Student Assistance General Provisions; General Provisions for the Federal Perkins Loan Program, Federal Work-Study Program, and Federal Supplemental Educational Opportunity Grant Program; Federal Perkins Loan Program; Federal Work-Study Programs; Federal Supplemental Educational Opportunity Grant Program; 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) and the Federal Pell Grant Program.

These proposed amendments, which eliminate duplicate provisions for the

student financial assistance programs and consolidate common provisions

for the campus-based programs, 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.

DATES: Comments must be received on or before October 21, 1996.

ADDRESSES: All comments concerning these proposed regulations should be

addressed to Nancy Adams, U.S. Department of Education, P.O. Box 23272,

Washington, D.C. 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.

FOR FURTHER INFORMATION CONTACT:

1. For the Federal Perkins Loan Program: Gail H. McLarnon, U.S.

Department of Education, 600 Independence Avenue, S.W., Regional Office

Building 3, Room 3053, Washington, D.C. 20202-5447. Telephone: (202)

708-8242.

2. For the FWS and FSEOG programs: Richard P. Coppage, U.S.

Department of Education, 600 Independence Avenue, S.W., Regional Office

Building 3, Room 3053, Washington, D.C. 20202-5447. Telephone: (202)

708-4690.

3. For the Federal Pell Grant Program: Daniel J. Sullivan, U.S.

Department of Education, 600 Independence Avenue, S.W., Regional Office

Building 3, Room 3053, Washington, D.C. 20202-5447. Telephone: (202)

708-4607.

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

may call the Federal Information Relay Service (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 considering amending these

regulations by moving the provisions that are common to all three of

the campus-based programs to a new part 673 of the Department's

regulations. The Secretary is proposing these changes to eliminate

duplication in the regulations and to make the regulations easier to

understand and use in administering the campus-based programs. The

public is invited to comment on this proposal. 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 published the first part of a planned series

of regulatory reform and relief measures that apply to the title IV,

HEA programs on December 1, 1995. These amendments are part of that

series.

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.

Summary of Proposed Changes

Campus-Based Programs

A new part 673 of Title 34 of the Code of Federal Regulations is

being created to consolidate sections with common provisions contained

in the Federal Perkins Loan--part 674, the FWS--part 675, and the

FSEOG--part 676, program regulations.

Sections 674.3, 675.3, and 676.3 Application

Sections 674.3, 675.3, and 676.3 of the Federal Perkins Loan, FWS,

and FSEOG program regulations, respectively, provide the procedures for

an institution to apply for campus-based program funds. The application

procedures are the same for all three programs. Therefore, the

Secretary is proposing to delete these sections currently found in

parts 674, 675, and 676 and consolidate the application procedures into

the new part 673 under Sec. 673.3.

Sections 674.4, 675.4, and 676.4 Allocation and Reallocation

The procedures for allocating and reallocating campus-based funds

are contained in the HEA for the Federal Perkins Loan Program in

section 462, the FWS Program in section 442, and the FSEOG Program in

section 413D. The current regulations for allocating and reallocating

these program funds are common in several areas. Therefore, the

Secretary is proposing to delete these sections currently found in

parts 674, 675, and 676 and consolidate the allocation and reallocation

provisions into the new part 673 under Sec. 673.4.

Sections 674.14, 675.14, and 676.14 Overaward

A financial aid administrator may not award or disburse aid from a

campus-based program if that aid, when combined with all other

resources, would exceed the student's need. Before awarding aid from

campus-based programs, the aid administrator must take into account the

aid that the student will receive from other student financial

assistance programs and other resources that the aid administrator

knows about or can reasonably anticipate at the time aid is awarded to

the student. If the student receives additional resources at any time

during the award period that were not considered in determining the

student's eligibility for aid, and these resources combined with the

expected financial

[[Page 49391]]

aid will exceed the student's need, the amount in excess of the

student's need is considered an overaward.

Currently Secs. 674.14, 675.14, and 676.14 of the campus-based

program regulations provide procedures that institutions must follow in

the event that an overaward situation occurs. The majority of the

overaward provisions are the same for all three programs. The Secretary

believes that the provisions are duplicates as presented in the three

program parts. Therefore, the Secretary is proposing to delete these

sections from parts 674, 675, and 676 and consolidate them into the new

part 673 under Sec. 673.5.

Sections 674.15, 675.15, 676.15 Coordination With BIA Grants

Sections 674.15, 675.15, and 676.15 of the Federal Perkins Loan,

FWS, and FSEOG program regulations provide institutions with the

procedures to follow when awarding title IV student financial aid to a

student who is also eligible for a Bureau of Indian Affairs (BIA)

education grant. Identical procedures are duplicated in all three

program regulations. The Secretary proposes to delete these identical

sections from parts 674, 675, and 676 and consolidate the provisions

into the new part 673 under Sec. 673.6.

Sections 674.18, 675.18, and 676.18 Use of Funds

Section 674.18(b), 675.18(b), and 676.18(b) of the Federal Perkins

Loan, FWS, and FSEOG program regulations provide the formula for

calculating an institution's administrative cost allowance and the

permissible use of the allowance. Institutions participating in these

programs are entitled to an allowance to help offset administrative

costs incurred in the administration of the campus-based programs and

the Federal Pell Grant program. These costs include salaries,

furniture, travel, supplies, and equipment and also include the expense

incurred for carrying out the student consumer information services

requirements of Subpart D of the Student Assistance General Provisions

regulations, 34 CFR part 668.

The formula for calculating this allowance is identical and

duplicated in all three program regulations. The allowable use of the

allowance is almost the same in all three program regulations.

Therefore, the Secretary is proposing to remove these duplicate

formulas and the allowable use provisions from parts 674, 675, and 676

and present them in the new part 673 under Sec. 673.7 with a new

heading of Administrative cost allowance.

Federal Pell Grant Program

There are no major proposed changes to the Federal Pell Grant

Program. However, the Secretary plans to make some minor technical

changes as described in the following paragraphs.

Section 690.2 General Definitions

The Secretary is proposing to clarify the definition of ``Annual

award'' in Sec. 690.2(c) to inform institutions of what a Federal Pell

Grant payment would be under the appropriate Disbursement Schedule for

a student attending half-time, three-quarter-time, and less-than-half-

time during that academic year. The Secretary also is proposing to

remove the definition for ``Comparable State income tax return.'' This

definition predated Sec. 668.57(a)(1) of Subpart E (Verification of

Student Aid Application Information) of the Student Assistance General

Provisions regulations, which requires the use of the income tax

return.

Subpart B--Application Procedures for Determining Expected Family

Contribution (EFC)

Section 690.14 Request for Recalculation of Expected Family

Contribution Because of Clerical or Arithmetic Error

The Secretary is proposing to amend Sec. 690.14 by revising the

heading of the section to include ``or if the information submitted was

incorrect'' and by clarifying paragraph (b)(1) to include the phrase

``or inaccurate information was submitted when the application was

signed.'' These changes would add an additional reason for

recalculating a student's EFC that was inadvertently left out of

earlier regulations.

Subpart F--Determination of Federal Pell Grant Awards

Section 690.61 Submission Process and Deadline for a Student Aid

Report or Institutional Student Information Record

The Secretary is proposing to amend Sec. 690.61(b)(2) by deleting

the June 30 deadline date for a student to submit a valid Student Aid

Report (SAR) or the institution to obtain a valid Institutional Student

Information Record (ISIR) and adding ``By the deadline date established

by the Secretary through publication of a notice in the Federal

Register.'' Due to faster electronic data processing, a student now has

an extended period of time to submit the required documents.

Subpart G--Administration of Grant Payments

Section 690.75 Determination of Eligibility for Payment

The Secretary is proposing to amend Sec. 690.75(e) by deleting

``the family contribution amount of $3,000'' and adding ``family

contribution amount at least equal to the maximum authorized award

amount for the award year.''

Section 690.78 Method of Disbursement--by Check or Credit to a

Student's Account

The Secretary is proposing to amend Sec. 690.78 (c)(2), (c)(3), and

(c)(4) to revise from 15 days to 20 days the timeframes governing

disbursements. If a student does not pick up the check on time, the

institution would still be required to pay the student if he or she

requests payment within 20 days after the last date of enrollment in

the award year. Also, the Secretary proposes to change from 15 days to

20 days the time period after which the institution may credit only

certain items to a student's account and after which the student

forfeits the right to receive payment. This additional five days would

give the student a longer time to claim Federal Pell Grant Program

funds to which he or she is entitled and would help standardize the

numerous timeframes in the title IV program regulations.

Section 690.81 Fiscal Control and Fund Accounting Procedures

The Secretary is proposing to delete Sec. 690.81(c) because the

provisions contained in this paragraph duplicate provisions in 34 CFR

668.161(b) of the Student Assistance General Provisions regulations,

which cover all of the title IV programs.

Goals 2000: Educate America Act

The Goals 2000: Educate America Act (Goals 2000) focuses the

Nation's education reform efforts on the eight National Education Goals

and provides a framework for meeting them. Goals 2000 promotes new

partnerships to strengthen schools and expands the Department's

capacities for helping communities to exchange ideas and obtain

information needed to achieve the goals.

These proposed regulations would address the National Education

Goal that calls for increasing the rate at which students graduate from

high school and pursue high quality postsecondary education and for

supporting life-long learning.

[[Page 49392]]

Executive Order 12866

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 proposed regulations contain technical terms

or other wording that interferes with their clarity? (3) Does the

format of the proposed regulations (grouping and order of sections, use

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

proposed 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. 674.18 Use of

funds.) (4) Is the description of the proposed regulations in the

``Supplementary Information'' section of this preamble helpful in

understanding the proposed regulations? How could this description be

more helpful in making the proposed regulations easier to understand?

(5) What else could the Department do to make the proposed 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, 600 Independence Avenue, S.W., (Room 5100, FB-10B),

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 that would be affected by these proposed

regulations are small institutions of postsecondary education. The

proposed changes in these regulations would not substantially increase

institutions' workload or costs associated with administering the title

IV, HEA programs and, therefore, would not have a significant economic

impact on a substantial number of small entities.

Paperwork Reduction Act of 1995

These proposed regulations have been examined under the Paperwork

Reduction Act of 1995 and have been found to contain no new information

collection requirements.

Intergovernmental Review

The Federal Supplemental Educational Opportunity Grant Program is

subject to the requirements of Executive Order 12372 and the

regulations in 34 CFR part 79. The objective of the Executive order is

to foster an intergovernmental partnership and a strengthened

federalism by relying on processes developed by State and local

governments for coordination and review of proposed Federal financial

assistance.

In accordance with the order, this document is intended to provide

early notification of the Department's specific plans and actions for

this program.

The Federal Perkins Loan, FWS, and Federal Pell Grant programs are

not subject to the requirements of Executive Order 12372 and the

regulations in 34 CFR part 79.

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 3045, ROB-3, 7th and D Streets, S.W., Washington, D.C.,

between the hours of 8:30 a.m. and 4:00 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.

34 CFR part 673

Loan programs--education, Grant programs--education, Student aid.

34 CFR part 674

Loan programs--education, Student aid.

34 CFR part 675

Loan programs--education, Student aid.

34 CFR part 676

Grant programs--education, Student aid.

34 CFR part 690

Grant programs--education, Student aid.

Dated: September 16, 1996.

Richard W. Riley,

Secretary of Education.

(Catalog of Federal Domestic Assistance Numbers: 84.007 Federal

Supplemental Educational Opportunity Grant Program; 84.033 Federal

Work-Study Program; 84.038 Federal Perkins Loan Program; and 84.063

Federal Pell Grant Program)

The Secretary proposes to amend chapter VI of Title 34 of the Code

of Federal Regulations as follows:

1. A new part 673 is added to read as follows:

PART 673--GENERAL PROVISIONS FOR THE FEDERAL PERKINS LOAN PROGRAM,

FEDERAL WORK-STUDY PROGRAM, AND FEDERAL SUPPLEMENTAL EDUCATIONAL

OPPORTUNITY GRANT PROGRAM

Subpart A--Purpose and Scope

Sec.

673.1 Purpose.

673.2 Applicability of regulations.

Subpart B--General Provisions for the Federal Perkins Loan, FWS, and

FSEOG programs

673.3 Application.

673.4 Allocation and reallocation.

673.5 Overaward.

673.6 Coordination with BIA grants.

673.7 Administrative cost allowance.

Authority: 20 U.S.C. 421-429, 1070b-1070b-3, 1087aa-1087ii; 42

U.S.C. 2751-2756b, unless otherwise noted.

Subpart A--Purpose and Scope

Sec. 673.1 Purpose.

This part governs the following three programs authorized by title

IV of the Higher Education Act of 1965, as amended (HEA) that

participating institutions administer:

(a) The Federal Perkins Loan Program, which encourages the making

of loans by institutions to needy undergraduate and graduate students

to help pay for the students' cost of education.

(b) The Federal Work-Study (FWS) Program, which encourages the

part-time employment of undergraduate and graduate students who need

the income to help pay for the students' costs of education and which

encourages FWS recipients to participate in community service

activities.

(c) The Federal Supplemental Educational Opportunity Grant (FSEOG)

Program, which encourages the providing of grants to exceptionally

needy undergraduate students to help pay for the students' cost of

education.

[[Page 49393]]

(Authority: 20 U.S.C. 421-429, 1070b-1070b-3, 1087aa-1087ii; 42

U.S.C. 2751-2756b)

Sec. 673.2 Applicability of regulations.

The participating institution is responsible for administering

these programs in accordance with the regulations in this part and the

applicable program regulations in 34 CFR part 674, 675, or 676.

(Authority: 20 U.S.C. 421-429, 1070b-1070b-3, 1087aa-1087ii; 42

U.S.C. 2751-2756b)

Subpart B--General Provisions for the Federal Perkins Loan, FWS,

and FSEOG Programs

Sec. 673.3 Application.

(a) To participate in the Federal Perkins Loan, FWS, or FSEOG

programs, an institution shall file an application before the deadline

date established annually by the Secretary through publication of a

notice in the Federal Register.

(b) The application for the Federal Perkins Loan, FWS, and FSEOG

programs must be on a form approved by the Secretary and must contain

the information needed by the Secretary to determine the institution's

allocation or reallocation of funds under sections 462, 442, and 413D

of the HEA, respectively.

(Authority: 20 U.S.C. 1070b-3, 1087bb; 42 U.S.C. 2752)

Sec. 673.4 Allocation and reallocation.

(a) Allocation and reallocation of Federal Perkins Loan funds. (1)

The Secretary allocates Federal capital contributions to institutions

participating in the Federal Perkins Loan Program in accordance with

section 462 of the HEA.

(2) The Secretary reallocates Federal capital contributions to

institutions participating in the Federal Perkins Loan Program by--

(i) Reallocating 80 percent of the total funds available in

accordance with section 462(j) of the HEA; and

(ii) Reallocating 20 percent of the total funds available in a

manner that best carries out the purposes of the Federal Perkins Loan

Program.

(b) Allocation and reallocation of FWS funds. The Secretary

allocates and reallocates funds to institutions participating in the

FWS Program in accordance with section 442 of the HEA.

(c) Allocation and reallocation of FSEOG funds. (1) The Secretary

allocates funds to institutions participating in the FSEOG Program in

accordance with section 413D of the HEA.

(2) The Secretary reallocates funds to institutions participating

in the FSEOG Program in a manner that best carries out the purposes of

the FSEOG Program.

(d) General allocation and reallocation--(1) Categories. As used in

section 462 (Federal Perkins Loan Program), section 442 (FWS Program),

and section 413D (FSEOG Program) of the HEA, ``Eligible institutions

offering comparable programs of instruction'' means institutions that

are being compared with the applicant institution and that fall within

one of the following six categories:

(i) Cosmetology.

(ii) Business.

(iii) Trade/Technical.

(iv) Art Schools.

(v) Other Proprietary Institutions.

(vi) Non-Proprietary Institutions.

(2) Payments to institutions. The Secretary allocates funds for a

specific period of time. The Secretary pays an institution its

allocation in periodic installments as determined by the Secretary.

(3) Unexpended funds. (i) If an institution returns more than 10

percent of its Federal Perkins Loan, FWS, or FSEOG allocation for an

award year, the Secretary reduces the institution's allocation for that

program for the second succeeding award year by the dollar amount

returned.

(ii) The Secretary may waive the provision of paragraph (d)(3)(i)

of this section for a specific institution if the Secretary finds that

enforcement would be contrary to the interests of the program.

(iii) The Secretary considers enforcement of paragraph (d)(3)(i) of

this section to be contrary to the interest of the program only if the

institution returns more than 10 percent of its allocation due to

circumstances beyond the institution's control that are not expected to

recur.

(e) Anticipated collections of Federal Perkins Loan funds.

(1) For the purposes of calculating an institution's share of any

excess allocation of Federal Perkins Loan funds, an institution's

anticipated collections are equal to the amount that was collected

during the second year preceding the beginning of the award period

multiplied by 1.21.

(2) The Secretary may waive the provision of paragraph (e)(1) of

this section for any institution that has a cohort default rate that

does not exceed 7.5 percent.

(f) Authority to expend FWS funds after the award year. Except as

specifically provided in 34 CFR 675.18 (b), (c), and (f), an

institution may not use funds allocated or reallocated for an award

year--

(1) To meet FWS wage obligations incurred with regard to an award

of FWS employment made for any other award year; or

(2) To satisfy any other obligation incurred after the end of the

designated award year.

(g) Authority to expend FSEOG funds after the award year. Except as

specifically provided in 34 CFR 676.16(e), an institution shall not use

funds allocated or reallocated for an award year--

(1) To make FSEOG disbursements to students in any subsequent award

year; or

(2) To satisfy any other obligation incurred after the end of the

designated award year.

(Authority: 20 U.S.C. 1070b-3, 1087bb; 42 U.S.C. 2752)

Sec. 673.5 Overaward.

(a) Overaward prohibited. (1) Federal Perkins Loan and FSEOG

Programs. An institution may only award or disburse a Federal Perkins

loan or an FSEOG to a student if that loan or the FSEOG, combined with

the other resources the student receives, does not exceed the student's

financial need.

(2) FWS Program. An institution may only award FWS employment to a

student if the award, combined with the other resources the student

receives, does not exceed the student's financial need.

(b) Awarding and disbursement. (1) When awarding and disbursing a

Federal Perkins loan or an FSEOG or awarding FWS employment to a

student, the institution shall take into account those resources it--

(i) Can reasonably anticipate at the time it awards Federal Perkins

Loan funds, an FSEOG, or FWS funds to the student;

(ii) Makes available to its students; or

(iii) Otherwise knows about.

(2) If a student receives resources at any time during the award

period that were not considered in calculating the Federal Perkins Loan

amount or the FWS or FSEOG award, and the total resources including the

loan, the FSEOG, or the prospective FWS wages exceed the student's

need, the overaward is the amount that exceeds need.

(c) Resources. (1) Except as provided in paragraph (c)(2) of this

section, the Secretary considers that ``resources'' include, but are

not limited to, any--

(i) Funds a student is entitled to receive from a Federal Grant;

(ii) William D. Ford Federal Direct Loans;

[[Page 49394]]

(iii) Federal Family Education Loans;

(iv) Long-term loans, including Federal Perkins loans made by the

institution;

(v) Grants, including FSEOGs, State grants, and ROTC subsistence

allowances;

(vi) Scholarships, including athletic scholarships and ROTC

scholarships;

(vii) Waiver of tuition and fees;

(viii) Fellowships or assistantships;

(ix) Veterans benefits;

(x) Net earnings from need-based employment; and

(xi) Insurance programs for the student's education.

(2) The Secretary does not consider as a resource--

(i) Any portion of the resources described in paragraph (c)(1) of

this section that are included in the student's expected family

contribution (EFC); and

(ii) Earnings from non-need-based employment.

(3) The institution may treat a Federal Direct PLUS Loan, a Federal

PLUS Loan, a Federal Direct Unsubsidized Stafford/Ford Loan, a Federal

Unsubsidized Stafford Loan, or a State-sponsored or private loan as a

substitute for a student's EFC. However, if the sum of the loan amounts

received exceeds the student's EFC, the excess is a resource.

(d) Treatment of resources in excess of need--General. An

institution shall take the following steps if it learns that a student

has received additional resources not included in the calculation of

Federal Perkins Loan, FWS, or FSEOG eligibility that would result in

the student's total resources exceeding his or her financial need by

more than $300:

(1) The institution shall decide whether the student has increased

financial need that was unanticipated when it awarded financial aid to

the student. If the student demonstrates increased financial need and

the total resources do not exceed this increased need by more than

$300, no further action is necessary.

(2) If the student's total resources still exceed his or her need

by more than $300, as recalculated pursuant to paragraph (d)(1) of this

section, the institution shall cancel any undisbursed loan or grant

(other than a Pell Grant).

(3) Federal Perkins loan and FSEOG overpayment. If the student's

total resources still exceed his or her need by more than $300, after

the institution takes the steps required in paragraphs (d) (1) and (2)

of this section, the institution shall consider the amount by which the

resources exceed the student's financial need by more than $300 as an

overpayment.

(e) Termination of FWS employment. (1) An institution may fund a

student's FWS employment with FWS funds only until the amount of the

FWS award has been earned or until the student's financial need, as

recalculated under paragraph (d)(1) of this section, is met.

(2) Notwithstanding the provisions of paragraph (e)(1) of this

section, an institution may provide additional FWS funding to a student

whose need has been met until that student's cumulative earnings from

all need-based employment occurring subsequent to the time his or her

financial need has been met exceed $300.

(f) Liability for and recovery of Federal Perkins loans and FSEOG

overpayments. (1) A student is liable for any Federal Perkins loan or

FSEOG overpayment made to him or her.

(2) The institution is also liable for a Federal Perkins loan or

FSEOG overpayment if the overpayment occurred because the institution

failed to follow the procedures in this part, 34 CFR part 668, 34 CFR

part 674 and 34 CFR part 676. The institution shall restore an amount

equal to the overpayment and any administrative cost allowance claimed

on that amount to its loan fund for a Federal Perkins loan overpayment

or to its FSEOG account for an FSEOG overpayment if it cannot collect

the overpayment from the student.

(3) If an institution makes a Federal Perkins loan or FSEOG

overpayment for which it is not liable, it shall help the Secretary

recover the overpayment by promptly attempting to recover the

overpayment by sending a written notice to the student requesting

repayment of the overawarded funds. The notice must state that failure

to make that repayment or to make arrangements, satisfactory to the

holder of the overpayment debt, to pay the overpayment renders the

student ineligible for further title IV aid until final resolution of

the overpayment.

(4) If a student objects to the institution's Federal Perkins loan

or FSEOG overpayment determination on the grounds that it is erroneous,

the institution shall consider any information provided by the student

and determine whether the objection is warranted.

(5) Referral of FSEOG overpayments. (i) If the student fails to

repay an FSEOG overpayment or make arrangements, satisfactory to the

holder of the overpayment debt, to pay the FSEOG overpayment after

taking the action required by paragraphs (f)(3) and, if applicable,

(f)(4) of this section, and the Federal share of the FSEOG overpayment

is $25.00 or more, the institution shall notify the Secretary

identifying the Federal share of the FSEOG overpayment, the student's

name, most recent address, telephone number, and any other relevant

information. After notifying the Secretary under this section, the

institution need make no further recovery efforts of FSEOG

overpayments.

(ii) If an institution fails in its attempt to collect the

overpayment and the Federal share of the FSEOG overpayment is less than

$25.00, the institution need make no further recovery efforts of the

FSEOG overpayment.

(Approved by the Office of Management and Budget under control

number 1840-0535)

(Authority: 20 U.S.C. 1070b-1, 1087dd, and 1087hh; 42 U.S.C. 2753)

Sec. 673.6 Coordination with BIA grants.

(a) Coordination of BIA grants with Federal Perkins Loans, FWS

awards, or FSEOGs. To determine the amount of a Federal Perkins Loan,

FWS compensation, or an FSEOG for a student who is also eligible for a

Bureau of Indian Affairs (BIA) education grant, an institution shall

prepare a package of student aid--

(1) From resources other than the BIA education grant the student

has received or is expected to receive; and

(2) That is consistent in type and amount with packages prepared

for students in similar circumstances who are not eligible for a BIA

education grant.

(b) (1) The BIA education grant, whether received by the student

before or after the preparation of the student aid package, supplements

the student aid package specified in paragraph (a) of this section.

(2) No adjustment may be made to the student aid package as long as

the total of the package and the BIA education grant is less than the

institution's determination of that student's financial need.

(c) (1) If the BIA education grant, when combined with other aid in

the package, exceeds the student's need, the excess must be deducted

from the other assistance (except for Federal Pell Grants), not from

the BIA education grant.

(2) The institution shall deduct the excess in the following

sequence: loans, work-study awards, and grants other than Federal Pell

Grants. However, the institution may change the sequence if requested

to do so by a student and the institution believes the change benefits

the student.

(d) To determine the financial need of a student who is also

eligible for a BIA

[[Page 49395]]

education grant, a financial aid administrator is encouraged to consult

with area officials in charge of BIA postsecondary financial aid.

(Authority: 20 U.S.C. 1070b-1, 1087dd; 42 U.S.C. 2753)

Sec. 673.7 Administrative cost allowance.

(a) An institution participating in the Federal Perkins Loan, FWS,

or FSEOG programs is entitled to an administrative cost allowance for

an award year if it advances funds under the Federal Perkins Loan

Program, provides FWS employment, or awards grants under the FSEOG

Program to students in that year.

(b) An institution may charge the administrative cost allowance

calculated in accordance with paragraph (c) of this section for an

award year against--

(1) The Federal Perkins Loan Fund, if the institution advances

funds under the Federal Perkins Loan Program to students in that award

year;

(2) The FWS allocation, if the institution provides FWS employment

to students in that award year; or

(3) The FSEOG allocation, if the institution awards grants to

students under the FSEOG program in that award year.

(c) For any award year, the amount of the allowance equals--

(1) Five percent of the first $2,750,000 of the institution's total

expenditures to students in that award year under the FWS, FSEOG and

the Federal Perkins Loan programs; plus

(2) Four percent of its expenditures to students that are greater

than $2,750,000 but less than $5,500,000; plus

(3) Three percent of its expenditures to students that are

$5,500,000 or more.

(d) The institution shall not include, when calculating the

allowance in paragraph (c) of this section, the amount of loans made

under the Federal Perkins Loan Program that it assigns during the award

year to the Secretary under section 463(a)(6) of the HEA.

(e) An institution shall use its allowance to offset its cost of

administering the Federal Pell Grant, FWS, FSEOG, and Federal Perkins

Loan programs. Administrative costs also include the expenses incurred

for carrying out the student consumer information services requirements

of Subpart D of the Student Assistance General Provisions regulations,

34 CFR part 668.

(f) An institution may use up to 10 percent of the allowance, as

calculated under paragraph (c) of this section, that is attributable to

the institution's expenditures under the FWS program to pay the

administrative costs of conducting its program of community service.

These costs may include the costs of--

(1) Developing mechanisms to assure the academic quality of a

student's experience;

(2) Assuring student access to educational resources, expertise,

and supervision necessary to achieve community service objectives; and

(3) Collaborating with public and private nonprofit agencies and

programs assisted under the National and Community Service Act of 1990

in the planning, development, and administration of these programs.

(g) If an institution charges any administrative cost allowance

against its Federal Perkins Loan Fund, it must charge these costs

during the same award year in which the expenditures for these costs

were made.

(Authority: 20 U.S.C. 1087cc, 20 U.S.C. 1096, 42 U.S.C. 2753, and 20

U.S.C. 1070b-2)

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

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

follows:

Authority: 20 U.S.C. 1085, 1088, 1091, 1092, 1094, 1099c, and

1141, unless otherwise noted.

Sec. 668.1 [Amended]

3. Section 668.1, paragraph (c)(4) is amended by adding ``673 and''

before ``676'' and adding an ``s'' to the word ``part''; paragraph

(c)(10) is amended by adding ``673 and'' before ``675'' and adding an

``s'' to the word ``part''; and paragraph (c)(12) is amended by adding

``673 and'' before ``674'' and adding an ``s'' to the word ``part''.

Sec. 668.2 [Amended]

4. Section 668.2, in paragraph (b) amend the definition of

``Campus-based programs'' in paragraph (1) by adding ``673 and'' before

``674'' and adding an ``s'' to the word ``part''; in paragraph (2) add

``673 and'' before ``675'' and add an ``s'' to the word ``part''; and

in paragraph (3) add ``673 and'' before ``676'' and add an ``s'' to the

word ``part''.

Sec. 668.22 [Amended]

5. Section 668.22, paragraph (g)(3)(i) is amended by removing

``674, 675, 676,''.

PART 674--FEDERAL PERKINS LOAN PROGRAM

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

follows:

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

otherwise noted.

Sec. 674.3 [Removed]

7. Section 674.3 is removed and reserved.

Sec. 674.4 [Removed]

8. Section 674.4 is removed and reserved.

Sec. 674.8 [Amended]

9. Section 674.8 is amended by removing in paragraph (b)(2),

``Sec. 674.18(b)'' and adding in its place ``34 CFR 673.7''.

Sec. 674.14 [Removed]

10. Section 674.14 is removed and reserved.

Sec. 674.15 [Removed]

11. Section 674.15 is removed and reserved.

Sec. 674.18 [Amended]

12. Section 674.18 is amended by removing paragraph (b) and by

redesignating paragraph (c) as paragraph (b).

PART 675--FEDERAL WORK-STUDY PROGRAM

13. The authority citation for part 675 is revised to read as

follows:

Authority: 42 U.S.C. 2751-2756b, unless otherwise noted.

Sec. 675.3 [Removed]

14. Section 675.3 is removed and reserved.

Sec. 675.4 [Removed]

15. Section 675.4 is removed and reserved.

Sec. 675.14 [Removed]

16. Section 675.14 is removed and reserved.

Sec. 675.15 [Removed]

17. Section 675.15 is removed and reserved.

Sec. 675.18 [Amended]

18. Section 675.18 is amended by removing paragraph (b) and by

redesignating paragraphs (c), (d), (e), (f), (g), and (h) as paragraphs

(b), (c), (d), (e), (f), and (g), respectively.

Sec. 675.49 [Amended]

19. Section 675.49 is amended by adding the words ``34 CFR part 673

and'' before the words ``this part 675''.

PART 676--FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT

PROGRAM

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

follows:

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

[[Page 49396]]

Sec. 676.3 [Removed]

21. Section 676.3 is removed and reserved.

Sec. 676.4 [Removed]

22. Section 676.4 is removed and reserved.

Sec. 676.14 [Removed]

23. Section 676.14 is removed and reserved.

Sec. 676.15 [Removed]

24. Section 676.15 is removed and reserved.

Sec. 676.16 [Amended]

25. Section 676.16 is amended by removing in paragraph (e)(1) and

(e)(2) ``(f)'' and adding in its place ``(e)''.

Sec. 676.18 [Amended]

26. Section 676.18 is amended by removing paragraph (b) and by

redesignating paragraph (c) as paragraph (b).

PART 690--FEDERAL PELL GRANT PROGRAM

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

follows:

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

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

definition of ``Comparable State income tax return'' and by revising

the definition of ``Annual award'' to read as follows:

Sec. 690.2 General definitions.

* * * * *

(c) * * *

Annual award: The Federal Pell Grant award amount a full-time

student would receive under the Payment Schedule for a full academic

year in an award year, and the amount a three-quarter-time, half-time,

and less-than-half-time student would receive under the appropriate

Disbursement Schedule for being enrolled in that enrollment status for

a full academic year in an award year.

* * * * *

29. Section 690.10(b) is revised to read as follows:

Sec. 690.10 Administrative cost allowance to participating schools.

* * * * *

(b) All funds an institution receives under this section must be

used solely to pay the institution's cost of administering the Federal

Pell Grant, Federal Perkins Loan, Federal Work-Study, and Federal

Supplemental Educational Opportunity Grant programs.

* * * * *

Sec. 690.12 [Amended]

30. Section 690.12(b)(1) is amended by removing ``a copy of''.

31. Section 690.13 is revised to read as follows:

Sec. 690.13 Notification of expected family contribution.

The Secretary sends a student's application information and EFC as

calculated by the central processor to the student on an SAR and allows

each institution designated by the student to obtain an ISIR for that

student.

(Approved by the Office of Management and Budget under control

number 1840-0681)

(Authority: 20 U.S.C. 1070a)

32. Section 690.14 is amended by removing paragraphs (b)(1)and

(b)(2); by redesignating paragraph (b)(3) introductory text as

paragraph (c) introductory text; by redesignating paragraph (b)(3)(i)

as paragraph (c)(1); by redesignating paragraph (b)(3)(ii) as paragraph

(c)(2); by redesignating paragraph (b)(4) as paragraph (d); and by

revising the heading and paragraphs (a) and (b) to read as follows:

Sec. 690.14 Applicant's request to recalculate expected family

contribution because of a clerical or arithmetic error or the

submission of inaccurate information.

(a) An applicant may request the Secretary to recalculate his or

her expected family contribution if--

(1) He or she believes a clerical or arithmetic error has occurred;

or

(2) The information he or she submitted was inaccurate when the

application was signed.

(b) The applicant shall request the Secretary to make the

recalculation described in paragraph (a) of this section by--

(1) Having his or her institution transmit that request to the

Secretary under EDE; or

(2) Sending to the Secretary an approved form, certified by the

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

student.

* * * * *

33. Section 690.61 is amended by revising paragraphs (a)(1)(ii) and

paragraph (b)(2) to read as follows:

Sec. 690.61 Disbursement conditions and deadlines.

(a) * * *

(1) * * *

(ii) The institution obtains a valid ISIR for the student.

* * * * *

(b) * * *

(2) By the deadline date established by the Secretary through

publication of a notice in the Federal Register.

* * * * *

Sec. 690.75 [Amended]

34. Section 690.75 (a)(2) is amended by adding ``in an eligible

program'' after ``enrolled''; and paragraph (e) is amended by removing

the phrase ``an expected family contribution of at least $3,000'' and

adding in its place ``an expected family contribution amount at least

equal to the maximum authorized award amount for the award year''.

Sec. 690.78 [Amended]

35. Section 690.78 (c)(2) is amended by removing ``15'' and adding

in its place ``20''; paragraph (c)(3) is amended by removing ``15'' and

adding in its place ``20''; and paragraph (c)(4) is amended by removing

``15'' and adding in its place ``20''.

Sec. 690.81 [Amended]

36. Section 690.81 is amended by removing paragraph (c).

[FR Doc. 96-24010 Filed 9-18-96; 8:45 am]

BILLING CODE 4000-01-P