Student Assistance General Provisions, Federal Perkins Loan Program, Federal Work-Study Programs, Federal Supplemental Educational Opportunity Grant Program, Federal Family Education Loan Program, William D. Ford Federal Direct Loan Programs, and Federal Pell Grant Program

SUMMARY: The Secretary proposes to amend the regulations governing the

student financial assistance programs authorized under title IV of the

Higher Education Act of 1965, as amended (title IV, HEA programs).

These programs include the campus-based programs (Federal Perkins Loan,

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

Opportunity Grant (FSEOG) programs), the Federal Family Education Loan

(FFEL) programs, the William D. Ford Federal Direct Loan programs, the

Federal Pell Grant Program, and the State Student Incentive Grant

program. These proposed amendments, which eliminate unnecessary

regulations and improve the existing regulations, are part of a planned

series of regulatory reform and relief proposals for the title IV, HEA

programs. The Secretary is proposing these changes in response to the

President's Regulatory Reform Initiative.

The Federal student financial assistance programs support the

National Education Goals by enhancing opportunities for postsecondary

education. The National Education Goals call for increasing the rate at

which students graduate from high school and pursue high quality

postsecondary education and for supporting life-long learning.

DATES: Comments on the proposed regulations must be received on or

before October 27, 1995.

ADDRESSES: All comments concerning these proposed regulations should be

addressed to: Harold McCullough, U.S. Department of Education, P.O. Box

23272, Washington, DC 20026-3272. Comments may also be sent through the

Internet to [email protected].

To ensure that public comments have maximum effect in developing

the final regulations, the Department urges that each comment clearly

identify the specific section or sections of the regulations that the

comment addresses and that comments be in the same order as the

proposed regulations.

Comments that concern information collection requirements must be

sent to the Office of Management and Budget at the address listed in

the Paperwork Reduction Act section of this preamble. A copy of those

comments may also be sent to the Department representative named above.

FOR FURTHER INFORMATION CONTACT:

1. For the Student Assistance General Provisions: Claude Denton,

Student Eligibility and Verification Section, General Provisions Branch

on (202) 708-7888;

2. For the Federal Perkins Loan Program: Sylvia R. Ross, Campus-

Based Loan Programs Section, Loans Branch on (202) 708-8242;

3. For the FWS and FSEOG programs: Kathy S. Gause, Campus-Based

Programs Section, Grants Branch on (202) 708-4690;

4. For the FFEL Programs: Ralph Madden, GSL Programs Section, Loans

Branch on (202) 708-8242;

5. For the William D. Ford Federal Direct Loan Programs: Doug

Laine, Direct Loan Policy Group on (202) 708-9406; and

6. For the Federal Pell Grant Program: Mike Oliver, Pell and State

Grant Section, Grants Branch on (202) 708-4607.

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: On March 4, 1995, the President directed

every Federal agency to review its rules and procedures to reduce

regulatory and paperwork burden, and directed Federal agencies to

eliminate or revise those regulations that are outdated or otherwise in

need of reform. Responding to the President's Regulatory Reform

Initiative, the Secretary announced plans to eliminate or revise 93

percent of the Department's regulations. To launch the Department's

reinvention effort, the Secretary published a notice in the May 23,

1995 Federal Register (60 FR 27223-27226), eliminating more than 30

percent of the Department's regulations, primarily in areas not related

to student financial assistance.

The Secretary is conducting a page-by-page review of all student

financial assistance regulations to identify those that should be

eliminated or improved. The Secretary is also considering developing

proposals for statutory amendments to eliminate unnecessary

administrative burden.

As part of his response to the President's regulatory reinvention

initiative, the Secretary is proposing these amendments to the

regulations that apply to the title IV, HEA programs. The Secretary

plans to propose additional reform and relief regulatory amendments for

the title IV, HEA programs in the upcoming months.

A description of the major proposed changes follows. The proposed

changes that apply to more than one program are described first

followed by descriptions of provisions that apply only to a specific

program.

The Federal student financial assistance programs support the

National Education Goals by enhancing opportunities for postsecondary

education.

Summary of Proposed Changes

Student Assistance General Provisions

The Student Assistance General Provisions regulations, 34 CFR part

668, implement requirements that are common to the title IV, HEA

programs.

Subpart A--General

Section 668.7 Eligible Student

The Secretary proposes to remove and reserve the section formerly

designated as Sec. 668.7, ``Eligible student.'' The ``eligible

student'' provisions currently provided in Sec. 668.7 would now

comprise a revised subpart C of 34 CFR part 668.

The Secretary believes that this relocation will improve regulatory

organization, provide greater clarity, and improve understanding of

those provisions.

Subpart B--Standards for Participation in Title IV, HEA Programs

Section 668.19 Financial Aid Transcript

Under the current regulations, if an institution determines that a

student previously attended another institution, the institution must

obtain a financial aid transcript from that other institution. The

financial aid transcript provides some of the information that enables

an institution to determine whether an enrolling student is eligible to

receive title IV, HEA program funds. Thus, the financial aid transcript

may indicate that a student is in default on a title IV, HEA program

loan, or owes a repayment on a title IV, HEA program grant or loan. It

may also help the institution to determine the amount that an eligible

student is entitled to receive in the current award year by indicating

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a student's Scheduled Federal Pell Grant award or the amount of FFEL or

William D. Ford Federal Direct loan funds that the student received in

the current award year.

The Secretary proposes an alternative to obtaining a financial aid

transcript. The Department has been developing the National Student

Loan Data System (NSLDS), which will contain basically the same

information that is included on a financial aid transcript. When the

system becomes fully operational, institutions will be able to obtain

financial aid history information about an applicant for title IV, HEA

program assistance from the NSLDS instead of from other institutions

previously attended by the applicant. Therefore, the Secretary is

proposing in Sec. 668.19 that when the NSLDS can be used to satisfy

this purpose, an institution will have the option of obtaining

information about an enrolling student who has previously attended

another institution from the NSLDS instead of requesting a financial

aid transcript from the other institution.

At the present time, the Secretary anticipates that institutions

will be able to obtain financial aid transcript information from the

NSLDS starting with the 1996-97 award year. However, the Secretary is

proposing in Sec. 668.19 to notify institutions through a Federal

Register notice when they may begin to use this option.

After experience demonstrates that the NSLDS is a valid alternative

to requesting a financial aid transcript from another institution, the

Secretary anticipates that institutions will use the NSLDS exclusively

to obtain information and the Secretary will eliminate the financial

aid transcript requirement.

The Secretary expects that use of NSLDS will relieve institutions

of the burden of requesting and compiling information from financial

aid transcripts. Because financial aid history information will be

available electronically, obtaining information from the NSLDS will

also reduce delays in awarding and disbursing title IV, HEA program

assistance to students.

While the Secretary is confident that NSLDS data will provide

accurate and reliable information, there will be instances where an

institution encounters inconsistencies between NSLDS data and other

sources of information. If that happens, the institution is expected to

resolve those conflicts in accordance with Sec. 668.16(f). Resolution

of inconsistencies can be achieved through use of the financial aid

transcript or other methods the institution determines to be

appropriate.

Subpart C--Student Eligibility

Because of increased statutory requirements affecting a student's

eligibility to receive title IV, HEA program funds, the Secretary

believes that the inclusion of all those requirements in one section of

the regulations has become too cumbersome. Therefore, the Secretary has

revised and reorganized those requirements into subpart C of 34 CFR

part 668. The Secretary requests comments on this proposed

reorganization.

Section 668.33 Student Identification

The Office of Inspector General recently recommended enhancement of

the data match with the Social Security Administration (SSA), under

which SSA would confirm claims of U.S. citizenship by applicants for

title IV, HEA program funds on their Free Application for Federal

Student Aid (FAFSA). Currently, the Department and SSA have a data

match under which SSA confirms the accuracy of social security numbers

provided by title IV, HEA program applicants.

The Secretary and SSA have agreed to this expanded data match

starting with the 1996-97 award year application cycle. Section 668.33

has provisions to conform these regulations to this internal

interagency process.

Operationally, the citizenship aspect of the SSA data match would

be similar to other data matches. If a student's claim of U.S. citizen

status is confirmed by SSA, the central processor will generate a

confirming message on an applicable ``output document,'' such as an

ISIR or SAR. No further action will be required by either the student

or institution, absent conflicting information. If the student's claim

is not confirmed, the student would be advised of the lack of

confirmation and would be given the opportunity to provide documentary

evidence to the institution, such as a birth certificate,

naturalization certificate, or passport, to support his or her

assertion of citizenship.

The Secretary proposes, in this section, to allow students to

satisfy the requirement of filing a Statement of Educational Purpose

with the institution, by completing the FAFSA, which will include this

statement starting with the 1996-97 award year. Currently, institutions

must collect a Statement of Educational Purpose individually from each

student applying for title IV, HEA program assistance. The Secretary;s

proposal does not affect current FFEL requirements with regard to this

statement on loan applications.

The Secretary proposes to eliminate the model Statement of

Educational Purpose in the current regulations. A model statement would

be duplicative because the statement will appear on the FAFSA starting

with the 1996-97 award year.

The Secretary also proposes to eliminate the Statement of

Registration Status because the statement is duplicative. A male

student's selective service registration status is now confirmed

through a data match with the Selective Service System. This data match

eliminates the need for the collection of a separate statement.

Section 668.34 Student Debts Under the HEA and to the U.S.

The Secretary is proposing in these regulations to amend and

reorganize, for clarity and conformity, the provisions under which a

student who owes a debt under the HEA or to the United States may

nevertheless be eligible to receive title IV, HEA program assistance.

Also, the Secretary proposes to conform the regulations to existing

statutory requirements pertaining to bankruptcy.

Specifically, these regulations would allow a student who owes a

debt under the HEA or to the United States to be eligible to receive

title IV, HEA program funds even though the student (1) is in default

on a title IV, HEA program loan, (2) inadvertently received a title IV,

HEA program loan in an amount that exceeded that program's annual or

aggregate loan limits, (3) owes a repayment on a title IV, HEA program

grant or loan, or (4) has property subject to a judgment lien for a

debt owed to the United States.

Under the proposed regulations, a student who is in default on a

title IV, HEA program loan would be eligible to receive additional

title IV, HEA program funds if the student repays the loan in full, or

makes six consecutive monthly payments on the defaulted loan and makes

arrangements, satisfactory to the holder of the loan, to repay that

loan.

A student who is not in default but inadvertently obtained loan

funds under a title IV, HEA loan program in an amount that exceeded the

annual or aggregate loan limits under that program would be eligible to

receive additional title IV, HEA program funds if the student repays in

full the excess loan amount or makes arrangements satisfactory to the

holder of the loan, to repay that excess loan amount.

A student who receives a grant or loan overpayment under a title

IV, HEA program would be eligible for additional title IV, HEA program

funds if the student pays the overpayment in full, or

[[Page 49116]]

makes arrangements satisfactory to the institution to pay the

overpayment.

A student who has property subject to a judgment lien for a debt

owed to the United States would be eligible for title IV, HEA program

funds if the student pays the debt in full, or makes arrangements

satisfactory to the United States to pay the debt.

In addition, the proposed regulations clarify that the exception

under bankruptcy law is applicable to a student who is otherwise in

default on a title IV, HEA program loan, or owes an overpayment on a

title IV, HEA program grant or loan.

These proposed changes provide clarification and, to the extent

allowed by the HEA, consistency in the treatment by institutions of

applicants for title IV, HEA program assistance who may owe a debt on

previously awarded title IV aid or when the applicant has had a lien

placed on another debt owed to the United States. Additionally, they

provide, in the case of a grant or loan overpayment, flexibility to the

holder of the debt by allowing for the establishment of satisfactory

arrangements to repay so that the applicant who demonstrates good faith

in resolving his or her obligation may regain eligibility for title IV,

HEA program assistance.

Subpart I--Immigration-Status Confirmation

Section 668.133 Conditions Under Which an Institution Shall Require

Documentation and Request Secondary Confirmation

The Secretary proposes to remove the requirement that an

institution request secondary confirmation from the Immigration and

Naturalization Service for a student if (1) the student presents

documents verifying his or her immigration status that are identical to

documents presented to that institution in a previous year, and (2)

that institution determined the student to be an eligible noncitizen

using secondary confirmation of those same documents in a previous

award year. This waiver of secondary confirmation requirements would

not apply if the institution has conflicting information or reason to

doubt the student's claim to be an eligible noncitizen.

Subpart K--Cash Management

Section 668.164 Maintaining Funds

The Secretary proposes to amend Sec. 668.164(a)(2) to limit the

requirement that all institutions file a UCC-1 statement for any bank

account in which title IV, HEA program funds are maintained.

Specifically, the Secretary proposes to eliminate the UCC-1 filing

requirement for institutions that (1) disclose clearly in the name of

the account that Federal funds are maintained in that account, or (2)

are backed by the full faith and credit of a State. The filing of a

UCC-1 would only be required for bank accounts of institutions that do

not satisfy either of these conditions.

In establishing this requirement, the Secretary sought to use the

UCC-1 filing process as the means by which an institution publicly

discloses which of its accounts contain Federal funds. A public

disclosure reduces the possibility that an unscrupulous institution

could misrepresent Federal funds as its own funds.

Upon further review, the Secretary believes that the disclosure

purposes of the UCC-1 filing requirement are adequately accomplished

where an institution includes the phrase ``Federal funds'' in the name

of its accounts. Moreover, the Secretary believes that the UCC-1 filing

requirement is not appropriate for public institutions because these

institutions generally do not seek to obtain credit in the same manner

as private institutions.

Section 668.165 Disbursing Funds

The Secretary is proposing to modify section 668.165(b)(1) to

provide an institution as much flexibility as possible with respect to

how it notifies a student or parent borrower that William D. Ford

Federal Direct Loan or FFEL program funds have been credited to a

student's account. Under the current regulations, the institution must

provide such notification in writing. Under the proposed rules, the

institution would be able to provide this notification electronically

or through the use of telecommunication devices. If an institution

provides the notification through these devices, the institution must

have a means of documenting that the student or parent received this

information. For example, if the institution provides this information

through electronic mail, the institution must ensure that it receives a

``return receipt'' message from the addressee.

The Secretary proposes to amend Sec. 668.165(b) (1) and (3) to

provide that under certain circumstances, and with a student's

permission, an institution may credit the student's account with title

IV, HEA program funds to pay for minor institutional charges from a

prior year. Currently, Sec. 668.165(b)(1) prohibits this practice. This

prohibition reflects long-standing Department policy and is based on

the tenet that title IV, HEA program funds are intended to be used to

pay for educational expenses a student incurs in the period for which

those funds are provided. The Cash Management regulations published on

December 1, 1994 merely codified this policy.

After the publication of these regulations, institutions have

brought to the Secretary's attention circumstances under which a

limited exception to this rule may be appropriate. These circumstances

occur where a student incurs a minor institutional charge late in a

semester after the institution has released to the student all of his

or her title IV, HEA program funds. This charge is often not paid by

the student by the end of the semester and is consequently carried over

to the next semester. Where that next semester falls within the award

year, the charges may be paid using the student's title IV, HEA program

funds. The institutions note, however, that a problem arises where the

next semester falls in a subsequent award year because many

institutions have a policy that prevents a student from continuing at

the institution until all prior year charges are paid. In this case,

the student's current title IV, HEA program funds may not be used to

pay the prior year charges even if the amount of these funds exceeds

all current allowable costs and the student's remaining funds are

sufficient to pay the prior year charges. While the institutions

acknowledge that a student's failure to pay institutional charges when

those charges are due is a problem that may arise regardless of whether

a student receives title IV, HEA program funds, they maintain that the

current regulatory prohibition on the payment of prior year charges

imposes an unnecessary administrative burden and otherwise interferes

with an institution's ability to resolve this problem with the student.

After further review, the Department announced on July 11, 1995

that in the case described above where a balance of title IV, HEA

program funds remains after the student's current allowable costs are

paid, an institution may use the student's current title IV, HEA

program funds to pay for minor prior year charges provided that the

institution obtains appropriate authorization from a student to do so.

These proposed regulations merely restate this announced policy.

The Secretary believes that, as a practical matter, the payment of

minor prior year charges does not violate the intended use of title IV,

HEA program funds because the primary purpose of these funds is to

assist a student in beginning and continuing to pursue his or her

postsecondary education. However, the Secretary is concerned

[[Page 49117]]

that the payment of prior year charges may impair a student from

continuing his or her education at an institution if the amount of

those charges reduces adversely the amount of title IV, HEA program

funds that the student would otherwise rely on in meeting his or her

living expenses and other educational costs. The Secretary believes

strongly that this would not only violate the intended use of title IV,

HEA program funds but that it would be a disservice to the student and

waste of Federal funds. Therefore, although the Secretary does not

specify the dollar amount of prior year charges that may be paid, the

Secretary would expect institutions to use the latitude provided under

this proposal in a reasonable manner.

Campus-Based Programs

Sections 674.2, 675.2 and 676.2 Definitions

Section 674.2(b) and Sec. 675.2(b) of the Federal Perkins Loan and

FWS program regulations, respectively, define the terms ``full-time or

professional student'' and ``full-time undergraduate student'' and

Sec. 676.2(b) of the FSEOG program regulations defines the term ``full-

time undergraduate student.'' However, Sec. 668.2 of the Student

Assistance General Provisions regulations contains a definition of the

term ``full-time student'' that duplicates those definitions.

Therefore, the Secretary is proposing to eliminate these duplicative

definitions in Sec. 674.2(b), Sec. 675.2(b) and Sec. 676.2(b) and

instead incorporate the definition of the term ``full-time student''

set forth in Sec. 668.2 for all three of the campus-based programs.

Sections 674.17, 675.17, and 676.17 Federal Interest in Allocated

Funds

Section 674.17(a), Sec. 675.17 and Sec. 676.17 of the Federal

Perkins Loan, FWS, and FSEOG program regulations provide that program

funds are held in trust for the Secretary and intended student

beneficiaries and cannot be used or hypothecated for any other purpose.

These very provisions are included in Sec. 668.161(b) of the Student

Assistance General Provisions regulations so are not needed in these

program regulations.

In the past, the Secretary kept these provisions in program

regulations even though they were in the Student Assistance General

Provisions regulations as a reminder of their importance. However, the

Secretary now believes that the continued presence of redundant

regulatory provisions in each Title IV, HEA program regulation is no

longer needed.

Sections 674.19, 675.19, and 676.19 Fiscal Procedures and Records

The Secretary proposes to amend Secs. 674.19(e)(4)(v),

675.19(c)(3), and 676.19(c)(3) of the Federal Perkins Loan, FWS, and

FSEOG program regulations, respectively, to allow institutions the

additional flexibility of using optical disk technology in complying

with recordkeeping requirements. The Secretary believes that the use of

new technologies such as optical disk is an important tool in reducing

paper retention at an institution, particularly if an institution keeps

its records in computer format. The Secretary further believes that

broadening methods of record retention through the use of optical disk

will enhance administrative efficiency and increase flexibility by

providing institutions with a new recordkeeping option that saves time

and space.

Federal Perkins Loan Program

Section 674.2 Definitions

The current definition of ``making of a loan'' under Sec. 674.2 of

the Federal Perkins Loan program regulations includes the burdensome

requirement of collecting a student's signature each time loan funds

are advanced. In order to make this definition consistent with the

changes in signature requirements being proposed in Sec. 674.16, the

Secretary is proposing to amend this definition by removing the

reference to a borrower signing for each advance of funds. The

Secretary proposes to redefine ``making of a loan'' simply as when the

borrower signs the promissory note and the loan funds are disbursed.

Section 674.16 Making and Disbursing Loans

In keeping with the Secretary's desire to alleviate administrative

burden on institutions and to protect students, the Secretary is

proposing to eliminate the requirement that a student must sign for

each loan advance under the Federal Perkins Loan Program. The financial

aid community has commented repeatedly that this is a time-consuming,

costly, and impractical requirement that often results in long lines of

students waiting to sign loan documents.

Under the Secretary's proposal, an institution simply must obtain

the borrower's signature on a promissory note for each award year

before it disburses any loan funds under that promissory note for that

award year. Thus, when he or she signs a promissory note for an award

year, the student will know the loan amount for that award year.

Moreover, the student will know when and how those funds will be

disbursed because the institution is required to provide that

information to the student under Sec. 668.165 of the Student Assistance

General Provisions regulations.

Section 674.31 Promissory Note

The Secretary proposes to amend Sec. 674.31(a) of the Federal

Perkins Loan Program regulations to indicate that the Secretary will

provide sample promissory notes to institutions. Institutions may add

additional items to the sample notes as long as the new items do not

alter the substance of these sample notes.

Section 674.33 Repayment

The Secretary is proposing to amend Sec. 674.33(a)(2) of the

Federal Perkins Loan Program regulations by allowing institutions to

combine the last scheduled Federal Perkins Loan payment with the next-

to-last payment if the last payment is $25 or less. As currently

written, in order to combine payments, the last payment must be $15 or

less. The Secretary believes that allowing institutions to combine a

last payment of a higher dollar amount will reduce collection costs by

eliminating the generation of bills for small dollar amounts and also

significantly improve an institution's success in collecting small loan

balances.

Section 674.47 Costs Chargeable to the Fund

The Secretary recently issued a ``Dear Colleague'' Letter regarding

the limitations on write-offs in the Federal Perkins Loan Program (CB-

95-17). However, the Secretary believes that confusion still exists as

to what the term ``write-off'' means as it relates to Sec. 674.47(g).

In an attempt to clarify the Secretary's position and to alleviate

burden on institutions, the Secretary is proposing to revise

Sec. 674.47(g) by replacing the term ``write-off'' with the term

``cessation of collection activity.''

As the proposed change indicates, an institution may cease

collection activity on a defaulted account with a balance of less than

$25. However, the institution must continue to include the loan as in

default for purposes of calculating its cohort default rate.

Cessation of collection activity by an institution does not relieve

the borrower of his or her obligation to repay that loan, and interest

continues to accrue on the amount on which collection activities cease.

Moreover, the borrower is still considered in default on that loan and

therefore remains ineligible for further title IV, HEA program

assistance and retains an adverse credit rating.

[[Page 49118]]

It is the Secretary's long-standing policy to require institutions

to collect every amount due on an account from the borrower. However,

the Secretary recognizes that institutions and collection agencies

experience cost-inefficiencies in their attempts to collect small-

balance, defaulted loan accounts.

The Secretary recognizes that very small balances frequently occur,

for example, when a few days of additional interest accrues on the

final balance, and that billing borrowers for this small remaining

balance is not cost-effective for institutions as servicing fees often

exceed the remaining balance. Accordingly, the Secretary is proposing

to further amend Sec. 674.47 by adding new paragraph (h) to allow

institutions to cease collection activities and write off loan accounts

with a balance of less than $1, including outstanding principal,

accrued interest, collection costs, and late charges.

The write-off of balances of less than $1 creates a paid-in-full

status on the loan and, therefore, relieves the borrower of all

obligations, does not have an adverse effect on the borrower's credit

rating, does not affect the borrower's eligibility for further title

IV, HEA program assistance, nor will the loan be included in the

calculation of an institution's cohort default rate.

Federal Work-Study Programs

Appendix B--Model Off-Campus Agreement

When an institution enters into a written agreement--a

contract--with any off-campus agency or company that employs FWS

students, the institution must make sure the organization is a

reliable organization with professional direction and staff, and

that the work to be performed is adequately supervised and

consistent with the purpose of the FWS Program. Appendix B of the

current FWS regulations provides a model off-campus agreement.

Institutions can use this model as a guide in developing their

agreements.

In an effort to streamline regulations, the Secretary is

proposing to eliminate this sample agreement as an appendix to the

FWS regulations. The Secretary will include a model off-campus

agreement in the Federal Student Financial Aid Handbook.

Federal Family Education Loan Program, William D. Ford Federal Direct

Loan Programs

Sections 682.201 and 685.200 Eligible Borrowers

The Secretary proposes to expand the pool of borrowers under the

Federal PLUS and Federal Direct PLUS programs to include the spouse of

a student's parent if that parent remarried. The Secretary is proposing

this expansion to provide greater flexibility to the student's family

to enable them to pay for the student's educational costs. The proposed

extension includes the spouse of the parent if that spouse's income and

assets would be taken into account in determining the student's

expected family contribution.

Section 682.600 Agreement Between an Eligible School and the Secretary

for Participation in the FFEL Programs and Sec. 682.602 Schedule

Requirements for Courses of Study by Correspondence

The Secretary believes that the provisions of Sec. 682.600(a)

through Sec. 682.600(c) duplicate provisions in 34 CFR part 600 or 668

and are therefore unnecessary. Accordingly, the Secretary has proposed

to eliminate those provisions in 34 CFR part 682. The provisions

included in Sec. 682.600(d) that deal with foreign schools are needed

and the Secretary has proposed to include those provisions in a new

section, Sec. 682.611.

Students enrolled in correspondence programs are not eligible to

receive FFEL Program loans unless they are enrolled in a program that

leads to an associate, bachelor, or graduate degree. Therefore, the

Secretary believes that the provisions contained in Sec. 682.602 are no

longer needed and has proposed to eliminate those provisions.

Federal Pell Grant Program

Subpart A--Scope, Purpose and General Definitions

Section 690.7 Institutional Participation

The Secretary proposes to revise Sec. 690.7 by deleting current

paragraph (a)(1) because the provisions contained in that paragraph

duplicate provisions in 34 CFR part 600 or 668.

Subpart G--Administration of Grants Payments

Section 690.71 Scope, Sec. 690.72 Institutional Participation,

Sec. 690.73 Termination of Institutional Participation Agreement, and

Sec. 690.74 Provision of Funds to Institutions

The Secretary proposes to eliminate the last sentences in

Secs. 690.71, 690.72, 690.73, and 690.74 because they duplicate

provisions contained in 34 CFR part 668.

Section 690.83 Submission of Reports

The Secretary proposes to revise Sec. 690.83 by consolidating in

one paragraph the procedures that allow institutions to receive payment

or credit for Federal Pell Grants they previously disbursed if that

situation is disclosed by an initial audit or program review.

Executive Order 12866

1. Assessment of Costs and Benefits

These proposed 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 proposed regulations are

those resulting from statutory requirements and those determined by the

Secretary to be necessary for administering these programs 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 1995.

In assessing the potential costs and benefits--both quantitative

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

determined that the benefits of the proposed 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.

To assist the Department in complying with the specific

requirements of Executive Order 12866, the Secretary invites comment on

whether there may be further opportunities to reduce any potential

costs or increase potential benefits resulting from these regulations

without impeding the effective and efficient administration of the

program.

2. Clarity of the Regulations

Executive Order 12866 requires each agency to write regulations

that are easy to understand.

The Secretary invites comments on how to make these proposed

regulations easier to understand, including answers to questions such

as the following: (1) Are the requirements in the proposed regulations

clearly stated? (2) Do the regulations contain technical terms or other

wording that interferes with their clarity? (3) Does the format of the

regulations (grouping and order of sections, use of headings,

paragraphing, etc.) aid or reduce their clarity? Would the regulations

be easier to understand if they were divided into more (but shorter)

sections? (A ``section'' is preceded by the symbol ``Sec. '' and a

numbered heading, for example, Sec. 674.4 Allocation and reallocation.)

(4) Is the description of the regulations in the ``Supplementary

Information'' section of this preamble helpful in understanding the

regulations? How could this

[[Page 49119]]

description be more helpful in making the regulations easier to

understand? (5) What else could the Department do to make the

regulations easier to understand?

A copy of any comments that concern how the Department could make

these proposed regulations easier to understand should be sent to

Stanley M. Cohen, Regulations Quality Officer, U.S. Department of

Education, 400 Maryland Avenue, S.W., (Room 5125, FOB-6), Washington,

D.C. 20202-2241.

Regulatory Flexibility Act Certification

The Secretary certifies that these proposed regulations would not

have a significant economic impact on a substantial number of small

entities. The small entities affected by these proposed regulations are

small institutions of postsecondary education. The changes in these

regulations will not substantially increase institutions--workload or

costs associated with administering the title IV, HEA programs and,

therefore, will not have a significant economic impact on a substantial

number of small entities.

Paperwork Reduction Act of 1995

Sections 668.19, 668.32, 668.33, 668.34, 668.36, 668.133, 668.164,

668.165, 674.16, 674.19, 674.31, 674.47, 675.19, 676.19, and 690.83

contain information collection requirements. As required by the

Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the Department of

Education has submitted a copy of these sections to the Office of

Management and Budget (OMB) for its review.

Collection of information: Student Assistance General Provisions--

Section 668.19--Financial aid transcript--Institutions are required

to obtain financial aid transcript information for purposes of

determining student eligibility under these regulations. The

information to be collected includes: assurances to meet certain

statutory requirements and specific information regarding a student's

financial aid history. Institutions need and use the information to

release title IV, HEA program funds.

All information is to be collected on a case by case basis for

those students that previously attended an institution and received

title IV, HEA program funds. Annual recordkeeping and reporting burden

contained in the collection of information proposed in these

regulations are estimated to average .17 hours for 17,600 respondents,

including the time for reviewing instructions, searching existing data

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

reviewing the collection of information. The total annual recordkeeping

and reporting burden equals 2992 hours.

Section 668.32--Statement of Educational Purpose--The Department

currently has this section approved under OMB control number for the

FAFSA (1840-0110). There are no new information collection requirements

as a result of these regulations.

Section 668.33--Statement of Registration Status--The Department

currently has this section approved under OMB control number for the

FAFSA (1840-0110). There are no new information collection requirements

as a result of these regulations.

Section 668.34--Model Statement of Educational Purpose and

Registration Status--The Department currently has this section approved

under OMB control number for the FAFSA (1840-0110). There are no new

information collection requirements as a result of these regulations.

Section 668.36--Selective Service notification, administrative

review, and liability--The Department currently has this section

approved under OMB control number for the FAFSA (1840-0110). There are

no new information collection requirements as a result of redesignating

and renaming this section from Sec. 668.35.

Section 668.133--Conditions under which an institution shall

require documentation and request secondary confirmation--Institutions

must require documentation and secondary confirmation with INS for

purposes of determining student eligibility for noncitizen applicants

under these regulations. The information to be collected includes:

specific information regarding a student's residency status and

documentary evidence. Institutions need and use the information to

determine a student's eligibility for title IV, HEA program funds.

All information is to be collected on a case by case basis. Annual

recordkeeping and reporting burden contained in the collection of

information proposed in these regulations are estimated to average .25

hours for 8,000 respondents, including the time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information. The total annual recordkeeping and reporting

burden equals 2000 hours.

Section 668.164--Maintaining funds--Institutions are required to

deposit title IV, HEA program funds into a bank account, (1) with the

words ``Federal funds'' in the title of the account, or (2) be backed

by the full faith and credit of a state, or (3) file a UCC-1 form with

the appropriate county and/or State office(s) and maintain a copy of

that filing in its records to disclose that Federal funds are

maintained in that bank account under these regulations.

All information is to be collected on a one time basis if changing

the title of a bank account, or annually if filing a UCC-1 form. Annual

recordkeeping and reporting burden contained in the collection of

information proposed in these regulations are estimated to average 1.23

hours for 3,634 respondents, including the time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information. The total annual recordkeeping and reporting

burden equals 4470 hours.

Section 668.165--Disbursing funds--There are no new information

collection requirements as a result of these regulations.

Collection of information: Federal Perkins Loan, FWS, and FSEOG

programs--

Section 674.16--Making and disbursing loans and section 674.31--

Promissory note--There are no new information collection requirements

as a result of these regulations.

Section 674.19, 675.19, and 676.19--Fiscal procedures and records--

The Department currently has these sections approved under OMB control

number for the FISAP (1840-0073). There are no new information

collection requirements as a result of these regulations.

Section 674.47--Costs chargeable to the fund--There are no new

information collection requirements as a result of these regulations.

Collection of information: Federal Pell Grant Program--

Section 690.83--Submission of reports--Institutions must follow

certain procedures for receiving funds for payment submissions after

established deadline dates.

All information is to be collected annually. There are no new

collection requirements as a result of these regulations. The current

annual recordkeeping and reporting burden contained in section 690.83

is estimated to average 41 hours for 400 respondents, including the

time for reviewing instructions, researching existing data sources,

gathering and maintaining the data needed, and completing and reviewing

the collection of information.

[[Page 49120]]

The total annual recordkeeping and reporting burdne equals 16,400

hours.

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 10235, New Executive

Office Building, Washington, D.C. 20503; Attention: Desk Officer for

U.S. Department of Education.

The Department considers comments by the public on these proposed

collections of information in--

Evaluating whether the proposed collections of information

are necessary for the proper performance of the functions of the

Department, including whether the information will have a practical

use;

Evaluating the accuracy of the Department's estimate of

the burden of the proposed collections of information, including the

validity of the methodology and assumptions used;

Enhancing the quality, usefullness, and clarity of the

information to be collected; and

Minimizing the burden of collection of information on

those who are to respond, including through the use of appropriate

automated, electronic, mechanical, or other technological collection

techniques or other forms of information technology; e.g., permitting

electronic submission of responses.

OMB is required to make a decision concerning the collections of

information contained in these proposed regulations between 30 and 60

days after publication of this document in the Federal Register.

Therefore, a comment to OMB is best assured of having its full effect

if OMB receives it within 30 days of publication. This does not affect

the deadline for the public to comment to the Department on the

proposed regulations.

Invitation To Comment

Interested persons are invited to submit comments and

recommendations regarding these proposed regulations.

All comments submitted in response to these proposed regulations

will be available for public inspection, during and after the comment

period, in Room 3053, ROB-3, 7th and D Streets, S.W., Washington, D.C.,

between the hours of 8:30 a.m. and 4 p.m., Monday through Friday of

each week except Federal holidays.

Assessment of Educational Impact

The Secretary particularly requests comments on whether the

proposed regulations in this document would 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

34 CFR Part 668

Administrative practice and procedure, Colleges and universities,

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

education, Student aid, Reporting and recordkeeping requirements.

34 CFR Part 674

Loan programs--education, Student aid, Reporting and recordkeeping

requirements.

34 CFR Part 675

Loan programs--education, Student aid, Reporting and recordkeeping

requirements.

34 CFR Part 676

Loan programs--education, Student aid, Reporting and recordkeeping

requirements.

(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal

Supplemental Educational Opportunity Grant Program; 84.032

Consolidation Program; 84.032 Federal Stafford Loan Program; 84.032

Federal PLUS Program; 84.032 Federal Supplemental Loans for Students

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

Loan Program; 84.063 Federal Pell Grant Program; 84.069 Federal

State Student Incentive Grant Program; 84.268 William D. Ford

Federal Direct Loan Programs; and 84.272 National Early Intervention

Scholarship and Partnership Program.)

Dated: September 13, 1995.

Richard W. Riley,

Secretary of Education.

The Secretary proposes to amend parts 668, 674, 675, 676, 682, 685,

and 690 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.

Sec. 668.2 [Amended]

2. Section 668.2, paragraph (b) is amended by revising the first

paragraph of the definition of ``Payment period'' to read as follows:

``With respect to the Federal Pell Grant Program, a payment period as

defined in 34 CFR 690.3;''

Sec. 668.7 [Amended]

3. Section 668.7 is removed and reserved.

4. Section 668.19 is revised to read as follows:

Sec. 668.19 Financial aid transcript.

(a)(1) An institution shall determine whether a student who is

applying for assistance under any title IV, HEA program has previously

attended another eligible institution.

(2) Before a student who previously attended another eligible

institution may receive any title IV, HEA program funds--

(i) The institution must request each institution the student

previously attended to provide a financial aid transcript to the

institution the student is, or will be, attending; or

(ii) The institution may use information obtained from the

National Student Loan Data System, that would otherwise be provided on

a financial aid transcript, once the Secretary notifies institutions

through a notice in the Federal Register that the National Student Loan

Data System is available for this purpose.

(3) Except as provided in paragraph (a)(5) of this section, if an

institution requests a financial aid transcript from each of the

institutions a student previously attended, until the institution

receives a financial aid transcript from each of those institutions,

the requesting institution--

(i) May withhold payment of Federal Pell Grant and campus-based

funds to the student;

(ii) May disburse Federal Pell Grant or campus-based funds to the

student for one payment period only;

(iii) May decline to certify the student's Federal Stafford Loan

application or the parent's Federal PLUS application under the FFEL

Program;

(iv) May decline to originate the student's Federal Direct

Stafford Loan application or the parent's Federal Direct PLUS

application under the William D. Ford Federal Direct Loan Programs;

(v) May not release Federal Stafford Loan proceeds to a student or

Federal PLUS proceeds to a parent or student under the FFEL Program;

and

(vi) May not release Federal Direct Stafford Loan proceeds to a

student or Federal Direct PLUS proceeds to a parent or student under

the William D. Ford Federal Direct Loan Programs.

(4)(i) An institution may not hold Federal Stafford, or Federal

PLUS loan proceeds under paragraph (a)(3) of this section for more than

45 days. If an institution does not receive all required financial aid

transcripts for a student within 45 days of the receipt of those

proceeds, the institution shall return the loan proceeds to the

appropriate lender.

(ii) An institution that certifies a Federal Stafford or Federal

PLUS loan

[[Page 49121]]

application before receiving all required financial aid transcripts

shall return to the lender the appropriate amount of any Federal

Stafford or Federal PLUS loan proceeds for the student if it receives a

financial aid transcript indicating that the student is not eligible

for all, or a part, of the loan proceeds.

(5) An institution may disburse title IV, HEA program funds to a

student without receiving a financial aid transcript from an eligible

institution the student previously attended if the institution the

student previously attended--

(i) Has closed, and information concerning the student's receipt of

title IV, HEA program assistance for attendance at that institution is

not available;

(ii) Is not located in a State; or

(iii) Provides the disbursing institution with the written

certification described in paragraph (b)(2)(ii) of this section.

(b) Upon request, each institution located in a State shall

promptly provide to the institution that requested a financial aid

transcript--

(1) All information in its possession concerning whether the

student in question attended institutions other than itself and the

requesting institution; and

(2)(i) A financial aid transcript for that student, if the student

received or benefited from any title IV, HEA program assistance while

attending the institution; or

(ii) A written certification that--

(A) The student did not receive or benefit from any title IV, HEA

program assistance while attending the institution; or

(B) The transcript would cover only years for which the

institution no longer has records and is no longer required to keep

records under the applicable title IV, HEA program recordkeeping

requirements.

(c) An institution must disclose on a financial aid transcript for

a student--

(1) The student's name and social security number;

(2) To the extent that the institution is aware, whether the

student is in default on any title IV, HEA loan;

(3) Whether the student owes an overpayment on any grant made

under the Federal Pell Grant or FSEOG programs and, to the extent that

the institution is aware, the SSIG Program, for attendance at the

institution;

(4) For the award year for which a financial aid transcript is

requested--

(i) The student's scheduled Federal Pell Grant award;

(ii) The amount of Federal Pell Grant funds disbursed to the

student;

(iii) The amount of loans made under the National Defense Student

Loan, Direct Loan, and Federal Perkins Loan programs; and

(iv) The amount of loans made under the FFEL and William D. Ford

Federal Direct Loan programs; and

(5) The aggregate amount of loans under the title IV, HEA loan

programs for attendance at the institution.

(d)(1) A financial aid transcript must be signed by an official

authorized by the institution to disclose information in connection

with title IV, HEA programs.

(2) An institution must base the information it includes on

financial aid transcripts on records it maintains under the title IV,

HEA programs' recordkeeping requirements.

5. The heading for Sec. 668.21 is revised to read as follows:

668.21 Treatment of Federal Perkins Loan, FSEOG, and Federal Pell

Grant program funds if the recipient withdraws, drops out, or is

expelled before his or her first day of class.

Sec. 668.22 [Amended]

6. Section 668.22 is amended by removing paragraph (h)(1)(i) and

redesignating paragraphs (h)(1)(ii) through (xiii) as paragraphs

(h)(1)(i) through (xii), respectively.

7.-8. Subpart C is revised to read as follows:

Subpart C--Student Eligibility

Sec.

668.31 Scope.

668.32 Student enrollment.

668.33 Student identification.

668.34 Student debts under the HEA and to the U.S.

668.35 Program-specific requirements.

668.36 Selective Service notification, administrative review, and

liability.

Subpart C--Student Eligibility

Sec. 668.31 Scope.

This subpart establishes rules by which a student establishes

eligibility for assistance under the title IV, HEA programs. In order

to qualify as an eligible student, a student must meet all applicable

requirements in this subpart.

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

Sec. 668.32 Student enrollment.

A student is eligible to receive assistance under the title IV,

HEA programs if the student--

(a)(1) Is a regular student enrolled or accepted for enrollment in

an eligible program at an eligible institution;

(2) For purposes of the FFEL or William D. Ford Federal Direct Loan

programs, 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; or

(3) For purposes of the Federal Perkins Loan, FWS, FFEL, or

William D. Ford Federal Direct Loan programs, 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 school or secondary school in that State;

(b) Is not enrolled in either an elementary or secondary school;

(c)(1) Has a high school diploma or its recognized equivalent;

(2) Has obtained within 12 months before the date the student

initially receives title IV, HEA program funds, a passing score

specified by the Secretary on an approved, independently administered

test, in accordance with subpart J of this part; or

(3) Is enrolled in an eligible institution that participates in a

State process approved by the Secretary under subpart J of this part;

(d) Maintains satisfactory progress in his or her course of study

according to the institution's published standards of satisfactory

progress that satisfy the provisions of Sec. 668.16(e). To make a

determination that a student is maintaining satisfactory progress, an

institution shall--

(1) At a minimum, review the student's academic progress at the end

of each academic year;

(2) If the student is enrolled in a program of study of more than

two academic years, at the end of the student's second year of

attendance, determine that the student--

(i) Has at least a cumulative grade point average of ``C'' or its

equivalent, or has academic standing consistent with the institution's

graduation requirements; or

(ii) Failed to have at least a cumulative grade point average of

``C'' or its equivalent, or academic standing consistent with its

graduation requirements because of--

(A) The death of a relative of the student;

(B) An injury or illness of the student; or

(C) Other special circumstances; or

(3) Is not making satisfactory progress at the end of the second

academic year, but at the end of a subsequent grading period comes into

compliance with the institution's requirements for graduation. The

institution may consider the student as making satisfactory progress

beginning with the next grading period;

[[Page 49122]]

(e) Is enrolled in an educational program leading to an associate,

bachelor's, or graduate degree, if enrolled in telecommunications or

correspondence courses; and

(f) If engaged in a study-abroad program, (which need not be

required as part of the student's degree program)--

(1) Maintains enrollment in an eligible institution during his or

her study-abroad program; and

(2) Enrolls in a study-abroad program that has been approved for

academic credit by the eligible institution at which the student is

enrolled.

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

Sec. 668.33 Student identification.

A student is eligible to receive assistance under the title IV,

HEA programs if the student--

(a) Citizenship status. (1) Has confirmed status as a U.S. citizen

or national as a result of a data match with the Social Security

Administration;

(2) In the absence of confirmation as provided in paragraph (a)(1)

of this section, and within a deadline to be set by the institution of

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

results of the data match, has provided documented evidence that he or

she is a U.S. citizen or national;

(3) Provides evidence from the U.S. Immigration and Naturalization

Service that he or she--

(i) Is a permanent resident of the United States; or

(ii) Is in the United States for other than a temporary purpose

with the intention of becoming a citizen or permanent resident; or

(4) For purposes of the FWS, FSEOG, and Federal Pell Grant

programs--

(i) Is a citizen of the Federated States of Micronesia, the

Republic of the Marshall Islands, or the Republic of Palau, and attends

an eligible institution of higher education in a State or a public or

nonprofit private institution of higher education in the Federated

States of Micronesia, the Republic of the Marshall Islands, or the

Republic of Palau; or

(ii) Meets the requirements of paragraph (a)(1), (a)(2), or (a)(3)

of this section and attends an eligible public or nonprofit private

institution of higher education in the Federated States of Micronesia,

the Republic of the Marshall Islands, or the Republic of Palau;

(b) Selective Service. (1) Has confirmed registration with

Selective Service as a result of a data match with the Selective

Service System; or

(2) In the absence of confirmation as provided in paragraph (b)(1)

of this section and within a deadline to be set by the institution of

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

results of the data match, has provided evidence of compliance with, or

exemption from, Selective Service registration requirements. An

institution may establish that a student is exempt from Selective

Service registration requirements if the institution determines, based

on clear and unambiguous evidence, that--

(i) The student is not, or was not required to be, registered with

Selective Service; or

(ii) The student--

(A) Was required to be registered with the Selective Service prior

to age 26;

(B) Is now at least 26 years old;

(C) Failed to register with the Selective Service prior to age 26;

and

(D)(1) Demonstrates to the institution that he did not knowingly

and willfully fail to register with the Selective Service. The

Secretary considers that a student satisfies this requirement by

obtaining and presenting 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; or

(2) 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;

(iii) The student is enrolled in an officer procurement program the

curriculum of which has been approved by the Secretary of Defense at

the following institutions:

(A) The Citadel, Charleston, South Carolina;

(B) North Georgia College, Dahlonega, Georgia;

(C) Norwich University, Northfield, Vermont; or

(D) Virginia Military Institute, Lexington, Virginia;

(iv) The student is a commissioned officer of the Public Health

Service or a member of the Reserve of the Public Health Service who is

on active duty as provided in section 6(a)(2) of the Military Selective

Service Act; or

(v) The student was unable to present himself for registration for

reasons beyond his control, such as being hospitalized,

institutionalized, or incarcerated;

(c) Incarcerated students. For purposes of the Federal Perkins

Loan, FFEL, and William D. Ford Federal Direct Loan programs, is not an

incarcerated student at the time funds are delivered or disbursed;

(d) Social security number. Except for the 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 by an eligible institution, which shall enforce the

following conditions:

(1) An institution may 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 indicating that

the Secretary has determined that the student's social security number

is correct, the institution may 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 indicating that

the Secretary has determined that the social security number provided

by the student is incorrect, or that the Secretary was unable to

confirm that the social security number provided 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 is notified of the

results of the data match, to provide clear and convincing evidence to

verify that the student has a correct social security number;

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

employ the student under the FWS Program, certify a Federal Stafford,

Federal PLUS, or originate a William D. Ford Federal Direct Loan

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

for in paragraph (d)(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 ensure that the student reports his or her 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 (d)(3)(i) of this section, the

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

eligible

[[Page 49123]]

for, any title IV, HEA program funds for that period of enrollment or

award year; employ the student under the FWS Program; certify a Federal

Stafford, or Federal PLUS; or originate a William D. Ford Federal

Direct Loan for the student for that period of enrollment.

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

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

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

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

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 may 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 permits 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; and

(e) Statement of Educational Purpose. Has filed a Statement of

Educational Purpose with the institution, or under the FFEL Program,

with the lender, in accordance with instructions of the Secretary.

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

Sec. 668.34 Student debts under the HEA and to the U.S.

(a) Except as provided under paragraphs (b) through (g) of this

section, a student is ineligible to receive title IV, HEA program funds

if the student--

(1) Is in default on a loan made under a title IV, HEA loan

program;

(2) Has inadvertently obtained loan funds under a title IV, HEA

loan program in an amount that exceeded the annual or aggregate loan

limits under that program;

(3) Received a grant or loan overpayment under a title IV, HEA

grant program; or

(4) Has property subject to a judgment lien for a debt owed to the

United States.

(b) A student who is in default on a loan made under a title IV,

HEA loan program may nevertheless be eligible to receive title IV, HEA

program funds if the student--

(1) Repays the loan in full; or

(2)(i) Makes at least six consecutive monthly payments on the

defaulted loan; and

(ii) Makes arrangements, satisfactory to the holder of the loan, to

repay the loan balance.

(c) A student who is not in default on a loan made under a title

IV, HEA loan program but has inadvertently obtained loan funds under a

title IV, HEA loan program in an amount that exceeded the annual or

aggregate loan limits under that program may nevertheless be eligible

to receive title IV, HEA program funds if the student--

(1) Repays in full the excess loan amount; or

(2) Makes arrangements, satisfactory to the holder of the loan, to

repay that excess loan amount.

(d)(1) A student who receives a grant or loan overpayment under a

title IV, HEA program may nevertheless be eligible to receive title IV,

HEA program funds if the student--

(i) Pays the overpayment in full; or

(ii) Makes arrangements, satisfactory to the institution, to pay

the overpayment.

(2) If a student's grant or loan payments exceed the amount he or

she is eligible to receive, he or she has received a grant or loan

overpayment.

(e) A student who has property subject to a judgment lien for a

debt owed to the United States may nevertheless be eligible to receive

title IV, HEA programs funds if the student--

(1) Pays the debt in full; or

(2) Makes arrangements, satisfactory to the United States, to pay

the debt.

(f)(1) The Secretary considers that a student does not receive a

Federal Pell Grant overpayment during an award year if the institution

can eliminate that overpayment by adjusting subsequent Federal Pell

Grant payments in the same award year.

(2) The Secretary considers that a student does not receive a

Federal Perkins Loan, FSEOG or SSIG overpayment during an award year if

the institution can eliminate that overpayment by adjusting subsequent

title IV, HEA program (other than Federal Pell Grant) disbursements in

the same award year.

(g) A student who otherwise is in default on a loan made under a

title IV, HEA loan program or who otherwise owes an overpayment on a

title IV, HEA program grant or loan is not considered to be in default

or owe an overpayment if the student--

(1) Obtains a judicial determination that the debt has been

discharged or is dischargeable in bankruptcy; or

(2) Demonstrates to the holder of the debt that--

(i) When the student filed the petition for bankruptcy relief, the

loan, or demand for the payment of the grant overpayment, had been

outstanding for the period required under 11 U.S.C. 523(a)(8)(A),

exclusive of applicable suspensions of the repayment period for either

debt of the kind defined in 34 CFR 682.402(m); and

(ii) The debt is otherwise qualifies for discharge under applicable

bankruptcy law.

(Authority: 20 U.S.C. 1091 and 11 U.S.C. 523 and 525)

Sec. 668.35 Program-specific requirements.

A student is eligible to receive assistance under the campus-

based, FFEL, William D. Ford Federal Direct Loan, and Federal Pell

Grant programs if the student has financial need, if applicable, and

otherwise meets the student eligibility requirements of--

(a) For purposes of the Federal Perkins Loan Program, 34 CFR 674.9;

(b) For purposes of the FWS Program, 34 CFR 675.9;

(c) For purposes of the FSEOG Program, 34 CFR 676.9;

(d) For purposes of the FFEL Program, 34 CFR 682.201;

(e) For purposes of the William D. Ford Federal Direct Loan

Programs, 34 CFR 685.200;

(f) For purposes of the Federal Pell Grant Program, 34 CFR 690.75;

or

(g) For purposes of the SSIG Program, 34 CFR 692.40.

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

Sec. 668.36 Selective Service notification, administrative review, and

liability.

(a) General. Before denying aid to any student under any title IV,

HEA program who is required by law to register with the Selective

Service, but fails to do so, the institution shall inform that student

in writing that he or she will be denied title IV, HEA program

assistance.

(b) Selective Service notification. (1) A student notified under

paragraph (a) of this section who has not registered, although required

to do so, may establish his eligibility for title IV, HEA program

assistance for the award year in which he was notified under paragraph

(a) of this section by registering with Selective Service before the

end of that award year.

(2) A student notified under paragraph (a) of this section who is

not required to register with the Selective Service may establish his

or her eligibility for title IV, HEA program

[[Page 49124]]

assistance for the award year in which he was notified under paragraph

(a) of this section by providing evidence of exemption within 30 days

of the receipt of the notice or the end of the same award year,

whichever is later.

(c) Administrative review. (1) A student who is required to

register with Selective Service, claims that he is registered with

Selective Service, and has been denied title IV, HEA program assistance

because he has not proven to the satisfaction of the institution that

he has complied with that requirement, may seek a hearing from the

Secretary by filing a request in writing with the Secretary. The

student must submit with that request--

(i) A statement that he is in compliance with registration

requirements;

(ii) A concise statement of the reasons why he has not been able

to prove that he is in compliance with those requirements; and

(iii) Copies of all material that he has already supplied to the

institution to verify his compliance.

(2) The Secretary provides an opportunity for a hearing to a

student who--

(i) Asserts that he is in compliance with registration

requirements; and

(ii) Files a written request for a hearing in accordance with

paragraph (c)(1) of this section within the award year for which he was

denied title IV, HEA program assistance or within 30 days following the

end of the payment period, whichever is later.

(3) An official designated by the Secretary shall conduct any

hearing held under paragraph (c)(2) of this section. The sole purpose

of this hearing is the determination of compliance with registration

requirements. At this hearing, the student retains the burden of

proving compliance, by credible evidence, with the requirements of the

Military Selective Service Act. The designated official may not

consider challenges based on constitutional or other grounds to the

requirements that a student state and verify, if required, compliance

with registration requirements, or to those registration requirements

themselves.

(4) Any determination of compliance made under this section is

final unless reopened by the Secretary and revised on the basis of

additional evidence.

(5) Any determination of compliance made under this section is

binding only for purposes of determining eligibility for title IV, HEA

program assistance.

(d) Liability. An institution is liable for any title IV aid

provided to a student who was required to register, but who was not

registered, if--

(1) The institution made its determination that the student was

not required to register on the basis of ambiguous information

regarding his status under registration law; or

(2)(i) The institution had conflicting information about whether

the student was required to register; and

(ii) Its determination that the student was not required to

register was not reasonable in the light of all available information.

(Authority: 50 U.S.C. App. 462)

9. Section 668.133 is amended by revising paragraph (b) to read as

follows:

Sec. 668.133 Conditions under which an institution shall require

documentation and request secondary confirmation.

* * * * *

(b) Exclusions from secondary confirmation. (1) An institution may

not require the student to produce the documentation requested under

Sec. 668.33(a)(3) and may not request that INS perform secondary

confirmation, if--

(i) The student demonstrates eligibility under the provisions of

Sec. 668.33(a)(4); and

(ii) The institution does not have conflicting documentation or

reason to believe that the student's claim of eligible noncitizen

status is incorrect.

(2) An institution receiving documentation required under

Sec. 668.33(a)(3) from a student need not request that INS perform

secondary confirmation for that student, if--

(i) The documents submitted by the student are identical to

documents received by the institution in a previous award year and for

which secondary confirmation was performed;

(ii) Based on the results of secondary confirmation, the

institution determined the student to be an eligible noncitizen for a

previous award year; and

(iii) The institution does not have conflicting documentation or

reason to believe that the student's claim of eligible noncitizen

status for the current award year is incorrect.

* * * * *

10. Section 668.164 is amended by revising paragraph (a) to read as

follows:

Sec. 668.164 Maintaining funds.

(a) General. (1) The requirements in this section apply only to

title IV, HEA program funds an institution receives under the campus-

based, William D. Ford Federal Direct Loan, Federal Pell Grant, and

SSIG programs. An institution that receives FFEL program funds through

electronic funds transfer or by master check must maintain those funds

as provided under 34 CFR 682.207(b).

(2)(i) Except as provided in paragraph (e) of this section, an

institution is not required to maintain a separate account for title

IV, HEA program funds. For funds an institution receives under the

campus-based, William D. Ford Federal Direct Student Loan, Federal Pell

Grant, and SSIG programs, an institution must maintain a bank account

that meets the requirements under paragraphs (b) or (c) of this

section. In establishing the bank account, an institution must--

(ii) Ensure that the name of the account discloses clearly that

Federal funds are maintained in that account; or

(iii)(A) Notify the bank of the accounts that contain Federal funds

and retain a record of that notice in its recordkeeping system; and

(B) Except for an institution that is backed by the full faith and

credit of a State, file with the appropriate State or municipal

government entity a UCC-1 statement disclosing that the account

contains Federal funds and maintain a copy of that statement in its

records.

* * * * *

11. Section 668.165 is amended by revising paragraph (b)(1); by

removing the word ``and'' at the end of paragraph (b)(3)(iv)(A); by

removing the period at the end of paragraph (b)(3)(iv)(B) and adding in

its place ``; and''; and by adding new paragraph (b)(3)(iv)(C) to read

as follows:

Sec. 668.165 Disbursing funds.

* * * * *

(b) Crediting a student's account--(1) General. In crediting the

student's account with title IV, HEA program funds, the institution may

apply those funds only to allowable charges described under paragraph

(b)(3) of this section. An institution must notify expeditiously a

student or parent borrower, in writing, electronically, or by other

means that the institution has credited the student's account with FFEL

or William D. Ford Federal Direct Loan program funds.

* * * * *

(3) * * *

(iv) * * *

(C) Provided that a student has or will have a title IV, HEA credit

balance as determined under paragraph (b)(2) of this section, minor

institutional charges assessed the student in a prior award year or

period of enrollment. For purposes of this paragraph, minor

institutional charges are limited to an amount that does not, or will

not, monetarily impair the student from paying for his or her room,

board, transportation, or other education-related expenses.

* * * * *

[[Page 49125]]

Sec. 668.1 [Amended]

12. In Sec. 668.1, paragraph (c)(11), remove ``FDSL'' and add in

its place ``William D. Ford Federal Direct Loan Programs''.

Sec. 668.2 [Amended]

13. In Sec. 668.2, paragraph (b) in the definitions of ``Federal

Direct PLUS loan'' and ``Federal Direct Stafford loan'' remove

``Federal Direct Student Program'' and add in its place ``William D.

Ford Federal Direct Loan Programs''; in the definition of ``Federal

Direct Student loan'' remove ``Federal Direct Student loan'' and add in

its place ``William D. Ford Federal Direct loan''; and in the

definition of ``Federal Direct Student Loan (FDSL) program'' remove

``Federal Direct Student Loan (FDSL) program'' and add in its place

``William D. Ford Federal Direct Loan Programs''; and remove the

definition of ``Income Contingent Loan (ICL) program''.

Sec. 668.13 [Amended]

14. In Sec. 668.13, paragraph (a)(4)(i) remove ``Federal Pell Grant

Program, the campus-based programs, the FDSL program, or the Federal

Stafford Loan, Federal SLS, or Federal PLUS Program'' and add in its

place ``campus-based programs, the Federal Stafford Loan, Federal PLUS

programs, the William D. Ford Federal Direct Loan Programs, or the

Federal Pell Grant Program''.

Sec. 668.21 [Amended]

15. In Sec. 668.21, in the heading and in paragraph (a)(1),

respectively, remove ``Pell Grant, SEOG, ICL, and Perkins Loan'' and

add in its place ``Federal Perkins Loan, FSEOG, and Federal Pell

Grant''.

Sec. 668.22 [Amended]

16. In Sec. 668.22, paragraphs (c)(2)(ii) and (g)(2)(ii)(B) remove

``Federal Direct Student Loan Program'' and add in its place ``William

D. Ford Federal Direct Loan Programs''.

Sec. 668.23 [Amended]

17. In Sec. 668.23, paragraphs (a) introductory language and

(c)(1)(i) remove ``FDSL'' and add in its place ``William D. Ford

Federal Direct Loan''.

Sec. 668.26 [Amended]

18. In Sec. 668.26, paragraph (b)(4) remove ``FDSL'' and add in its

place ``William D. Ford Federal Direct Loan''; in paragraph (b)(6)

remove ``National Defense/Direct Student Loan and ICL.'' and add in its

place ``National Defense Student Loan and Direct Loan programs''; in

paragraph (d)(1) remove ``or PAS Program''; in paragraph (d)(3) remove

``FDSL'' and ``Federal Direct Student loan'', respectively, and add in

its place ``William D. Ford Federal Direct Loan'', respectively; in

paragraph (d)(3)(i) remove ``FDSL'' and add in its place ``William D.

Ford Federal Direct Loan''; and in paragraph (e)(1) remove ``and PAS

programs'' and add in its place ``Program''.

Sec. 668.43 [Amended]

19. In Sec. 668.43, paragraph (c)(6) remove ``Federal Direct

Student Loan'' and add in its place ``William D. Ford Federal Direct

Loan''.

Sec. 668.51 [Amended]

20. In Sec. 668.51, paragraph (a) remove ``FDSL'' and add in its

place ``William D. Ford Federal Direct Loan''.

Sec. 668.52 [Amended]

21. In Sec. 668.52, in the definition of ``Student aid

application'' remove ``Federal Direct Loan'' and add in its place

``William D. Ford Federal Direct Loan''.

Sec. 668.54 [Amended]

22. In Sec. 668.54, paragraph (a)(2)(i) remove ``Federal Pell

Grant, Federal Direct Student Loan, campus-based, and Federal Stafford

Loan'' and add in its place ``campus-based, Federal Stafford Loan,

William D. Ford Federal Direct Loan, and Federal Pell Grant''.

Sec. 668.55 [Amended]

23. In Sec. 668.55, paragraph (c) remove ``Federal Pell Grant,

campus-based, Federal Stafford Loan, or FDSL'' and add in its place

``campus-based, Federal Stafford Loan, William D. Ford Federal Direct

Loan, or Federal Pell Grant''; in paragraphs (c)(1) and (c)(2) remove

``Federal Pell Grant, campus-based, or FDSL'', respectively, and add in

its place ``campus-based, William D. Ford Federal Direct Loan, or

Federal Pell Grant'', respectively.

Sec. 668.58 [Amended]

24. In Sec. 668.58, paragraph (a)(1)(i) remove ``Federal Pell

Grant, campus-based, or need-based ICL'' and add in its place ``campus-

based, or Federal Pell Grant''; in paragraph (a)(2)(i) remove ``Federal

Pell Grant and campus-based'' and add in its place ``campus-based and

Federal Pell Grant''; and in paragraph (a)(2)(iii)(A) add ``origination

of the applicant's'' before ``William''; and add ``originate the''

before ``William''.

Sec. 668.59 [Amended]

25. In Sec. 668.59, paragraph (d)(1) add ``s'' to ``Program''.

Sec. 668.60 [Amended]

26. In Sec. 668.60, paragraph (b) remove ``FDSL'' and add in its

place ``William D. Ford Federal Direct Loan''; in paragraphs

(b)(1)(i)(A) and (b)(1)(iii), respectively, remove ``FDSL, or FSEOG''

and add in its place ``FSEOG, or William D. Ford Federal Direct Loan'',

respectively; and in paragraph (d) remove ``FDSL, or Federal Stafford

Loan'' and add in its place ``Federal Stafford Loan, or William D. Ford

Federal Direct Loan''.

Sec. 668.61 [Amended]

27. In Sec. 668.61, paragraph (a)(2)(ii)(B) remove ``Federal Pell

Grant, Federal Perkins Loan, FDSL, or FSEOG'' and add in its place

``Federal Perkins Loan, FSEOG, William D. Ford Federal Direct Loan, or

Federal Pell Grant''.

Sec. 668.161 [Amended]

28. In Sec. 668.161, paragraph (a)(4) remove ``Federal Pell Grant,

PAS, FSEOG, Federal Perkins Loan, FWS, Direct Loan, and FFEL'' and add

in its place ``Federal Perkins Loan, FWS, FSEOG, FFEL, William D. Ford

Federal Direct Loan, and Federal Pell Grant''.

Sec. 668.162 [Amended]

29. In Sec. 668.162 in the definition of ``Disburse'' in paragraph

(1)(i) add ``William D. Ford Federal'' before ``Direct''; in paragraph

(1)(ii) remove ``Direct Loan or FFEL'' and add in its place ``FFEL or

William D. Ford Federal Direct Loan''; and in the definition of

``Period of enrollment'' add ``William D. Ford Federal'' before

``Direct''.

Sec. 668.165 [Amended]

30. In Sec. 668.165, paragraph (c)(2)(ii) remove ``Direct Loan and

FFEL'' and add in its place ``FFEL and William D. Ford Federal Direct

Loan''; and in paragraph (c)(3) add ``William D. Ford Federal'' before

``Direct''.

Sec. 668.166 [Amended]

31. In Sec. 668.166, paragraph (b)(3) add ``William D. Ford

Federal'' before ``Direct''.

* * * * *

PART 674--FEDERAL PERKINS LOAN PROGRAM

32. The authority citation for part 674 continues to read as

follows:

Authority: 20 U.S.C. 1087aa-1087ii and 20 U.S.C. 421-429, unless

otherwise noted.

33. Section 674.2 paragraph (a) is amended by adding, in

alphabetical order, ``Full-time student''.

34. Section 674.2 paragraph (b) is amended by removing the

definitions of ``Full-time graduate or professional student'' and

``Full-time undergraduate student''; and by revising the definition of

``Making of a loan'' to read as follows:

[[Page 49126]]

Sec. 674.2 Definitions.

* * * * *

(b) * * *

Making of a loan: When the borrower signs the promissory note and

the loan funds are disbursed.

* * * * *

35. Section 674.16 is amended by revising paragraph (d) to read as

follows:

Sec. 674.16 Making and disbursing loans.

* * * * *

(d)(1) The institution shall disburse funds to a student or the

student's account in accordance with 34 CFR 668.165.

(2) The institution shall obtain the borrower's signature on a

promissory note for each award year before it disburses any loan funds

to the borrower under that note for that award year.

* * * * *

Sec. 674.17 [AMENDED]

36. Section 674.17 is amended by removing paragraph (a) and by

redesignating paragraphs (b)(1), (b)(1)(i), (b)(1)(ii), (b)(1)(iii),

(b)(2), (b)(3), (b)(4), (b)(4)(i), (b)(4)(ii), and (5) as paragraphs

(a), (a)(1), (a)(2), (a)(3), (b), (c), (d), (d)(1), (d)(2), and (e),

respectively.

37. Section 674.19 is amended by revising paragraph (e)(4)(v) to

read as follows:

Sec. 674.19 Fiscal procedures and records.

* * * * *

(e) * * *

(4) * * *

(v) An institution may keep the records required in this section on

microforms, optical disk, other machine readable format, or it may keep

its records in computer format. If an institution keeps its records in

computer format it shall maintain, in either hard copy, microforms,

optical disk, or other machine readable format, the source documents

supporting the computer input.

* * * * *

38. Section 674.31 is amended by redesignating paragraph (a)(2) as

paragraph (a)(3); and by adding a new paragraph (a)(2) to read as

follows:

Sec. 674.31 Promissory note.

* * * * *

(a) * * *

(2) The Secretary provides sample promissory notes to participating

institutions. The institution may not change the substance of these

sample notes.

* * * * *

Sec. 674.33 [Amended]

39. Section 674.33, paragraph (a)(2) is amended by removing ``$15''

and adding in its place ``$25''.

40. Section 674.47 is amended by revising paragraph (g) and by

adding a new paragraph (h) to read as follows:

Sec. 674.47 Costs chargeable to the fund.

* * * * *

(g) Cessation of collection activity of defaulted accounts. (1) An

institution may cease collection activity of a defaulted account with a

balance of less than $25, including outstanding principal, accrued

interest, collection costs, and late charges.

(2) An institution that ceases collection activity under paragraph

(g)(1) of this section may no longer include the amount of the account

as an asset of the Fund.

(h) Write-offs of accounts of less than $1. Notwithstanding any

other provision in this subpart, an institution may write off an

account with a balance of less than $1, including outstanding

principal, accrued interest, collection costs, and late charges.

* * * * *

PART 675--FEDERAL WORK-STUDY PROGRAMS

41. The authority citation for part 675 continues to read as

follows:

Authority: 42 U.S.C. 2571-2756b, unless otherwise noted.

Sec. 675.2 [Amended]

42. Section 675.2, paragraph (a) is amended by adding in

alphabetical order, ``Full-time student''.

43. Section 675.2, paragraph (b) is amended by removing the

definitions of ``Full-time graduate or professional student'' and

``Full-time undergraduate student''.

Sec. 675.17 [Removed]

44. Section 675.17 is removed and reserved.

45. Section 675.19 is amended by revising paragraph (c)(3) to read

as follows:

Sec. 675.19 Fiscal procedures and records.

* * * * *

(c) * * *

(3) An institution may keep the records required in this section on

microforms, optical disk, other machine readable format, or it may keep

its records in computer format. If an institution keeps its records in

computer format it shall maintain, in either hard copy, microforms,

optical disk, or other machine readable format, the source documents

supporting the computer input.

* * * * *

Appendix B to Part 675--[Removed]

46. Appendix B to part 675--Model Off-Campus Agreement is removed.

PART 676--FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT

PROGRAM

47. The authority citation for part 676 continues to read as

follows:

Authority: 20 U.S.C. 1070b-1070-3, unless otherwise noted.

Sec. 676.2 [Amended]

48. Section 676.2, paragraph (a) is amended by adding in

alphabetical order, ``Full-time student''.

49. Section 676.2, paragraph (b) is amended by removing the

definition of ``Full-time undergraduate student''.

Sec. 676.17 [Removed]

50. Section 676.17 is removed and reserved.

51. Section 676.19 is amended by revising paragraph (c)(3) to read

as follows:

Sec. 676.19 Fiscal procedures and records.

* * * * *

(c) * * *

(3) An institution may keep the records required in this section on

microforms, optical disk, other machine readable format, or it may keep

its records in computer format. If an institution keeps its records in

computer format it shall maintain, in either hard copy, microforms,

optical disk, or other machine readable format, the source documents

supporting the computer input.

* * * * *

PART 682--FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM

52. The authority citation for part 682 continues to read as

follows:

Authority: 20 U.S.C. 1071 to 1087-2, unless otherwise noted.

53. Section 682.201, paragraph (b) is amended by redesignating

paragraphs (b)(1) through (b)(8) as paragraphs (b)(1)(i) through

(b)(1)(viii), respectively; by redesignating the introductory sentence

as paragraph (b)(1); and by adding a new paragraph (b)(2) to read as

follows:

Sec. 682.201 Eligible borrowers.

* * * * *

(b) * * *

(2) For purposes of paragraph (b)(1) of this section, a ``parent''

includes the

[[Page 49127]]

individuals described in the definition of the term ``parent'' in 34

CFR 668.2 and the spouse of a parent who remarried, if that spouse's

income and assets are taken into account when calculating a dependent

student's expected family contribution.

Sec. 682.600 [Removed]

54. Section 682.600 is removed and reserved.

Sec. 682.602 [Removed]

55. Section 682.602 is removed and reserved.

56. A new Sec. 682.611 is added to read as follows:

Sec. 682.611 Foreign schools.

A foreign school shall comply with the regulations in this part

except to the extent that the Secretary states in these regulations or

in other official publications or documents that those schools do not

have to comply.

(Authority: 20 U.S.C. 1077, 1078, 1078-1, 1078-2, 1078-3, 1082,

1088, and 1094)

PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAMS

57. The authority citation for part 685 continues to read as

follows:

Authority: 20 U.S.C. 1078a et seq., unless otherwise noted.

58. Section 685.200, paragraph (b) is amended by redesignating

paragraphs (b)(1) through (b)(7) as paragraphs (b)(1)(i) through

(b)(1)(vii), respectively; by redesignating the introductory sentence

as paragraph (b)(1); and by adding a new paragraph (b)(2) to read as

follows:

Sec. 685.200 Borrower eligibility.

* * * * *

(b) * * *

(2) For purposes of paragraph (b)(1) of this section, a ``parent''

includes the individuals described in the definition of the term

``parent'' in 34 CFR 668.2 and the spouse of a parent who remarried, if

that spouse's income and assets are taken into account when calculating

a dependent student's expected family contribution.

* * * * *

PART 690--FEDERAL PELL GRANT PROGRAM

59. The authority citation for part 690 continues to read as

follows:

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

Sec. 690.7 [Amended]

60. Section 690.7, paragraph (a)(1) is removed and paragraph (a)(2)

is redesignated as paragraph (a).

Sec. 690.71 [Amended]

61. Section 690.71 is amended by removing the second sentence.

Secs. 690.72, 690.73, 690.74 [Removed]

62. Sections 690.72, 690.73, and 690.74 are removed and reserved.

Sec. 690.83 [Amended]

63. Section 690.83 is amended by removing paragraph (c); by

redesignating paragraphs (d) and (e) as paragraphs (c) and (d),

respectively; by removing in redesignated paragraph (c), ``paragraphs

(a), (b) or (c) of this section'' and adding, in its place,

``paragraphs (a) or (b) of this section''; and by removing in

redesignated paragraph (d)(1), ``Notwithstanding paragraphs (a), (b),

(c)(1) or (2), or (d) of this section'' and adding, in its place,

``Notwithstanding paragraphs (a), (b), or (c) of this section''; by

removing in redesignated paragraph (d)(1) ``(e)'' and adding, in its

place, ``(d)''; by adding in redesignated paragraph (d)(2) ``or program

review,'' after ``34 CFR 668.23(c),'', and ``or program review'' after

``audit'' in the last sentence.

[FR Doc. 95-23150 Filed 9-20-95; 8:45 am]

BILLING CODE 4000-01-P