Institutional Eligibility; Student Assistance General Provisions

SUMMARY: The Secretary amends the Institutional Eligibility and Student

Assistance General Provisions regulations. These technical amendments

are necessary to correct cross-references, delete references to

programs that are no longer funded, and make a number of nomenclature

changes that provide the correct names of various Title IV, HEA

programs.

EFFECTIVE DATE: These regulations take effect July 29, 1998.

FOR FURTHER INFORMATION CONTACT: Lorraine Kennedy, U.S. Department of

Education, 600 Independence Avenue, SW, Regional Office Building 3,

Room 3045, Washington, D.C. 20202-5451. Telephone: (202) 708-8242.

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.

Individuals with disabilities may obtain this document in an

alternate format (e.g., Braille, large print, audiotape, or computer

diskette) on request to the contact persons listed in the preceding

paragraph.

SUPPLEMENTARY INFORMATION: The Institutional Eligibility regulations,

34 CFR part 600, and the Student Assistance General Provisions

regulations, 34 CFR part 668 are amended to clarify regulations, and to

correct errors and omissions.

All references to Income Contingent Loan (ICL), State Postsecondary

Review Entity (SPRE), and Presidential Access Scholarship (PAS)

throughout 34 CFR parts 600 and 668 have been removed because the ICL

program was eliminated and the other two programs were not funded.

References to the name of the Direct Loan Program under 34 CFR

parts 600 and 668 have been changed to conform to the program names set

fourth in the William D. Ford Federal Direct Loan (Direct Loan) Program

regulations, 34 CFR part 685. As required, under 34 CFR part 685 and

appropriate sections throughout the regulations, other conforming

changes have been made to incorporate the Direct Loan Program.

All references to Sec. 668.7 have been removed and replaced with

references to the correct sections in Subpart C of the Student

Assistance General Provisions in accordance with the regulations that

were published in the Federal Register on December 1, 1995.

These regulations change current Student Right-to-Know (SRK)

regulations by incorporating some technical corrections to the December

1, 1995 SRK regulations; these changes are made to reflect statutory

provisions omitted in the December 1, 1995 SRK regulations. Other

changes being made in these regulations reflect recent statutory

changes to the SRK provisions of the Higher Education Act of 1965, as

amended (HEA); these recent statutory changes were made to the HEA by

Pub.L. 105-18 entitled ``1997 Emergency Supplemental Appropriations Act

for Recovery From Natural Disasters, and for Overseas Peacekeeping

Efforts, Including Those in Bosnia.''

Waiver of Proposed Rulemaking

In accordance with the Administrative Procedure Act, 5 U.S.C. 553,

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

opportunity to comment on proposed regulations. However, the regulatory

changes in this document correct minor technical errors and omissions

in the Institutional Eligibility regulations, 34 CFR part 600 and the

Student Assistance General Provisions regulations, 34 CFR part 668. The

changes in this document do not establish any new substantive rules.

Therefore, the Secretary has determined that publication of a proposed

rule is unnecessary and contrary to the public interest under 5 U.S.C.

553(b)(B). For the reasons stated, the Secretary also waives the

delayed effective date under 5 U.S.C. 553(d).

The Secretary certifies that these final regulations will not have

significant economic impact on a substantial number of small entities.

Small entities affected by these regulations are small institutions of

higher education. These regulations contain technical amendments

designed to clarify and correct current regulations. The changes will

not have a significant economic impact on the institutions affected.

Paperwork Reduction Act of 1995

These regulations have been examined under the Paperwork Reduction

Act of 1995 and have been found to contain no information collection

requirements.

Assessment of Educational Impact

Based on its own review, the Department has determined that the

regulations in this document do not require transmission of information

that is being gathered by, or is available from, any other agency or

authority of the United States.

Electronic Access to This Document

Anyone may view this document, as well as all other Department of

Education documents published in the Federal Register, in text or

portable document format (pdf) on the World Wide Web at either of the

following sites:

http://ocfo.ed.gov/fedreg.htm

http://www.ed.gov/news.html

To use the pdf you must have the Adobe Acrobat Reader Program with

Search, which is available free at either of the previous sites. If you

have questions about using the pdf, call the U.S. Government Printing

Office toll free at 1-888-293-6498.

List of Subjects in 34 CFR Parts 600 and 668

Administrative practice and procedure, Colleges and universities,

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

and recordkeeping requirements, Student aid.

Dated: July 21, 1998.

David A. Longanecker,

Assistant Secretary for Postsecondary Education.

The Secretary amends Parts 600 and 668 of Title 34 of the Code of

Federal Regulations as follows:

PART 600--INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT

OF 1965, AS AMENDED

1. The authority citation for part 600 continues to read as

follows:

Authority: 20 U.S.C. 1088, 1091, 1094, 1099b. 1099c, and 1141,

unless otherwise noted.

Sec. 600.2 [Amended]

2. Section 600.2 is amended by capitalizing the ``P'' in the

definition of ``Federal Family Education Loan (FFEL) programs''.

Sec. 600.9 [Amended]

3. Section 600.9(b)(2)(ii) is amended by removing ``or SPRE,''.

Sec. 600.40 [Amended]

4. Section 600.40 is amended by adding the word ``or'' at the end

of paragraph (a)(1)(iv)(A), removing ``; or'' at the end of paragraph

(a)(1)(iv)(B) and adding a period in its place, and removing paragraph

(a)(1)(iv)(C).

[[Page 40623]]

Sec. 600.41 [Amended]

5. Section 600.41 is amended by adding the word ``or'' at the end

of paragraph (a)(1)(ii)(F), removing the word ``or'' at the end of

paragraph (a)(1)(ii)(G), removing paragraph (a)(1)(ii)(H), and removing

paragraph (e)(3).

Sec. 600.55 [Amended]

6. Section 600.55 is amended by removing ``668.7(a)(4)(i) through

(iii)'' from paragraph (a)(5)(i)(A) and adding, in its place,

``668.33''.

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

7. 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.

8. Section 668.1 is amended by removing paragraphs (c)(3), (c)(7),

and (c)(11); redesignating paragraphs (c)(4), (5), (6), (8), (9), (10),

and (12) as paragraphs (c)(3), (4), (5), (6), (7), (8), and (10),

respectively; and adding a new paragraph (c)(9) to read as follows:

Sec. 668.1 Scope.

* * * * *

(c) * * *

(9) The William D. Ford Federal Direct Loan (Direct Loan) Program

(20 U.S.C. 1087a et seq.; 34 CFR part 685); and

* * * * *

9. Section 668.2(b) is amended by removing the definitions of

``Direct loan,'' ``Federal Direct PLUS loan,'' ``Federal Direct

Stafford loan,'' ``Federal Direct Student loan,'' ``Federal Direct

Student Loan (FDSL) Program,'' ``Income Contingent Loan (ICL)

program,'' ``Payment period,'' and ``Presidential Access Scholarship

(PAS) program'' and the authority citations following the definitions;

by removing ``while they were students'', and by adding ``Federal

Consolidation Loan,'' after ``(as in effect before October 17, 1986),''

the first time it appears in the definition of ``Federal Consolidation

Loan program''; removing the word ``natural'' in the definition of

``Parent'' and adding, in its place, the word ``biological''; removing

``and in 34 CFR 691.2 for purposes of the PAS Program'' in the

definitions of ``Valid institutional student information report (valid

ISIR)'' and ``Valid student aid report (valid SAR)''; and adding new

definitions for ``Direct Loan Program loan,'' ``Direct PLUS Loan,''

``Direct Subsidized Loan,'' ``Direct Unsubsidized Loan,'' ``Federal

Direct PLUS Program,'' ``Federal Direct Stafford/Ford Loan Program,''

``Federal Direct Unsubsidized Stafford/Ford Loan Program,'' ``William

D. Ford Federal Direct Loan (Direct Loan) Program'' and authority

citations following the definitions in alphabetical order to read as

follows:

Sec. 668.2 General definitions.

* * * * *

(b) * * *

Direct Loan Program loan: A loan made under the William D. Ford

Federal Direct Loan Program.

(Authority: 20 U.S.C. 1087a et seq.)

Direct PLUS Loan: A loan made under the Federal Direct PLUS

Program.

(Authority: 20 U.S.C. 1078-2 and 1087a et seq.)

Direct Subsidized Loan: A loan made under the Federal Direct

Stafford/Ford Loan Program.

(Authority: 20 U.S.C. 1071 and 1087a et seq.)

Direct Unsubsidized Loan: A loan made under the Federal Direct

Unsubsidized Stafford/Ford Loan Program.

(Authority: 20 U.S.C. 1087a et seq.)

* * * * *

Federal Direct PLUS Program: A loan program authorized by Title IV,

Part D of the HEA that is one of the components of the Direct Loan

Program. The Federal Direct PLUS Program provides loans to parents of

dependent students attending schools that participate in the Direct

Loan Program. The borrower is responsible for the interest that accrues

during any period.

(Authority: 20 U.S.C. 10782 and 1087a et seq.)

Federal Direct Stafford/Ford Loan Program: A loan program

authorized by Title IV, Part D of the HEA that is one of the components

of the Direct Loan Program. The Federal Direct Stafford/Ford Loan

Program provides loans to undergraduate, graduate, and professional

students attending schools that participate in the Direct Loan Program.

The Secretary subsidizes the interest while the borrower is in an in-

school, grace, or deferment period.

(Authority: 20 U.S.C. 1071 and 1087a et seq.)

Federal Direct Unsubsidized Stafford/Ford Loan Program: A loan

program authorized by Title IV, Part D of the HEA that is one of the

components of the Direct Loan Program. The Federal Direct Unsubsidized

Stafford/Ford Loan Program provides loans to undergraduate, graduate,

and professional students attending schools that participate in the

Direct Loan Program. The borrower is responsible for the interest that

accrues during any period.

(Authority: 20 U.S.C. 1087a et seq.)

* * * * *

William D. Ford Federal Direct Loan (Direct Loan) Program: The loan

program authorized by Title IV, Part D of the HEA.

(Authority: 20 U.S.C. 1087a et seq.)

Sec. 668.8 [Amended]

10. Section 668.8(d)(3) is amended by removing ``Federal Stafford

Loan, Federal PLUS, and Federal SLS'' and adding, in its place, ``FFEL

and Direct Loan''.

Sec. 668.13 [Amended]

11. Section 668.13 is amended by removing ``the FDSL Program, or

the Federal Stafford Loan, Federal SLS, or Federal PLUS Program'' and

adding, in its place, ``the Direct Loan Program, or the FFEL Program,''

in paragraph (a)(4)(i) introductory text; and removing ``(f)(1)'' and

adding, in its place, ``(d)(1)'' in paragraph (d)(2)(i).

12. Section 668.14 is amended by removing paragraph (b)(4)(ii);

redesignating paragraphs (b)(4)(iii) through (vi), as (b)(4)(ii)

through (v), respectively; removing ``Federal Stafford Loan, Federal

PLUS, and Federal SLS'' and adding, in its place, ``Federal Stafford

Loan and Federal PLUS'' in redesignated paragraph (b)(4)(ii); removing

``Federal SLS,'' in paragraph (b)(7); removing ``Federal Stafford Loan,

Federal PLUS, and Federal SLS'' and adding, in its place, ``Federal

Stafford Loan and Federal PLUS'' in paragraph (b)(15); removing ``State

postsecondary review entities designated under 34 CFR part 667,'' in

paragraph (b)(17); removing ``, State postsecondary review entities

designated under 34 CFR part 667,'' in paragraph (b)(23); and revising

paragraphs (b)(8), (11), and (16) to read as follows:

Sec. 668.14 Program participation agreement.

* * * * *

(b) * * *

(8) It will not provide any statement to any student or

certification to any lender in the case of an FFEL Program loan, or

origination record to the Secretary in the case of a Direct Loan

Program loan that qualifies the student or parent for a loan or loans

in excess of the amount that the student or parent is eligible to

borrow in accordance with sections 425(a), 428(a)(2), 428(b)(1)(A) and

(B), 428B, 428H, and 455(a) of the HEA;

* * * * *

(11) In the case of an institution participating in the FFEL

program, the

[[Page 40624]]

institution will inform all eligible borrowers, as defined in 34 CFR

part 682, enrolled in the institution about the availability and

eligibility of those borrowers for State grant assistance from the

State in which the institution is located, and will inform borrowers

from another State of the source of further information concerning

State grant assistance from that State;

* * * * *

(16) In the case an institution that changes ownership that results

in a change of control, or that changes its status as a main campus,

branch campus, or an additional location, the institution will, to

participate in the FFEL Program, develop a default management plan for

approval by the Secretary and implement the plan for at least two years

after the change in control or status;

* * * * *

13. In Sec. 668.16, paragraph (e)(2)(i) is amended by removing

``668.7(c)'' and adding, in its place, ``668.34''; paragraph (j)(1) is

amended by removing ``State postsecondary review entities designated

under 34 CFR part 667,''; and paragraph (m)(1) introductory text and

(m)(1)(i) and the authority citation are revised to read as follows:

Sec. 668.16 Standards of administrative capability.

* * * * *

(m)(1) Has an FFEL Program cohort default rate, a Direct Loan

cohort rate, or where applicable, a weighted average cohort rate--

(i) As defined in Sec. 668.17, that is less than 25 percent for

each of the three most recent fiscal years for which the Secretary has

determined the institution's rate; and

* * * * *

(Authority: 20 U.S.C. 1082, 1985, 1094, and 1099c)

14. Section 668.19 is amended by removing ``Federal Direct Stafford

Loan'' and adding, in its place, ``Direct Subsidized Loan or Direct

Unsubsidized Loan'' and by removing ``Federal Direct PLUS'' and adding,

in its place, ``Direct PLUS Loan'' in paragraph (a)(3)(iv); removing

``Federal Direct Stafford Loan'' and adding, in its place, ``Direct

Subsidized or Direct Subsidized Loan'' in paragraph (a)(3)(v); and by

removing ``Federal Direct PLUS'' and adding, in its place, ``Direct

PLUS Loan'' in paragraph (a)(3)(vi).

15. Section 668.20 is amended by revising paragraph (c)

introductory text and paragraph (d)(2) to read as follows:

Sec. 668.20 Limitations on remedial coursework that is eligible for

Title IV, HEA program assistance.

* * * * *

(c) In determining a student's enrollment status under the Title

IV, HEA programs or a student's cost of attendance under the campus-

based, FFEL, and Direct Loan programs, an institution may not take into

account any noncredit or reduced credit remedial course if--

* * * * *

(d) * * *

(2) A student's cost of attendance under the campus-based, FFEL,

and Direct Loan programs.

* * * * *

Sec. 668.21 [Amended]

16. Section 668.21 is amended by removing ``Pell Grant, SEOG, ICL,

and'' in paragraph (a)(1), and adding, in its place, ``Federal Pell

Grant, FSEOG, and Federal''.

17. Section 668.22 is amended by revising paragraph (c)(2)(ii);

removing ``Federal Stafford loan, Federal PLUS, Federal SLS, Federal

Direct Stafford, or Federal Direct PLUS Program'' in paragraphs

(f)(1)(ii), (g)(3)(ii) and (h)(1), and adding, in its place, ``FFEL, or

Direct Loan Program'; removing ``unsubsidized Federal Direct Stafford

loans'' in paragraph (h)(1)(iv), and adding, in its place, ``Direct

Unsubsidized Loans''; removing ``subsidized Federal Direct Stafford

loans'' in paragraph (h)(1)(v), and adding, in its place ``Direct

Subsidized Loans''; removing ``Federal'' and capitalizing ``L'' in

``loans'' in paragraph (h)(i)(vi); removing ``Federal Stafford Loan,

Federal PLUS, Federal SLS, Federal Direct Stafford Loan or Federal

Direct PLUS'' in paragraph (h)(2)(ii), and adding, in its place ``FFEL

or Direct Loan''; removing ``Federal Stafford Loan, Federal PLUS,

Federal SLS Program, Federal Direct Stafford, or Federal Direct PLUS''

in paragraph (f)(2)(i), and adding, in its place ``FFEL, or Direct Loan

Program''; revising paragraph (g)(2)(ii)(B); removing ``Federal PLUS,

Federal SLS'' in paragraph (h)(2)(iii), and adding, in its place, ``and

Federal PLUS''; and removing ``Federal Stafford Loan, Federal PLUS, and

Federal SLS'' in paragraph (h)(2)(iv), and adding, in its place, ``and

FFEL''; removing ``Federal Stafford Loan, Federal PLUS, Federal SLS,

Federal Direct Stafford, and Federal Direct PLUS programs'' in

paragraph (h)(2)(v), and adding, in its place, ``FFEL, and Direct Loan

Programs''; removing ``Federal Direct PLUS loans'' in paragraph (i),

and adding, in its place, ``Direct PLUS Loans'' to read as follows:

Sec. 668.22 Institutional refunds and repayments.

* * * * *

(c) * * *

(2) * * *

(ii) Late disbursements of loans made under the FFEL and Direct

Loan Programs in accordance with 34 CFR 682.207(d) and 34 CFR

685.303(d), respectively; and

* * * * *

(g) * * *

(2) * * *

(ii) * * *

(B) Late disbursements of loans made under the FFEL and Direct Loan

programs in accordance with 34 CFR 682.207(d) and 34 CFR 685.303(d),

respectively; and

* * * * *

Sec. 668.25 [Amended]

18. Section 668.25 is amended by removing ``or Federal SLS'' in

paragraph (c)(4); and removing ``, Federal PLUS, and Federal SLS'' in

paragraph (c)(4)(ii), and adding, in its place, ``and Federal PLUS''.

Sec. 668.26 [Amended]

19. Section 668.26 is amended by removing ``or FDSL'' in paragraph

(b)(4); removing ``and ICL'' in paragraph (b)(6); removing ``and

Federal SLS'' in paragraph (c)(2); removing ``Federal Stafford or

Federal SLS'' both times it appears in paragraph (d)(2) introductory

text and adding, in its place, ``Federal Family Education Loan

Programs''; removing ``deliver'' in paragraph (d)(3) introductory text,

and adding, in its place, ``disburse''; removing ``disbursement of a''

in paragraph (d)(3); removing ``FDSL'' in paragraphs (d)(3)

introductory text and (d)(3)(i), and adding, in its place, ``Direct

Loan''; removing ``Federal Direct Student'' in paragraph (d)(3)

introductory text, and adding, in its place, ``Direct Loan Program''.

Sec. 668.32 [Amended]

20. Section 668.32 is amended by removing ``, FSEOG, and SSIG'' and

adding, in its place ``and FSEOG'' in paragraph (c)(1); and by removing

``Student'' and adding ``William D. Ford'' before ``Federal'' in

paragraph (k)(5).

21. Section 668.42 is amended by revising paragraph (b)

introductory text to read as follows:

Sec. 668.42 Preparation and dissemination of materials.

* * * * *

[[Page 40625]]

(b) Make those materials available to the student through

appropriate publications and mailings before the student enters into a

financial obligation with the institution, to--

* * * * *

Sec. 668.43 [Amended]

22. Section 668.43(c)(6) is amended by removing ``34 CFR 685.303''

and adding, in its place, ``34 CFR 685.304''; by removing ``Student'';

by adding ``William D. Ford'' before ``Federal Direct''; and by

removing ``and Federal SLS programs'' and adding, in its place,

``Program''.

Sec. 668.46 [Amended]

23. Section 668.46 is amended by removing ``July 1, 1996'' in

paragraph (a)(1), and adding, in its place, ``September 1, 1996'';

removing ``July 1st of one year and June 30th'' in paragraph

(a)(2)(ii), and adding, in its place, ``September 1 of one year and

August 31''; removing ``July 1, 1996 and June 30, 1997'' in paragraph

(a)(5)(i), and adding, in its place, ``September 1, 1996 and August 31,

1997''; and removing ``June 30'' in paragraph (a)(5)(ii), and adding,

in its place, ``August 31''.

Sec. 668.46 [Amended]

24. The heading of the note following Sec. 668.48 is corrected to

read ``Note to paragraph (c)''.

25. Section 668.49 is amended by adding ``, categorized by race and

gender'' before the period at the end of paragraph (a)(1)(iii); adding

a new paragraph (a)(1)(vi); removing ``and (c)'' in paragraph (b), and

adding, in its place, ``, (c), and (d)''; and revising paragraph (d) to

read as follows:

Sec. 668.49 Report on completion and graduation rates for student-

athletes.

(a) * * *

(1) * * *

(vi) The average completion or graduation rate and transfer-out

rate of the four most recent classes of entering students described in

Sec. 668.46 (a)(2), (3), and (4) who received athletically-related

student aid, categorized by race and gender within each sport. If an

institution has completion or graduation rates and transfer-out rates

for fewer than four of those classes, it shall disclose the average

rate of those classes for which it has rates.

* * * * *

(d) The provisions of Sec. 668.46(e) apply for purposes of this

section.

Sec. 668.51 [Amended]

26. Section 668.51(a) is amended by removing ``Federal Direct

Student Loan (FDSL)'' and adding, in its place, ``Federal Direct

Stafford/Ford Loan programs''.

Sec. 668.54 [Amended]

27. Section 668.54 is amended by removing ``Student'' in paragraph

(a)(2)(i), and adding, in its place ``Stafford/Ford'.

Sec. 668.55 [Amended]

28. Section 668.55 is amended by removing ``FDSL, or'' in paragraph

(c), and adding, in its place ``or Federal Direct Stafford/Ford Loan';

removing the comma after the word ``Grant'' and adding, in its place

``or'' in paragraph (c)(1); removing ``FDSL or program'' in paragraph

(c)(1); and adding ``, or originating a Direct Subsidized Loan'' after

the word ``application'' in paragraph (c)(1); removing the comma after

the word ``Grant'' and adding, in its place ``or'' in paragraph (c)(2);

removing ``FDSL, or program'' after the word ``campus-based'' in

paragraph (c)(2); removing ``or William D. Ford Federal Direct Loan

application'' and adding, in its place ``application or previously

originated Direct Subsidized Loan'' in paragraph (c)(2); and adding

``If the institution has previously originated a Direct Subsidized Loan

for a borrower, the school shall not update the borrower's dependence

status on the loan origination record.'' after the last sentence in

paragraph (d)(2).

29. Section 668.58 is amended by removing the word ``or'' at the

end of paragraph (a)(1)(ii); removing the period at the end of

paragraph (a)(1)(iii) and adding, in its place, ``; or''; removing

``William D. Ford Federal'' in paragraphs (c), (d)(1), and (d)(2);

revising paragraphs (a)(1)(i), (a)(2)(ii)(A), and (a)(2)(iii); and

adding a new paragraph (a)(1)(iv) to read as follows:

Sec. 668.58 Interim disbursements.

* * * * *

(a) * * *

(1) * * *

(i) Disburse any Federal Pell Grant or campus-based program funds

to the applicant;

* * * * *

(iv) Originate or disburse a Direct Subsidized Loan.

* * * * *

(2) * * *

(ii)(A) May make one disbursement of any combination of Federal

Pell Grant, Federal Perkins Loan, or FSEOG funds for the applicant's

first payment period; and

* * * * *

(iii)(A) May withhold certification of the applicant's Federal

Stafford Loan application or origination of the applicant's Direct

Subsidized Loan; or

(B) May certify the Federal Stafford Loan application or originate

the Direct Subsidized Loan provided that the institution does not

deliver Federal Stafford Loan proceeds or disburse Direct Subsidized

Loan proceeds.

* * * * *

30. Section 668.59 is amended by adding ``Federal'' before ``Pell''

in paragraph (b)(1); replacing ``William D. Ford Federal'' with

``Federal Direct Stafford/Ford'' in paragraphs (c) introductory text

and (c)(1)(ii); and revising paragraph (d)(1) to read as follows:

Sec. 668.59 Consequences of a change in application information.

* * * * *

(d)(1) If the institution selects an applicant for verification for

an award year who previously received a Direct Subsidized Loan for that

award year, and as a result of verification the loan amount is reduced,

the institution shall comply with the procedures specified in

Sec. 668.61(b)(2).

* * * * *

31. Section 668.60 is amended by removing ``FDSL'' in paragraphs

(b)(1)(i)(A) and (b)(1)(iii); removing ``FDSL'' and adding, in its

place, ``Federal Direct Stafford/Ford Loan'' in paragraph (d); removing

``FDSL and PAS'' and adding, in its place, ``and Federal Direct

Stafford/Ford Loan'' in paragraph (b) introductory text; removing

``CWS'' and adding, in its place, ``FWS'' in paragraph (b)(1)(i)(B);

removing ``William D. Ford Federal Direct Loan'' in paragraph

(b)(1)(i)(D) and adding, in its place, ``Direct Subsidized Loan''; and

revising paragraphs (b)(1)(i)(C), (b)(1)(ii), and (e)(2) to read as

follows:

Sec. 668.60 Deadlines for submitting documentation and the

consequences of failing to provide documentation.

* * * * *

(b) * * *

(1) * * *

(i) * * *

(C) Certify the applicant's Federal Stafford Loan application or

originate the applicant's Direct Subsidized Loan; or

* * * * *

(ii) The institution shall return to the lender, or to the

Secretary, in the case of a Direct Subsidized Loan, any Federal

Stafford Loan or Direct Subsidized Loan proceeds that otherwise would

be payable to the applicant; and

* * * * *

(e) * * *

[[Page 40626]]

(2) Certify that applicant's Federal Stafford Loan application,

originate that applicant's Direct Subsidized Loan, or process that

applicant's Federal Stafford Loan or Direct Subsidized Loan proceeds;

or

* * * * *

32. Section 668.61 is amended by removing ``FDSL, FSEOG or'' and

adding, in its place, ``or FSEOG'' in paragraph (a)(2)(ii)(B); removing

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

redesignating paragraph (b) as (b)(1); and adding a new paragraph

(b)(2) to read as follows:

Sec. 668.61 Recovery of funds.

* * * * *

(b) * * *

(2) If the institution determines as a result of the verification

process that a student received Direct Subsidized Loan proceeds for an

award year in excess of the student's need for the loan, the

institution shall reduce or cancel one or more subsequent disbursements

to eliminate the amount in excess of the student's need.

Sec. 668.81 [Amended]

33. Section 668.81 is amended by removing paragraph (e).

Sec. 668.83 [Amended]

34. Section 668.83 is amended by removing ``, Federal PLUS, or

Federal SLS'' and adding, in its place, ``or Federal PLUS'' in

paragraph (c)(2)(i)(B); removing ``, Federal PLUS, and Federal SLS''

and adding, in its place ``or Federal PLUS'' in paragraph

(c)(2)(iii)(D); and removing ``, Federal PLUS, or Federal SLS Program''

and adding, in its place, ``or Federal PLUS programs'' in paragraph

(d)(1)(iii).

Sec. 668.94 [Amended]

35. Section 668.94 is amended by removing the period after

``termination'' and adding, in its place, ``--'' in paragraph (a); and

removing ``, Federal PLUS, or Federal SLS Program'' and adding, in its

place, ``Program or Federal PLUS programs'' in paragraph (a)(5).

Sec. 668.130 [Amended]

36. Section 668.130 is amended by removing ``Sec. 668.7(a)(4)(ii)''

and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraphs (a) and

(b).

Sec. 668.131 [Amended]

37. Section 668.131 is amended by removing ``Sec. 668.7(a)(4)(ii)''

and adding, in its place, ``Sec. 668.33(a)(2)'' in the definitions of

``Eligible noncitizen'' and ``Primary confirmation.''

Sec. 668.132 [Amended]

38. Section 668.132 is amended by removing ``Sec. 668.7(a)(4)(ii)''

and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraphs (a)(2)

and (b).

Sec. 668.133 [Amended]

39. Section 668.133 is amended by removing ``Sec. 668.7(a)(4)(ii)''

and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraphs (a)

introductory text (twice), and (a)(1)(i).

Sec. 668.134 [Amended]

40. Section 668.134 is amended by removing ``Sec. 668.7(a)(4)(ii)''

and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraphs (a)

introductory text, (a)(1), (a)(3), (b)(1), and (b)(2).

Sec. 668.136 [Amended]

41. Section 668.136 is amended by removing ``Sec. 668.7(a)(4)(ii)''

and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraphs (a) and

(b) introductory text.

Sec. 668.137 [Amended]

42. Section 668.137 is amended by removing ``Sec. 668.7(a)(4)(ii)''

and adding, in its place, ``Sec. 668.33(a)(2)'' in paragraph (a); and

removing ``or certify a Federal Stafford, Federal PLUS, or Federal SLS

loan'' and adding, in its place, ``certify a Federal Stafford or

Federal PLUS loan application, or originate a Direct Loan Program

loan'' in paragraph (b).

43. Section 668.138 is amended by revising paragraphs (a) and (b)

to read as follows:

Sec. 668.138 Liability.

(a) A student is liable for any SSIG, FSEOG, or Federal Pell Grant

payment and for any Federal Stafford, Direct Subsidized, Direct

Unsubsidized or Federal Perkins loan made to him or her if the student

was ineligible for the Title IV, HEA assistance.

(b) A Federal PLUS or Direct PLUS Loan borrower is liable for any

Federal PLUS or Direct PLUS Loan made to him or her on behalf of an

ineligible student.

* * * * *

44. Section 668.139 is amended by revising paragraphs (b) and (d)

to read as follows:

Sec. 668.139 Recovery of payments and loan disbursements to ineligible

students.

* * * * *

(b) If an institution causes a Federal Stafford, Federal PLUS,

Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan to be

disbursed to or on behalf of an ineligible student for which it is not

liable in accordance with Sec. 668.138, it shall assist the Secretary

in recovering the funds by notifying the lender in the case of an FFEL

Program loan or the Secretary in the case of a Direct Loan Program loan

that the student has failed to establish eligibility under the

requirements of Secs. 668.201 or 685.200, as appropriate.

* * * * *

(d) If an institution is liable for a Federal Stafford, Federal

PLUS, Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan

disbursement to an ineligible student, the institution shall repay an

amount equal to the disbursement to the lender in the case of an FFEL

Program loan or the Secretary in the case of a Direct Loan Program

loan, and provide written notice to the borrower.

Sec. 668.166 [Amended]

45. Section 668.166(a)(1) is amended by adding ``other than Federal

Perkins Loan Program funds,'' after ``title IV, HEA program funds,'.

46. Section 668.167 is amended by revising paragraph (a)(3) to read

as follows:

Sec. 668.167 FFEL Program funds.

(a) * * *

(3)(i) An institution may not request a lender to provide it with

loan funds by EFT or master check for any Federal PLUS Program loan

earlier than 13 days before the first day of classes for any payment

period.

(ii) An institution may not request a lender to provide with loan

funds by check requiring the endorsement of the borrower for any

Federal PLUS Program loan earlier than 30 days before the first day of

classes for any payment period.

* * * * *

[FR Doc. 98-20171 Filed 7-28-98; 8:45 am]

BILLING CODE 4000-01-P