Student Assistance General Provisions; Final Rule DEPARTMENT OF EDUCATION

SUMMARY: The Secretary amends the Student Assistance General Provisions

regulations governing student eligibility under the Higher Education

Act of 1965, as amended (HEA). The regulations implement certain new

provisions of the Higher Education Amendments of 1992 and the Higher

Education Technical Amendments of 1993 that pertain to student

eligibility. The regulations also make technical corrections to the

final regulations published in the Federal Register on June 8, 1993

with regard to the applicability of Sec. 668.7(a)(1) to specific

programs set forth in title IV of the HEA (title IV, HEA). The purpose

of the regulations is to reduce the potential for abuse in the programs

authorized under the title IV, HEA programs by improving the accuracy

of the information used to assess a student's eligibility for these

programs. The regulations also clarify the Secretary's policy with

regard to the eligibility of incarcerated students, students studying

abroad, and students enrolled in telecommunications or correspondence

courses.

EFFECTIVE DATE: Subject to meeting the requirements of section 431(d)

of the General Education Provisions Act (20 U.S.C. 1232(d)), these

regulations take effect on July 1, 1994. When these regulations become

effective, they govern student eligibility for any title IV, HEA

program assistance that may be awarded to any student for award years

beginning with 1994-95.

FOR FURTHER INFORMATION CONTACT: Claude Denton, Program Specialist,

Student Eligibility and Verification Section, General Provisions

Branch, Division of Policy Development, U.S. Department of Education,

400 Maryland Avenue SW., (ROB-3, Room 4318), Washington, DC 20202.

Telephone: (202) 708-7888. Individuals who use a telecommunications

device for the deaf (TDD) may call the Federal Information Relay

Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8 p.m., Eastern

time, Monday through Friday.

SUPPLEMENTARY INFORMATION: The Student Assistance General Provisions

regulations implement requirements that apply to all institutions that

participate in the title IV, HEA student financial assistance programs.

The title IV, HEA student financial assistance programs include the

Federal Pell Grant, Federal Stafford Loan, Federal PLUS Loan, Federal

Supplemental Loans for Students (SLS), Federal Direct Student Loan

(Direct Loans), State Student Incentive Grant (SSIG), Federal Perkins

Loan, Federal Work-Study (FWS), and Federal Supplemental Educational

Opportunity Grant (FSEOG) programs. The last three programs are known

collectively as the ``campus-based programs.''

These regulations implement portions of the Higher Education

Amendments of 1992, Public Law 102-325, enacted July 23, 1992.

Regulatory implementation of this statute revises the Student

Assistance General Provisions (34 CFR part 668), which apply to all

students seeking assistance under the title IV, HEA programs. These

revisions seek to improve the efficiency of the title IV, HEA programs

and, by so doing, improve their capacity to enhance opportunities for

postsecondary education. Encouraging students to graduate from high

school and to pursue high quality postsecondary education are important

elements of the National Education Goals.

Waiver of Rulemaking

On June 8, 1993, the Secretary published final regulations in the

Federal Register, 58 FR 32188, that implement statutory changes, make

technical modifications, and enhance program integrity in the title IV,

HEA programs. As published, Sec. 668.7(a)(1) of those regulations

incorrectly states that an otherwise eligible student who is enrolled

for no longer than one twelve-month period as at least a half-time

student in a course of study necessary for enrollment in an eligible

program is eligible to receive assistance under the Stafford Loan,

PLUS, SLS, FWS, Federal Perkins Loan, or FDSL programs. Under section

484(b)(3) of the HEA, as amended by the Higher Education Technical

Amendments of 1993 (Technical Amendments)(Pub. L. 103-208, enacted

December 20, 1993), this student would be eligible to receive

assistance under the Stafford Loan, PLUS, SLS or FDSL programs only.

In addition, the Higher Education Amendments of 1992 amended

section 484(b)(4) of the HEA to provide that an otherwise eligible

student, who is enrolled or accepted for enrollment as at least a half-

time student at an eligible institution in a program necessary for a

professional credential or certification from a State that is required

for employment as a teacher in an elementary or secondary school in

that State, is now eligible to receive assistance under the FWS,

Federal Perkins Loan, or FDSL programs in addition to funds under the

Stafford Loan, PLUS, or SLS programs. Section 668.7(a)(1) has been

corrected to reflect the applicable statutory requirements. Until the

effective date of these regulations, the statutory requirements of

section 484(b) (3) and (4) of the HEA supersede Sec. 668.7(a)(1) as

published in the June 8, 1993 final regulations.

For purposes of this rulemaking, the Technical Amendments also

exempt students from three Pacific Island republics from the

requirement of providing social security numbers as a condition of

eligibility for title IV, HEA assistance. In addition, the Technical

Amendments provide for institutional authority to determine that a

social security number is correct without the need for a subsequent

review by the Secretary. In accordance with these statutory changes,

Secs. 668.7(a)(16) and 668.7(i) have been revised, respectively.

It is the practice of the Secretary to offer interested parties the

opportunity to comment on proposed regulations in accordance with

section 431(b)(2)(A) of the General Education Provisions Act (20 U.S.C.

1232(b)(2)(A)) and the Administrative Procedure Act, 5 U.S.C. 553.

However, since these changes merely incorporate statutory requirements

into the regulations and do not implement substantive policy, public

comment could have no effect. Therefore, the Secretary has determined

pursuant to 5 U.S.C. 553(b)(B) that public comment on the regulations

is unnecessary and contrary to the public interest.

Major Issues

On October 4, 1993, the Secretary published a notice of proposed

rulemaking (NPRM) in the Federal Register (58 FR 51712). The NPRM

included a discussion of the major issues surrounding the proposed

changes that will not be repeated here. The following list summarizes

those issues and identifies the pages of the preamble to the NPRM on

which a discussion of those issues may be found:

Amendment to General Definitions contained in Sec. 668.2 to add a

definition of the term ``output document'' to ensure consistent use of

the term throughout part 668 (page 51713);

Addition of provisions for a data match with the Selective Service

System and providing that a confirmation of Selective Service

registration on the student's application output document that is

submitted to the institution fulfills the Selective Service

registration requirement (page 51713);

Addition of a provision making incarcerated students ineligible to

receive assistance under the Federal Family Education Loan, Federal

Direct Student Loan, and Federal Perkins Loan programs (page 51713);

Addition of a provision requiring a student, as a condition of

eligibility for title IV, HEA assistance, to provide a social security

number (page 51714);

Addition of provisions for a data match with the Social Security

Administration to verify the accuracy of social security numbers

provided by students and institutional requirements related to this

verification (pages 51714-51715);

Addition of a provision making a student ineligible to receive

title IV, HEA assistance for a correspondence course unless the course

is part of a program leading to an associate, bachelor's, or graduate

degree (page 51715);

Addition of a provision establishing a methodology for calculating

the percentage of telecommunications and correspondence courses

delivered by the institution for the purpose of determining whether the

total number of telecommunications and correspondence courses exceeds

50 percent of all courses offered (page 51715); and

Addition of a provision clarifying that if a program of study

abroad is approved for credit by the home institution at which a

student is enrolled, the otherwise eligible student is eligible to

receive title IV, HEA assistance without regard to whether the study

abroad program is required as part of the student's degree program

(pages 51715-51716).

Section 668.7(i) has been revised, in response to public comments,

to provide for institutional verification of a student's social

security number if the institution has information that conflicts with

the Secretary's initial determination that the student's social

security number is accurate.

The Technical Amendments redesignated several provisions of HEA

section 484 and, accordingly, several references to that statutory

provision in these regulations have been revised.

Analysis of Comments and Changes

In response to the Secretary's invitation in the NPRM, 31 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 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.

Section 668.7 Eligible Student

Selective Service Registration Status

Comments: Several commenters supported the provision for a data

match with the Selective Service System and the provision that a

confirmation of Selective Service registration on the student's output

document that is submitted to the institution fulfills the requirement

to file a separate statement of compliance. One commenter recommended a

waiver of the Statement of Registration Status when a student presents

other documentation from the Selective Service System proving

registration. One commenter questioned the need for a 30-day period for

the student to collect and submit documentation to the institution to

support his claim of registration or exemption from registration, and

suggested that a statement from the student or a telephone call to the

Selective Service System would be equally effective and less burdensome

to the institution. One commenter requested that the Secretary address

the issues regarding students who failed to register with Selective

Service and are currently beyond the age of registration, veterans of

the Armed Forces who never registered, and aliens who missed the

opportunity to register. One commenter suggested that the data match

with the Selective Service System eliminates the need for a Statement

of Registration Status and recommended deletion of the Statement of

Registration Status from the student's output document. Another

commenter noted that section 484(n) of the HEA provides that an

institution may use data or documents to support the student's

registration, or exemption from registration, as a substitute for a

separate statement of compliance, but the commenter suggested that no

regulatory provisions exist, or are proposed, for waiver of the

Statement of Registration Status if the student submits documentation

proving that he is registered. Concern was also expressed by a

commenter that the 30-day minimum period allowed for the student to

submit a Statement of Registration Status imposes Selective Service

enforcement responsibilities on institutions. Another commenter

suggested that the Secretary stress in the preamble to these

regulations that the 30-day provision is a minimum requirement and that

institutions have the option of a later deadline. One commenter was

concerned about whether an institution can allow exceptions to the 30-

day deadline if an output document is submitted close to the end of an

award year and the 30-day period would extend beyond the end of the

award year, thereby precluding the student's eligibility for programs

without late disbursement provisions. Another commenter questioned

whether the 30-day period should begin at the time the institution

receives the student's output document, given the fact that many

institutions using electronic output documents receive the output

documents before the student receives them. One commenter requested

specific examples of what the Secretary would describe as clear and

unambiguous evidence of compliance with Selective Service registration

requirements, and suggested that the examples should include returned

Postal Service receipts from the Selective Service System. Another

commenter suggested that the Secretary add a provision to

Sec. 668.7(a)(13) to provide that if a student submits a Statement of

Registration Status claiming to be registered with Selective Service

and that claim is not confirmed by the data match, the student should

be required to present evidence from the Selective Service System to

resolve these conflicting sources of information. Several commenters

suggested that if the data match is out of service, the Secretary

should delay processing the student's application for title IV, HEA

assistance until the data match is again operational.

Discussion: Section 484(n) of the HEA requires the Secretary to

conduct a data base match with the Selective Service System for the

purpose of enforcing the Selective Service registration provisions of

section 113 of Public Law 97-252. Since the Secretary's participation

in this data match is mandatory, the institution's compliance with

section 2 of the Computer Matching and Privacy Protection Act of 1988

is also mandatory with respect to providing the student a minimum of 30

days to provide a Statement of Registration Status, or clear and

convincing evidence to the institution to support the student's claim

to have registered, or to be exempt from, Selective Service

registration. If the data match does not confirm that the student is

registered with Selective Service, the Secretary does not consider the

student's statement to be ``clear and convincing'' evidence, but

considers the institution's documented statement based on a telephone

conversation with an employee of the Selective Service System to meet

the ``clear and convincing'' standard. Returned Postal Service receipts

from the Selective Service System are also acceptable forms of

documentation. Regarding the recommendation for a waiver of the

Statement of Registration Status if evidence of registration is

submitted by the student, the Secretary notes that provisions for such

a waiver already exist in Sec. 668.33. However, the Secretary believes

that a revision to Sec. 668.7(a)(13)(ii) is needed to clarify that

Sec. 668.33 may require the student to file a Statement of Registration

Status or other evidence. With regard to veterans of the U.S. Armed

Forces who failed to register with the Selective Service System, the

Secretary recently issued final regulations (58 FR 32188, June 8, 1993)

that address this issue. Section 668.33(b) of the Student Assistance

General Provisions now provides that the student is not required to be

registered with the Selective Service System if the student ``served as

a member of one of the U.S. Armed Forces on active duty and received a

DD Form 214, ``Certificate of Release or Discharge from Active Duty''

showing military service with other than the reserve forces and

National Guard.'' Section 668.33(b) also provides that a student who

was required to be registered with the Selective Service System prior

to age 26, is now at least 26 years old or older, and claims to have

unknowingly failed to register with the Selective Service System must

demonstrate to the institution that he did not knowingly and willfully

fail to register with Selective Service. This requirement is satisfied

if the student obtains and presents to the institution an advisory

opinion from the Selective Service System that does not dispute the

student's claim that he did not knowingly and willfully fail to

register, and the institution does not have uncontroverted evidence

that the student knowingly and willfully failed to register. Section

668.33, as revised by the June 8, 1993 final regulations, also provides

for a waiver of the Statement of Registration Status if the student

submits to the institution documentation proving that he is registered.

With regard to the comment suggesting removal of the Statement of

Registration Status, the statute provides for use of documentation as a

substitute for the Statement of Registration Status only if the student

is able to submit such documentation. If the student claims to have

registered with Selective Service, or claims to be exempt from

registration, and does not have evidence to support such claims, the

Statement of Registration Status is an effective means of communicating

these claims to the institution. With regard to the comment that the

30-day period for the student to submit a Statement of Registration

Status forces institutions into an ``enforcement'' position of denying

title IV, HEA assistance based on institutionally-set deadlines, the

Secretary wishes to emphasize that the 30-day requirement is mandated

by the Computer Matching and Privacy Protection Act of 1988 and that

the provision establishes a minimum length of time, giving institutions

the option of setting a later deadline. Furthermore, the 30-day period

is intended to provide due process protection to an individual who may

be adversely affected by the results of a data match, and is not

intended to force the institution into denying title IV, HEA assistance

to students before the institution would otherwise be prepared to do

so. The Secretary also realizes that strict adherence to the 30-day

minimum period may create difficulties when the student's application

is being processed near the end of the award year, and supports the use

of institutional discretion in setting deadlines that conform to

existing statutory requirements and practical considerations regarding

the time needed to process title IV, HEA applications. With regard to

the comment concerning the beginning of the 30-day period for

institutions with electronic access to output documents, the 30-day

period should not begin until the student acknowledges to the

institution receipt of the output document containing information

relating to the results of the data match.

Changes: Section 668.7(a)(13)(ii) is revised to clarify that if the

student's Selective Service System status is not confirmed by the data

match, the student may be required to file a Statement of Registration

Status or other evidence as required by Sec. 668.33.

Incarcerated Students

Comments: One commenter requested clarification with respect to

whether a student meets the Secretary's definition of ``incarcerated''

if the student is furloughed during the day for the purpose of

attending classes and returns to confinement in a correctional

institution at night. Other commenters questioned whether an

incarcerated student should be allowed to receive his or her loan for a

period of attendance completed before the incarceration begins. One

commenter requested that the Secretary describe or reference

calculation and disbursement procedures for borrowers who have reduced

eligibility due to incarceration. Another commenter questioned whether

a student who is incarcerated at the beginning of an enrollment or

payment period and is subsequently released prior to the end of that

period should be considered eligible for the entire period.

Discussion: The Secretary is considering the definition of an

``incarcerated student'' in a separate proposed rulemaking published in

the Federal Register on February 10, 1994 (59 FR 6446-6465). Until that

rulemaking is effective, institutions are advised to seek the advice of

their own legal counsel with regard to compliance with section

484(b)(5) of the HEA, which makes incarcerated students ineligible to

receive assistance under the title IV, HEA loan programs. This comment

will be considered along with any others received during the comment

period applicable to that rulemaking. With regard to whether an

incarcerated student can receive a loan disbursement for a period of

attendance completed before incarceration, section 484(b)(5) of the HEA

precludes an incarcerated student from receiving a loan disbursement,

even if the disbursement would have applied toward a period of

attendance already completed. Calculations of eligibility for students

who become incarcerated during a payment period should be similar to

the calculations made with regard to cost of attendance for a borrower

who withdraws from the institution during the period. A student who is

incarcerated at the beginning of a payment period and is subsequently

released before the end of the payment period is eligible for

disbursement of loan funds provided that the disbursement is made after

release from incarceration and the student maintains an eligible

student status as provided in Sec. 668.7.

Changes: None.

Social Security Number

Comments: One commenter questioned the need for a social security

number data match, suggesting that institutions should be allowed to

maintain evidence of a correct social security number on file. Several

commenters expressed concern that title IV, HEA assistance may be

delayed to a student if the data match with the Social Security

Administration is out of service at the time the student's application

for title IV, HEA assistance is processed and the student is unable to

promptly provide evidence of a correct social security number. One

commenter suggested the use of several data elements as matching

criteria, including proper names, nicknames, abbreviated names, and

married names. One commenter questioned the Secretary's proposal to

resubmit the student's social security number for a final determination

if there is a possibility the data match could again be nonoperational.

Title IV, HEA assistance may be delayed, according to other commenters,

when institutions choose not to incur liability if a student provides

evidence of a correct social security number that differs from the

social security number originally submitted to the Secretary. Several

commenters suggested that the Secretary should issue a rejected output

document if the student's social security number is not confirmed, and

that responsibility for reconciliation of the nonconfirmed match should

be placed on the student and the Social Security Administration.

Several commenters suggested that, if the accuracy of a student's

social security number is not confirmed because the data match is not

in operation, the institution should assume that the social security

number provided by the student is correct until a subsequent data match

indicates that the social security number is incorrect, and that the

student should not be required to present evidence to prove the

accuracy of his or her social security number. One commenter asked the

Secretary for specific guidance on how to assist the student in

providing evidence and obtaining a final determination from the

Secretary with regard to the accuracy of the student's social security

number, and several commenters urged the Secretary to allow the

institutions to make this final determination. Another commenter

requested the opportunity to make a first disbursement without

liability if the student can provide evidence of an accurate social

security number. One commenter suggested that, once verification

confirms that the student's social security number is accurate and such

verification is documented in the student's file, no subsequent

verification of the student's social security number be required in

subsequent years. One commenter questioned whether corrections to the

student's social security number will cause a permanent change to the

student's record identification number, and whether the default data

match will be initiated based on the corrected social security number.

Several commenters suggested that a maximum turnaround time be allowed

for institutions to await a final determination from the Secretary with

regard to the accuracy of a student's social security number and that,

if a final determination is not received by the due date, that the

institution be allowed to disburse title IV, HEA funds. Several

commenters requested a thorough test of the matching data base to

prevent nonconfirmations of social security numbers because of name

changes, misspellings, and other typographical errors. One commenter

suggested that the institution should be allowed to require evidence of

an accurate social security number if the institution has information

that conflicts with the Secretary's confirmation that the student's

social security number is correct. One commenter recommended the

deletion of Sec. 668.7(i)(1), contending that there are no

circumstances in which the institution would be required to comply with

this provision. One commenter objected to any assignment of liability

to the institution in light of section 484(p)(4) of the HEA, which

prohibits the Secretary from taking any compliance, disallowance,

penalty, or other regulatory action against an institution with respect

to an error in a social security number, unless the error is the result

of institutional fraud. One commenter suggested that students who do

not meet the institutional deadline as proposed in Sec. 668.7(i)(3)(i)

should be ineligible for the period of enrollment during which they

applied for title IV, HEA assistance, not for the entire award year.

Discussion: With regard to the comment concerning the need for a

data match with the Social Security Administration, section 484(p) of

the HEA requires the Secretary, in cooperation with the Commissioner of

the Social Security Administration, to verify any social security

number provided by a student applying for title IV, HEA assistance. The

Secretary believes that a data match is the most efficient method of

accomplishing this task. The Secretary understands that a student with

a social security number that is not confirmed by the Secretary because

the data match is out of service may experience delays in title IV, HEA

assistance if he or she cannot promptly provide evidence of a correct

social security number. As a possible solution to this problem and to

reduce administrative burden on institutions, the Secretary considered

carefully the possibility of delaying the processing of applications

when the data match is out of service. Such delays would back up entire

batches of applications on subsequent processing days, however, and

would seriously compromise the efficiency of the processing system

during peak volume periods. The Secretary is confident that

interruptions in data match operations will be rare, that the data

match will provide virtually trouble-free, continuous service and that

the institution will very infrequently need to resubmit a social

security number because the data match is out of service. If the match

is out of service, however, the Secretary believes that the institution

should require documented evidence from the student of a correct social

security number and should make a determination that the student's

social security number is correct before disbursing title IV, HEA

assistance. With regard to the comment favoring the use of proper

names, nicknames, abbreviated names and married names as matching

criteria, the Secretary, in cooperation with staff at the Social

Security Administration, considered a number of possible data items

that are normally collected by the Social Security Administration, and

has determined that the student's name, date of birth, and social

security number are the three most useful matching elements. With

regard to the commenter who suggests that title IV, HEA assistance will

be delayed if the student's institution chooses not to incur liability

if the student provides evidence of a social security number that

differs from the social security number originally submitted to the

Secretary, section 484(p)(2) has been revised by the Higher Education

Technical Amendments of 1993 to accommodate this concern. According to

this revised statutory provision, if a student's social security number

is determined by the Secretary to be incorrect, the institution must

deny the student's eligibility for title IV, HEA assistance until such

time as the student provides documented evidence of a social security

number that is determined by the institution to be correct. The

Secretary will not impose any liability on the institution making this

determination if the student's social security number is subsequently

found to be incorrect, provided that the institution has not committed

fraud and the institution's determination is based on clear and

convincing evidence. The institution may make a determination that a

social security number is correct and disburse title IV, HEA assistance

to an otherwise eligible student even if the student is submitting a

social security number that differs from the social security number

originally submitted to the Secretary. If such a determination is made,

the institution will be required to report the new social security

number to the Secretary, and the Secretary will accept the new social

security number as accurate. This statutory change addresses the

concerns of commenters seeking guidance on how to provide evidence and

obtain a final determination from the Secretary with regard to a

student's social security number that has not been confirmed as

accurate by the data match. The institution has the authority to make a

determination with regard to the accuracy of a student's social

security number. Commenters urging the Secretary to allow the

institution to make a final determination, commenters seeking to make

disbursements without liability if the student can provide evidence of

an accurate social security number, and commenters suggesting a maximum

turnaround time for the Secretary's final determination have also had

their concerns addressed by this change. The Secretary agrees in

principle with the commenter who suggests that the Secretary should

issue a rejected output document if the student's social security

number is not confirmed. Rejected output documents are planned for

applications in which the social security number does not correspond

with a valid social security number in the Social Security

Administration data base. However, the Secretary plans to use the

output document to alert the institution to particular matching

criteria, such as the date of birth, that do not match corresponding

data in the Social Security Administration data base, rather than

rejecting the application for minor discrepancies. The Secretary is

interested in minimizing the burden on institutions wherever possible

in this process of reconciling nonconfirmed matches and solicits

comments from institutions at any time with regard to the technical

aspects of data match operations. However, the Secretary disagrees with

the commenter who would place responsibility for reconciliation of

nonconfirmed matches on the student and the Social Security

Administration. The institution retains primary responsibility for

ensuring that all students receiving title IV, HEA assistance are

eligible students in accordance with this section of the regulations.

The Secretary agrees with the commenter's suggestion that a verified

social security number should not need verification in subsequent

years, and will include the social security number as part of the

renewal application data items that are transferred from year to year.

With regard to the comment regarding use of the student's corrected

social security number as the student's record identification number

and for purposes of the default match, the Secretary will maintain both

social security numbers in the processing system but will automatically

rerun the default match for any corrected social security number. The

Secretary agrees with the commenter who suggests that the Social

Security Administration data base be tested to prevent nonconfirmations

due to name changes, misspellings, and other typographical errors, and

has begun such testing. However, the Secretary recognizes that the data

base is only as accurate as the data that is made available to it and

kept updated by individuals. The Secretary also agrees with the

commenter who suggests that the institution be allowed to require

evidence of an accurate social security number from the student if the

institution has information which conflicts with the Secretary's

determination from the data match that the student's social security

number is accurate. The Secretary does not agree with the commenter who

proposes the deletion of Sec. 668.7(i)(1), which prohibits an

institution from denying, delaying, reducing, or terminating a

student's eligibility for title IV, HEA assistance because social

security number verification is pending. This provision, also found in

section 484(p)(1) of the HEA, prevents delays in disbursements of title

IV, HEA assistance to students attending institutions that would

otherwise not disburse title IV, HEA assistance on the basis of their

own determinations that the student's social security number is

correct. For students whose social security numbers are not confirmed

as correct by the data match, section 484(p)(2) mandates a delay in

title IV, HEA disbursements until documented evidence of a correct

social security number is provided to the institution. However, once

this evidence is provided and the institution determines that the

social security number is correct, section 484(p)(1) prohibits any

further delays in title IV, HEA disbursements to otherwise eligible

students. The Secretary disagrees with the commenter who argues that

the Secretary cannot assign liability to an institution failing to

comply with the requirements of this section, on the basis that section

484(p)(4) of the HEA prohibits the Secretary from taking any

compliance, disallowance, penalty, or other regulatory action against

an institution with respect to an error in a social security number,

unless the error is the result of institutional fraud. The Secretary,

in accordance with this provision, will not take any of the

administrative actions mentioned in HEA section 484(p)(4) against an

institution that, notwithstanding compliance with this section, makes a

title IV, HEA disbursement to a student using an incorrect social

security number. However, section 484(p) does not prevent the Secretary

from holding an institution liable for any title IV, HEA disbursements

made in error to a student if the erroneous disbursements were caused

by the institution's failure to comply with the provisions of this

section.

Changes: If there is a determination by the Secretary that the

social security number provided by a student to an institution is

incorrect, Sec. 668.7(i) is revised to allow an institution to

determine that a student's social security number is correct based on

documented evidence. If the institution verifies the accuracy of a

social security number that differs from the social security number

originally provided to the Secretary, the institution is required to

report the correct social security number to the Secretary. Section

668.7(i)(2) is also revised to require an institution to collect

evidence of a correct social security number if the institution has

information that conflicts with the Secretary's determination that the

student's social security number is correct.

Enrollment in Correspondence or Telecommunications Courses

Comments: One commenter suggested that the Secretary clarify that a

student's ineligibility for title IV, HEA assistance because of the

student's enrollment in a correspondence course not leading to a degree

extends only to that course, and that the same student may be eligible

for title IV, HEA assistance if he or she is enrolled in degree program

courses. The same commenter inquired as to whether a student enrolled

in a telecommunications course that is being categorized as a

correspondence course for purposes of HEA section 484(l)(1) is also

counted as a correspondence student for purposes of HEA section

481(a)(3).

One commenter questioned whether a course taught through live,

interactive telephone transmission qualifies as a telecommunications

course. One commenter requested clarification with regard to whether

the Secretary's use of the phrase ``part of an educational program'' in

Sec. 668.7(a)(15) refers to part of the student's academic program or

part of the curriculum of the institution. One commenter questioned

whether students enrolled in residential degree programs who enroll in

additional correspondence courses for purposes of certification or

licensure would be eligible for title IV, HEA assistance. The same

commenter inquired as to whether an aid officer can deny funding

applicable to correspondence programs provided at another institution

with which a consortium agreement exists. One commenter suggested that

the Secretary should institute a waiver procedure which would allow

certain institutions to waive the 50 percent standard provided in

Sec. 668.7(j). One commenter requested that the Secretary define the

term ``correspondence.''

Discussion: The Secretary agrees with the commenter's presumption

that a student enrolled in a telecommunications or correspondence

course that is not part of a degree program is ineligible for title IV,

HEA assistance only to the extent that he or she is enrolled in

ineligible courses. An otherwise eligible student who is enrolled in

both degree program coursework and non-degree correspondence courses

continues to be eligible for title IV, HEA assistance to offset the

costs of the degree program courses. With regard to the applicability

of the 50 percent standard to HEA section 481(a)(3), the Secretary

wishes to emphasize that the calculation of the percentage of

telecommunications and correspondence courses provided for in

Sec. 668.7(j) is applicable only to Sec. 668.7(j), and does not apply

to the standard set for percentage of students enrolled in

correspondence courses in HEA section 481(a)(3). With regard to the

question concerning use of the phrase ``part of a program'' in

Sec. 668.7(a)(15), the phrase refers to the student's academic program,

which must lead to an associate, bachelor's, or graduate degree. A

student enrolled in correspondence courses for the purpose of attaining

certification or licensure is not eligible for title IV, HEA assistance

for those courses, but may be eligible to receive title IV, HEA

assistance for other correspondence courses in a degree program. With

regard to the comment concerning consortium agreements, the aid officer

may deny title IV, HEA assistance to a student for any correspondence

courses that do not meet degree-seeking requirements, including

correspondence courses taken by consortium agreement at another

institution. With regard to whether a course taught through live,

interactive telephone transmission is a telecommunications course, the

Secretary notes that HEA section 484(m)(4) defines

``telecommunications'' as ``the use of television, audio, or computer

transmission, including open broadcast, closed circuit, cable,

microwave, or satellite, audio conferencing, computer conferencing, or

video cassettes or discs, except that such term does not include a

course that is delivered using video cassette or disc recordings at

such institution and that is not delivered in person to other students

of that institution.'' Since the definition encompasses audio or

computer conferencing, a course taught through interactive telephone

transmissions must be considered a telecommunications course. With

regard to the comment requesting a waiver procedure, the Secretary has

no authority to prescribe procedures for waiving any of the provisions

in HEA section 484. With regard to a definition of ``correspondence,''

the Secretary is considering a definition of ``correspondence course''

in a separate proposed rulemaking published in the Federal Register on

February 10, 1994 (59 FR 6446-6465). Until that separate rulemaking is

published as final regulations, the commenter may refer to Sec. 600.2

of the Institutional Eligibility regulations, which defines a ``program

of study by correspondence'' as ``an educational program offered

principally by mail by an institution. Under this type of program, the

institution prepares lesson materials and mails them to the student in

a sequential and logical order. The student completes the lessons and

mails them back to the institution within a specified period of time.

The program may include a required period of residential training.''

Changes: None.

Program of Study Abroad

Comments: One commenter questioned whether the Secretary intends to

limit the eligibility of permanent resident aliens and other noncitizen

students seeking assistance under the Federal Family Education Loan

Program for the purpose of enrolling in study abroad programs. One

commenter asked for clarification concerning the circumstances under

which an aid officer could approve a study abroad course that is not

part of the student's degree program.

Discussion: Permanent resident aliens and other noncitizens who are

determined to be eligible students for purposes of Sec. 668.7(a)(4)(ii)

and part 668, Subpart I, and are otherwise eligible, are not prohibited

from enrolling in study abroad programs. With regard to the approval of

a study abroad course that is not part of a degree program, this

provision ensures that an eligible student may receive title IV, HEA

assistance for any study abroad course that is approved for credit at

an eligible institution, and that the course need not be required for

completion of a specific degree. For example, an otherwise eligible

student pursuing a degree in mathematics may receive title IV, HEA

assistance for an elective course in art history taken abroad, provided

that the art history course is approved for credit by the eligible

institution toward the student's graduation.

Changes: None.

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

collection 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 regulations, the Secretary has determined

that the benefits of the regulations justify the costs.

Paperwork Reduction Act of 1980

These regulations have been examined under the Paperwork Reduction

Act of 1980 and have been found to contain no information collection

requirements.

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 668

Administrative practice and procedure, Colleges and universities,

Consumer protection, Education, Grant programs--education, Loan

programs--education, Student aid.

Dated: February 2, 1994.

Richard W. Riley,

Secretary of Education.

(Catalog of Federal Domestic Assistance Numbers: Federal

Supplemental Opportunity Grant Program, 84.007; Federal Stafford

Loan Program, 84.032; Federal PLUS Loan Program, 84.032; Federal

Work-Study Program, 84.033; Federal Perkins Loan Program, 84.038;

Federal Pell Grant Program, 84.063; State Student Incentive Grant

Program, 84.069; Early Intervention Scholarship Program, 84.272)

The Secretary amends part 668 of title 34 of the Code of Federal

Regulations as follows:

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

1. The authority citation for part 668 continues to read as

follows:

Authority: 20 U.S.C. 1085, 1088, 1091, 1092, 1094, and 1141,

unless otherwise noted.

2. Section 668.2, paragraph (b) is amended by adding in

alphabetical order a new definition for ``Output document'' to read as

follows:

Sec. 668.2 General definitions.

* * * * *

(b) * * *

Output document: The Student Aid Report (SAR), Electronic Student

Aid Report (ESAR), other document or automated data generated by the

Department of Education's central processing system as the result of

processing the data provided in a Free Application for Federal Student

Aid (FAFSA) or multiple data entry application.

* * * * *

3. Section 668.7 is amended by revising paragraph (a)(1)(ii) and

adding a new paragraph (a)(1)(iii); revising paragraph (a)(8); removing

the word ``and'' at the end of paragraph (a)(11)(vii); removing the

period at the end of paragraph (a)(12), and adding, in its place, a

semicolon; and by adding new paragraphs (a)(13), (a)(14), (a)(15),

(a)(16), (i), (j), and (k) to read as follows:

Sec. 668.7 Eligible student.

(a) * * *

(1) * * *

(ii) For purposes of the Stafford Loan, PLUS, SLS, or Federal

Direct Student Loan Program, enrolled for no longer than one twelve-

month period as at least a half-time student in a course of study

necessary for enrollment in an eligible program; or

(iii) For purposes of the Stafford Loan, PLUS, SLS, CWS, Perkins

Loan, or Federal Direct Student Loan Program, enrolled or accepted for

enrollment as at least a half-time student at an eligible institution

in a program necessary for a professional credential or certification

from a State that is required for employment as a teacher in an

elementary or secondary school in that State;

* * * * *

(8) In accordance with the requirements of Sec. 668.32, has filed a

Statement of Educational Purpose;

* * * * *

(13) Has filed--

(i) An output document confirming registration with Selective

Service by providing the results of a data match with the Selective

Service System; or

(ii) In the absence of confirmation as provided in paragraph

(a)(13)(i) of this section and within a deadline to be set by the

institution of no less than 30 days from the date the institution

receives the output document, a Statement of Registration Status or

other evidence in accordance with Sec. 668.33;

(14) For purposes of the FFEL, Federal Direct Student Loan, and

Federal Perkins Loan programs, is not an incarcerated student at the

time funds are delivered or disbursed;

(15) Is, if enrolled in a telecommunications or correspondence

course, enrolled in a telecommunications or correspondence course that

is part of an educational program leading to an associate, bachelor's,

or graduate degree; and

(16) Except for residents of the Republic of the Marshall Islands,

the Federated States of Micronesia, or the Republic of Palau, has a

correct social security number that has been verified in accordance

with the requirements of paragraph (i) of this section;

* * * * *

(i) Social security number. The Secretary verifies a social

security number provided by a student to an eligible institution and

shall enforce the following conditions:

(1) An institution shall not deny, reduce, delay or terminate a

student's eligibility for assistance under the title IV, HEA programs

because social security number verification is pending;

(2) If the institution receives an output document from a student

indicating that the Secretary has determined that the student's social

security number is correct, the institution shall not require the

student to produce other evidence to confirm that the student's social

security number is correct, unless the institution--

(i) Has documentation that conflicts with the social security

number status reported on the output document; or

(ii) Has reason to believe the output document is incorrect.

(3) If the institution receives an output document from a student

indicating that the Secretary has determined that the social security

number provided to the institution by the student is incorrect, or that

the Secretary was unable to confirm that the social security number

provided to the institution by the student is correct, the

institution--

(i) Shall provide the student an opportunity, within a deadline of

at least 30 days from the date the institution receives the output

document, to provide clear and convincing evidence to verify that the

student has a correct social security number; and

(ii) May disburse any combination of title IV, HEA program funds,

employ the student under the Federal Work-Study Program, or certify a

Federal Stafford, Federal PLUS, Federal SLS, or Federal Direct Student

loan application for the student upon making, based on the evidence

provided for in paragraph (i)(3)(i) of this section, a determination

that the social security number provided by the otherwise eligible

student to the institution is correct; and

(iii) Shall report the student's correct social security number to

the Secretary if the correct social security number differs from the

social security number previously reported by the student to the

Secretary.

(4) If a student fails to submit the documentation by the deadline

established in accordance with paragraph (i)(3)(i) of this section, the

institution may not disburse to the student, or certify the student as

eligible for, any title IV, HEA program funds for that period of

enrollment or award year; employ the student under the Federal Work-

Study Program; or certify a Federal Stafford, Federal PLUS, Federal

Direct Student Loan, or Federal SLS loan application for the student

for that period of enrollment.

(5) If the Secretary determines that the social security number

provided to an eligible institution by a student is incorrect, and the

institution has not made a determination under paragraph (i)(3) of this

section, and a loan has been guaranteed for the student under the

Federal Family Education Loan Program, the institution shall notify and

instruct the lender and guaranty agency making and guaranteeing the

loan, respectively, to cease further disbursements of the loan, until

the Secretary or the institution determines that the social security

number provided by the student is correct, but the guaranty shall not

be voided or otherwise nullified with respect to disbursements made

before the date that the lender and the guaranty agency receive the

notice.

(6) Nothing in this section shall permit the Secretary to take any

compliance, disallowance, penalty or other regulatory action against--

(i) Any institution of higher education with respect to any error

in a social security number, unless the error was the result of fraud

on the part of the institution; or

(ii) Any student with respect to any error in a social security

number, unless the error was a result of fraud on the part of the

student.

(j) Special provisions regarding telecommunications and

correspondence courses. (1) A student enrolled in an educational

program at an eligible institution (other than an institution that

meets the definition in section 521(4)(C) of the Carl D. Perkins

Vocational and Applied Technology Education Act) that is offered in

whole or in part through telecommunications and leads to a recognized

associate, bachelor's, or graduate degree conferred by the institution

is not enrolled in correspondence courses unless the total amount of

telecommunications and correspondence courses at the institution equals

or exceeds 50 percent of all courses delivered at that institution.

(2) The percentage provided in paragraph (j)(1) of this section is

calculated by comparing the total number of correspondence and

telecommunications courses delivered during the preceding award year

with the total number of all courses delivered during that award year.

If an institution delivers the same course in person, by

telecommunications, or by correspondence, the Secretary considers each

delivery of the course by the institution to be a separate course for

purposes of this calculation.

(3) A student is subject to reduced eligibility for title IV, HEA

assistance if the financial aid administrator determines under the

discretionary authority provided in section 479A of the HEA that the

student's telecommunications instruction results in a substantially

reduced cost of attendance to the student.

(k) Program of study abroad. (1) An otherwise eligible student who

is engaged in a program of study abroad is eligible to receive title

IV, HEA assistance if--

(i) The student maintains enrollment in an eligible institution

during his or her program of study abroad; and

(ii) The eligible institution approves the program of study abroad

for academic credit at the eligible institution.

(2) The study abroad program need not be required as part of the

student's degree program.

Sec. 668.131 [Amended]

4. Section 668.131 is amended by removing the definition of Output

document.

[FR Doc. 94-6127 Filed 3-15-94; 8:45 am]

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