Student Assistance General Provisions

SUMMARY: We amend the regulations governing student eligibility for 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 Federal Pell Grant Program, the campus-based

programs (Federal Perkins Loan, Federal Work-Study (FWS), and Federal

Supplemental Educational Opportunity Grant (FSEOG) Programs), the

William D. Ford Federal Direct Loan (Direct Loan) Program, the Federal

Family Education Loan (FFEL) Program, and the Leveraging Educational

Assistance Partnership (LEAP) Program (formerly called the State

Student Incentive Grant (SSIG) Program). The regulations implement

changes made to the Higher Education Act of 1965, as amended (HEA), by

the Higher Education Amendments of 1998 (Public Law 105-244, enacted

October 7, 1998) (1998 Amendments).

DATES: These regulations are effective July 1, 2000.

Implementation Date: The changes to Secs. 668.32 and 668.38 reflect

statutory provisions that already are in effect. Institutions may use

these regulations prior to July 1, 2000 as guidance in complying with

those statutory provisions.

FOR FURTHER INFORMATION CONTACT: Lloyd Horwich, U.S. Department of

Education, 400 Maryland Avenue, S.W., ROB-3, Room 3045, Washington,

D.C. 20202-5344. Telephone (202) 708-8242. If you use a

telecommunications device for the deaf (TDD), you may call the Federal

Information Relay Service (FIRS) at 1-800-877-8339.

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 person listed in the preceding

paragraph.

SUPPLEMENTARY INFORMATION: On July 16, 1999, we published a notice of

proposed rulemaking (NPRM) in the Federal Register (64 FR 38504)

proposing to amend the regulations governing student eligibility for

the title IV, HEA programs. In the preamble to the NPRM, we discussed

the following proposed changes:

Amending Sec. 668.32(e) to allow a student who completes a

secondary school education in a home school that is treated as a home

school or private school under State law to be eligible to receive

title IV, HEA program funds.

Amending Sec. 668.32(h) to provide that a student file his

or her Statement of Educational Purpose with the Department.

Amending Sec. 668.32(k)(7) to reflect the name-change of

the SSIG program to the LEAP program.

Amending Sec. 668.32 by adding as Sec. 668.32(l) a cross-

reference to the student eligibility criteria concerning drug

convictions described in proposed Sec. 668.40.

Amending Sec. 668.38 to provide the conditions under which

a student enrolled in telecommunications courses will not be considered

enrolled in correspondence courses.

Adding Sec. 668.40 to provide the conditions under which a

student who has been convicted under Federal or State law of possession

or sale of illegal drugs will be ineligible to receive title IV, HEA

program funds.

There are no significant differences between the NPRM and these

final regulations, except that these final regulations clarify the

status under Sec. 668.40 of determinations or adjudications for

possession or sale of illegal drugs arising out of a juvenile

proceeding.

Discussion of Student Financial Assistance Regulations Development

Process

The regulations in this document were developed through the use of

negotiated rulemaking. Section 492 of the HEA requires that, before

publishing any proposed regulations to implement programs under title

IV of the HEA, we obtain public involvement in the development of the

proposed regulations. After obtaining advice and recommendations, we

must conduct a negotiated rulemaking process to develop the proposed

regulations. All proposed regulations must conform to agreements

resulting from the negotiated rulemaking process unless we reopen that

process or explain any departure from the agreements to the negotiated

rulemaking participants.

These regulations were published in proposed form on July 16, 1999

in conformance with the consensus of the negotiated rulemaking

committee. Under the committee's protocols, consensus meant that no

member of the committee dissented from the agreed-upon language. We

invited comments on the proposed regulations by September 14, 1999, and

18 comments were received. An analysis of the comments and of the

changes in the proposed regulations follows.

We discuss substantive issues under the sections of the regulations

to which they pertain. Generally, we do not address technical and other

minor changes and suggested changes the law does not authorize us to

make.

Analysis of Comments and Changes

Section 668.32 Student Eligibility-General

Home-schooled students

Comments: A number of commenters specifically supported our

statement in the NPRM that a student who completes a secondary school

education in a home school setting that is treated as a home school or

private school under State law simply must satisfy the home-school

completion requirements of the State in which the student was home

schooled to be eligible for title IV, HEA program funds.

Changes: None.

Comments: A number of commenters specifically supported our

statement in the NPRM that the Secretary will allow a home-schooled

student to self-certify his or her eligibility in the same way a high

school graduate or General Equivalency Degree (GED) recipient may.

Changes: None.

Comments: The Department should clarify the meaning of ``exemption

from compulsory attendance requirements under State law'' in proposed

Sec. 668.32(e)(4)(ii).

Discussion: ``Exemption from compulsory attendance requirements

under State law,'' means that the State does not consider a home-

schooled student to be in violation of the State's truancy laws.

Changes: None.

Comments: The Department should clarify whether home-schooled

students must take an ability-to-benefit test to be eligible to receive

Title IV, HEA program funds under proposed Sec. 668.32(e).

Discussion: Home-schooled students who satisfy the requirements of

Sec. 668.32(e)(4) are eligible to receive title IV, HEA program funds.

They are not required to take an ability-to-benefit test.

Changes: None.

Section 668.38 Enrollment in Telecommunications and Correspondence

Courses

Comments: The Department should clarify the status under proposed

Sec. 668.38 of students enrolled in telecommunications courses at

institutions described in section

[[Page 57357]]

521(4)(C) of the Carl D. Perkins Vocational and Applied Technology

Education Act.

Discussion: Students enrolled in telecommunications courses at

institutions described in section 521(4)(C) of the Carl D. Perkins

Vocational and Applied Technology Education Act are considered to be

enrolled in correspondence courses.

Changes: None.

Section 668.40 Suspension of eligibility for drug-related offenses

Comments: The Department should clarify that the provisions of

Sec. 668.40 apply only to a student's eligibility for title IV, HEA

program funds for award years beginning on or after July 1, 2000.

Discussion: The provisions of Sec. 668.40 apply only to a student's

eligibility for title IV, HEA program funds for award years beginning

on or after July 1, 2000. However, convictions that occur before July

1, 2000 may affect a student's eligibility for title IV, HEA program

funds as of July 1, 2000. For example, a student convicted for the

first time for possession of a controlled substance on February 1, 2000

will be ineligible from July 1, 2000 (the effective date of the

regulations) until February 1, 2001 (one year from the date of

conviction).

Changes: None.

Comments: Clarify whether a conviction for multiple counts of

possession or multiple counts of sale is considered a single

conviction.

Discussion: A conviction for multiple counts of possession or

multiple counts of sale is considered a single conviction. Also, a

determination or adjudication arising out of a juvenile proceeding is

not a conviction for purposes of this regulation.

Changes: Section 668.40(a)(2) is changed to reflect the above

clarification concerning juvenile violations.

Comments: The Department should clarify the meaning of

``indefinite'' under Secs. 668.40(b)(1)(iii) and (b)(2)(ii), concerning

the ineligibility period of a student convicted three or more times for

possession of illegal drugs or two or more times for sale of illegal

drugs.

Discussion: For purposes of this regulation, ``indefinite'' means

permanent, unless (1) the student completes an approved drug

rehabilitation program described in Sec. 668.40(d) or (2) convictions

are reversed, set aside, or removed from the student's record so that

the student has fewer than three convictions for possession and fewer

than two convictions for sale remaining on his or her record, in which

case the student's ineligibility period would be determined by the

number and type of remaining convictions.

Changes: None.

Comments: An institution should not be required to be involved in

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

under this regulation.

Discussion: We will not require institutions to question their

applicants for title IV, HEA program funds about drug convictions. We

intend to use the aid application process--the Free Application for

Federal Student Aid (FAFSA) and the Student Aid Report (SAR)--to

collect the necessary information from applicants. However, we will

encourage students to notify their financial aid office if their

eligibility status changes.

Changes: None.

Comments: An institution should not be liable for funds disbursed

to a student when the student is ineligible under this regulation and

the institution is not aware the student is ineligible.

Discussion: An institution will not be liable for funds disbursed

to a student who is ineligible under this regulation if the institution

is unaware at the time of disbursement that the student is ineligible.

Changes: None.

Comments: Students who regain their eligibility under this

regulation during a payment or enrollment period should be eligible for

aid for the entire payment period (in the case of Pell Grants, FSEOG,

FWS, or Perkins Loans) or the entire enrollment period (in the case of

Direct or FFEL Loans). Similarly, students who lose their eligibility

during a payment or enrollment period should not forego funds until the

beginning of the next payment or enrollment period.

Discussion: Students who regain eligibility under this regulation

during a payment period will be eligible to receive Pell Grants, FSEOG,

FWS, or Perkins Loans for the entire payment period, and will be

eligible to receive Direct or FFEL Loans for the entire enrollment

period.

However, students who lose eligibility during a payment period will

be immediately ineligible to receive subsequent disbursements of any

title IV, HEA program funds, and will be required to repay any title

IV, HEA program funds that they receive after losing their eligibility.

Those students will not be considered to have been ineligible for funds

disbursed to them prior to their loss of eligibility. Institutions will

not have to recalculate students' awards on a pro-rata basis.

Changes: None.

Comments: Students should be allowed to self-certify both their

eligibility under this regulation for title IV, HEA program funds and

the renewal of their eligibility during a payment period.

Discussion: We will allow students to self-certify their

eligibility for title IV, HEA program funds on the FAFSA or SAR. We

also will allow institutions to disburse funds to students who regain

eligibility during a payment period or enrollment period, based on

students' self-certification to the institution. Students may not self-

certify their eligibility based on projected eligibility dates (i.e.,

students who will regain eligibility during a payment period may not

self-certify at the beginning of the payment period that they are

eligible, even though as discussed above, students who regain

eligibility during a payment period will be eligible to receive funds

for the entire payment period or enrollment period, as appropriate),

nor may institutions disburse funds based on projected eligibility

dates, but institutions will not be responsible for verifying the

accuracy of students' self-certifications.

Changes: None.

Comments: The regulation should not be overly restrictive in

defining what is an acceptable drug rehabilitation program.

Discussion: We agree, and believe that Sec. 668.40(d) addresses

this concern.

Changes: None.

Comments: The Department should provide individualized advice to

students on the meaning of this regulation.

Discussion: We will provide guidance to students and institutions

over the coming months concerning this regulation.

Changes: None.

Executive Order 12866

Under Executive Order 12866, we have assessed the potential costs

and benefits of this regulatory action. The potential costs associated

with this regulatory action are those resulting from statutory

requirements and those we have determined are necessary to administer

this program effectively and efficiently.

In assessing the potential costs and benefits of this regulatory

action--both quantitative and qualitative--we have determined that the

benefits justify the costs. We have also determined that this

regulatory action would not unduly interfere with State, local, and

tribal governments in the exercise of their governmental functions.

[[Page 57358]]

We summarized the potential costs and benefits of this regulatory

action in the preamble to the NPRM.

Paperwork Reduction Act of 1995

These proposed regulations do not contain any information

collection requirements.

Assessment of Educational Impact

In the NPRM, we requested comments on whether the proposed

regulations would require transmission of information that any other

agency or authority of the United States gathers or makes available.

Based on the response to the NPRM and on our review, we have determined

that these final regulations do not require transmission of information

that any other agency or authority of the United States gathers or

makes available.

Electronic Access to This Document

You may view this document in text or Adobe Portable Document

Format (PDF) on the Internet at the following sites:

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

http://www.ed.gov/legislation/HEA/rulemaking/

http://ifap.ed.gov/csb__html/fedlreg.htm

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

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

you have questions about using the PDF, call the U.S. Government

Printing Office (GPO) toll free, at 1-888-293-6498; or in the

Washington, D.C., area at (202) 512-1530.

Note: The official version of this document is the document

published in the Federal Register. Free Internet access to the

official edition of the Federal Register and the Code of Federal

Regulations is available on GPO Access at: http://

www.access.gpo.gov/nara/index.html

(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 LEAP; and

84.268 William D. Ford Federal Direct Loan Programs)

List of Subjects in 34 CFR Part 668

Administrative practice and procedure, Colleges and universities,

Student aid, Reporting and recordkeeping requirements.

Dated: October 18, 1999.

Richard W. Riley,

Secretary of Education.

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

Regulations as follows:

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

1. The authority citation for part 668 is amended to read as

follows:

Authority: 20 U.S.C. 1001, 1002, 1003, 1085, 1088, 1091, 1092,

1094, 1099c, and 1099c-1, unless otherwise noted.

2. Section 668.32 is amended as follows:

A. In paragraph (e)(2), by removing ``or'';

B. In paragraph (e)(3), by adding ``or'' after the semi-colon;

C. By adding a new paragraph (e)(4) to read as follows;

D. In paragraph (h), by removing ``, or in the case of a loan made

under the FFEL Program, with the lender'';

E. In paragraph (j), by removing the ``and'' after the semi-colon;

F. In paragraph (k)(7), by removing ``SSIG'' and adding in its

place, ``LEAP,'' by removing the period at the end of the paragraph and

adding in its place a semi-colon, and adding ``and'' after the semi-

colon; and

G. By adding paragraph (l) to read as follows.

Sec. 668.32 Student eligibility--general.

* * * * *

(e) * * *

(4) Was home-schooled, and either--

(i) Obtained a secondary school completion credential for home

school (other than a high school diploma or its recognized equivalent)

provided for under State law; or

(ii) If State law does not require a home-schooled student to

obtain the credential described in paragraph (e)(4)(i) of this section,

has completed a secondary school education in a home school setting

that qualifies as an exemption from compulsory attendance requirements

under State law;

* * * * *

(1) Is not ineligible under Sec. 668.40.

* * * * *

3. Section 668.38 is amended by revising paragraph (b) to read as

follows:

Sec. 668.38 Enrollment in telecommunications and correspondence

courses.

* * * * *

(b)(1) For purposes of this section, a student enrolled in a

telecommunications course at an institution of higher education is not

enrolled in a correspondence course, if--

(i) The student is enrolled in a program that leads to a

certificate for a program of study of 1 year or longer, or an

associate, bachelor, or graduate degree; and

(ii) The number of telecommunications and correspondence courses

the institution offered during its latest completed award year was

fewer than 50 percent of all the courses the institution offered during

that same year.

(2) For purposes of paragraph (b)(1) of this section, an

institution of higher education is one--

(i) That is not an institute or school described in section

521(4)(C) of the Carl D. Perkins Vocational and Applied Technology Act;

and

(ii) At which at least 50 percent of the programs of study offered

by the institution during its latest completed award year led to an

associate, bachelor, or graduate degree.

(3) For purposes of paragraph (b)(1)(ii) of this section, the

institution must calculate the number of courses using the provisions

contained in 34 CFR 600.7(b)(2).

4. Section 668.40 is added to read as follows:

Sec. 668.40 Conviction for possession or sale of illegal drugs.

(a)(1) A student is ineligible to receive title IV, HEA program

funds if the student has been convicted of an offense involving the

possession or sale of illegal drugs for the period described in

paragraph (b) of this section. However, the student may regain

eligibility before that period expires under the conditions described

in paragraph (c) of this section.

(2) For purposes of this section, a conviction means only a

conviction that is on a student's record. A conviction that was

reversed, set aside, or removed from the student's record is not

relevant for purposes of this section, nor is a determination or

adjudication arising out of a juvenile proceeding.

(3) For purposes of this section, an illegal drug is a controlled

substance as defined by section 102(6) of the Controlled Substances Act

(21 U.S.C. 801(6)), and does not include alcohol or tobacco.

(b)(1) Possession. Except as provided in paragraph (c) of this

section, if a student has been convicted--

(i) Only one time for possession of illegal drugs, the student is

ineligible to receive title IV, HEA program funds for one year after

the date of conviction;

(ii) Two times for possession of illegal drugs, the student is

ineligible to receive title IV, HEA program funds for two years after

the date of the second conviction; or

[[Page 57359]]

(iii) Three or more times for possession of illegal drugs, the

student is ineligible to receive title IV, HEA program funds for an

indefinite period after the date of the third conviction.

(2) Sale. Except as provided in paragraph (c) of this section, if a

student has been convicted--

(i) Only one time for sale of illegal drugs, the student is

ineligible to receive title IV, HEA program funds for two years after

the date of conviction; or

(ii) Two or more times for sale of illegal drugs, the student is

ineligible to receive Title IV, HEA program funds for an indefinite

period after the date of the second conviction.

(c) If a student successfully completes a drug rehabilitation

program described in paragraph (d) of this section after the student's

most recent drug conviction, the student regains eligibility on the

date the student successfully completes the program.

(d) A drug rehabilitation program referred to in paragraph (c) of

this section is one which--

(1) Includes at least two unannounced drug tests; and

(2)(i) Has received or is qualified to receive funds directly or

indirectly under a Federal, State, or local government program;

(ii) Is administered or recognized by a Federal, State, or local

government agency or court;

(iii) Has received or is qualified to receive payment directly or

indirectly from a Federally- or State-licensed insurance company; or

(iv) Is administered or recognized by a Federally- or State-

licensed hospital, health clinic or medical doctor.

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

[FR Doc. 99-27673 Filed 10-21-99; 8:45 am]

BILLING CODE 4000-01-U