favorable learning environment. The Secretary believes that the

calculations may act as an additional incentive to encourage

institutions to provide instruction in a timeframe that is more in

keeping with the academic year definition and that the Secretary

believes is most educationally beneficial to the student.

Changes: None.

Comments: Another commenter questioned whether the requirements of

the regulations for credit-hour without terms and clock-hour programs

were the same as those specified in the 1994-95 Delivery System

Training. The commenter noted that the preamble of the NPRM did not

mention the complete methodology for calculating timeframe fractions

for the number of weeks of instructional time in the program divided by

the number of weeks of instructional time in the academic year and

fails to mention that an institution must use the lesser of that

fraction or a fraction that divides the number of weeks in the academic

year by the number of weeks in the academic year. The second fraction

always results in the number one, as discussed in the 1994-95 Delivery

System Training.

Discussion: The preamble of the Federal Pell Grant Program NPRM

provided only a summary description of the timeframe component in

calculating a payment for a payment period for a credit-hour without

terms or clock-hour program. While the preamble discussion did mention

the fraction based on the time it takes a full-time student to complete

a program whose length is less than an academic year, the preamble did

not describe the calculation for a program that requires a full-time

student to attend longer than an academic year. In the latter case, the

fraction can be less than or greater than one. However, since a student

may not receive more than a Scheduled Federal Pell Grant for an

academic year except as provided for under Sec. 690.67, the institution

must use the lesser of the result of the fraction for the timeframe

requirement for an academic year or the number one.

Changes: The fraction in Sec. 690.63(e)(2) has been modified to

clarify that the fraction used for timeframe can never be greater than

one.

Payments for a Payment Period for a Program Granted a Waiver to the

Academic Year Definition

Comments: None.

Discussion: In the NPRM as well as the NPRM for the Student

Assistance General Provisions regulations, the Secretary requested

comments from the public on how to implement changes in the 1993

Technical Amendments in the academic year definition which provides

that ``* * * the Secretary may, on a case-by-case basis, reduce for

good cause the 30-week minimum instructional time to not less than 26

weeks of instructional time in the case of an institution that provides

a 2-year or 4-year program of instruction for which it awards an

associate or baccalaureate degree * * *.'' While the Secretary did not

receive any comments in connection with this NPRM, the Secretary did

receive comments in connection with the NPRM for the Student Assistance

General Provisions regulations. As a result, the Secretary implemented

the statutory provision in 34 CFR 668.3.

If an institution receives a waiver of the 30 weeks of

instructional time component for its academic year, the Secretary has

provided instructions on how to accommodate that waiver under

Sec. 690.63(a)(6).

Institutions may use the methodologies in Sec. 690.63 (b) or (d)

for a program offered in terms and credit hours where a waiver of the

30-week requirement is granted. An institution may use the methodology

in Sec. 690.63(e) for a credit-hour without terms or a clock-hour

programs where a waiver of the 30-week requirement is granted.

Changes: If an institution receives a waiver of the 30 weeks of

instructional time requirement under 34 CFR 668.3, the institution may

use Sec. 690.63 (b), (d), or (e), as applicable, to calculate a

student's award. If the institution qualifies to use the procedures in

paragraph (b), no changes are necessary unless the provisions of

paragraph (b)(3)(ii) apply. If the institution must use, or chooses to

use, the procedures in paragraph (d) or (e), the institution will

substitute the number of weeks in its academic year, i.e. 26, 27, 28,

or 29, whenever any provision calls for the institution to use the

number of weeks of instructional time in its academic year.

Section 690.64 Calculation of a Pell Grant for a Payment Period Which

Occurs in Two Award Years

Comments: One commenter requested clarification on what constituted

minisessions versus nonstandard terms. The commenter noted that under

Sec. 690.64(c) minisessions were required to be combined when a payment

period occurred in two award years. However, there was no similar

requirement for minisessions that occurred at other times during the

award year, nor was there a similar requirement to treat nonstandard

terms in this manner.

Discussion: The Secretary believes that there is little difference

between minisessions and nonstandard terms except that minisessions

have traditionally been assembled into one single payment period and a

nonstandard term is a payment period by itself. Under Sec. 690.64(c),

institutions have been required to assemble minisessions into a single

payment period when the payment period occurs in two award years. There

has not been a similar requirement that an institution combine terms at

any other time in the award year although many institutions have chosen

to do so in accordance with policy guidance that the Department has

issued. The Secretary believes that requiring an institution to combine

minisessions at only one point during the award year serves little

purpose. The requirement also limits an institution's flexibility in

meeting the needs of its students and may be administratively

burdensome. The Secretary, therefore, believes it is not necessary to

require that minisessions be combined in a payment period that occurs

in two award years.

Changes: The Secretary removes Sec. 690.64(c) that requires

minisessions to be combined in a payment period that occurs within two

award years.

Section 690.65 Transfer Student: Attendance at More Than One

Institution During an Award Year

Comments: One commenter was unsure whether the provisions to

provide a second Scheduled Federal Pell Grant award in an award year

would apply to a transfer student and requested clarification of the

language in Sec. 690.65(c) that requires an institution to ensure that

a transfer student receives no more than one Scheduled Federal Pell

Grant award during an award year. The commenter asked if it was the

Secretary's intent to change the historic practice of limiting a

student to 100 percent of a Scheduled Federal Pell Grant award during

an award year regardless of the number of institutions the student

attends during the award year.

Discussion: The requirements for determining the amount of

remaining Federal Pell Grant eligibility for a transfer student have

not changed. However, if a student meets the requirements for a second

Scheduled Federal Pell Grant award within the same award year under

Sec. 690.67, the institution receiving the transfer student may make

disbursements to the student from his or her second Scheduled Federal

Pell Grant award in accordance with Sec. 690.63.

Changes: Section 690.65(c) is revised to permit a transfer student

to receive a second Scheduled Award in an award year.

Comments: When a transfer student has been overpaid because of

attendance at more than one institution, a commenter recommended that

the regulations clarify which institution the student must repay. The

commenter believed that the regulations should require the student to

indicate which institution he or she would repay and restrict the

institution at which the student is currently enrolled from making

additional title IV disbursements until the student has indicated which

institution he or she would repay.

Discussion: The Secretary believes that current Federal Pell Grant

regulations under Sec. 690.79 are clear regarding an institution's

responsibility regarding overpayments to a transfer student. The

Secretary does not believe that the current regulatory requirements,

which designate responsibility for repayment when an overpayment

occurs, should be changed to provide that a student determine which

institution to repay. In addition, the Secretary believes that the

student should not regain eligibility for title IV, HEA assistance

until the Secretary has been repaid or determines that the overpayment

has been resolved.

Changes: None.

Sec. 690.66 Correspondence Study

Comments: One commenter noted that the proposed regulations did not

describe how to calculate a student's payment for a payment period if

he or she was taking a program of study by correspondence. The

commenter noted that the Secretary had not added the academic year

timeframe requirement to the payment period calculations for a

correspondence program.

Discussion: The Secretary agrees that the new academic year

requirements must be incorporated into payment for a payment period

calculations for correspondence study. The Secretary believes that the

weeks of instructional time in the academic year for correspondence

study can be determined from the written lesson schedule that must be

developed by the institution. The written lesson schedule reflects a

workload of at least 12 hours of preparation per week. Since

correspondence programs generally are programs without terms, the

Secretary believes that payments for payment periods for these programs

can be calculated in much the same manner as clock-hour programs and

credit-hour programs without terms. The Secretary is adapting the

methodology under Sec. 690.63(e) to determine a payment for a payment

period for correspondence programs in Sec. 690.63(f). If a

correspondence program uses terms, the Secretary is providing that an

institution may calculate a payment for a payment period using

Sec. 690.63(d). Of course, a student taking a program of study by

correspondence is considered to be enrolled no more than half-time and

can never receive more than one-half of his or her Scheduled Award.

Therefore, the Secretary requires an institution to use the half-time

Disbursement Schedule to calculate the payment for a payment period for

a program of study by correspondence except in the case of a

correspondence program offered using terms. In the latter circumstance,

the institution would use the less-than-half-time Disbursement Schedule

for a student enrolled in less than the hours necessary to be a half-

time student.

Changes: Section 690.66 is revised to incorporate the academic year

definition into the method for calculating a payment for a payment

period for a program of correspondence courses. Sec. 690.66 is also

amended to incorporate consideration of enrollment status for students

taking only correspondence courses in a term-based program.

Section 690.67 Receiving Two Scheduled Federal Pell Grant Awards

During a Single Award Year

Comments: Several commenters responded to the Secretary's request

for suggestions on how to implement fairly and equitably the statutory

provisions in the 1992 Amendments and the 1993 Technical Amendments

that permit a student to receive up to two Scheduled Federal Pell Grant

awards in a single award year. One commenter believed that all students

must be treated equitably and fairly regardless of the type of

institution they attend, and recommended that any program whose courses

are fully transferable into an associate or baccalaureate degree

program be eligible for an additional Federal Pell Grant in an award

year. Some commenters proposed that the Secretary determine a

reasonable method to identify a student eligible to receive more than

one Scheduled Federal Pell Grant award in the award year. One commenter

recommended that to implement this provision, the Secretary should base

his ``case-by-case'' approval not on a ``student-by-student'' basis,

but on the entire program's academic calendar. It was proposed that a

``blanket'' approval apply to all students in an associate or

baccalaureate degree program for which the institution has sought and

received approval if the student completes more than an academic year's

coursework and meets other program requirements. The approval would be

requested by the institution from the Secretary. The commenter further

proposed that a program should be approved based on its ability to

provide a course of instruction that meets the statutory definition of

an academic year in credit hours and weeks of instructional time. Any

changes in the academic year definition or program structure at the

institution should be reported to the Secretary immediately since

approval would only be granted for the current program structure and

changes would be subject to reapproval.

Discussion: The Secretary agrees that any implementation of this

provision must be equitable and fair to all students eligible to

receive a second Scheduled Federal Pell Grant award within the

program's statutory provisions. The 1992 Amendments and the 1993

Technical Amendments establish statutory eligibility criteria that a

student must meet to receive a second Scheduled Federal Pell Grant

award in an award year. The statutory criteria require that a student

must be enrolled full-time in an associate or baccalaureate degree

program and that the student must have completed all the credits for a

complete academic year. A student who is enrolled in a program whose

credits are fully transferable to an associate or baccalaureate degree

program but is not enrolled in one of those degree programs is not

eligible for a second award.

In addition, the Secretary believes that the information necessary

for the Secretary to approve a student for a second Scheduled Award in

an award year is maintained at the institution he or she is attending.

Therefore, the Secretary believes that if an institution chooses to

award up to two Scheduled Federal Pell Grants within an award year, the

approval of a student for a second Scheduled Federal Pell Grant award

should be entrusted to the institution. The Secretary does not believe

that it is necessary to approve the program in which a student must

enroll to be eligible for a second Scheduled Award if the student meets

all other eligibility criteria.

The Secretary believes that a program's approval for this provision

should not be based on whether an institution provides a course of

instruction that meets the statutory definition of an academic year in

both credit hours and weeks of instructional time. For example, an

institution's definition of an academic year may not coincide with its

academic calendar's enrollment periods, i.e., it may have two semesters

that total 28 weeks of instructional time. If a student completes an

academic year's worth of credit hours yet fails to complete all the

weeks of instructional time, the Secretary believes the student should

still be eligible to receive additional Federal Pell Grant funds during

an award year because the statute requires only that a student complete

the coursework for an academic year to be eligible for a second

Scheduled award, not the weeks of instructional time. The student would

receive the remaining amount of his or her first Scheduled Federal Pell

Grant award as he or she completes the weeks of instructional time in

the first academic year in the payment period in which the student

becomes eligible to receive funds from his or her second Scheduled

Federal Pell Grant award. In the example, a student would have \2/30\

of his or her first award remaining in a 12 semester-hour summer

session. The student would receive the \2/30\ balance of the first

award and \12/30\ of the second award in the summer session since under

Sec. 690.63(c) the payment for each payment period would be \14/30\ of

an annual award.

Changes: The Secretary adds a new section at Sec. 690.67 describing

the criteria under which a student may receive more than one Scheduled

Award in an award year. The Secretary provides that an institution may

determine which students are eligible for a second Scheduled Award in

accordance with these criteria set forth in Sec. 690.67.

Comments: Some commenters recommended that a student at a term

institution be required to complete the equivalent of a full academic

year of study in two semesters or trimesters or three quarters. The

student would then be eligible for a second Scheduled Award to pursue

additional work during a third semester or trimester or a fourth

quarter. It was further recommended that full-time study for a student

eligible to receive a second Scheduled Award in an award year be based

on the norms required to complete the student's program as published by

the institution. If the institutional norm was to complete 120 credits

of a baccalaureate degree in 4 years, the student would be required to

complete 30 credits during each academic year before he or she would be

eligible for a second Scheduled Award.

Discussion: Since a full-time student normally completes a full

academic year's worth of credit hours in two semesters or trimesters or

three quarters, the Secretary does not believe that it is necessary to

prescribe the number of terms over which the credits are earned. The

Secretary also believes that it would be unfair to establish an

academic year course load for a student using a criterion other than

the one established for all students in the same program of study as

long as the criterion met the minimum statutory requirement. A

requirement greater than that criterion would make it more difficult

for a student to qualify for a second Scheduled Award within an award

year. However, under section 401(b)(6) of the HEA, a student must

complete the coursework in an academic year before he or she can be

considered for a second Scheduled Award. In addition, the Secretary

believes that the student must be making satisfactory academic progress

at the time he or she receives a second Scheduled Award. Therefore,

this institution must verify, before disbursing funds from the second

Scheduled Award, that a student is making satisfactory progress in his

or her program of study under 34 CFR 668.7 and 668.16(e).

Changes: The Secretary has included provisions in Sec. 690.67 that

require a student to complete an academic year's coursework and to be

making satisfactory progress in his or her program of study to be

eligible to receive a second Scheduled Award from the Federal Pell

Grant Program.

Comments: One commenter specified that the additional coursework

for which a student enrolled should be coursework required for

completion of his or her associate or baccalaureate degree.

Discussion: The Secretary agrees that additional coursework funded

under this provision should be coursework that counts toward completion

of a student's associate or baccalaureate degree program. Such a

requirement is in keeping with the intent of this statutory provision

to provide a student a means to continue his or her education without

interruption throughout the pursuit of his or her associate or

baccalaureate degree program.

Changes: The Secretary requires that coursework funded by the

second Scheduled Award be either required courses or electives that

will be counted toward completion of the student's associate or

baccalaureate degree program.

Comments: Several commenters proposed methodologies to calculate

the additional Federal Pell Grant eligibility by using ratios based

either on the additional credits the student would take or, in the case

of a term institution, the additional terms in which the student would

enroll.

Discussion: The Secretary believes that the student's payment for a

payment period should be determined using an appropriate methodology

under Sec. 690.63 or Sec. 690.66. However, an institution must use the

same methodology to calculate the payment for a payment period for all

students in a program regardless of whether that calculation relates to

a first or second Scheduled Federal Pell Grant for an award year.

Changes: None.

Section 690.77 Initial Disbursement of a Federal Pell Grant in an

Award Year Without a Valid SAR or Valid Institutional Student

Information Record

Comments: In the notice of proposed rulemaking the Secretary

requested comment on whether to remove Sec. 690.77. Most commenters

supported removal of this section because the rapid delivery of ISIRs

through electronic means makes it unnecessary to make a first payment

to a student without a valid SAR or ISIR. One commenter believed that

elimination of this provision would reduce the cost and the burden of

trying to collect an overaward from a student who did not submit a

valid SAR after being paid. Two commenters believed that, while most

institutions did not make payments to students without a valid SAR or

ISIR, the provision should be retained. One commenter believed that the

provisions in this section were mandated in the Federal Pell Grant

Program statute.

One commenter, while not commenting on whether Sec. 690.77 should

be retained or removed, noted a difference in the liability language

between Secs. 690.77 (c)(1) and (c)(2). In Sec. 690.77(c)(1) an

institution is liable if it chooses to make a disbursement without a

valid SAR or valid ISIR. In Sec. 690.77(c)(2), both the student and the

institution are liable for a disbursement made without a valid SAR or

ISIR. The commenter believed that a student was not liable for an

overpayment in Sec. 690.77(c)(1) as he or she would be in

Sec. 690.77(c)(2). The commenter recommended that the language in the

two provisions be rewritten to make both the student and the

institution liable in Sec. 690.77(c)(1) if a student requested a first

disbursement without a valid SAR or ISIR and the institution could

document the student's request.

Discussion: Although one commenter believed that this provision was

mandated in the statute, the statute was changed in the 1992 Amendments

to eliminate the statutory charge that required the Secretary to allow

a payment of a Federal Pell Grant without a valid SAR or ISIR.

Furthermore, the Secretary agrees with the majority of commenters that

the provision is no longer necessary.

Since the Secretary believes that this provision is no longer

necessary, revisions to the provisions under this section are not

required.

Changes: The Secretary is removing Sec. 690.77 from the Federal

Pell Grant Program regulations.

Section 690.82 Maintenance and Retention of Records

Comments: Most commenters supported the Secretary's proposed change

in Sec. 690.82 that would eliminate the requirement in the Federal Pell

Grant Program to retain an SAR regardless of whether the student

received a Federal Pell Grant. Two commenters indicated that they

understood the intent of the change in this provision was to eliminate

the requirement to maintain eligibility documents for students

receiving aid from other title IV programs or for other title IV

program purposes. One other commenter, while supporting the reduction

in the Federal Pell Grant Program record keeping requirements,

recommended that the Secretary recognize that many institutions

participate in the Federal Pell Grant Program electronically and

maintain a computerized data base. The commenter suggested that those

institutions be allowed to maintain the data in an electronic format

rather than a paper one.

Discussion: The Secretary appreciates the public support of his

proposal to change the record retention requirements for the Federal

Pell Grant Program. The Secretary believes, however, that clarification

is necessary since two commenters were unclear as to the Secretary's

intent in making this change. Eliminating the requirement under the

Federal Pell Grant Program for retaining the SAR or ISIR, regardless of

whether the student received a Federal Pell Grant, does not eliminate

the requirement to retain an SAR or ISIR if it has been used as an

eligibility document to determine and pay a student Federal student aid

under another title IV program or if the information was required to

complete the institution's Fiscal Operations Application Report for the

campus-based programs. The change would eliminate the need to retain an

SAR or ISIR if an institution did not use it as an eligibility

document, the student did not receive a Federal Pell Grant, another

document had been used to award other title IV, HEA assistance, or the

student was ineligible for title IV, HEA assistance.

The Secretary also agrees that it is reasonable to retain many of a

student's financial aid documents in media formats other than paper.

However, since the electronic technology is changing so quickly the

Secretary believes that he should publish periodically, in a notice, a

compilation of acceptable media storage formats and the documents that

can be stored in those formats.

Changes: The Secretary has added a provision in Sec. 690.82(e) to

allow for the retention of information in media formats acceptable to

the Secretary other than microform and the original documents. The

Secretary will publish in the Federal Register a listing of the media

formats and the documents that can be retained using those formats.

Comments: One commenter indicated that although the Secretary

required an institution to retain a student's application for Federal

student aid when his or her application information was submitted

electronically to the Secretary, the regulations at Sec. 690.82 did not

specify a record retention requirement for the application. The

commenter stated that the regulations should clarify: (1) How long the

application must be retained; (2) the circumstances under which an

application must be retained; and (3) what constitutes an acceptable

application for retention purposes (e.g., a Free Application for

Federal Student Aid or a printout of an electronic application).

Discussion: The commenter is correct that the Secretary requires

retention of any paper application signed by the student, and by one of

his or her parents if the student is dependent, when that application

is submitted to the Secretary electronically from an institution or its

agent. The Secretary requires that the application be retained for all

students whose applications were submitted from that institution and

were processed by the Secretary regardless of whether the student

attends that institution or receives title IV, HEA assistance. While

the regulations have not been specific on the institutional

responsibilities concerning retention of a student's application at the

point of submission, the Secretary requires an institution, as part of

its agreement to participate in EDE, to retain an application when the

application information is submitted electronically to the central

processor. However, the Secretary believes that the commenter is

correct in questioning what the Secretary requires of an institution

under such circumstances.

Changes: The Secretary has added a document maintenance requirement

at Sec. 690.82(b) for institutions that transmit electronically the

application information to the Secretary. The signed application and

signed copies of any corrections to application information must be

retained any time an institution submits that application information

electronically to the Secretary and the application information is

processed by the Secretary, regardless of whether the student attends

the institution or is eligible to receive a Federal Pell Grant.

Presidential Access Scholarship Program

Comments: Commenters generally commended the Secretary for his

proposal to incorporate the Presidential Access Scholarship (PAS)

Program into the Federal Pell Grant Program delivery system as a way to

eliminate additional burden on institutions.

Discussion: None.

Changes: None.

Section 691.16 Eligibility Requirements To Receive an Award

Comments: One of the criteria to determine eligibility to receive a

PAS is to have ranked in the top 10 percent, by grade point average, of

a student's secondary school graduating class. A commenter believed

that the requirement to graduate in the top 10 percent of a student's

class should be further defined so that students graduating in very

small classes, who might have to study harder to be in the top 10

percent, would be treated equally with students graduating from larger

classes. Another commenter requested that the Secretary clarify what

determines that a student has graduated in the top 10 percent of his or

her high school class.

Discussion: Section 406C of the 1992 Amendments requires that for a

student to be eligible he or she either (a) participate in an eligible

early-intervention program for a minimum of 36 months or (b) graduate

in the top 10 percent, by grade point average, of his or her high

school class. To determine whether a student is in the top 10 percent

of his or her graduating class, the number of students in the

graduating class is multiplied by .1. For example, if there are 250

students in the graduating class, 25 (250 x.1) are graduating in the

top 10 percent of the class. If a student's high school does not rank

its students, a student may only be considered eligible if the

institution can factually and statistically document that the student

would rank in the top 10 percent of graduating high school students

statewide in his or her state. The institution may also consider the

student's application if he or she has a GED test score equivalent to

ranking in the top 10 percent of the GED test scores in the State.

Changes: None.

Section 691.61 Disbursement Conditions and Deadlines

Comments: The PAS Program regulations require that a student

present written documentation that he or she has participated in an

approved, eligible early-intervention program for at least 36 months or

that he or she qualifies for a waiver under Sec. 690.16(b) of the

regulations. Several commenters requested clarification of the type of

documentation the student must present to demonstrate that he or she

has met these requirements. Another commenter recommended that to

minimize the burden on institutions the student be required to submit

documentation to determine participation in an eligible early-

intervention program with his or her application for a Federal Pell

Grant and PAS. This commenter believed that, in addition to lessening

the burden on institutions, keeping this information with the central

processor would allow the Secretary to keep track of eligible students

more easily.

Discussion: An example of the documentation that a student can

provide to establish that he or she participated in an eligible early

intervention program would be a letter from the program director

certifying that the student participated for at least 36 months in the

eligible program. The documentation can be collected at the institution

at the time the student applies to the institution for financial aid;

thus, an unnecessary burden is not placed on an institution to request

and maintain a certificate from a student indicating that he or she has

participated in an eligible early-intervention program. In addition, a

separate certificate could not be processed with the application for

calculating a student's EFC since it is not relevant to calculating the

student's EFC.

Changes: None.

Section 691.77 Initial Disbursement of a PAS in an Award Year Without

a Valid SAR or Institutional Student Information Record

Comments: Several commenters indicated that, if this provision is

removed from the Federal Pell Grant Program regulations because the

provision was no longer necessary for the Federal Pell Grant Program,

the Secretary should remove it from the PAS Program for similar

reasons.

Discussion: The Secretary agrees that, since the section is being

removed from the Federal Pell Grant Program, there is no need to retain

the section under Sec. 691.77.

Changes: Section 691.77 is removed from the final PAS Program

regulations and reserved.

Executive Order 12866

These final regulations have been reviewed in accordance with

Executive Order 12866. Under the terms of the order the Secretary has

assessed the potential costs and benefits of this regulatory action.

The potential costs associated with the final regulations are those

resulting from statutory requirements and those determined by the

Secretary to be necessary for administering this program effectively

and efficiently. Burdens specifically associated with information

requirements, if any, are identified and explained elsewhere in this

preamble under the heading Paperwork Reduction Act of 1980.

In assessing the potential costs and benefits--both quantitative

and qualitative--of these final regulations, the Secretary has

determined that the benefits of the final regulations justify the

costs.

The Secretary has also determined that this regulatory action does

not unduly interfere with State, local, and tribal governments in the

exercise of their governmental functions.

Paperwork Reduction Act of 1980

Sections 690.12, 690.13, 690.67, 690.75, 690.82, 691.61, 691.73,

691.82, and 691.83 contain information collection requirements. As

required by the Paperwork Reduction Act of 1980, the U.S. Department of

Education will submit a copy of these sections to the Office of

Management and Budget (OMB) for its review.

(44 U.S.C. 3504(h))

These regulations affect businesses or other for-profit

organizations and nonprofit institutions that are eligible to

participate in the title IV, HEA programs. The Department needs and

uses the information to implement the 1992 Amendments for the Federal

Pell Grant Program and PAS Program. The regulations provide the

requirements that States, institutions, and students must follow to

participate in these programs.

Federal Pell Grant

Annual public reporting and recordkeeping burden for this

collection of information is reduced by 1140 hours because of the

elimination of state recordkeeping and reporting requirements for 57

States and territories with enactment on September 13, 1994 of the

Violent Crime and Law Enforcement Act of 1994 which amends section

401(b)(8) of the Higher Education Act of 1965, as amended.

Presidential Access Scholarship Program

Annual public reporting and recordkeeping burden for this

collection of information is estimated to average 40 hours per response

for 57 States and territories and 2,280 total hours per year, including

the time for reviewing instructions, searching existing data sources,

gathering and maintaining the data needed, and completing and reviewing

the collection of information.

Annual approved public reporting and recordkeeping burden for this

collection of information is: (1) 3 hours per response for 57 States

and territories; and (2) 3 hours per response for 10,000 institutions.

The approved total hours for States and institutions are 30,971 hours

per year including the time for reviewing instructions, searching

existing data sources, gathering and maintaining the data needed, and

completing and reviewing the collection of information.

Organizations and individuals desiring to submit comments on the

information collection requirements should direct them to the Office of

Information and Regulatory Affairs, OMB, Room 3002, New Executive

Office Building, Washington, DC 20503; Attention: Daniel J. Chenok.

Assessment of Educational Impact

In the notice of proposed rulemaking, the Secretary requested

comments on whether the proposed regulations would require transmission

of information that is being gathered by or is available from any other

agency or authority of the United States.

Based on the response to the proposed rules and on its own review,

the Department has determined that the regulations in this document do

not require transmission of information that is being gathered by or is

available from any other agency or authority of the United States.

List of Subjects in 34 CFR Part 690

Administrative practice and procedure, Colleges and universities,

Education, Grant programs--education, Reporting and recordkeeping

requirements, Student aid.

List of Subjects in 34 CFR Part 691

Administrative practice and procedure, Colleges and universities,

Education, Grant programs--education, Reporting and recordkeeping

requirements, Student aid.

(Catalog of Federal Domestic Assistance (CFDA) Numbers: 84.063

Federal Pell Grant Program; Catalog of Federal Domestic Assistance

Number for the Presidential Access Scholarship Program has not been

assigned.)

Dated: September 27, 1994.

Richard W. Riley,

Secretary of Education.

The Secretary amends title 34 of the Code of Federal Regulations by

amending part 690 and adding a new part 691 as follows:

PART 690--[AMENDED]

1. The authority citation for part 690 is revised to read as

follows:

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

2. The heading for part 690 is revised to read as follows:

PART 690--FEDERAL PELL GRANT PROGRAM

Secs. 690.1, 690.2, 690.3, 690.6, 690.7, 690.9, 690.10, 690.11, subpart

F, 690.62, 690.64, 690.65, 690.71, 690.72, 690.74, 690.75, 690.78,

690.79, 690.81, and 690.83. [Amended]

3. In part 690 add the word ``Federal'' before the words ``Pell

Grant'' in the following places:

(a) Section 690.1;

(b) Section 690.2(c) under the terms ``Disbursement Schedule'' and

``Scheduled Pell Grant'';

(c) Section 690.3(a)(2)(ii);

(d) Section 690.6 (a) and (e);

(e) Section 690.7(a)(1) introductory text, (a)(2) (twice), (b)

introductory text (twice), (c)(2), (c)(3), and (c)(4);

(f) Section 690.9(a) introductory text, (a)(1) (twice), (a)(2)

introductory text, and (a)(2)(ii);

(g) Section 690.10 (a) and (b);

(h) Section 690.11 heading and text;

(i) Subpart F heading;

(j) Section 690.62(a);

(k) Section 690.64 heading and paragraphs (a)(2) and (b);

(l) Section 690.65(d) introductory text (twice), (d)(1) (twice),

(d)(3), and (e) (three times);

(m) Section 690.71;

(n) Section 690.72(a);

(o) Section 690.75(a) introductory text, (a)(3)(i), (a)(3)(ii),

(c), and (d) (twice);

(p) Section 690.78(c) introductory text;

(q) Section 690.79(a)(1) and (a)(2);

(r) Section 690.81(a)(2) and (b) (twice); and

(s) Section 690.83(a)(1) introductory text, (b)(1), and (c)(2).

Secs. 690.74 and 690.81 [Amended]

4. In part 690 add the word ``Federal'' before the words ``Pell

Grants'' in the following places:

(a) Section 690.74 (twice); and

(b) Section 690.81(c).

Sec. 690.2 [Amended]

5. and 6. Section 690.2 paragraph (a) is amended by removing in

alphabetical order the terms ``One-year training program'', ``Program

of study by correspondence'', Proprietary institution of higher

education'', ``Postsecondary vocational institution'', and ``Six-month

training program'', and adding in alphabetical order the terms ``Award

year'', ``Correspondence course'', ``Regular student'', and ``State''.

Sec. 690.2 [Amended]

7. Section 690.2 paragraph (b) is amended by adding in alphabetical

order the terms ``Federal Pell Grant Program'', ``Federal Perkins Loan

Program'', ``Federal Supplemental Educational Opportunity Grant

Program'', ``Federal Work-Study Program'', ``Full-time student'', and

``HEA'', and removing the terms ``Award year'', ``College Work-Study

Program'', ``Income Contingent Loan (ICL) Program'', ``Perkins Loan

Program'', ``Public or private nonprofit institution of higher

education'', ``Pell Grant Program'', ``Regular student'', ``State'',

and ``Supplemental Educational Opportunity Grant Program''.

8. Section 690.2 paragraph (c) is amended by removing the

definitions of ``Full-time student'', ``Pell Grant Index'', and

``Student Aid Report (SAR) Payment Document''; by adding, in

alphabetical order, new definitions of ``Annual award'', ``Central

processor'', ``Expected family contribution'', ``Institutional Student

Information Record (ISIR)'', ``Less-than-half-time student'', ``Payment

Voucher'', and ``Valid Institutional Student Information Record (valid

ISIR)''; and by revising introductory text and paragraphs (1) and (2)

of the definition of ``Disbursement Schedule'', and revising

``Electronic Data Exchange'', ``Enrollment status'', ``Payment

Schedule''; and ``Valid Student Aid Report'' to read as follows:

Sec. 690.2 General definitions.

* * * * *

(c) * * *

Annual award: The Federal Pell Grant award amount a full-time

student would receive under the Payment Schedule for a full award year,

and the amount a three-quarter-time, half-time, and less-than-half-time

student would receive under the appropriate Disbursement Schedule for a

full award year.

Central processor: An organization under contract with the

Secretary that calculates an applicant's expected family contribution

based on the applicant's application information, transmits an ISIR to

each institution designated by the applicant, and submits reports to

the Secretary on the correctness of its computations of the expected

family contribution amounts and the accuracy of the answers to

questions on application forms for the previous award year cycle.

* * * * *

Disbursement Schedule: A table showing the annual awards that

three-quarter, half-time, and less-than-half-time students at term-

based institutions using credit hours would receive for an academic

year. This table is published annually by the Secretary and is based

on--

(1) A student's expected family contribution, as determined in

accordance with title IV, part F of the HEA; and

(2) A student's attendance costs as defined in title IV, part F of

the HEA.

* * * * *

Electronic Data Exchange: An electronic exchange system between the

central processor and an institution under which--

(1) A student is able to transmit his or her application

information to the central processor through his or her institution and

an ISIR is transmitted back to the institution;

(2) A student through his or her institution is able to transmit

any changes in application information to the central processor; and

(3) An institution is able to receive an ISIR from the central

processor for a student.

Enrollment status: Full-time, three-quarter-time, half-time, or

less-than-half-time depending on a student's credit-hour work load per

academic term at an institution using semesters, trimesters, quarters,

or other academic terms and measuring progress by credit hours.

* * * * *

Expected family contribution (EFC): The amount, determined under

title IV, part F of the HEA, which the student and the student's family

may be reasonably expected to contribute toward the student's

postsecondary education for the academic year.

* * * * *

Institutional Student Information Record (ISIR): A paper document

or a computer-generated electronic record that the central processor

transmits to an institution that includes an applicant's--

(1) Personal identification information;

(2) Application data used to calculate the applicant's EFC; and

(3) EFC calculated by the central processor.

Less-than-half-time student: An enrolled student who is carrying

less than half the work load of the appropriate minimum requirement

outlined in the institution's definition of a full-time student.

* * * * *

Payment Schedule: A table showing a full-time student's Scheduled

Federal Pell Grant for an academic year. This table, published annually

by the Secretary, is based on--

(1) The student's expected family contribution, as determined in

accordance with part F of title IV of the HEA; and

(2) The student's cost of attendance as defined in part F of title

IV of the HEA.

* * * * *

Payment Voucher: An electronic or magnetic record, or for the 1995-

96 award year a paper record, that is provided to the Secretary by an

institution showing a student's expected family contribution, cost of

attendance, enrollment status, and student disbursement information.

* * * * *

Valid Institutional Student Information Record (valid ISIR): An

ISIR on which all the information used in calculating the applicant's

expected family contribution is accurate and complete as of the date

the application is signed.

* * * * *

Valid Student Aid Report: A Student Aid Report on which all of the

information used in calculating the applicant's expected family

contribution is accurate and complete as of the date the application is

signed.

9. Section 690.3 is amended by revising the section heading and

paragraphs (b)(1), (b)(2), and (b)(3), to read as follows:

Sec. 690.3 Payment period.

* * * * *

(b) Payment periods for an eligible program that does not have

academic terms: (1) For a student whose eligible program is one

academic year or less--

(i) The first payment period is the period of time in which the

student completes the first half of his or her program as measured in

credit or clock hours; and

(ii) The second payment period is the period of time in which the

student completes the second half of his or her program as measured in

credit or clock hours; or

(2) For a student whose eligible program is more than one academic

year--

(i) For the first academic year, the first payment period is the

period of time in which the student completes the first half of his or

her academic year as measured in credit or clock hours, and the second

payment period is the period of time in which the student completes the

second half of that academic year.

(ii) For subsequent academic years, each payment period is the

period of time in which the student first completes--

(A) One half of the academic year; or

(B) The remainder of the student's program.

(3) For purposes of paragraphs (b)(1) and (b)(2) of this section,

at an institution measuring progress in credit hours, if a student

cannot earn half of his or her credits in the program under paragraph

(b)(1) of this section or the academic year under paragraph (b)(2) of

this section until after the midpoint between the first and last

scheduled days of class, the student is considered to begin his or her

second payment period on the later of--

(i) The calendar midpoint between the first and last scheduled days

of class of the program or academic year; or

(ii) The date, as determined by the institution, that the student

has completed half of his or her academic coursework.

* * * * *

10. Section 690.6 is amended by removing paragraphs (c), (d), and

(e), and by adding a second sentence to paragraph (b) to read as

follows:

Sec. 690.6 Duration of student eligibility.

* * * * *

(b) * * * Any noncredit or remedial course taken by a student,

including a course in English language instruction, is not included in

the institution's determination of that student's period of Federal

Pell Grant eligibility.

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

11. Section 690.8 is amended by revising paragraphs (c) and (d) to

read as follows:

Sec. 690.8 Enrollment status for students taking regular and

correspondence courses.

* * * * *

(c)(1) Notwithstanding the limitation in paragraph (b)(3) of this

section, a student who would be a half-time student based solely on his

or her correspondence work is considered a half-time student unless the

calculation in paragraph (b) of this section produces an enrollment

status greater than half-time.

(2) A student who would be a less-than-half-time student based

solely on his or her correspondence work or a combination of

correspondence work and regular course work is considered a less-than-

half-time student.

(d) The following chart provides examples of the rules set forth in

this section. It assumes that the institution defines full-time

enrollment as 12 credits per term, making the half-time enrollment

equal to 6 credits per term.

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

Total course

load in credit

No. of credit No. of credit hours to

Under Sec. 690.8 hours regular hours determine Enrollment status

work correspondence enrollment

status

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

(b)(3)............................... 3 3 6 Half-time.

(b)(3)............................... 3 6 6 Half-time.

(b)(3)............................... 3 9 6 Half-time.

(b)(3)............................... 6 3 9 Three-quarter-time.

(b)(3)............................... 6 6 12 Full-time.

(b)(3) and (c)....................... 2 6 6 Half-time.

(c)\1\............................... .............. .............. ................ Less-than-half-time.

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

\1\Any combination of regular and correspondence work that is greater than 0, but less than 6 hours.

12. Section 690.10 is amended by revising the authority citation at

the end of the section, and by adding a new paragraph (c) to read as

follows:

Sec. 690.10 Administrative cost allowance to participating schools.

* * * * *

(c) If an institution enrolls a significant number of students who

are attending less-than-full-time or are independent students, the

institution shall use a reasonable proportion of these funds to make

financial aid services available during times and in places that will

most effectively accommodate the needs of those students.

(Authority: 20 U.S.C. 1096)

13. Section 690.12 is amended by removing paragraph (c), by

redesignating paragraph (b) as paragraph (c), by revising paragraph

(a), and by adding a new paragraph (b) to read as follows:

Sec. 690.12 Application.

(a) As the first step to receiving a Federal Pell Grant, a student

shall apply on an approved application form to the Secretary to have

his or her expected family contribution calculated. A copy of this form

is not acceptable.

(b) The student shall submit an application to the Secretary by--

(1) Providing a copy of the application form, signed by all

appropriate family members, to the institution at which the student

attends or plans to attend so that the institution can transmit

electronically the application information to the Secretary under EDE;

or

(2) Mailing the paper application form to the Secretary.

* * * * *

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

14. Section 690.13 is revised to read as follows:

Sec. 690.13 Notification of expected family contribution.

(a) Beginning with the 1996-97 award year, the Secretary sends a

student's application information and EFC as calculated by the central

processor to each student and an ISIR to each institution designated by

the applicant.

(b) For the 1995-96 award year, an institution participating in EDE

shall provide a copy of a student's application information and EFC as

calculated by the central processor to the student for whom it has

transmitted the student's application information to the central

processor.

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

15. Section 690.14 is amended by revising the title of the section

heading, and paragraph (c) is revised and redesignated as paragraph (b)

to read as follows:

Sec. 690.14 Request for recalculation of expected family contribution

because of clerical or arithmetic error.

* * * * *

(b) (1) If a student believes that a clerical or arithmetic error

produced an inaccurate expected family contribution determination, the

student may request a recalculation of that expected family

contribution by submitting that request to the Secretary.

(2) A student makes that request by--

(i) Having his or her institution transmit that request under EDE

to the Secretary; or

(ii) Mailing an approved form, certified by the student, and if the

student is a dependent student, one of the student's parents, directly

to the Secretary.

(3) If an institution transmits electronically the student's

recalculation request to the Secretary, the corrected information must

be supported by--

(i) Information contained on an approved form, that is certified by

the student, and if the student is a dependent student, one of the

student's parents; or

(ii) Verification documentation provided by a student under 34 CFR

668.57.

(4) The recalculation request must be received by the Secretary no

later than the deadline date established by the Secretary through

publication in the Federal Register.

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

16. Subpart C is removed and reserved.

17. Section 690.61 is revised to read as follows:

Sec. 690.61 Submission process and deadline for a Student Aid Report

or Institutional Student Information Record.

(a) Submission process. (1) Except as provided in paragraph (a)(2)

of this section, an institution must disburse a Federal Pell Grant to

an eligible student who is otherwise qualified to receive that

disbursement if--

(i) The student submits a valid SAR to the institution; or

(ii) The institution--

(A) Obtains a valid ISIR for that student; and

(B) For the 1995-96 award year, electronically or magnetically

transmits Federal Pell Grant disbursement data to the Secretary.

(2) In determining a student's eligibility to receive his or her

Federal Pell Grant, an institution is entitled to assume that SAR

information or ISIR information is accurate and complete except under

the conditions set forth in 34 CFR 668.16(f) and 668.60.

(b) Student Aid Report or Institutional Student Information Record

deadline. Except as provided in 34 CFR 668.60, for a student to receive

a Federal Pell Grant for an award year, the student must submit the

relevant parts of the SAR to his or her institution or the institution

must obtain a valid ISIR by the earlier of--

(1) The last date that the student is still enrolled and eligible

for payment at that institution; or

(2) June 30 of that award year.

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

18. Section 690.62 is amended by revising the title of the section

heading, by removing paragraph (c), and by revising paragraph (b) to

read as follows:

Sec. 690.62 Calculation of a Federal Pell Grant.

* * * * *

(b) No payment may be made to a student if the student's annual

award is less than $200. However, a student who is eligible for an

annual award that is equal to or greater than $200, but less than or

equal to $400, shall be awarded a Federal Pell Grant of $400.

19. Section 690.63 is revised to read as follows:

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

(a)(1) Programs using standard terms with at least 30 weeks of

instructional time. A student's Federal Pell Grant for a payment period

is calculated under paragraphs (b) or (d) of this section if--

(i) The student is enrolled in an eligible program that--

(A) Measures progress in credit hours;

(B) Is offered in semesters, trimesters, or quarters;

(C) Requires the student to enroll for at least 12 credit hours in

each term in the award year to qualify as a full-time student; and

(D) Is not offered with overlapping terms; and

(ii) The institution offering the program--

(A) Provides the program using an academic calendar that includes

two semesters or trimesters in the fall through the following spring,

or three quarters in the fall, winter, and spring; and

(B) Provides at least 30 weeks of instructional time in the terms

specified in paragraph (a)(1)(ii)(A) of this section.

(2) Programs using standard terms with less than 30 weeks of

instructional time. A student's Federal Pell Grant for a payment period

is calculated under paragraph (c) or (d) of this section if--

(i) The student is enrolled in an eligible program that--

(A) Measures progress in credit hours;

(B) Is offered in semesters, trimesters, or quarters;

(C) Requires the student to enroll in at least 12 credit hours in

each term in the award year to qualify as a full-time student; and

(D) Is not offered with overlapping terms; and

(ii) The institution offering the program--

(A) Provides the program using an academic calendar that includes

two semesters or trimesters in the fall through the following spring,

or three quarters in the fall, winter, and spring; and

(B) Does not provide at least 30 weeks of instructional time in the

terms specified in paragraph (a)(2)(ii)(A) of this section.

(3) Other programs using terms and credit hours. A student's

Federal Pell Grant for a payment period is calculated under paragraph

(d) of this section if the student is enrolled in an eligible program

that--

(i) Measures progress in credit hours; and

(ii) Is offered in academic terms other than those described in

paragraphs (a)(1) and (a)(2) of this section.

(4) Programs not using terms or using clock hours. A student's

Federal Pell Grant for any payment period is calculated under paragraph

(e) of this section if the student is enrolled in an eligible program

that--

(i) Is offered in credit hours but is not offered in academic

terms; or

(ii) Is offered in clock hours.

(5) Programs of study offered by correspondence. A student's

Federal Pell Grant payment for a payment period is calculated under

Sec. 690.66 if the program is offered by correspondence courses.

(6) Programs for which an exception to the academic year definition

has been granted under 34 CFR 668.3. If an institution receives a

waiver from the Secretary of the 30 weeks of instructional time

requirement under 34 CFR 668.3, an institution may calculate a

student's Federal Pell Grant payment for a payment period using the

following methodologies:

(i) If the program is offered in terms and credit hours, the

institution uses the methodology in--

(A) Paragraph (b) of this section provided that the program meets

all the criteria in paragraph (a)(1) of this section, except that in

lieu of paragraph (a)(1)(ii)(B) of this section, the program provides

at least the same number of weeks of instructional time in the terms

specified in paragraph (a)(1)(ii)(A) of this section as are in the

program's academic year; or

(B) Paragraph (d) of this section.

(ii) The institution uses the methodology described in paragraph

(e) of this section if the program is offered in credit hours without

terms or clock hours.

(iii) The institution uses the methodology described in Sec. 690.66

if the program is correspondence study.

(b) Programs using standard terms with at least 30 weeks of

instructional time. The Federal Pell Grant for a payment period, i.e.,

an academic term, for a student in a program using standard terms with

at least 30 weeks of instructional time in two semesters or trimesters

or in three quarters as described in paragraph (a)(1)(ii)(A) of this

section, is calculated by--

(1) Determining his or her enrollment status for the term;

(2) Based upon that enrollment status, determining his or her

annual award from the Payment Schedule for full-time students or the

Disbursement Schedule for three-quarter-time, half-time, or less-than-

half-time students; and

(3) Dividing the amount described under paragraph (b)(2) of this

section by--

(i) Two at institutions using semesters or trimesters or three at

institutions using quarters; or

(ii) The number of terms over which the institution chooses to

distribute the student's annual award if--

(A) An institution chooses to distribute all of the student's

annual award determined under paragraph (b)(2) of this section over

more than two terms at institutions using semesters or trimesters or

more than three quarters at institutions using quarters; and

(B) The number of weeks of instructional time in the terms,

including the additional term or terms, equals the weeks of

instructional time in the program's academic year.

(c) Programs using standard terms with less than 30 weeks of

instructional time. The Federal Pell Grant for a payment period, i.e.,

an academic term, for a student in a program using standard terms with

less than 30 weeks of instructional time in two semesters or trimesters

or in three quarters as described in paragraph (a)(2)(ii)(A) of this

section, is calculated by--

(1) Determining his or her enrollment status for the term;

(2) Based upon that enrollment status, determining his or her

annual award from the Payment Schedule for full-time students or the

Disbursement Schedule for three-quarter-time, half-time, or less-than-

half-time students;

(3) Multiplying his or her annual award determined under paragraph

(c)(2) of this section by the following fraction as applicable:

In a program using semesters or trimesters--

The number of weeks of instructional time offered in the program in the

fall and spring semesters

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

The number of weeks in the program's academic year

; or

In a program using quarters--

The number of weeks of instructional time offered in the program in the

fall, winter, and spring quarters

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

The number of weeks in the program's academic year

; and

(4)(i) Dividing the amount determined under paragraph (c)(3) of

this section by two for programs using semesters or trimesters or three

for programs using quarters; or

(ii) Dividing the student's annual award determined under paragraph

(c)(2) of this section by the number of terms over which the

institution chooses to distribute the student's annual award if--

(A) An institution chooses to distribute all of the student's

annual award determined under paragraph (c)(2) of this section over

more than two terms for programs using semesters or trimesters or more

than three quarters for programs using quarters; and

(B) The number of weeks of instructional time in the terms,

including the additional term or terms, equals the weeks of

instructional time in the program's academic year definition.

(d) Other programs using terms and credit hours. The Federal Pell

Grant for a payment period, i.e., an academic term, for a student in a

program using terms and credit hours, other than those described in

paragraphs (a)(1) or (a)(2) of this section, is calculated by--

(1)(i) For a student enrolled in a semester, trimester, or quarter,

determining his or her enrollment status for the term; or

(ii) For a student enrolled in a term other than a semester,

trimester, or quarter, determining his or her enrollment status for the

term by--

(A) Dividing the number of weeks of instructional time in the term

by the number of weeks of instructional time in the program's academic

year;

(B) Multiplying the fraction determined under paragraph

(d)(1)(ii)(A) of this section by the number of credit hours in the

program's academic year to determine the number of hours required to be

enrolled to be considered a full-time student; and

(C) Determining a student's enrollment status by comparing the

number of hours in which the student enrolls in the term to the number

of hours required to be considered full-time under paragraph

(d)(1)(ii)(B) of this section for that term;

(2) Based upon that enrollment status, determining his or her

annual award from the Payment Schedule for full-time students or the

Disbursement Schedule for three-quarter-time, half-time, or less-than-

half-time student;

(3) Multiplying his or her annual award determined under paragraph

(d)(2) of this section by the following fraction:

The number of weeks of instructional time in the term

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

The number of weeks of instructional time in the program's academic year

; and

(4) Paying the student the amount determined under paragraph (d)(3)

of this section.

(e) Programs using clock hours or credit hours without terms. The

Federal Pell Grant for a payment period for a student in a program

using credit hours without terms or using clock hours is calculated

by--

(1) Determining the student's Scheduled Federal Pell Grant using

the Payment Schedule;

(2) Multiplying the amount determined under paragraph (e)(1) of

this section by the lesser of--

(i) The number of weeks of instructional time required for a full-time

student to complete the lesser of the clock or credit hours in the

program or the academic year

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

The number of weeks of instructional time in the program's academic year

; or

(ii) One; and

(3) Multiplying the amount determined under paragraph (e)(2) of

this section by--

The number of credit or clock hours in a payment period

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

The number of credit or clock hours in the program's academic year

(f) A single disbursement may not exceed 50 percent of any award

determined under paragraph (d) or (e) of this section. If a payment for

a payment period calculated under paragraphs (d) or (e) of this section

would require the disbursement of more than 50 percent of a student's

annual award in that payment period, the institution shall make at

least two disbursements to the student in that payment period. The

institution may not disburse an amount that exceeds 50 percent of the

student's annual award until the student has completed the period of

time in the payment period that equals, in terms of weeks of

instructional time, 50 percent of the weeks of instructional time in

the program's academic year.

(g)(1) Notwithstanding paragraphs (b), (c), (d), and (e) of this

section and 34 CFR 668.66, the amount of a student's award for an award

year may not exceed his or her Scheduled Federal Pell Grant award for

that award year except as provided in Sec. 690.67.

(2) For purposes of this section and Sec. 690.66, an institution

must define an academic year for each of its eligible programs in terms

of the number of credit or clock hours and weeks of instructional time

in accordance with the requirements of 34 CFR 668.2 and 668.3.

20. Section 690.64 is amended by removing paragraph (c).

21. Section 690.65 is amended by revising paragraphs (a), (c), and

(f) to read as follows:

Sec. 690.65 Transfer student: attendance at more than one institution

during an award year.

(a) If a student who receives a Federal Pell Grant at one

institution subsequently enrolls at a second institution in the same

award year, the student may receive a Federal Pell Grant at the second

institution only if--

(1) The student submits a valid SAR to the second institution; or

(2) The second institution obtains a valid ISIR.

* * * * *

(c) The second institution may pay a Federal Pell Grant only for

that portion of the academic year in which a student is enrolled at

that institution. The grant amount must be adjusted, if necessary, to

ensure that the grant does not exceed the student's Scheduled Federal

Pell Grant for that award year except as provided under Sec. 690.67.

* * * * *

(f) A transfer student shall repay any amount received in an award

year that exceeds--

(1) His or her Scheduled Federal Pell Grant; or

(2) The amount which he or she was eligible to receive for the

award year under Sec. 690.67.

22. Section 690.66 is revised to read as follows:

Sec. 690.66 Correspondence study.

(a) An institution calculates the Federal Pell Grant for a payment

period for a student in a program of study offered by correspondence

courses without terms, but not including any residential component by--

(1) Determining the student's annual award using the half-time

Disbursement Schedule;

(2) Determining the length of the correspondence program in weeks

of instructional time by--

(i) Preparing a written schedule for submission of lessons that

reflect a workload of at least 12 hours of preparation per week; and

(ii) Determining the number of weeks of instructional time in the

program of study using the written schedule for submission of lessons;

(3) Multiplying the annual award determined from the Disbursement

Schedule for a half-time student by the lesser of--

(i) The number of weeks of instructional time as determined under

paragraph (a)(2)(ii) of this section for a student to complete the

lesser of the credit hours in the program or the academic year

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

The number of weeks of instructional time in the program's academic year

definition

; or

(ii) One; and

(4) Multiplying the amount determined under (a)(3) of this section

by--

The number of credit hours in the payment period

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

The number of credit hours in the program's academic year

(b) For purposes of paragraph (a) of this section--

(1) An academic year as measured in credit hours must consist of 2

payment periods--

(i) The first payment period must be the period of time in which

the student completes the lesser of the first half of his or her

academic year or program; and

(ii) The second payment period must be the period of time in which

the student completes the lesser of the second half of the academic

year or program; and

(2)(i) The institution shall make the first payment to a student

for an academic year, as calculated under paragraph (a)(4) of this

section, after the student submits 25 percent of the lessons or

otherwise completes 25 percent of the work scheduled for the program or

the academic year, whichever occurs last; and

(ii) The institution shall make the second payment to a student for

an academic year, as calculated under (a)(4) of this section, after the

student submits 75 percent of the lessons or otherwise completes 75

percent of the work scheduled for the program or the academic year,

whichever occurs last.

(c) In a program of correspondence study offered by correspondence

courses using terms but not including any residential component--

(1) The institution must prepare a written schedule for submission

of lessons that reflects a workload of at least 30 hours of preparation

per semester hour or 20 hours of preparation per quarter hour during

the term;

(2)(i) If the student is enrolled in at least 6 credit hours that

commence and are completed in that term, the Disbursement Schedule for

a half-time student is used; or

(ii) If the student is enrolled in less than 6 credit hours that

commence and are completed in that term the Disbursement Schedule for a

less-than-half-time student is used;

(3) A payment for a payment period is calculated using the formula

in Sec. 690.63(d) except that paragraphs (c) (1) and (2) of this

section are used in lieu of Sec. 690.63(d) (1) and (2) respectively;

and

(4) The institution shall make the payment to a student for a

payment period after that student completes 50 percent of the lessons

or otherwise completes 50 percent of the work scheduled for the term,

whichever occurs last.

(d) Payments for periods of residential training shall be

calculated under Sec. 690.63(d) if the residential training is offered

using terms and credit hours or Sec. 690.63(e) if the residential

training is offered using credit hours without terms.

23. A new section 690.67 is added to Subpart F to read as follows:

Sec. 690.67 Receiving up to two Scheduled Federal Pell Grant awards

during a single award year.

(a) The Secretary announces in the Federal Register whether an

institution may award up to a second Scheduled Federal Pell Grant to a

student in a particular award year.

(b) Based on the announcement described in paragraph (a) of this

section, an institution may award up to a second Scheduled Federal Pell

Grant award to a student in that award year if--

(1) The student is enrolled as a full-time student in an eligible

program that is at least 2 academic years as measured in credit hours

and weeks of instructional time and leads to an associate or

baccalaureate degree at an institution;

(2) The student is enrolled only in coursework required for

completing his or her associate or baccalaureate degree, including

courses in his or her major area of study or electives that fulfill the

student's graduation requirements, during any payment period in which

the student is paid any portion of his or her second Scheduled Federal

Pell Grant award;

(3) In the previous payment periods in the award year the student

has completed the number of credit hours required in an academic year

leading to his or her associate or baccalaureate degree program; and

(4) The student has completed the weeks of instructional time

required for an academic year or will complete them in the first

payment period for which he or she will receive a payment from his or

her second Scheduled Federal Pell Grant award.

(c) If an institution awards a student up to a second Scheduled

Federal Pell Grant award, the institution must make such awards to all

students who qualify under paragraph (a) of this section.

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

Sec. 690.73 [Amended]

24. Section 690.73 is revised to read as follows:

When an institution is terminated under 34 CFR 668.86, the

institution shall provide the following information to the Secretary:

(a) The name and enrollment status of each eligible student who

submitted a valid SAR or for whom the institution received a valid ISIR

before the termination date.

(b) The amount of funds the institution paid to each Federal Pell

Grant recipient before the termination date.

(c) The amount due each student eligible to receive a Federal Pell

Grant through the end of the award year.

(d) An accounting of Federal Pell Grant expenditures to the date of

termination.

25. Section 690.75 is amended by revising paragraphs (a)(2), and

(b) to read as follows:

Sec. 690.75 Determination of eligibility for payment.

(a) * * *

(2) Is enrolled as an undergraduate student; and

* * * * *

(b) If an eligible student submits a valid SAR to the institution

or the institution receives a valid ISIR for that student and that

student then becomes ineligible before receiving a payment, the

institution may pay the student only the amount that it determines

could have been used for educational purposes before the student became

ineligible.

* * * * *

Sec. 690.77 [Removed and Reserved]

26. Section 690.77 is removed and reserved.

27. Section 690.80 is amended by revising the title of the section

heading and paragraphs (a) and (b)(1) to read as follows:

Sec. 690.80 Recalculation of a Federal Pell Grant award.

(a) Change in expected family contribution. (1) The institution

shall recalculate a Federal Pell Grant award for the entire award year

if the student's expected family contribution changes at any time

during the award year. The change may result from--

(i) The correction of a clerical or arithmetic error under

Sec. 690.14; or

(ii) A correction based on information required as a result of

verification under 34 CFR part 668, Subpart E.

(2) Except as described in 34 CFR 668.60(c), the institution shall

adjust the student's award when an overaward or underaward is caused by

the change in the expected family contribution. That adjustment must be

made--

(i) Within the same award year--if possible--to correct any

overpayment or underpayment; or

(ii) During the next award year to correct any overpayment that

could not be adjusted during the year in which the student was

overpaid.

(b) Change in enrollment status. (1) If the student's enrollment

status changes from one academic term to another term within the same

award year, the institution shall recalculate the Federal Pell Grant

award for the new payment period taking into account any changes in the

cost of attendance.

* * * * *

28. Section 690.82 is amended by revising paragraphs (a)

introductory text and (a)(1); removing paragraph (d); redesignating

paragraphs (b) and (c) as paragraphs (c) and (d) respectively, and by

adding new paragraphs (a)(8), (b), and (e) to read as follows:

Sec. 690.82 Maintenance and retention of records.

(a) Each institution shall maintain adequate records (including

those related to verification), which include the fiscal and accounting

records that are required under Sec. 690.81, records required for

audits in 34 CFR 668.23, the SAR or ISIR of each student who received a

Federal Pell Grant, and records indicating--

(1) The eligibility of all enrolled students who have submitted

valid SARs to the institution or for whom the institution has received

valid ISIRs;

* * * * *

(8) Documentation of a student's eligibility for any part of a

second Scheduled Federal Pell Grant award in any award year.

(b) Each institution shall retain any completed applications and

any other documents submitted by a student to the institution under

Sec. 690.14(c) if the application information is transmitted to the

Secretary under EDE and is processed by the Secretary.

* * * * *

(e) An institution may substitute microform copies or other media

formats acceptable to the Secretary, as published in a notice in the

Federal Register, in lieu of original records in meeting the

requirements of this section.

29. A new part 691 is added to read as follows:

PART 691--PRESIDENTIAL ACCESS SCHOLARSHIP PROGRAM

Subpart A--General

Sec.

691.1 Scope and purpose.

691.2 General definitions.

691.3 Payment period.

691.4 [Reserved]

691.5 [Reserved]

691.6 Duration of student eligibility.

691.7 Institutional participation.

691.8 Enrollment status for students taking regular and

correspondence courses.

691.9 Written agreements between two or more eligible institutions.

691.10 [Reserved]

691.11 Payments from more than one institution.

Subpart B--Application Procedures and Eligibility Requirements

691.12 The application process.

691.13-691.14 [Reserved]

691.15 Eligibility to apply initially for a scholarship.

691.16 Eligibility requirements to receive an award.

691.17 Eligibility requirements to continue to receive an award.

Subpart C--[Reserved]

Subpart D--[Reserved]

Subpart E--[Reserved]

Subpart F--Determination of Awards

691.61 Disbursement conditions and deadlines.

691.62 Calculation of a Presidential Access Scholarship Program

award.

691.63 Calculation of a Presidential Access Scholarship for a

payment period.

691.64 Calculation of a Presidential Access Scholarship for a

payment period that occurs in 2 award years.

691.65 Transfer student: attendance at more than one institution

during an award year.

691.66 Correspondence study.

Subpart G--Institutional Administration

691.71 Scope.

691.72 Institutional participation agreement.

691.73 Termination of institutional participation agreement.

691.74 [Reserved]

691.75 Determination of eligibility for payment.

691.76 Frequency of payment.

691.77 [Reserved]

691.78 Method of disbursement by check or credit to a student's

account.

691.79 Recovery of overpayments.

691.80 Recalculation of a PAS Program award.

691.81 Fiscal control and fund accounting procedures.

691.82 Maintenance and retention of records.

691.83 Submission of reports.

Subpart H--Administrative Responsibilities of a State

691.90 Early-intervention agreement.

691.91 Records a State must maintain.

Authority: 20 U.S.C. 1070a-31 et seq.

Subpart A--General

Sec. 691.1 Scope and purpose.

The purposes of the Presidential Access Scholarship (PAS) Program

are to encourage students to finish high school and attend college and

to upgrade the course of study completed by high school graduates who

are from low- or moderate-income families.

(Authority: 20 U.S.C. 1070a-31)

Sec. 691.2 General definitions.

(a) Definitions of the following terms used in this part are

described in subpart A of the regulations for Institutional Eligibility

under the Higher Education Act of 1965, as amended, 34 CFR part 600:

Accredited Award year, Clock hour program, Correspondence course,

Educational program, Eligible institution, Recognized equivalent of

high school diploma, Regular Student, Secretary, and State.

(b) Definitions of the following terms used in this part are

described in subpart A of the Student Assistance General Provisions, 34

CFR part 668: Academic year, Enrolled, Federal Pell Grant Program,

Full-time student, and HEA.

(c) Other terms used in this part are:

Central processor: An organization under contract with the

Secretary that calculates an applicant's expected family contribution

based on the applicant's application data, transmits an ISIR to each of

the institutions designated by the applicant, and submits reports to

the Secretary on the correctness of its computations of the expected

family contribution amounts and the accuracy of the answers to

questions on application forms for the previous award year cycle.

Disbursement Schedule: A table showing the annual awards that

three-quarter, half-time, and less-than-half-time students at term-

based institutions using credit hours would receive for an academic

year. This table is published annually by the Secretary and is based

on--

(1) A student's expected family contribution, as determined in

accordance with title IV, part F of the HEA; and

(2) A student's attendance costs as defined in title IV, part F of

the HEA.

Electronic Data Exchange: An electronic exchange system between the

central processor and an institution under which--

(1) A student is able to transmit his or her application

information to the central processor through his or her institution and

an ISIR is transmitted back to the institution;

(2) The student through his or her institution is able to transmit

any changes in application information to the central processor; and

(3) The institution receives an ISIR from the central processor for

that student.

Eligible early-intervention program: A program as required under

Sec. 691.16(a)(5) that provides education-related activities such as

counseling, mentoring, academic support, outreach, and other supportive

services, including providing information on opportunities for

postsecondary financial aid, to students enrolled in preschool through

grade 12. To qualify, a program must be one of the following:

(1) A Talent Search project as described in 34 CFR part 643 and

authorized under section 402B of the HEA, as amended;

(2) An Upward Bound project as described in 34 CFR part 645 and

authorized under section 402C of the HEA, as amended;

(3) An Opportunity Center as described in 34 CFR part 644 and

authorized under section 402F of the HEA, as amended; or

(4) A National Early Intervention Scholarship and Partnership

Program as authorized under section 404A of the HEA, as amended; or

(5) A program that is certified as an honors scholars program by

the Governor of the State in which it is offered and that the Governor

determines meets comparable requirements for any program funded under

34 CFR parts 643, 644, 645, or section 404A of the HEA.

Expected family contribution (EFC): The amount which the student

and the student's family may be reasonably expected to contribute

toward the student's postsecondary education for the academic year.

Half-time student: (1) Except as provided in paragraph (2) of this

definition, an enrolled student who is carrying a half-time academic

work load--as determined by the institution--that amounts to at least

half the work load of the appropriate minimum requirement outlined in

the institution's definition of a full-time student.

(2) A student enrolled solely in a program of study by

correspondence who is carrying a work load of at least 12 hours of work

per week or is earning at least 6 credit hours per semester, trimester,

or quarter. However, regardless of the workload, no student enrolled

solely in correspondence study is considered more than a half-time

student.

Honors scholars program: A program designed to encourage a high

level of academic achievement from students who are enrolled in the

program.

Institutional Student Information Record (ISIR): A paper document

or a computer-generated electronic record that the central processor

transmits to an institution that includes an applicant's--

(1) Personal identification information;

(2) Application data used to calculate the applicant's EFC; and

(3) EFC calculated by the central processor.

Less-than-half-time student: An enrolled student who is carrying

less than half the work load of the appropriate minimum requirement

outlined in the institution's definition of a full-time student.

Payment Schedule: A table showing a full-time student's Scheduled

PAS Award for an academic year. This table is published annually by the

Secretary.

Payment Voucher: An electronic or magnetic record, or for the 1995-

96 award year a paper record, that is provided to the Secretary by an

institution showing a student's expected family contribution, cost of

attendance, enrollment status, and student disbursement information.

Scheduled Presidential Access Scholarship: The amount of a PAS that

would be paid to a full-time student for a full academic year. This

table, published annually by the Secretary, is based on--

(1) The student's expected family contribution, as determined in

accordance with part F of title IV of the HEA; and

(2) The student's cost of attendance as defined in part F of title

IV of the HEA.

Student Aid Report (SAR): A report provided to an applicant showing

the amount of his or her expected family contribution.

Three-quarter-time student: An enrolled student who is carrying a

three-quarter-time academic work load--as determined by the

institution--that amounts to at least three-quarters of the work of the

appropriate minimum requirement outlined in the definition of a ``full-

time student.''

Undergraduate student: A student enrolled in an undergraduate

course of study at an institution of higher education who--

(1) Has not earned a baccalaureate or first professional degree;

and

(2) Is in an undergraduate course of study that usually does not

exceed 4 academic years or is enrolled in a 4 to 5 academic year

program designed to lead to a first degree. A student enrolled in a

program of any other length is considered an undergraduate student only

for the first 4 academic years of that program.

Valid Institutional Student Information Record (valid ISIR): An

ISIR on which all the information used in calculating the applicant's

expected family contribution is accurate and complete as of the date

the application is signed.

Valid Student Aid Report: A Student Aid Report on which all of the

information used in calculating the applicant's expected family

contribution is accurate and complete as of the date the application is

signed.

(Authority: 20 U.S.C. 1070a-31 et seq.)

Sec. 691.3 Payment period.

(a) Payment period for an eligible program that has academic terms:

(1) Except as noted in paragraph (a)(2) of this section, for an

eligible program that uses semesters, trimesters, quarters, or other

academic terms, the payment period is the semester, trimester, quarter,

or other academic term.

(2) For an eligible program that uses semesters, trimesters,

quarters, or other academic terms and measures progress in clock

hours--

(i) A payment period is a semester, trimester, quarter, or other

academic term if the student completes all the clock hours scheduled

for that term;

(ii) If at the end of a term, the student has not completed all of

the clock hours scheduled for that term and the student has received a

PAS for that term, the payment period extends beyond that term for as

long as it takes the student to complete the number of clock hours

originally scheduled for that term; and

(iii) If a payment period extends into another term, the next

payment period consists of the number of clock hours scheduled for that

term that were not included in the previous payment period.

(b) Payment periods for an eligible program that does not have

academic terms: (1) For a student whose eligible program is one

academic year or less--

(i) The first payment period is the period of time in which the

student completes the first half of his or her program as measured in

credit or clock hours; and

(ii) The second payment period is the period of time in which the

student completes the second half of his or her program as measured in

credit or clock hours; or

(2) For a student whose eligible program is more than one academic

year--

(i) For the first academic year, the first payment period is the

period of time in which the student completes the first half of his or

her academic year as measured in credit or clock hours, and the second

payment period is the period of time in which the student completes the

second half of that academic year.

(ii) For subsequent academic years, each payment period is the

period of time in which the student first completes--

(A) One half of the academic year; or

(B) The remainder of the student's program.

(3) For purposes of paragraphs (b)(1) and (b)(2) of this section at

an institution measuring progress in credits hours, if a student cannot

earn half of his or her credits in the program under paragraph (b)(1)

of this section or the academic year under paragraph (b)(2) of this

section until after the midpoint between the first and last scheduled

days of class, the student is considered to begin his or her second

payment period on the later of--

(i) The calendar midpoint between the first and last scheduled days

of class of the program or academic year; or

(ii) The date, as determined by institution, that the student has

completed half of his or her academic coursework.

(4) If an institution chooses to have more than two payment periods

in an academic year, the rules in paragraphs (b)(1) through (b)(3) of

this section are modified to reflect the increased number of payment

periods. For example, if an institution chooses to have three payment

periods in an academic year, each payment period must correspond to

one-third of the academic year.

(Authority: 20 U.S.C. 1070a-32)

Secs. 691.4-691.5 [Reserved]

Sec. 691.6 Duration of student eligibility.

A scholarship under the PAS Program shall be awarded to a student

for a period of--

(a) Not more than 4 academic years; or

(b) Not more than 5 academic years in the case of a student who is

enrolled in an undergraduate course of study requiring attendance for

the full-time equivalent of 5 academic years.

(Authority: 20 U.S.C. 1070a-32)

Sec. 691.7 Institutional participation.

(a)(1) An institution of higher education is eligible to award

scholarships for the PAS Program if it--

(i) Meets the appropriate definition set forth in section 481 of

the HEA;

(ii) Enters into a program participation agreement with the

Secretary; and

(iii) Complies with that agreement and with the applicable

provisions of this part and 34 CFR part 668.

(2) If an institution begins participation in the PAS Program

during an award year, a student enrolled in and attending that

institution is eligible to receive a PAS for the payment period during

which the institution enters into a program participation agreement

with the Secretary and any subsequent payment period.

(b) If an institution becomes ineligible to participate in the PAS

Program during an award year, an eligible student who was attending the

institution and who submitted a valid SAR to the institution or whose

institution received a valid ISIR from the U.S. Department of Education

before the date the institution became ineligible is paid a PAS for

that award year for--

(1) The payment periods that the student completed before the

institution became ineligible; and

(2) The payment period in which the institution became ineligible.

(c) An institution that becomes ineligible shall, within 45 days

after the effective date of loss of eligibility, provide to the

Secretary--

(1) The name and enrollment status of each eligible student who,

during the award year, received a PAS at the institution before it

became ineligible;

(2) The amount of funds paid to each PAS recipient for that award

year;

(3) The amount due each student eligible to receive a PAS through

the end of the payment period during which the institution became

ineligible; and

(4) An accounting of the PAS expenditures for that award year to

the date of ineligibility.

(Approved by the Office of Management and Budget under control

number 1840-0681)

(Authority: 20 U.S.C. 1070a-32)

Sec. 691.8 Enrollment status for students taking regular and

correspondence courses.

(a) If, in addition to regular coursework, a student takes

correspondence courses from either his or her own institution or

another institution having an agreement for this purpose with the

student's institution, the correspondence work may be included in

determining the student's enrollment status to the extent permitted

under paragraph (b) of this section.

(b) Except as noted in paragraph (c) of this section, the

correspondence work that may be included in determining a student's

enrollment status is that amount of work which--

(1) Applies toward a student's degree or certificate;

(2) Is completed within the period of time required for regular

course work; and

(3) Does not exceed the amount of a student's regular course work

for the payment period for which the student's enrollment status is

being calculated.

(c)(1) Notwithstanding the limitation in paragraph (b)(3) of this

section, a student who would be a half-time student based solely on his

or her correspondence work is considered a half-time student unless the

calculation in paragraph (b) of this section produces an enrollment

status greater than half-time.

(2) A student who would be a less-than-half-time student based

solely on his or her correspondence work or a combination of

correspondence work and regular course work is considered a less-than-

half-time student.

(d) The following chart provides examples of the rules set forth in

this section. It assumes that the institution defines full-time

enrollment as 12 credits per term, making the half-time enrollment

equal to 6 credits per term.

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

Total course

No. of credit load in credit

No. of credit hours hours to

Under Sec. 691.8 hours regular correspondence determine Enrollment status

work enrollment

status

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

(b)(3)................................. 3 3 6 Half-time.

(b)(3)................................. 3 6 6 Half-time.

(b)(3)................................. 3 9 6 Half-time.

(b)(3)................................. 6 3 9 Three-quarter-time.

(b)(3)................................. 6 6 12 Full-time.

(b)(3) and (c)......................... 2 6 6 Half-time.

(c) \1\................................ .............. .............. .............. Less-than-half-time.

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

\1\Any combination of regular and correspondence work that is greater than 0, but less than 6 hours.

(Approved by the Office of Management and Budget under control

number 1840-0681)

(Authority: 20 U.S.C. 1070a-32)

Sec. 691.9 Written agreements between two or more eligible

institutions.

(a) A student who is enrolled in an eligible program at one

eligible institution and taking courses at one or more other eligible

institutions that apply toward his or her degree or certificate at the

first institution may receive a PAS for attendance at both institutions

only if there is a written agreement between the institutions.

(b) The institution at which the student is enrolled and expects to

receive his or her degree or certificate shall determine and pay the

student's PAS. However, the other institution may determine and pay the

student's PAS if the institutions agree in writing to that arrangement.

(c) The institution that determines and pays the PAS shall--

(1) Take into account all courses that apply to the student's

degree or certificate taken by the student at each eligible institution

participating in the agreement when determining the student's

enrollment status and cost of attendance; and

(2) Maintain all records regarding the student's eligibility for

and receipt of the PAS.

(Approved by the Office of Management and Budget under control

number 1840-0681)

(Authority: 20 U.S.C. 1070a-32)

Sec. 691.10 [Reserved]

Sec. 691.11 Payments from more than one institution.

A student is not entitled to receive PAS Program payments

concurrently from more than one institution or from the Secretary and

an institution.

(Authority: 20 U.S.C. 1070a-32)

Subpart B--Application Procedures and Eligibility Requirements

Sec. 691.12 The application process.

Each eligible student desiring to apply for a PAS shall--

(a) Submit annually an application to the Secretary on the same

approved form and at the same time the student applies for a Federal

Pell Grant;

(b) Provide the application to the Secretary within the time frame

required to apply for a Federal Pell Grant; and

(c) Provide such information as is required to apply for a Federal

Pell Grant.

(Authority: 20 U.S.C. 1070a-33)

Secs. 691.13-691.14 [Reserved]

Sec. 691.15 Eligibility to apply initially for a scholarship.

A student is eligible to apply for a PAS for his or her first year

of postsecondary study if the student--

(a) Is scheduled to graduate from or is a graduate of a public or

private secondary school, or has the equivalent of a high school

diploma as recognized by the State in which the eligible student

resides, but has not yet received a baccalaureate degree; and

(b) Is either enrolled, accepted for enrollment, or intends to

enroll, at an institution of higher education not later than 3 calendar

years after the date that the student graduates from secondary school

or obtains the recognized equivalent of a high school diploma.

(Authority: 20 U.S.C. 1070a-35)

Sec. 691.16 Eligibility requirements to receive an award.

(a) A student is eligible to receive a PAS for his or her first

year of postsecondary study if the student--

(1) Is eligible to receive a Federal Pell Grant in the award year

in which the PAS is awarded;

(2) Is enrolled or accepted for enrollment in a degree or

certificate program of at least 2 years in length;

(3) Has demonstrated academic achievement and preparation for

postsecondary education by taking the following college preparatory

level coursework that includes at least--

(i) Four years of English;

(ii) Three years of science;

(iii) Three years of mathematics;

(iv) Either--

(A) Three years of history; or

(B) Two years of history and one year of social studies; and

(v) Either--

(A) Two years of foreign language; or

(B) One year of computer science and 1 year of foreign language;

(4) Has earned a grade point average of 2.5 or higher, on a scale

of 4.0, in the final 2 years of high school; and

(5) Has either (i) participated for a minimum period of 36 months

in an eligible early-intervention program; or

(ii) Ranked in the top 10 percent, by grade point average, of the

student's secondary school graduating class.

(b) Notwithstanding the requirements in paragraph (a)(5) of this

section, a student may receive a PAS if an authorized official of the

State in which the student resides certifies to the Secretary that the

student was unable to participate in an eligible early-intervention

program because--

(1) The program was not available in the area where the student

resides; or

(2) Due to unusual and exceptional circumstances, the student was

unable to participate in such a program.

(c) Notwithstanding the requirements in paragraph (a)(3) of this

section, a student may receive a PAS if the student's secondary school

does not offer the necessary coursework required in paragraph (a)(3) of

this section, and the student has completed the required coursework at

another local secondary school or at a community college.

(d) Notwithstanding the requirements in paragraph (a)(3)(v) of this

section, a student may receive a PAS if the student is--

(1) Fluent in a language other than English and participates in a

program to learn English; or

(2) An English-speaking student who is fluent in a second language.

(Authority: 20 U.S.C. 1070a-33, 1070a-35, 1070a-36(c))

Sec. 691.17 Eligibility requirements to continue to receive an award.

(a) To be eligible to continue to receive a PAS after the first

year of postsecondary study, a student shall--

(1) Continue to meet the eligibility requirements in Sec. 691.16(a)

(1) and (2); and

(2) Fulfill the requirements for satisfactory academic progress as

described in 34 CFR in 668.7(c) (the Student Assistance General

Provisions regulations) and section 484(c) of the HEA.

(b) If a student ceases to be eligible for a PAS because he or she

is no longer eligible for a Federal Pell Grant, the student can later

regain eligibility to receive a PAS at the time he or she qualifies for

a Federal Pell Grant.

(Authority: 20 U.S.C. 1070a-33)

Subparts C-E--[Reserved]

Subpart F--Determination of Awards

Sec. 691.61 Disbursement conditions and deadlines.

(a) Submission process. An institution makes a disbursement of a

PAS to a student only if--

(1) The student submits a valid SAR to the institution; or

(2) The institution obtains a valid ISIR for that student; and

(3)(i) The student presents a certificate issued by an appropriate

official of a high school in a State verifying that the student has

completed the necessary coursework to qualify for a PAS; or

(ii) The student presents written documentation that he or she has

participated in an approved eligible early-intervention program for at

least 36 months or qualifies for an exception under Secs. 691.16(b).

(4) In determining a student's eligibility to receive his or her

Federal Pell Grant, an institution is entitled to rely on valid SAR

information or valid ISIR information except under the conditions set

forth in 34 CFR 668.14(f) and 668.60.

(b) Student Aid Report or Institutional Student Information Record

deadline. Except as provided in 34 CFR 668.60, for a student to receive

a PAS award for an award year, the student must submit the relevant

parts of the SAR to his or her institution or the institution must

obtain a valid ISIR--

(1) While the student is still enrolled and eligible for payment at

that institution; and

(2) By June 30 of that award year.

(Authority: 20 U.S.C. 1070a-32)

Sec. 691.62 Calculation of a Presidential Access Scholarship Program

award.

The amount of a student's PAS for an academic year is equal to 25

percent of the student's Federal Pell Grant awarded for that academic

year as determined under 34 CFR 690.62 except that--

(a) If funding in a fiscal year is sufficient to fund fully all

eligible student awards in that academic year, no payment shall be made

to a full-time student of less than $400 for an academic year,

independent of the amount of the Federal Pell Grant.

(b) If funding is insufficient to fund fully all eligible students,

the Secretary reduces each student's award in proportion to the amount

that the PAS Program is not fully funded.

(Authority: 20 U.S.C. 1070a-32)

Sec. 691.63 Calculation of a Presidential Access Scholarship for a

payment period.

For an eligible student enrolled in an institution of higher

education in an eligible program, the student's PAS for each payment

period is calculated by--

(a) Determining his or her total PAS award in accordance with

Sec. 691.62; and

(b) Determining the amount of each payment based on the payment

amount for a Federal Pell Grant as calculated in accordance with

Sec. 690.63.

(Authority: 20 U.S.C. 1070a-32)

Sec. 691.64 Calculation of a Presidential Access Scholarship for a

payment period that occurs in 2 award years.

(a) If a student enrolls in a payment period that is scheduled to

occur in 2 award years--

(1) The entire payment period must be considered to occur within 1

award year.

(2) The institution shall determine

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